[Congressional Record Volume 151, Number 89 (Wednesday, June 29, 2005)]
[Senate]
[Pages S7616-S7641]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. LOTT (for himself and Mr. Baucus):
S. 1327. A bill to amend the Internal Revenue Code of 1986 to modify
the active business definition under section 355; to the Committee on
Finance.
Mr. LOTT. Mr. President, I rise today to introduce legislation
proposing a change to the Internal Revenue Code that has been endorsed
by both the Joint Committee on Taxation and the United States Treasury
Department. It is a simplification measure that has been passed by this
body on three separate occasions, and I am pleased to be joined by the
gentleman from Montana, Senator Baucus, the Ranking Democratic Member
on the Finance Committee, in introducing this common sense legislation
today. It is now time for Congress to act again and include this
meritorious provision in the next appropriate tax bill reported from
the Finance Committee.
Corporations and affiliated groups of corporations, for any number of
good reasons, find it appropriate and many times necessary to shed some
of their businesses. If the business is not being sold, the Internal
Revenue Code makes it possible to reorganize without having to
recognize gain on the transaction. A typical transaction is a spin-off
transaction performed per the terms of section 355 of the Internal
Revenue Code, where a parent corporation distributes the shares of its
subsidiary(s) to its shareholders who once had shares of just the
parent corporation now have shares of both the parent and the shares of
just the parent corporation now have shares of its subsidiary(s) to its
shareholders who once had shares of just the parent corporation now
have shares of both the parent and the subsidiary. As a matter of long-
standing tax policy, there is typically no tax exacted with these kinds
of divisions, nor should there be. Typically the business hasn't
changed what it is doing; it is simply being done under a separated
ownership structure and the shareholders have ownership in two
corporations instead of one, with no overall change in their holdings.
In order to be accorded tax-free treatment, section 355 requires the
corporation involved in the transaction to be engaged in an ``active
trade or business.'' Under the current regulations interpreting section
355 of the Internal Revenue Code, a much more rigorous test of ``active
trade or business'' is imposed if a holding company seeks to spin-off a
subsidiary than would be the case if the subsidiary were simply owned
directly by the parent corporation. It is a distinction without
substance and requires corporations, holding companies, to go through
major restructurings to satisfy the requirements of section 355. There
is absolutely no substantive policy rationale for such a result. The
distinction is inappropriate and has been identified as such by both
the staff of the Joint Committee on Taxation and the Treasury
Department in 1999 and 2000. This legislation addresses that anomaly
and treats both situations equally.
The cost of this provision is minimal, at about $8 million a year by
the last revenue estimate from the staff of the Joint Committee on
Taxation. This provision is a small but significant step toward
simplification of the tax code, and I urge my colleagues on the Finance
Committee and in this body to act on this change one more time, and
hopefully for the last time.
Mr. BAUCUS. Mr. President, virtually everyone supports tax
simplification. But for some reason, it is awfully hard to accomplish.
Today, I am pleased to join my friend and colleague from Mississippi,
Senator Lott, in introducing tax legislation that is non-controversial
and a clear tax simplification measure. Further, the bill we are filing
today has been supported in the past by the Joint Tax Committee and the
U.S. Treasury.
Normally, corporations are taxed on distributions of property to
shareholders as if sold at fair market value. However, section 355 of
the tax code provides corporations with the flexibility to distribute
one or more of their businesses to their shareholders, such as in a
spin-off, without triggering tax consequences if the transaction meets
important requirements. Through this exception in section 355,
corporations may make strategic business decisions without imposing tax
burdens on their shareholders, but only if both the distributing and
distributed businesses continue as an active trade or business. The
regulatory structure that has evolved over the years under section 355
has created very different ``active trade or business'' tests depending
on whether the distributing corporation operates as a holding company
or whether it holds the business assets directly. There is no rationale
to support that distinction.
Both the staff of the Joint Tax Committee and the Clinton Treasury
Department recommended that the rules be conformed as a tax
simplification measure. The Senate has passed legislation similar to
what we are proposing today on three occasions. And, on one of those
occasions, it passed the House as well in legislation that was later
vetoed for other reasons. I have heard of no opposition to this change,
which would simply apply a ``look through'' rule for the ``active trade
or business'' test on an affiliated group level, so that parent holding
companies could count the active businesses of its subsidiaries. And it
would eliminate hours of wasted time and resources in tax planning
activities that serve no function other than to try and conform
corporate ownership structures to satisfy the literal language of
current tax requirements.
Again, I should emphasize that this proposal does not bring wholesale
change to section 355. Spin-off requirements dealing with the
continuity of historical shareholder interest, continuity of business
enterprises, business purpose, and absence of any device to distribute
earnings and profits all remain. With a cost of less than $10 million a
year, this is an affordable step we can take now to simplify the
Internal Revenue Code.
I am pleased to join with Senator Lott in working for passage of this
important simplification bill, and I urge my colleagues on the Finance
Committee and in the Senate give our bill every consideration.
______
By Mr. JEFFORDS (for himself and Mr. Sarbanes):
S. 1328. A bill to amend the Safe Drinking Water Act to ensure that
the District of Columbia and States are provided a safe, lead-free
supply of drinking water; to the Committee on Environment and Public
Works.
Mr. JEFFORDS. Mr. President, I rise today to introduce the Lead-Free
Drinking Water Act of 2005 with my colleague Senator Sarbanes. We are
joined by our colleagues, Congresswoman Norton, Congressman Waxman, and
others, who will be introducing the House companion bill today. Today,
we introduce this bill for the second time.
Last year, we shared the shock felt by DC residents when it was first
reported that lead levels in the DC public water system were
significantly higher than Federal guidelines, and had been so for at
least 2 years.
We sought answers to the same questions everyone was asking
themselves--How much water did I drink? How much water did my children
drink? What are the effects of lead in our bloodstream?
We shared the outrage felt by many DC residents, asking ourselves--
why were we not told about this sooner? How did this happen? What are
we going to do about it?
In the 108th Congress, we attempted to answer those questions. We
held a hearing in the Senate Environment and Public Works Committee and
listened to the concerns of DC parents worried about their children's
health.
We listened to experts who identified weaknesses in the Safe Drinking
Water Act and the lead and copper rule, governing how the public is
informed when lead is present in a drinking water system and what
corrective actions public water systems must take.
One of the most disturbing points is that many of the things that
happened in Washington, DC, were within the boundaries of the existing
rules that purport to protect the public from lead in drinking water.
We responded by introducing the Lead-Free Drinking Water Act of 2004,
which sought to correct the weaknesses in those rules.
Today, we are reintroducing the Lead-Free Drinking Water Act of 2005.
[[Page S7617]]
Our bill will overhaul the Safe Drinking Water Act to strengthen the
Federal rules governing lead testing and regulations in our public
water systems to ensure that our most vulnerable citizens--infants,
children, pregnant women, and new moms--are not harmed by lead in
drinking water.
Specifically, the bill requires the EPA to reevaluate the current
regulatory structure to figure out if it really provides the level of
public health protection required.
The bill calls on the EPA to establish a maximum contaminant level
for lead at the tap, and if that is not practical given the presence of
lead inside home plumbing systems, the bill requires EPA to reevaluate
the current action level for lead to ensure that vulnerable populations
such as infants, children, pregnant women, and nursing mothers receive
adequate protection.
I look forward to working with EPA on this evaluation to determine
which approach is most feasible and which provides the greatest level
of public health protection.
EPA has three choices: keep current standard, an ``action level'' at
15 parts per billion; lower the current action level below 15 parts per
billion; establish a ``maximum contaminant load.''
For example, it is clear that a maximum contaminant level, which is
measured at the water treatment plant, would do little to protect
people from lead-contaminated drinking water at their faucets. Our bill
requires that standards be measured at the tap.
A low lead action level measured at the tap could provide more
protection than a high MCL measured anywhere in the system if there
were extremely strong and effective public notification procedures in
place.
Public notice is the key to success of any lead regulation--parents
say to me, ``If only I had known, I could have protected my family.''
It is our job to be sure the public notice system we have in place gets
people the information they need when they need it.
The bill will require information such as the number of homes tested,
the lead levels found, the areas of the community in which they were
located, and the disproportionate adverse health effects of lead on
infants, be made public immediately upon detection of lead.
In addition, the bill requires that, as part of routine testing
conducted, any residents whose homes test high for lead receive
notification and appropriate medical referrals within 14 days.
Finally, we don't want the day of an exceedance to be the first time
people have heard about lead in drinking water. The bill establishes a
basic public education program to ensure that people have a basic
understanding that lead may be present in drinking water and what the
corrective actions might be even before their water system detects a
problem.
The bill requires increased water testing and lead remediation in
schools and day-care centers nationwide. This provision exists in law
today, but it was affected by previous litigation. This bill corrects
the problem by requiring the Administrator to execute this program if
states choose not to. It is wholly unacceptable to do anything less
than provide a learning environment for our next generation that does
not degrade their intellectual capacity. Our bill provides $150 million
over 5 years for this program.
And we strengthen existing requirements to ensure that all lead
service lines will be replaced by a public water system at a rate of 10
percent per year until they are gone.
This is common sense--let us get rid of the lead in our systems and
get rid of the lead in our water.
Our bill makes water systems responsible for replacing lead service
lines, including the privately owned sections, once a system exceeds
lead standards. Homeowners have the final say in whether their line is
replaced.
We provide $1 billion over 5 years for lead service line replacement.
The EPA estimates that our Nation needs $265 billion to maintain and
improve its drinking water infrastructure over the next 20 years.
If we do not address this, we will be facing more and more health and
environmental issues as our Nation's water infrastructure degrades.
Lead service lines are only one part of the picture. Leaded solder
was banned in 1987. However, ``lead-free'' plumbing fixtures are
currently allowed to have 8 percent lead.
Our bill makes ``lead-free'' mean lead-free. It defines the term as
trace amounts of lead -0.2 percent. It prohibits the use of pipes, or
pipe or plumbing fitting or fixtures that are ``high lead'' which our
bill defines as 2.0 percent lead within 1 year. And within 5 years, it
prohibits the use of any plumbing components with anymore than 0.2
percent lead. This is a huge step toward making our water systems truly
lead-free.
Our bill strengthens existing requirements for leaching by requiring
independent third-party performance certification.
Finally, our bill requires that the existing requirements for
leaching be revised to be as protective as the existing leaching
standards in California which have set the bar for plumbing fittings
and fixtures.
We urge our colleagues to support this legislation.
Last year, Good Housekeeping independently ran a piece about the
Lead-Free Drinking Water Act and gave its readers information to
contact us with their support. We received over a thousand responses
from individual readers in 48 States and the District of Columbia.
In the 18th century, almost 300 years ago, Ben Franklin concluded
that lead was poisonous. In a biography written by Edmund S. Morgan,
this story is recounted:
At the request of his friend and English publisher Benjamin Vaughan,
he wrote out a proof of what he had once casually mentioned in
conversation: his conclusion that lead was poisonous. After detailing
his own and other printers' ailments from the continuous handling of
lead type, he went on to describe his observations of the grass and
plants that died from the fumes near furnaces where lead was smelted,
of the effects of drinking rainwater that sluiced off lead roofs, and
of his queries to sickened plumbers, painters, and glaziers in a Paris
hospital. His observations of the toxic effects of lead, he noted, were
nothing new; and he remarked wryly, ``how long a useful Truth may be
known, and exist, before it is generally receiv'd and practis'd on.''
We have known lead is a poison for centuries. What are we waiting
for? As we learned from the incidents in Washington, DC, and Boston,
there are large deficiencies in Federal safe drinking water
regulations. It is time to plug the holes in these regulations and
fully protect the public from this poison. It is time to get the lead
out.
Safe drinking water is not a privilege; it is a right--whether you
live in Washington, DC, or Washington State or Washington County, VT.
I urge my colleagues to join us in working to pass the Lead-Free
Drinking Water Act of 2005 to get the lead out of our pipes, out of our
water, out of our families, and out of our lives.
______
By Mrs. CLINTON (for herself, Mr. Smith, Mr. Martinez, Mr. Reed,
and Mr. Durbin):
S. 1330. A bill to amend the Internal Revenue Code of 1986 to provide
incentives for employer-provided employee housing assistance, and for
other purposes; to the Committee on Finance.
Mrs. CLINTON. Mr. President, I rise today during National Home
Ownership Month to introduce the Housing America's Workforce Act.
Affordable and safe housing plays a vital role in creating and
sustaining healthy communities and a vibrant workforce. The Housing
America's Workforce Act creates incentives to expand employer-assisted
housing initiatives across the Nation. I thank Senators Smith,
Martinez, Reed, and Durbin for their co-sponsorship of this important
legislation. I would also like to thank Congresswoman Nydia Velazquez
for her leadership in introducing the companion bill in the House of
Representatives.
The sad truth is that across our Nation, working full-time no longer
guarantees that a family will be able to afford a secure and
comfortable home. The shortage of workforce housing has become a
national crisis as housing costs have far outgrown the rate of
inflation in many markets and as the gap between wages and housing
costs widens. The result is that affordable housing is out of reach for
a growing number of working families. As a result,
[[Page S7618]]
people who provide the backbone services for our communities--teachers,
firefighters, police officers, and nurses--often cannot afford to live
in the communities in which they serve. A recent workforce housing
study released by the National Association of Home Builders found that
for the most part, workers who provide these vital community services
can only find housing they can afford in less than half of the nation's
top 25 metropolitan areas.
Across the Nation, the number of working families with critical
housing problems (defined as those paying more than half of their
income for housing and/or living in dilapidated conditions) has
increased by 67 percent between 1997 and 2003 to approximately 5
million families. Families that spend more than half of their income on
housing have little income left over for other essentials such as food,
healthcare, and transportation.
And despite overall improvements in home-ownership trends since 1978,
working families--employed households with children earning less than
120 percent of Area Median Income--have actually experienced a decrease
in homeownership rates. A 2004 Center for Housing Policy study shows
that the homeownership rate for working families with children was at
62.5 percent in 1978, and only 56.6 percent through 2001.
Employer-assisted housing, EAH, is a local, innovative solution that
a growing number of employers are using to meet the housing needs of
their employees while increasing the competitiveness of their
businesses. There are several types of EAH products, including
homebuyer education, down payment assistance, rental assistance and
loan guarantee programs. Employers often combine these products to meet
their employees' specific needs in the most effective ways.
The benefits for employees and employers are impressive. The
employee, in addition to receiving financial support from an employer
to buy or rent a home closer to work, also regains extra time--formerly
spent in traffic--for family or community life. The employer likewise
benefits from a more stable workforce when employees live near work.
They enjoy the advantages from the improved employee morale, lower
turnover rate and reduced recruitment costs result in bottom line
savings that the increased proximity brings. Furthermore, EAH programs
benefit not only the workers and employers, but also the entire
community. As former commuters buy homes near the jobsite, the
surrounding community which previously suffered from traffic
congestion, now enjoys new investment and property tax revenues.
The Housing America's Workforce Act is inspired in great part by
lessons learned in States and local communities across the Nation,
where EAH has proven to be an effective tool to promote housing
affordability for working families and community revitalization.
Through EAH programs, the private sector becomes part of the solution,
investing in housing assistance for employees while experiencing bottom
line benefits. This is clearly a public-private partnership that is
proven and makes sense.
The Housing America's Workforce Act provides incentives to increase
private sector investment in housing in three important ways. First, it
offers a tax credit of 50 cents for every dollar that an employer
provides to eligible employees up to $10,000 or six percent of the
employee's home purchase price, whichever is less, or up to $2,000 for
rental assistance. Second, to ensure that employees receive the full
value of employers' contributions, the Act defines housing assistance
as a ``nontaxable benefit,'' similar to health, dental and life
insurance. Third, the act establishes a competitive grant program
available to nonprofit housing organizations that provide technical
assistance, program administration, and outreach support to employers
undertaking EAH initiatives.
In New York and in other parts of the country, EAH has caught on with
the local business community, elected and appointed officials, and the
broader housing arena. Its expansion indicates a growing understanding
among the private sector that it pays to invest in workforce housing. I
have worked with employers across my State to launch county employer-
assisted housing programs in places such as Long Island, Rochester and
Westchester.
I have met many of the families that have already benefited from Long
Island's EAH program, which I helped launch in 2002. People like the
Isaacs family, who were able to buy their first home in North
Amityville in 2002 thanks to their employer's participation in the
program. Pamela Isaac, like so many employees on Long Island, works as
a Dietician at Our Lady of Consolation, part of the Catholic Health
Services Network. Catholic Health Services' participation in the
employer assisted housing program enabled Pamela and her husband
Bartholomew to stay on Long Island and raise their three children in
their own home.
I also worked in collaboration with Mayor William A. Johnson of
Rochester to jumpstart the City of Rochester's EAH initiative. The City
provides $3,000 for its own employees and also encourages other
employers to provide a home purchase benefit by offering to match that
benefit dollar for dollar up to a maximum of $3,000. Therefore, if an
employer offered the maximum benefit of $3,000, he or she would produce
a $6,000 benefit for his or her employees with the city's matching
funds.
The Westchester County EAH, which was spEAHheaded by the Business
Council and Fannie Mae, brings together the following Westchester
County nonprofit organizations: Housing Action Council, Westchester
Residential Opportunities, Westchester Housing Fund and Community
Housing Innovations. Each of these nonprofits provides standardized,
comprehensive education and counseling support to participating
employers. The initiative also provides matching funds of up to $3,000
from Westchester County or from the cities of Yonkers, New Rochelle,
White Plains or Mount Vernon. In addition, the nonprofit collaborative
offers down payment and closing cost assistance programs that can match
employer contributions.
The creation of Federal incentives to expand employer-assisted
housing has been a consistent recommendation of experts in the broader
housing arena, including the Millennial Housing Commission. In
addition, former HUD Secretaries Henry Cisneros and Jack Kemp, along
with Nic Retsinas and Kent Colton of the Harvard Joint Center for
Housing Studies recently released a bipartisan platform for national
housing policy, which includes EAH as one of its recommendations.
According to the Society for Human Resources Management's 2004
Benefits Survey, 12 percent of employers offered home ownership
assistance in 2004, up from 7 percent in 2002. Since 1991, Fannie Mae
has offered a nationwide EAH program through participating lending
institutions and employers. Fannie Mae has helped about 750 employers
of various sizes implement EAH programs and nearly 570 have been
launched since 2000. Freddie Mac launched a similar national program in
1999, which it expanded in 2004. Several states have enacted EAH tax
incentive programs, including Illinois, Connecticut, Missouri, and New
Jersey.
Employer-assisted housing programs offer a fresh approach to
addressing our Nation's housing challenge by allowing the private
sector to play a direct role in promoting housing affordability. I hope
every Senator will recognize that the Housing America's Workforce Act
will create opportunities for us as a Nation to expand these public-
private partnerships and will make a profound impact in the lives of
our workforce, and I hope that you will support this important piece of
legislation.
Mr. SMITH. Mr. President, I rise today to join Senators Clinton,
Martinez, Reed, and Durbin to introduce the Housing America's Workforce
Act.
Across the country, low- and moderate-income families face difficulty
finding affordable housing. Homebuilding has not kept pace with job
growth, and the cost of housing has skyrocketed. In the last 5 years,
the number of working U.S. families paying more than half their income
to put a roof over their heads has jumped to 4.2 million in 2003 from
2.4 million in 1997, a 76-percent increase in 5 years.
Our bill tries to address the issue of affordable housing from a new
perspective, one that allows the private sector to play a direct role
in promoting housing affordability. Specifically, our bill would create
a Federal tax credit for
[[Page S7619]]
businesses that offer housing assistance programs to their low- to
moderate-income employees.
Employer assisted housing, EAH, programs have been used successfully
for more than 100 years and have proven effective in helping to
revitalize neighborhoods and to recruit and retain employees. In my
home State of Oregon, EAH programs have been used by employers such as
Legacy Emanuel Hospital & Health Center, Housing Authority of Portland,
Multnomah County, and Wacker Siltronic.
In 1990, Legacy Emanuel developed an EAH program to encourage
employees to purchase homes in the neighborhood near the hospital. The
program shortened employee commute time, reduced traffic congestion,
and helped spur a dramatic revitalization of the surrounding area.
Similar programs have succeeded around the country and have helped to
ease the spatial mismatch between where job growth is taking place and
where people can afford to live.
Under our bill, housing assistance can be used for either
homeownership or rental assistance. Homeownership assistance could be
used for down payments, closing costs, financing costs, or
contributions to an employee homeownership savings plan, such as an
Individual Development Accounts. Rental assistance could be used for
security deposits and rental payments.
Employer assisted housing programs are innovative ways to leverage
public and private funds to make housing affordable for working
families. As such, our proposal has been endorsed by National Housing
Conference, National Association of Home Builders, National Association
of Realtors, National Association of Housing and Redevelopment
Officials, National League of Cities, National Association of Counties,
Mortgage Bankers Association, National NeighborWorks Association,
AmeriDream, and the National Association of Local Housing Finance
Agencies.
I look forward to continuing to work with my colleagues to address
the affordable housing shortfall.
______
By Mr. JOHNSON (for himself, Mr. Thomas, Mr. Enzi, Mr. Dorgan,
Mr. Burns, Mr. Thune, Mr. Bingaman, and Mr. Baucus):
S. 1331. A bill to amend the Agricultural Marketing Act of 1946 to
change the date of implementation of country of origin labeling to
January 30, 2006; to the Committee on Agriculture, Nutrition, and
Forestry.
Mr. JOHNSON. Mr. President, I rise to discuss an issue of great
importance to producers and consumers in my home State of South Dakota
and across the Nation. Mandatory country of origin labeling, COOL,
remains an overwhelmingly popular provision not only as a consumer
right-to-know issue, but also as a marketing tool for our Nation's
farmers and ranchers.
Mandatory country of origin labeling was signed into law under this
most recent Farm Bill and by this current President. As the primary
author of the COOL language included in the 2002 Farm Bill, I am
increasingly frustrated at the amount of heel dragging this
Administration has shown for the program. I rise to introduce a bill to
move forward with the implementation of mandatory COOL in a timely and
reasonable manner, instating a January 30, 2006 mandatory date of
implementation. COOL has experienced great bipartisan support in the
Senate. I am pleased that Senator Craig Thomas joins me in this
bipartisan effort, as does Senator Mike Enzi, Senator Byron Dorgan, and
Senator Conrad Burns.
I worked with my Senate colleagues to ensure that no delay language
was included in the Senate version of the fiscal year 2006 Agriculture
Appropriations Bill that was reported out of committee. As a member of
the Senate Appropriations Committee, and specifically, the Agriculture
Appropriations Subcommittee, I worked with my Senate colleagues to
ensure we assembled a satisfactory bill that did not contain the same
delay language as found in the House agriculture spending measure. The
House fiscal year 2006 Agriculture Appropriations Bill contained a 1-
year delay for meat and meat products, which is identical to the
situation that unfolded with the program in fiscal year 2004.
While the House version of the fiscal year 2004 spending bill
contained a 1-year delay for meat and meat products exclusively, the
final omnibus contained a 2-year delay for all covered commodities
except fish and shellfish. During closed door consideration of the
measure, Senate leadership chose to bow to special interest groups
despite the significant support COOL experiences from the majority of
consumers and producers. While I was pleased to see the Senate version
of the fiscal year 2006 bill that we reported out of committee
contained $3.111 million for an audit-based compliance program for COOL
implementation, the United States Department of Agriculture, USDA,
Agricultural Marketing Service, AMS, will need substantive funding for
the implementation of the full program. While the money funds an audit-
based compliance program exclusively for fish and shellfish, additional
dollars are needed for the inclusion of all covered commodities.
Mandatory COOL for fish and shellfish was implemented on April 4,
2005. USDA instituted a six month phase-in period to ensure adequate
time for compliance, and the Department promulgated an interim final
rule on September 30, 2004. Given this process, I see no reason why the
Department should not proceed with the promulgation of the interim
final rule for all covered commodities at the earliest possible time.
If the implementation date is moved to January 30, 2006, then producers
and consumers will at least see benefits under the program by late
summer of 2006. Producers and consumers have waited long enough for
program implementation, and it is high time USDA move forward with the
implementation of this crucial program.
Mr. FEINGOLD. Mr. President, I am proud to join the chairman and the
ranking member of the Senate Judiciary Committee in cosponsoring the
Personal Data Privacy and Security Act of 2005. This bill is a much-
needed solution to the daunting problem of ensuring the privacy and the
security of our personal data, which has become such a precious
commodity.
As we enter the 21st century, several forces are converging to make
our personal information more valuable--and vulnerable--than ever. The
world is going digital, and so is our personal data. In this day and
age, almost everything we do results in a third party creating a
digital record about us--digital records that we may not even realize
exist. We seek the convenience of opening bank accounts and making
major purchases over the Internet, often without ever speaking to
another person face to face or even over the telephone, making identity
theft easier and more lucrative. Businesses, nonprofits and even
political parties are personalizing their messages, products and
services to a degree we've never seen before, and they are willing to
invest significant amounts of money in collecting personal information
about potential customers or donors. And we are living in an age where
identity-based screening and security programs can be vitally
important, resulting in more information being collected about
individuals in an attempt to identify them accurately.
As a result, personal information has become a hot commodity that is
bought, sold, and--as so often happens when something becomes
valuable--stolen.
We are at a crossroads. We all know about the security breaches that
have been on the front pages of newspapers all over the country for the
past 6 months. They have placed the identities of hundreds of thousands
of Americans at risk.
But this is about much more than just information security. Until
California law required ChoicePoint to notify individuals that their
information was compromised and they might be vulnerable to identity
theft, many Americans had never heard of this company. As news stories
focused on the data broker business, many Americans were surprised to
discover that companies are creating digital dossiers about them that
contain massive amounts of information, and that these companies sell
that information to commercial and government entities. The revelations
about these security breaches highlighted the fact that Americans
need a better understanding of what happens to their information in a
digital world--and what kind of consequences they can face as a result.
[[Page S7620]]
When I am back home in Wisconsin, I hear from people who do not
understand why companies have the right to sell their sensitive
personal information. I hear from people who are shocked to discover
that personal information about them is available for free on the
Internet.
There is no question that data aggregators facilitate societal
benefits, allowing consumers to obtain instant credit and personalized
services, and police officers to locate suspects. But these companies
also gather a great deal of potentially sensitive information about
individuals, and in many instances they go largely unregulated.
Too many of my constituents feel they have lost control over their
own information. Congress must return some power to individual
Americans so that we can all better understand and manage what happens
to our own personal data.
The Personal Data Privacy and Security Act takes a comprehensive
approach to the privacy and security problems we face. It gives
consumers back some control over their own information. The bill
requires data brokers to allow consumers to access their own
information, and to investigate when consumers tell them that
corrections are necessary. And it requires companies to give notice to
affected consumers and to law enforcement if there is a serious
security breach, so that individuals know their identity may be at risk
and can take steps to protect themselves.
In addition, the bill increases penalties for those who steal our
identities. It provides grants to State and local law enforcement to
help them combat data fraud and related crimes. It requires companies
that buy and sell information to have appropriate data security systems
in place. It provides protection to Social Security numbers by
prohibiting the sale, purchase or display of Social Security numbers,
with certain exceptions, and preventing companies from requiring
customers to provide their Social Security numbers in order to purchase
goods or services. These protections will help safeguard against future
privacy violations and security breaches in the commercial data
industry. But that is not all this bill accomplishes.
The bill also contains some critically important privacy and security
provisions to govern the Government's use of commercial data. This is
an aspect of the data broker business that has not yet gotten as much
attention in the wake of the recent security breaches. The information
gathered by these companies is not just sold to individuals and
businesses; Government agencies of all stripes also buy or subscribe to
information from commercial sources. The most recent example was the
discovery that the Pentagon has a contract with a marketing firm to
analyze commercial and other data about high school and college
students.
While I believe the Government should be able to access commercial
databases in appropriate circumstances, there are few existing rules or
guidelines to ensure this information is used responsibly. Nor are
there restrictions on the use of commercial data for powerful,
intrusive data mining programs, an issue I have been particularly
concerned about. The Privacy Act, which governs when Government
agencies themselves are collecting data, does not apply because the
information is held outside the Government and is not gathered solely
at Government direction.
As a result, there is a great deal we do not know about Government
use of commercial data, even in clearly appropriate circumstances such
as when the agency's goal is simply to locate an individual already
suspected of a crime.
We don't know under what circumstances Government employees can
obtain access to these databases or for what purposes. We don't know
how Government agencies evaluate the accuracy of the databases to which
they subscribe, or how the accuracy level affects government use of the
data. We don't know how employees are monitored to ensure they do not
abuse their access to these databases, or how those who misuse the
information are punished. And we don't know how Government agencies,
particularly those engaged in sensitive national security
investigations, ensure that the data brokers cannot keep records of who
the Government is investigating, records which themselves could create
a huge security risk in light of the vulnerabilities that have come to
the forefront in recent months.
That is why I am so pleased that this bill includes provisions to
address the Government's use of commercial data. A comprehensive
approach to data privacy and security would be incomplete without
taking on this piece of the puzzle. The bill recognizes there are many
legitimate reasons for Government agencies to obtain commercially
available data, but that they need to be subject to privacy and
security protections. It takes a commonsense approach, pushing
Government agencies to take basic steps to ensure that individuals'
personal information is secure and only used for legitimate purposes,
and that the commercial information the Government is paying for and
relying on is accurate and complete.
Specifically, the bill would require that Federal agencies that
subscribe to commercial data adopt standards governing its use. These
standards would reflect long-standing basic privacy principles. The
bill would ensure that Government agencies consider and determine which
personnel will be permitted to access the information and under what
circumstances; develop retention policies for this personal data and
get rid of data they no longer need, minimizing the opportunity for
abuse or theft; rely only on accurate and complete data, and penalize
vendors who knowingly provide inaccurate information to the Federal
Government; provide individuals who suffer adverse consequences as a
result of the agency's reliance on commercial data with a redress
mechanism; and establish enforcement mechanisms for those privacy
policies.
The bill also extends to other screening programs the existing
protections that already are in place to govern the Transportation
Security Administration's possible use of commercial data for its
identity-based airline passenger screening program, Secure Flight. If
the Federal Government is going to rely on commercial data to screen
Americans and decide whether to permit them to travel by air or engage
in other common activities, it should do so only subject to explicit
congressional authorization, as this bill provides. In addition,
agencies should have to provide a redress process for those wrongly
affected, and should have to operate under rules that govern the
access, use, disclosure, accuracy and retention of that data.
The bill also directs the General Services Administration to review
Government contracts for commercial data to make sure that vendors have
appropriate security programs in place, and that they do not provide
information to the Government that they know to be inaccurate. And it
requires agencies to audit the information security practices of their
vendors.
These are basic good Government measures. They guarantee that the
Federal Government is not wasting money on inaccurate data, and that
vendors are undertaking the security programs that they have promised
and for which the Government is paying.
We live in a new digital world. The law may never fully keep up with
technology, but we must make every effort we can. I am proud to be
involved in this comprehensive, reasoned approach to privacy and
security. I congratulate Chairman Specter and Ranking Member Leahy for
their excellent work on this bill. This bill is important and it
deserves very serious consideration by the Senate.
______
By Mr. SPECTER (for himself and Mr. Leahy):
S. 1332. A bill to prevent and mitigate identity theft; to ensure
privacy; and to enhance criminal penalties, law enforcement assistance,
and other protections against security breaches, fraudulent access, and
misuse of personally identifiable information; read the first time.
Mr. SPECTER. Mr. President, I rise today to introduce S. 1332, the
Personal Data Privacy and Security Act of 2005.
Not too long ago, our personal information--our Social Security
numbers, our date of birth, our mothers' maiden name, where we live-all
remained relatively private. Where we live, and what we paid for our
house, and whether we had a mortgage might have been publicly
available, but finding that information out would require a trip to
[[Page S7621]]
the local recorders office. Our privacy was preserved by the sheer
difficulty of obtaining the information. This privacy--the ability to
be left alone--has been a cherished value throughout American history.
As our day-to-day transactions have become electronic, more and more
of our personal data has been stored, transmitted and accessed
electronically. Almost all of us have benefited from this change.
Because our personal information is available electronically, we can
purchase goods and services over the phone or on the internet. We can
obtain a mortgage or rent an apartment in a matter of hours. We can
apply for a credit card while we wait at the store and purchase things
on-line. The availability of such information also helps law
enforcement agencies conduct investigations and catch criminals. The
information has also been used to do good. In one instance, Associated
Press journalists matched Social Security numbers obtained from data
brokers to Mississippi prison data exposing eight school teachers who
failed to report that they had been convicted of sex offenses or drug
crimes.
However, as Justice Warren prophetically wrote in the 1963 case,
Lopez v. United States--a case balancing the privacy interests of an
individual with the law enforcement needs of the government--``The
fantastic advances in the field of electronic communication constitute
a great danger to the privacy of the individual.'' In electronic form,
our personal information is both more valuable and more vulnerable. As
we have all witnessed in recent months, electronic data is more
vulnerable because it can be accessed from afar and can be stolen in a
split second. The problem first became apparent when data brokers,
companies that buy and sell our personal data, announced that they had
experienced large-scale breaches involving the personal data of
hundreds of thousands of Americans. In February, ChoicePoint, one of
the Nation's largest collectors of consumer information, notified over
145,000 Americans of a system security breach. In March, LexisNexis
announced that unauthorized persons posing as legitimate customers
obtained personal the personal data of over 300,000 Americans.
It soon became apparent that the problem extended beyond data
brokers. In April, Carnegie Mellon University notified 19,000 students,
alumni, faculty and staff that their personal data may have been
compromised. In May, a data storage company lost information on 600,000
current and former employees of Time Warner. In recent days, MasterCard
announced 40 million credit card numbers belonging to U.S. consumers
were accessed by a computer hacker--the largest breach yet.
Even government agencies have not been immune. Personal data
including Social Security numbers on nearly 6,000 current and former
Federal Deposit Insurance Corporation employees was stolen early last
year, some of which has been used for fraudulent purposes.
Electronic personal data is more valuable because identity thieves
can steal large volumes and use it before anyone knows. For the last 5
years, Identity Theft has topped the FTC's list of consumer complaints.
From 2002 to 2004, the number of complaints rose 52 percent, to
246,570. Put another way, that's once every 2 minutes. But this is only
the tip of the iceberg. Not all consumers report identity theft to the
FTC. Not all victims report identity theft to their local police. Sixty
percent of those who did file a report with the FTC did not call their
local police department. It stands to reason that many did not call the
FTC.
A recent study by the Better Business Bureau concluded that 9.3
million Americans were victims of identity fraud in 2004, and that each
victim lost approximately $5,800. Ultimately, nearly 20 percent
Americans will become victims of identity theft. Worse, according to
the study, it took victims an average of 28 hours on the phone with
creditors and credit bureaus to clear their names. I use the term
``clear'' loosely, because in many cases the damage caused by identity
theft is irreversible. Victims will have fraud alerts on their credit
reports for years to come, making it more difficult to open new
accounts or make major purchases. Some will be erroneously contacted by
collection agencies.
Individuals whose personal information is not stolen also suffer.
Businesses lose nearly $50 billion a year from identity thieves posing
as customers. These losses translate into increased prices for every
consumer.
In some cases, the availability of electronic personal data can lead
to tragedy. In 1999, a former high school classmate of Amy Lynn Boyer
obtained her former work address and social security number from an on-
line data broker. By calling her home and posing as the former
employer, he convinced Amy's mom to give him Amy's work address. He
then drove to Boyer's workplace and fatally shot her.
In an effort to protect the privacy and security of our electronic
personal information, and prevent future tragedies, small and large, my
colleague Senator Leahy and I are introducing the Personal Data Privacy
and Security Act of 2005. First, this legislation goes after identity
thieves by increasing penalties for crimes involving electronic
personal data. For example, it increases penalties for computer fraud
when such fraud involves personal data. It also goes after those who
intentionally expose Americans to identity theft by punishing those who
intentionally conceal a security breach that involves personal data.
The bill also empowers Americans to look after the privacy of their
own data. The bill will allow individuals to obtain access to any
personal information held by data brokers. For individuals who believe
their information is wrong, data brokers must provide them with
guidance on how to correct their information.
The legislation also puts the burden those that store, transmit and
access electronic personal data. It will require the companies,
government agencies, universities that keep significant amounts of
personal data to assess the vulnerability of their systems and to adopt
policies that will address those vulnerabilities. Some entities will
choose to encrypt the personal data that they store and transmit.
Others will pick a means more appropriate their size and the
sensitivity of their data.
Of course, these provisions do not apply to data held by health care
providers and financial institutions that is already regulated by other
federal laws. This legislation fills in gaps left by other federal
laws. It has become clear that many entities other than health care
providers and financial institutions have large amounts of personal
information. This legislation would require such entities to adequately
protect their electronic data.
Such measures will not always be enough. As I've already noted, the
nature of electronic data makes it vulnerable even when those who hold
it take reasonable steps to protect it. Currently, no federal law
requires those who maintain our sensitive personal data to notify
affected individuals when such data is lost or exposed. This
legislation would require those who maintained such data to notify
affected individuals as well as law enforcement. As everyone knows,
knowledge is power. Once individuals learn that their personal
information is exposed, they can take steps to protect themselves. And,
the company, school or agency that experienced the breach must help.
They must provide individuals whose data was lost with a monthly credit
report and they must provide information on the identity theft victim
assistance available to them. For large breaches, the media must be
notified. Media reports over the past few months have made Americans
far more aware of the problem of security breaches. Hopefully, we can
continue to raise awareness by requiring data holders to continue the
practice of making public announcements regarding large breaches.
Notice will also give law enforcement a head start in the effort to
prevent harm to individuals as a result of a breach.
One of the most critical pieces of information that can be lost is
one's Social Security number. We can all think of instances when we've
been asked for our Social Security number to verify our identities--
utilities, doctors, schools--I could go on. In itself, this is not
harmful. Problems arise however, when the Social Security number gets
passed along to others without the person's knowledge or permission.
The legislation would prohibit companies from buying, selling or
displaying a Social Security number without consent
[[Page S7622]]
from the individual whose number it is. The bill also would prevent
companies from requiring individuals to give their Social Security
number in order to obtain goods or services. Finally, it would bar
government agencies from posting public records that contain Social
Security numbers on the internet. This legislation would not prevent
the use of Social Security numbers altogether. We recognize that would
not be practical. It would, however, protect the value of Social
Security numbers by preventing their proliferation.
Finally, this legislation will protect the privacy of all Americans
by providing a check on the government's use of databases maintained by
data brokers. As I've already noted, federal law enforcement uses
electronic personal data maintained by data brokers to track criminals
and criminal activity. Correctly used, these databases can be very
useful tools in the fight against crime. However, there should be some
check on their use. In addition, the legislation aims at making sure
the government's use of such data is secure. It will require audits to
ensure that data brokers are keeping law enforcement inquiries private.
This bill represents a comprehensive effort to protect the privacy
and security of electronic personal data. Our lives have all been made
easier because our personal information is readily available to those
who have a legitimate need for it. This legislation aims to keep such
information out of the hands of those who have no legitimate need for
it. I urge my colleagues to join me in supporting this important
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. 1332
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 ``Personal
Data Privacy and Security Act of 2005''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
TITLE I--ENHANCING PUNISHMENT FOR IDENTITY THEFT AND OTHER VIOLATIONS
OF DATA PRIVACY AND SECURITY
Sec. 101. Fraud and related criminal activity in connection with
unauthorized access to personally identifiable
information.
Sec. 102. Organized criminal activity in connection with unauthorized
access to personally identifiable information.
Sec. 103. Concealment of security breaches involving personally
identifiable information.
Sec. 104. Aggravated fraud in connection with computers.
Sec. 105. Review and amendment of Federal sentencing guidelines related
to fraudulent access to or misuse of digitized or
electronic personally identifiable information.
TITLE II--ASSISTANCE FOR STATE AND LOCAL LAW ENFORCEMENT COMBATING
CRIMES RELATED TO FRAUDULENT, UNAUTHORIZED, OR OTHER CRIMINAL USE OF
PERSONALLY IDENTIFIABLE INFORMATION
Sec. 201. Grants for State and local enforcement.
Sec. 202. Authorization of appropriations.
TITLE III--DATA BROKERS
Sec. 301. Transparency and accuracy of data collection.
Sec. 302. Enforcement.
Sec. 303. Relation to State laws.
Sec. 304. Effective date.
TITLE IV--PRIVACY AND SECURITY OF PERSONALLY IDENTIFIABLE INFORMATION
Subtitle A--Data Privacy and Security Program
Sec. 401. Purpose and applicability of data privacy and security
program.
Sec. 402. Requirements for a personal data privacy and security
program.
Sec. 403. Enforcement.
Sec. 404. Relation to State laws.
Subtitle B--Security Breach Notification
Sec. 421. Right to notice of security breach.
Sec. 422. Notice procedures.
Sec. 423. Content of notice.
Sec. 424. Risk assessment and fraud prevention notice exemptions.
Sec. 425. Victim protection assistance.
Sec. 426. Enforcement.
Sec. 427. Relation to State laws.
Sec. 428. Study on securing personally identifiable information in the
digital era.
Sec. 429. Authorization of appropriations.
Sec. 430. Effective date.
TITLE V--PROTECTION OF SOCIAL SECURITY NUMBERS
Sec. 501. Social Security number protection.
Sec. 502. Limits on personal disclosure of social security numbers for
commercial transactions and accounts.
Sec. 503. Public records.
Sec. 504. Treatment of social security numbers on government checks and
prohibition of inmate access.
Sec. 505. Study and report.
Sec. 506. Enforcement.
Sec. 507. Relation to State laws.
TITLE VI--GOVERNMENT ACCESS TO AND USE OF COMMERCIAL DATA
Sec. 601. General Services Administration review of contracts.
Sec. 602. Requirement to audit information security practices of
contractors and third party business entities.
Sec. 603. Privacy impact assessment of government use of commercial
information services containing personally identifiable
information.
Sec. 604. Implementation of Chief Privacy Officer requirements.
SEC. 2. FINDINGS.
Congress finds that--
(1) databases of personal identifiable information are
increasingly prime targets of hackers, identity thieves,
rogue employees, and other criminals, including organized and
sophisticated criminal operations;
(2) identity theft is a serious threat to the nation's
economic stability, homeland security, the development of e-
commerce, and the privacy rights of Americans;
(3) over 9,300,000 individuals were victims of identity
theft in America last year;
(4) security breaches are a serious threat to consumer
confidence, homeland security, e-commerce, and economic
stability;
(5) it is important for business entities that own, use, or
license personally identifiable information to adopt
reasonable procedures to ensure the security, privacy, and
confidentially of that personally identifiable information;
(6) individuals whose personal information has been
compromised or who have been victims of identity theft should
receive the necessary information and assistance to mitigate
their damages and to restore the integrity of their personal
information and identities;
(7) data brokers have assumed a significant role in
providing identification, authentication, and screening
services, and related data collection and analyses for
commercial, nonprofit, and government operations;
(8) data misuse and use of inaccurate data have the
potential to cause serious or irreparable harm to an
individual's livelihood, privacy, and liberty and undermine
efficient and effective business and government operations;
(9) there is a need to insure that data brokers conduct
their operations in a manner that prioritizes fairness,
transparency, accuracy, and respect for the privacy of
consumers;
(10) government access to commercial data can potentially
improve safety, law enforcement, and national security; and
(11) because government misuse of commercial data endangers
privacy, security, and liberty, there is a need for Congress
to exercise oversight over government use of commercial data.
SEC. 3. DEFINITIONS.
In this Act:
(1) Agency.--The term ``agency'' has the same meaning given
such term in section 551 of title 5, United States Code.
(2) Affiliate.--The term ``affiliate'' means persons
related by common ownership or affiliated by corporate
control.
(3) Business entity.--The term ``business entity'' means
any organization, corporation, trust, partnership, sole
proprietorship, unincorporated association, venture
established to make a profit, or nonprofit, and any
contractor, subcontractor, affiliate, or licensee thereof
engaged in interstate commerce.
(4) Identity theft.--The term ``identity theft'' means a
violation of section 1028 of title 18, United States Code, or
any other similar provision of applicable State law.
(5) Data broker.--The term ``data broker'' means a business
entity which for monetary fees, dues, or on a cooperative
nonprofit basis, regularly engages, in whole or in part, in
the practice of collecting, transmitting, or otherwise
providing personally identifiable information on a nationwide
basis on more than 5,000 individuals who are not the
customers or employees of the business entity or affiliate.
(6) Data furnisher.--The term ``data furnisher'' means any
agency, governmental entity, organization, corporation,
trust, partnership, sole proprietorship, unincorporated
association, venture established to make a profit, or
nonprofit, and any contractor, subcontractor, affiliate, or
licensee thereof, that serves as a source of information for
a data broker.
(7) Personal electronic record.--The term ``personal
electronic record'' means the
[[Page S7623]]
compilation of personally identifiable information of an
individual (including information associated with that
personally identifiable information) in a database, networked
or integrated databases, or other data system.
(8) Personally identifiable information.--The term
``personally identifiable information'' means any
information, or compilation of information, in electronic or
digital form serving as a means of identification, as defined
by section 1028(d)(7) of title 18, United State Code.
(9) Public record.--The term ``public record'' means any
item, collection, or grouping of information about an
individual that is maintained by an agency, including--
(A) education, financial transactions, medical history, and
criminal or employment history containing the name of an
individual; and
(B) the identifying number, symbol, or other identifying
particular assigned to an individual, such as--
(i) a fingerprint;
(ii) a voice print; or
(iii) a photograph.
(10) Security breach.--
(A) In general.--The term ``security breach'' means
compromise of the security, confidentiality, or integrity of
computerized data through misrepresentation or actions that
result in, or there is a reasonable basis to conclude has
resulted in, the unauthorized acquisition of and access to
sensitive personally identifiable information.
(B) Exclusion.--The term ``security breach'' does not
include a good faith acquisition of sensitive personally
identifiable information if the sensitive personally
identifiable information is not subject to further
unauthorized disclosure.
(11) Sensitive personally identifiable information.--The
term ``sensitive personally identifiable information'' means
any name or number used in conjunction with any other
information to identify a specific individual, including
any--
(A) name, social security number, date of birth, official
State or government issued driver's license or identification
number, alien registration number, government passport
number, employer or taxpayer identification number;
(B) unique biometric data, such as--
(i) a fingerprint;
(ii) a voice print;
(iii) a retina or iris image; or
(iv) any other unique physical representation;
(C) unique electronic identification number, address, or
routing code; or
(D) telecommunication identifying information or access
device (as defined in section 1029(e) of title 18, United
States Code).
TITLE I--ENHANCING PUNISHMENT FOR IDENTITY THEFT AND OTHER VIOLATIONS
OF DATA PRIVACY AND SECURITY
SEC. 101. FRAUD AND RELATED CRIMINAL ACTIVITY IN CONNECTION
WITH UNAUTHORIZED ACCESS TO PERSONALLY
IDENTIFIABLE INFORMATION.
Section 1030(a)(2) of title 18, United States Code, is
amended--
(1) in subparagraph (B), by striking ``or'' after the
semicolon;
(2) in subparagraph (C), by inserting ``or'' after the
semicolon; and
(3) by adding at the end the following:
``(D) information contained in the databases or systems of
a data broker, or in other personal electronic records, as
such terms are defined in section 3 of the Personal Data
Privacy and Security Act of 2005;''.
SEC. 102. ORGANIZED CRIMINAL ACTIVITY IN CONNECTION WITH
UNAUTHORIZED ACCESS TO PERSONALLY IDENTIFIABLE
INFORMATION.
Section 1961(1) of title 18, United States Code, is amended
by inserting ``section 1030(a)(2)(D)(relating to fraud and
related activity in connection with unauthorized access to
personally identifiable information,'' before ``section
1084''.
SEC. 103. CONCEALMENT OF SECURITY BREACHES INVOLVING
PERSONALLY IDENTIFIABLE INFORMATION.
(a) In General.--Chapter 47 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1039. Concealment of security breaches involving
personally identifiable information
``Whoever, having knowledge of a security breach requiring
notice to individuals under title IV of the Personal Data
Privacy and Security Act of 2005, intentionally and willfully
conceals the fact of, or information related to, such
security breach, shall be fined under this title or
imprisoned not more than 5 years, or both.''.
(b) Conforming and Technical Amendments.--The table of
sections for chapter 47 of title 18, United States Code, is
amended by adding at the end the following:
``1039. Concealment of security breaches involving personally
identifiable information.''.
SEC. 104. AGGRAVATED FRAUD IN CONNECTION WITH COMPUTERS.
(a) In General.--Chapter 47 of title 18, United States
Code, is amended by adding after section 1030 the following:
``Sec. 1030A. Aggravated fraud in connection with computers
``(a) In General.--Whoever, during and in relation to any
felony violation enumerated in subsection (c), knowingly
obtains, accesses, or transmits, without lawful authority, a
means of identification of another person may, in addition to
the punishment provided for such felony, be sentenced to a
term of imprisonment of up to 2 years.
``(b) Consecutive Sentences.--Notwithstanding any other
provision of law, should a court in its discretion impose an
additional sentence under subsection (a)--
``(1) no term of imprisonment imposed on a person under
this section shall run concurrently, except as provided in
paragraph (3), with any other term of imprisonment imposed on
such person under any other provision of law, including any
term of imprisonment imposed for the felony during which the
means of identifications was obtained, accessed, or
transmitted;
``(2) in determining any term of imprisonment to be imposed
for the felony during which the means of identification was
obtained, accessed, or transmitted, a court shall not in any
way reduce the term to be imposed for such crime so as to
compensate for, or otherwise take into account, any separate
term of imprisonment imposed or to be imposed for a violation
of this section; and
``(3) a term of imprisonment imposed on a person for a
violation of this section may, in the discretion of the
court, run concurrently, in whole or in part, only with
another term of imprisonment that is imposed by the court at
the same time on that person for an additional violation of
this section.
``(c) Definition.--For purposes of this section, the term
`felony violation enumerated in subsection (c)' means any
offense that is a felony violation of paragraphs (2) through
(7) of section 1030(a).''.
(b) Conforming and Technical Amendments.--The table of
sections for chapter 47 of title 18, United States Code, is
amended by inserting after the item relating to section 1030
the following new item:
``1030A. Aggravated fraud in connection with computers.''.
SEC. 105. REVIEW AND AMENDMENT OF FEDERAL SENTENCING
GUIDELINES RELATED TO FRAUDULENT ACCESS TO OR
MISUSE OF DIGITIZED OR ELECTRONIC PERSONALLY
IDENTIFIABLE INFORMATION.
(a) Review and Amendment.--Not later than 180 days after
the date of enactment of this Act, the United States
Sentencing Commission, pursuant to its authority under
section 994 of title 28, United States Code, and in
accordance with this section, shall review and, if
appropriate, amend the Federal sentencing guidelines
(including its policy statements) applicable to persons
convicted of using fraud to access, or misuse of, digitized
or electronic personally identifiable information, including
identity theft or any offense under--
(1) sections 1028, 1028A, 1030, 1030A, 2511, and 2701 of
title 18, United States Code; or
(2) any other relevant provision.
(b) Requirements.--In carrying out the requirements of this
section, the United States Sentencing Commission shall--
(1) ensure that the Federal sentencing guidelines
(including its policy statements) reflect--
(A) the serious nature of the offenses and penalties
referred to in this Act;
(B) the growing incidences of theft and misuse of digitized
or electronic personally identifiable information, including
identity theft; and
(C) the need to deter, prevent, and punish such offenses;
(2) consider the extent to which the Federal sentencing
guidelines (including its policy statements) adequately
address violations of the sections amended by this Act to--
(A) sufficiently deter and punish such offenses; and
(B) adequately reflect the enhanced penalties established
under this Act;
(3) maintain reasonable consistency with other relevant
directives and sentencing guidelines;
(4) account for any additional aggravating or mitigating
circumstances that might justify exceptions to the generally
applicable sentencing ranges;
(5) consider whether to provide a sentencing enhancement
for those convicted of the offenses described in subsection
(a), if the conduct involves--
(A) the online sale of fraudulently obtained or stolen
personally identifiable information;
(B) the sale of fraudulently obtained or stolen personally
identifiable information to an individual who is engaged in
terrorist activity or aiding other individuals engaged in
terrorist activity; or
(C) the sale of fraudulently obtained or stolen personally
identifiable information to finance terrorist activity or
other criminal activities;
(6) make any necessary conforming changes to the Federal
sentencing guidelines to ensure that such guidelines
(including its policy statements) as described in subsection
(a) are sufficiently stringent to deter, and adequately
reflect crimes related to fraudulent access to, or misuse of,
personally identifiable information; and
(7) ensure that the Federal sentencing guidelines
adequately meet the purposes of sentencing under section
3553(a)(2) of title 18, United States Code.
(c) Emergency Authority to Sentencing Commission.--The
United States Sentencing Commission may, as soon as
practicable, promulgate amendments under this section in
accordance with procedures established in section 21(a) of
the Sentencing Act of 1987 (28
[[Page S7624]]
U.S.C. 994 note) as though the authority under that Act had
not expired.
TITLE II--ASSISTANCE FOR STATE AND LOCAL LAW ENFORCEMENT COMBATING
CRIMES RELATED TO FRAUDULENT, UNAUTHORIZED, OR OTHER CRIMINAL USE OF
PERSONALLY IDENTIFIABLE INFORMATION
SEC. 201. GRANTS FOR STATE AND LOCAL ENFORCEMENT.
(a) In General.--Subject to the availability of amounts
provided in advance in appropriations Acts, the Assistant
Attorney General for the Office of Justice Programs of the
Department of Justice may award a grant to a State to
establish and develop programs to increase and enhance
enforcement against crimes related to fraudulent,
unauthorized, or other criminal use of personally
identifiable information.
(b) Application.--A State seeking a grant under subsection
(a) shall submit an application to the Assistant Attorney
General for the Office of Justice Programs of the Department
of Justice at such time, in such manner, and containing such
information as the Assistant Attorney General may require.
(c) Use of Grant Amounts.--A grant awarded to a State under
subsection (a) shall be used by a State, in conjunction with
units of local government within that State, State and local
courts, other States, or combinations thereof, to establish
and develop programs to--
(1) assist State and local law enforcement agencies in
enforcing State and local criminal laws relating to crimes
involving the fraudulent, unauthorized, or other criminal use
of personally identifiable information;
(2) assist State and local law enforcement agencies in
educating the public to prevent and identify crimes involving
the fraudulent, unauthorized, or other criminal use of
personally identifiable information;
(3) educate and train State and local law enforcement
officers and prosecutors to conduct investigations and
forensic analyses of evidence and prosecutions of crimes
involving the fraudulent, unauthorized, or other criminal use
of personally identifiable information;
(4) assist State and local law enforcement officers and
prosecutors in acquiring computer and other equipment to
conduct investigations and forensic analysis of evidence of
crimes involving the fraudulent, unauthorized, or other
criminal use of personally identifiable information; and
(5) facilitate and promote the sharing of Federal law
enforcement expertise and information about the
investigation, analysis, and prosecution of crimes involving
the fraudulent, unauthorized, or other criminal use of
personally identifiable information with State and local law
enforcement officers and prosecutors, including the use of
multi-jurisdictional task forces.
(d) Assurances and Eligibility.--To be eligible to receive
a grant under subsection (a), a State shall provide
assurances to the Attorney General that the State--
(1) has in effect laws that penalize crimes involving the
fraudulent, unauthorized, or other criminal use of personally
identifiable information, such as penal laws prohibiting--
(A) fraudulent schemes executed to obtain personally
identifiable information;
(B) schemes executed to sell or use fraudulently obtained
personally identifiable information; and
(C) online sales of personally identifiable information
obtained fraudulently or by other illegal means;
(2) will provide an assessment of the resource needs of the
State and units of local government within that State,
including criminal justice resources being devoted to the
investigation and enforcement of laws related to crimes
involving the fraudulent, unauthorized, or other criminal use
of personally identifiable information; and
(3) will develop a plan for coordinating the programs
funded under this section with other federally funded
technical assistant and training programs, including directly
funded local programs such as the Local Law Enforcement Block
Grant program (described under the heading ``Violent Crime
Reduction Programs, State and Local Law Enforcement
Assistance'' of the Departments of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations
Act, 1998 (Public Law 105-119)).
(e) Matching Funds.--The Federal share of a grant received
under this section may not exceed 90 percent of the total
cost of a program or proposal funded under this section
unless the Attorney General waives, wholly or in part, the
requirements of this subsection.
SEC. 202. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There is authorized to be appropriated to
carry out this title $25,000,000 for each of fiscal years
2006 through 2009.
(b) Limitations.--Of the amount made available to carry out
this title in any fiscal year not more than 3 percent may be
used by the Attorney General for salaries and administrative
expenses.
(c) Minimum Amount.--Unless all eligible applications
submitted by a State or units of local government within a
State for a grant under this title have been funded, the
State, together with grantees within the State (other than
Indian tribes), shall be allocated in each fiscal year under
this title not less than 0.75 percent of the total amount
appropriated in the fiscal year for grants pursuant to this
title, except that the United States Virgin Islands, American
Samoa, Guam, and the Northern Mariana Islands each shall be
allocated 0.25 percent.
(d) Grants to Indian Tribes.--Notwithstanding any other
provision of this title, the Attorney General may use amounts
made available under this title to make grants to Indian
tribes for use in accordance with this title.
TITLE III--DATA BROKERS
SEC. 301. TRANSPARENCY AND ACCURACY OF DATA COLLECTION.
(a) In General.--Data brokers engaging in interstate
commerce are subject to the requirements of this title for
any offered product or service offered to third parties that
allows access, use, compilation, distribution, processing,
analyzing, or evaluating personally identifiable information,
unless that product or service is currently subject to
similar protections under subsections (b) and (g) of this
section, the Fair Credit Reporting Act (Public Law 91-508),
or the Gramm-Leach Bliley Act (Public Law 106-102), and
implementing regulations.
(b) Disclosures to Individuals.--
(1) In general.--A data broker shall, upon the request of
an individual, clearly and accurately disclose to such
individual for a reasonable fee all personal electronic
records pertaining to that individual maintained for
disclosure to third parties in the databases or systems of
the data broker at the time of the request.
(2) Information on how to correct inaccuracies.--The
disclosures required under paragraph (1) shall also include
guidance to individuals on the processes and procedures for
demonstrating and correcting any inaccuracies.
(c) Creation of an Accuracy Resolution Process.--A data
broker shall develop and publish on its website timely and
fair processes and procedures for responding to claims of
inaccuracies, including procedures for correcting inaccurate
information in the personal electronic records it maintains
on individuals.
(d) Accuracy Resolution Process.--
(1) Public record information.--
(A) In general.--If an individual notifies a data broker of
a dispute as to the completeness or accuracy of information,
and the data broker determines that such information is
derived from a public record source, the data broker shall
determine within 30 days whether the information in its
system accurately and completely records the information
offered by the public record source.
(B) Data broker actions.--If a data broker determines under
subparagraph (A) that the information in its systems--
(i) does not accurately and completely record the
information offered by a public record source, the data
broker shall correct any inaccuracies or incompleteness, and
provide to such individual written notice of such changes;
and
(ii) does accurately and completely record the information
offered by a public record source, the data broker shall--
(I) provide such individual with the name, address, and
telephone contact information of the public record source;
and
(II) notify such individual of the right to add to the
personal electronic record of the individual maintained by
the data broker a statement disputing the accuracy or
completeness of the information for a period of 90 days under
subsection (e).
(2) Investigation of disputed non-public record
information.--If the completeness or accuracy of any non-
public record information disclosed to an individual under
subsection (b) is disputed by the individual and such
individual notifies the data broker directly of such dispute,
the data broker shall, before the end of the 30-day period
beginning on the date on which the data broker receives the
notice of the dispute--
(A) investigate free of charge and record the current
status of the disputed information; or
(B) delete the item from the individuals data file in
accordance with paragraph (8).
(3) Extension of period to investigate.--Except as provided
in paragraph (4), the 30-day period described in paragraph
(1) may be extended for not more than 15 additional days if a
data broker receives information from the individual during
that 30-day period that is relevant to the investigation.
(4) Limitations on extension of period to investigate.--
Paragraph (3) shall not apply to any investigation in which,
during the 30-day period described in paragraph (1), the
information that is the subject of the investigation is found
to be inaccurate or incomplete or a data broker determines
that the information cannot be verified.
(5) Notice identifying the data furnisher.--If the
completeness or accuracy of any information disclosed to an
individual under subsection (b) is disputed by the
individual, a data broker shall provide upon the request of
the individual, the name, business address, and telephone
contact information of any data furnisher who provided an
item of information in dispute.
(6) Determination that dispute is frivolous or
irrelevant.--
(A) In general.--Notwithstanding paragraphs (1) through
(4), a data broker may decline to investigate or terminate an
investigation of information disputed by an individual under
those paragraphs if the data broker reasonably determines
that the dispute by the individual is frivolous or
irrelevant, including by reason of a failure by the
individual to provide sufficient information to investigate
the disputed information.
[[Page S7625]]
(B) Notice.--Not later than 5 business days after making
any determination in accordance with subparagraph (A) that a
dispute is frivolous or irrelevant, a data broker shall
notify the individual of such determination by mail, or if
authorized by the individual, by any other means available to
the data broker.
(C) Contents of notice.--A notice under subparagraph (B)
shall include--
(i) the reasons for the determination under subparagraph
(A); and
(ii) identification of any information required to
investigate the disputed information, which may consist of a
standardized form describing the general nature of such
information.
(7) Consideration of individual information.--In conducting
any investigation with respect to disputed information in the
personal electronic record of any individual, a data broker
shall review and consider all relevant information submitted
by the individual in the period described in paragraph (2)
with respect to such disputed information.
(8) Treatment of inaccurate or unverifiable information.--
(A) In general.--If, after any review of public record
information under paragraph (1) or any investigation of any
information disputed by an individual under paragraphs (2)
through (4), an item of information is found to be inaccurate
or incomplete or cannot be verified, a data broker shall
promptly delete that item of information from the
individual's personal electronic record or modify that item
of information, as appropriate, based on the results of the
investigation.
(B) Notice to individuals of reinsertion of previously
deleted information.--If any information that has been
deleted from an individual's personal electronic record
pursuant to subparagraph (A) is reinserted in the personal
electronic record of the individual, a data broker shall, not
later than 5 days after reinsertion, notify the individual of
the reinsertion and identify any data furnisher not
previously disclosed in writing, or if authorized by the
individual for that purpose, by any other means available to
the data broker, unless such notification has been previously
given under this subsection.
(C) Notice of results of investigation of disputed non-
public record.--
(i) In general.--Not later than 5 business days after the
completion of an investigation under paragraph (2), a data
broker shall provide written notice to an individual of the
results of the investigation, by mail or, if authorized by
the individual for that purpose, by other means available to
the data broker.
(ii) Additional requirement.--Before the expiration of the
5-day period, as part of, or in addition to such notice, a
data broker shall, in writing, provide to an individual--
(I) a statement that the investigation is completed;
(II) a report that is based upon the personal electronic
record of such individual as that personal electronic record
is revised as a result of the investigation;
(III) a notice that, if requested by the individual, a
description of the procedures used to determine the accuracy
and completeness of the information shall be provided to the
individual by the data broker, including the business name,
address, and telephone number of any data furnisher of
information contacted in connection with such information;
and
(IV) a notice that the individual has the right to request
notifications under subsection (g).
(D) Description of investigation procedures.--Not later
than 15 days after receiving a request from an individual for
a description referred to in subparagraph (C)(ii)(III), a
data broker shall provide to the individual such a
description.
(E) Expedited dispute resolution.--If by no later than 3
business days after the date on which a data broker receives
notice of a dispute from an individual of information in the
personal electronic record of such individual in accordance
with paragraph (2), a data broker resolves such dispute in
accordance with subparagraph (A) by the deletion of the
disputed information, then the data broker shall not be
required to comply with subsections (e) and (f) with respect
to that dispute if the data broker provides--
(i) to the individual, by telephone, prompt notice of the
deletion; and
(ii) to the individual a right to request that the data
broker furnish notifications under subsection (g).
(e) Statement of Dispute.--
(1) In general.--If the completeness or accuracy of any
information disclosed to an individual under subsection (b)
is disputed, an individual may file a brief statement setting
forth the nature of the dispute.
(2) Contents of statement.--A data broker may limit the
statements made pursuant to paragraph (1) to not more than
100 words if it provides an individual with assistance in
writing a clear summary of the dispute or until the dispute
is resolved, whichever is earlier.
(f) Notification of Dispute in Subsequent Reports.--
Whenever a statement of a dispute is filed under subsection
(e), unless there is a reasonable grounds to believe that it
is frivolous or irrelevant, a data broker shall, in any
subsequent report, product, or service containing the
information in question, clearly note that it is disputed by
an individual and provide either the statement of such
individual or a clear and accurate codification or summary
thereof for a period of 90 days after the data broker first
posts the statement of dispute.
(g) Notification of Deletion of Disputed Information.--
Following any deletion of information which is found to be
inaccurate or whose accuracy can no longer be verified, a
data broker shall, at the request of an individual, furnish
notification that the item has been deleted or the statement,
codification, or summary pursuant to subsection (e) or (f) to
any user or customer of the products or services of the data
broker who has within 90 days received a report with the
deleted or disputed information or has electronically
accessed the deleted or disputed information.
SEC. 302. ENFORCEMENT.
(a) Civil Penalties.--
(1) Penalties.--Any data broker that violates the
provisions of section 301 shall be subject to civil penalties
of not more than $1,000 per violation per day, with a maximum
of $15,000 per day, while such violations persist.
(2) Intentional or willful violation.--A data broker that
intentionally or willfully violates the provisions of section
301 shall be subject to additional penalties in the amount of
$1,000 per violation per day, with a maximum of an additional
$15,000 per day, while such violations persist.
(3) Equitable relief.--A data broker engaged in interstate
commerce that violates this section may be enjoined from
further violations by a court of competent jurisdiction.
(4) Other rights and remedies.--The rights and remedies
available under this subsection are cumulative and shall not
affect any other rights and remedies available under law.
(b) Injunctive Actions by the Attorney General.--
(1) In general.--Whenever it appears that a data broker to
which this title applies has engaged, is engaged, or is about
to engage, in any act or practice constituting a violation of
this title, the Attorney General may bring a civil action in
an appropriate district court of the United States to--
(A) enjoin such act or practice;
(B) enforce compliance with this title;
(C) obtain damages--
(i) in the sum of actual damages, restitution, and other
compensation on behalf of the affected residents of a State;
and
(ii) punitive damages, if the violation is willful or
intentional; and
(D) obtain such other relief as the court determines to be
appropriate.
(2) Other injunctive relief.--Upon a proper showing in the
action under paragraph (1), the court shall grant a permanent
injunction or a temporary restraining order without bond.
(c) State Enforcement.--
(1) Civil actions.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of that State has been or is threatened or
adversely affected by an act or practice that violates this
title, the State may bring a civil action on behalf of the
residents of that State in a district court of the United
States of appropriate jurisdiction, or any other court of
competent jurisdiction, to--
(A) enjoin that act or practice;
(B) enforce compliance with this title;
(C) obtain--
(i) damages in the sum of actual damages, restitution, or
other compensation on behalf of affected residents of the
State; and
(ii) punitive damages, if the violation is willful or
intentional; or
(D) obtain such other legal and equitable relief as the
court may consider to be appropriate.
(2) Notice.--
(A) In general.--Before filing an action under this
subsection, the attorney general of the State involved shall
provide to the Attorney General--
(i) a written notice of that action; and
(ii) a copy of the complaint for that action.
(B) Exception.--Subparagraph (A) shall not apply with
respect to the filing of an action by an attorney general of
a State under this subsection, if the attorney general of a
State determines that it is not feasible to provide the
notice described in this subparagraph before the filing of
the action.
(C) Notification when practicable.--In an action described
under subparagraph (B), the attorney general of a State shall
provide the written notice and the copy of the complaint to
the Attorney General as soon after the filing of the
complaint as practicable.
(3) Attorney general authority.--Upon receiving notice
under paragraph (2), the Attorney General shall have the
right to--
(A) move to stay the action, pending the final disposition
of a pending Federal proceeding or action as described in
paragraph (4);
(B) intervene in an action brought under paragraph (1); and
(C) file petitions for appeal.
(4) Pending proceedings.--If the Attorney General has
instituted a proceeding or action for a violation of this Act
or any regulations thereunder, no attorney general of a State
may, during the pendency of such proceeding or action, bring
an action under this subsection against any defendant named
in such criminal proceeding or civil action for any violation
that is alleged in that proceeding or action.
(5) Rule of construction.--For purposes of bringing any
civil action under paragraph (1), nothing in this Act shall
be construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by
the laws of that State to--
[[Page S7626]]
(A) conduct investigations;
(B) administer oaths and affirmations; or
(C) compel the attendance of witnesses or the production of
documentary and other evidence.
(6) Venue; service of process.--
(A) Venue.--Any action brought under this subsection may be
brought in the district court of the United States that meets
applicable requirements relating to venue under section 1931
of title 28, United States Code.
(B) Service of process.--In an action brought under this
subsection process may be served in any district in which the
defendant--
(i) is an inhabitant; or
(ii) may be found.
SEC. 303. RELATION TO STATE LAWS.
(a) In General.--Except as provided in subsection (b), this
title does not annul, alter, affect, or exempt any person
subject to the provisions of this title from complying with
the laws of any State with respect to the access, use,
compilation, distribution, processing, analysis, and
evaluation of any personally identifiable information by data
brokers, except to the extent that those laws are
inconsistent with any provisions of this title, and then only
to the extent of such inconsistency.
(b) Exceptions.--No requirement or prohibition may be
imposed under the laws of any State with respect to any
subject matter regulated under section 301, relating to
individual access to, and correction of, personal electronic
records.
SEC. 304. EFFECTIVE DATE.
This title shall take effect 180 days after the date of
enactment of this Act.
TITLE IV--PRIVACY AND SECURITY OF PERSONALLY IDENTIFIABLE INFORMATION
Subtitle A--Data Privacy and Security Program
SEC. 401. PURPOSE AND APPLICABILITY OF DATA PRIVACY AND
SECURITY PROGRAM.
(a) Purpose.--The purpose of this subtitle is to ensure
standards for developing and implementing administrative,
technical, and physical safeguards to protect the privacy,
security, confidentiality, integrity, storage, and disposal
of personally identifiable information.
(b) In General.--A business entity engaging in interstate
commerce that involves collecting, accessing, transmitting,
using, storing, or disposing of personally identifiable
information in electronic or digital form on 10,000 or more
United States persons is subject to the requirements for a
data privacy and security program under section 402 for
protecting personally identifiable information.
(c) Limitations.--Notwithstanding any other obligation
under this subtitle, this subtitle does not apply to--
(1) financial institutions subject to--
(A) the data security requirements and implementing
regulations under the Gramm-Leach-Bliley Act (15 U.S.C. 6801
et seq.); and
(B) examinations for compliance with the requirements of
this Act by 1 or more Federal functional regulators (as
defined in section 509 of the Gramm-Leach-Bliley Act (15
U.S.C. 6809)); or
(2) ``covered entities'' subject to the Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. 1301 et
seq.), including the data security requirements and
implementing regulations of that Act.
SEC. 402. REQUIREMENTS FOR A PERSONAL DATA PRIVACY AND
SECURITY PROGRAM.
(a) Personal Data Privacy and Security Program.--Unless
otherwise limited under section 401(c), a business entity
subject to this subtitle shall comply with the following
safeguards to protect the privacy and security of personally
identifiable information:
(1) Scope.--A business entity shall implement a
comprehensive personal data privacy and security program,
written in 1 or more readily accessible parts, that includes
administrative, technical, and physical safeguards
appropriate to the size and complexity of the business entity
and the nature and scope of its activities.
(2) Design.--The personal data privacy and security program
shall be designed to--
(A) ensure the privacy, security, and confidentiality of
personal electronic records;
(B) protect against any anticipated vulnerabilities to the
privacy, security, or integrity of personal electronic
records; and
(C) protect against unauthorized access to use of personal
electronic records that could result in substantial harm or
inconvenience to any individual.
(3) Risk assessment.--A business entity shall--
(A) identify reasonably foreseeable internal and external
vulnerabilities that could result in unauthorized access,
disclosure, use, or alteration of personally identifiable
information or systems containing personally identifiable
information;
(B) assess the likelihood of and potential damage from
unauthorized access, disclosure, use, or alteration of
personally identifiable information; and
(C) assess the sufficiency of its policies, technologies,
and safeguards in place to control and minimize risks from
unauthorized access, disclosure, use, or alteration of
personally identifiable information.
(4) Risk management and control.--Each business entity
shall--
(A) design its personal data privacy and security program
to control the risks identified under paragraph (3); and
(B) adopt measures commensurate with the sensitivity of the
data as well as the size, complexity, and scope of the
activities of the business entity that--
(i) control access to systems and facilities containing
personally identifiable information, including controls to
authenticate and permit access only to authorized
individuals;
(ii) detect actual and attempted fraudulent, unlawful, or
unauthorized access, disclosure, use, or alteration of
personally identifiable information, including by employees
and other individuals otherwise authorized to have access;
and
(iii) protect personally identifiable information during
use, transmission, storage, and disposal by encryption or
other reasonable means (including as directed for disposal of
records under section 628 of the Fair Credit Reporting Act
(15 U.S.C. 1681w) and the implementing regulations of such
Act as set forth in section 682 of title 16, Code of Federal
Regulations).
(5) Accountability.--Each business entity required to
establish a data security program under section 401 shall
publish on its website or make otherwise available the terms
of such program to the extent that such terms do not reveal
information that compromise data security or privacy.
(b) Training.--Each business entity subject to this
subtitle shall take steps to ensure employee training and
supervision for implementation of the data security program
of the business entity.
(c) Vulnerability Testing.--
(1) In general.--Each business entity subject to this
subtitle shall take steps to ensure regular testing of key
controls, systems, and procedures of the personal data
privacy and security program to detect, prevent, and respond
to attacks or intrusions, or other system failures.
(2) Frequency.--The frequency and nature of the tests
required under paragraph (1) shall be determined by the risk
assessment of the business entity under subsection (a)(3).
(d) Relationship to Service Providers.--In the event a
business entity subject to this subtitle engages service
providers not subject to this subtitle, such business entity
shall--
(1) exercise appropriate due diligence in selecting those
service providers for responsibilities related to personally
identifiable information, and take reasonable steps to select
and retain service providers that are capable of maintaining
appropriate safeguards for the security, privacy, and
integrity of the personally identifiable information at
issue; and
(2) require those service providers by contract to
implement and maintain appropriate measures designed to meet
the objectives and requirements governing entities subject to
this section, section 401, and subtitle B.
(e) Periodic Assessment and Personal Data Privacy and
Security Modernization.--Each business entity subject to this
subtitle shall on a regular basis monitor, evaluate, and
adjust, as appropriate its data privacy and security program
in light of any relevant changes in--
(1) technology;
(2) the sensitivity of personally identifiable information;
(3) internal or external threats to personally identifiable
information; and
(4) the changing business arrangements of the business
entity, such as--
(A) mergers and acquisitions;
(B) alliances and joint ventures;
(C) outsourcing arrangements;
(D) bankruptcy; and
(E) changes to personally identifiable information systems.
(f) Implementation Time Line.--Not later than 1 year after
the date of enactment of this Act, a business entity subject
to the provisions of this subtitle shall implement a data
privacy and security program pursuant to this subtitle.
SEC. 403. ENFORCEMENT.
(a) Civil Penalties.--
(1) In general.--Any business entity that violates the
provisions of sections 401 or 402 shall be subject to civil
penalties of not more than $5,000 per violation per day, with
a maximum of $35,000 per day, while such violations persist.
(2) Intentional or willful violation.--A business entity
that intentionally or willfully violates the provisions of
sections 401 or 402 shall be subject to additional penalties
in the amount of $5,000 per violation per day, with a maximum
of an additional $35,000 per day, while such violations
persist.
(3) Equitable relief.--A business entity engaged in
interstate commerce that violates this section may be
enjoined from further violations by a court of competent
jurisdiction.
(4) Other rights and remedies.--The rights and remedies
available under this section are cumulative and shall not
affect any other rights and remedies available under law
(b) Injunctive Actions by the Attorney General.--
(1) In general.--Whenever it appears that a business entity
or agency to which this subtitle applies has engaged, is
engaged, or is about to engage, in any act or practice
constituting a violation of this subtitle, the Attorney
General may bring a civil action in an appropriate district
court of the United States to--
(A) enjoin such act or practice;
[[Page S7627]]
(B) enforce compliance with this subtitle; and
(C) obtain damages--
(i) in the sum of actual damages, restitution, and other
compensation on behalf of the affected residents of a State;
and
(ii) punitive damages, if the violation is willful or
intentional; and
(D) obtain such other relief as the court determines to be
appropriate.
(2) Other injunctive relief.--Upon a proper showing in the
action under paragraph (1), the court shall grant a permanent
injunction or a temporary restraining order without bond.
(c) State Enforcement.--
(1) Civil actions.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of that State has been or is threatened or
adversely affected by an act or practice that violates this
subtitle, the State may bring a civil action on behalf of the
residents of that State in a district court of the United
States of appropriate jurisdiction, or any other court of
competent jurisdiction, to--
(A) enjoin that act or practice;
(B) enforce compliance with this subtitle;
(C) obtain--
(i) damages in the sum of actual damages, restitution, or
other compensation on behalf of affected residents of the
State; and
(ii) punitive damages, if the violation is willful or
intentional; or
(D) obtain such other legal and equitable relief as the
court may consider to be appropriate.
(2) Notice.--
(A) In general.--Before filing an action under this
subsection, the attorney general of the State involved shall
provide to the Attorney General--
(i) a written notice of that action; and
(ii) a copy of the complaint for that action.
(B) Exception.--Subparagraph (A) shall not apply with
respect to the filing of an action by an attorney general of
a State under this subsection, if the attorney general of a
State determines that it is not feasible to provide the
notice described in this subparagraph before the filing of
the action.
(C) Notification when practicable.--In an action described
under subparagraph (B), the attorney general of a State shall
provide the written notice and the copy of the complaint to
the Attorney General as soon after the filing of the
complaint as practicable.
(3) Attorney general authority.--Upon receiving notice
under paragraph (2), the Attorney General shall have the
right to--
(A) move to stay the action, pending the final disposition
of a pending Federal proceeding or action as described in
paragraph (4);
(B) intervene in an action brought under paragraph (1); and
(C) file petitions for appeal.
(4) Pending proceedings.--If the Attorney General has
instituted a proceeding or action for a violation of this Act
or any regulations thereunder, no attorney general of a State
may, during the pendency of such proceeding or action, bring
an action under this subsection against any defendant named
in such criminal proceeding or civil action for any violation
that is alleged in that proceeding or action.
(5) Rule of construction.--For purposes of bringing any
civil action under paragraph (1) nothing in this Act shall be
construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by
the laws of that State to--
(A) conduct investigations;
(B) administer oaths and affirmations; or
(C) compel the attendance of witnesses or the production of
documentary and other evidence.
(6) Venue; service of process.--
(A) Venue.--Any action brought under this subsection may be
brought in the district court of the United States that meets
applicable requirements relating to venue under section 1931
of title 28, United States Code.
(B) Service of process.--In an action brought under this
subsection process may be served in any district in which the
defendant--
(i) is an inhabitant; or
(ii) may be found.
SEC. 404. RELATION TO STATE LAWS.
(a) In General.--Except as provided in subsection (b), this
title does not annul, alter, affect, or exempt any person
subject to the provisions of this title from complying with
the laws of any State with respect to security programs for
personally identifiable information, except to the extent
that those laws are inconsistent with any provisions of this
title, and then only to the extent of such inconsistency.
(b) Exceptions.--No requirement or prohibition may be
imposed under the laws of any State with respect to any
subject matter regulated under section 401(c), relating to
entities exempted from compliance with subtitle A.
Subtitle B--Security Breach Notification
SEC. 421. RIGHT TO NOTICE OF SECURITY BREACH.
(a) In General.--Unless delayed under section 422(d) or
exempted under section 424, any business entity or agency
engaged in interstate commerce that involves collecting,
accessing, using, transmitting, storing, or disposing of
personally identifiable information shall notify, following
the discovery of a security breach of its systems or
databases in its possession or direct control when such
security breach impacts sensitive personally identifiable
information--
(1) if the security breach impacts more than 10,000
individuals nationwide, impacts a database, networked or
integrated databases, or other data system associated with
more than 1,000,000 individuals nationwide, impacts databases
owned or used by the Federal Government, or involves
sensitive personally identifiable information of employees
and contractors of the Federal Government--
(A) the United States Secret Service, which shall be
responsible for notifying----
(i) the Federal Bureau of Investigation, if the security
breach involves espionage, foreign counterintelligence,
information protected against unauthorized disclosure for
reasons of national defense or foreign relations, or
Restricted Data (as that term is defined in section 11y of
the Atomic Energy Act of 1954 (42 U.S.C. 2014(y)), except for
offenses affecting the duties of the United States Secret
Service under section 3056(a) of title 18, United States
Code; and
(ii) the United States Postal Inspection Service, if the
security breach involves mail fraud; and
(B) the attorney general of each State affected by the
security breach;
(2) each consumer reporting agency described in section
603(p) of the Fair Credit Reporting Act (15 U.S.C. 1681a),
pursuant to subsection (b); and
(3) any resident of the United States whose sensitive
personally identifiable information was subject to the
security breach, pursuant to sections 422 and 423, but in the
event a business entity or agency is unable to identify the
specific residents of the United States whose sensitive
personally identifiable information was impacted by a
security breach, the business entity or agency shall consult
with the United States Secret Service to determine the scope
of individuals who there is a reasonable basis to conclude
have been impacted by such breach and should receive notice.
(b) Consumer Reporting Agencies.--Any business entity or
agency obligated to provide notice of a security breach to
more than 1,000 residents of the United States under
subsection (a)(3) shall inform consumer reporting agencies of
the fact and scope of such notices for the purpose of
facilitating and managing potential increases in consumer
inquiries and mitigating identity theft or other negative
consequences of the breach.
SEC. 422. NOTICE PROCEDURES.
(a) Timeliness of Notice.--
(1) In general.--Except as provided in subsection (c), all
notices required under section 421 shall be issued
expeditiously and without unreasonable delay after discovery
of the events requiring notice.
(2) 14-day rule.--The notices to Federal law enforcement
and the attorney general of each State affected by a security
breach required under section 421(a) shall be delivered not
later than 14 days after discovery of the events requiring
notice.
(3) Required disclosure.--In complying with the notices
required under section 421, a business entity or agency shall
expeditiously and without unreasonable delay take reasonable
measures which are necessary to--
(A) determine the scope and assess the impact of a breach
under section 421; and
(B) restore the reasonable integrity of the data system.
(b) Method.--Any business entity or agency obligated to
provide notice under section 421 shall be in compliance with
that section if they provide notice as follows:
(1) Written notification.--By written notification to the
last known home address of the individual whose sensitive
personally identifiable information was breached, or if
unknown, notification via telephone call to the last known
home telephone number.
(2) Internet posting.--If more than 1,000 residents of the
United States require notice under section 421 and if the
business entity or agency maintains an Internet site,
conspicuous posting of the notice on the Internet site of the
business entity or agency.
(3) Media notice.--If more than 5,000 residents of a State
or jurisdiction are impacted, notice to major media outlets
serving that State or jurisdiction.
(c) Delay of Notification for Law Enforcement Purposes.--
(1) In general.--If Federal law enforcement or the attorney
general of a State determines that the notices required under
section 421(a) would impede a criminal investigation, such
notices may be delayed until such law enforcement agency
determines that the notices will no longer compromise such
investigation.
(2) Extended delay of notification for law enforcement
purposes.--If a business entity or agency has delayed the
notices required under paragraphs (2) and (3) of section
421(a) as described in paragraph (1), the business entity or
agency shall give notice 30 days after the day such law
enforcement delay was invoked unless Federal law enforcement
provides written notification that further delay is
necessary.
SEC. 423. CONTENT OF NOTICE.
(a) In General.--A business entity or agency obligated to
provide notice to residents of the United States under
section 421(a)(3) shall clearly and concisely detail the
nature of the sensitive personally identifiable information
impacted by the security breach.
(b) Content of Notice.--A notice under subsection (a) shall
include--
(1) the availability of victim protection assistance
pursuant to section 425;
(2) guidance on how to request that a fraud alert be placed
in the file of the individual
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maintained by consumer reporting agencies, pursuant to
section 605A of the Fair Credit Reporting Act (15 U.S.C.
1681c-1) and the implications of such actions;
(3) the availability of a summary of rights for identity
theft victims from consumer reporting agencies, pursuant to
section 609 of the Fair Credit Reporting Act (15 U.S.C.
1681g);
(4) if applicable, notice that the State where an
individual resides has a statute that provides the individual
the right to place a security freeze on their credit report;
and
(5) if applicable, notice that consumer reporting agencies
have been notified of the security breach.
(c) Marketing Not Allowed in Notice.--A notice under
subsection (a) may not include--
(1) marketing information;
(2) sales offers; or
(3) any solicitation regarding the collection of additional
personally identifiable information from an individual.
SEC. 424. RISK ASSESSMENT AND FRAUD PREVENTION NOTICE
EXEMPTIONS.
(a) Risk Assessment Exemption.--A business entity will be
exempt from the notice requirements under paragraphs (2) and
(3) of section 421(a), if a risk assessment conducted in
consultation with Federal law enforcement and the attorney
general of each State affected by a security breach concludes
that there is a de minimis risk of harm to the individuals
whose sensitive personally identifiable information was at
issue in the security breach.
(b) Fraud Prevention Exemption.--A business entity will be
exempt from the notice requirement under section 421(a) if--
(1) the nature of the sensitive personally identifiable
information subject to the security breach cannot be used to
facilitate transactions or facilitate identity theft to
further transactions with another business entity that is not
the business entity subject to the security breach
notification requirements of section 421;
(2) the business entity utilizes a security program
reasonably designed to block the use of the sensitive
personally identifiable information to initiate unauthorized
transactions before they are charged to the account of the
individual; and
(3) the business entity has a policy in place to provide
notice and provides such notice after a breach of the
security of the system has resulted in fraud or unauthorized
transactions, but does not necessarily require notice in
other circumstances.
SEC. 425. VICTIM PROTECTION ASSISTANCE.
Any business entity or agency obligated to provide notice
to residents of the United States under section 421(a)(3)
shall offer to those same residents to cover the cost of--
(1) monthly access to a credit report for a period of 1
year from the date of notice provided under section
421(a)(3); and
(2) credit-monitoring services for up to 1 year from the
date of notice provided under section 421(a)(3).
SEC. 426. ENFORCEMENT.
(a) Civil Penalties.--
(1) In general.--Any business entity that violates the
provisions of sections 421 through 425 shall be subject to
civil penalties of not more than $5,000 per violation per
day, with a maximum of $55,000 per day, while such violations
persist.
(2) Intentional or willful violation.--A business entity
that intentionally or willfully violates the provisions of
sections 421 through 425 shall be subject to additional
penalties in the amount of $5,000 per violation per day, with
a maximum of an additional $55,000 per day, while such
violations persist.
(3) Equitable relief.--A business entity engaged in
interstate commerce that violates this section may be
enjoined from further violations by a court of competent
jurisdiction.
(4) Other rights and remedies.--The rights and remedies
available under this section are cumulative and shall not
affect any other rights and remedies available under law.
(b) Injunctive Actions by the Attorney General.--
(1) In general.--Whenever it appears that a business entity
or agency to which this subtitle applies has engaged, is
engaged, or is about to engage, in any act or practice
constituting a violation of this subtitle, the Attorney
General may bring a civil action in an appropriate district
court of the United States to--
(A) enjoin such act or practice;
(B) enforce compliance with this subtitle; and
(C) obtain damages--
(i) in the sum of actual damages, restitution, and other
compensation on behalf of the affected residents of a State;
and
(ii) punitive damages, if the violation is willful or
intentional; and
(D) obtain such other relief as the court determines to be
appropriate.
(2) Other injunctive relief.--Upon a proper showing in the
action under paragraph (1), the court shall grant a permanent
injunction or a temporary restraining order without bond.
(c) State Enforcement.--
(1) Civil actions.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of that State has been, or is threatened to be,
adversely affected by a violation of this subtitle, the
State, as parens patriae, may bring a civil action on behalf
of the residents of that State in a district court of the
United States of appropriate jurisdiction, or any other court
of competent jurisdiction, to--
(A) enjoin that practice;
(B) enforce compliance with this subtitle;
(C) obtain damages--
(i) in the sum of actual damages, restitution, and other
compensation on behalf of the affected residents of that
State; and
(ii) punitive damages, if the violation is willful or
intentional; and
(D) obtain such other equitable relief as the court may
consider to be appropriate.
(2) Notice.--
(A) In general.--Before filing an action under paragraph
(1), the attorney general of the State involved shall provide
to the Attorney General--
(i) written notice of the action; and
(ii) a copy of the complaint for the action.
(B) Exception.--
(i) In general.--Subparagraph (A) shall not apply with
respect to the filing of an action by an attorney general of
a State under this subsection, if the attorney general of a
State determines that it is not feasible to provide the
notice described in such subparagraph before the filing of
the action.
(ii) Notification when practicable.--In an action described
in clause (i), the attorney general of a State shall provide
notice and a copy of the complaint to the Attorney General at
the time the attorney general of a State files the action.
(3) Attorney general authority.--Upon receiving notice
under paragraph (2), the Attorney General shall have the
right to--
(A) move to stay the action, pending the final disposition
of a pending Federal proceeding or action as described in
paragraph (4);
(B) intervene in an action brought under paragraph (1); and
(C) file petitions for appeal.
(4) Pending proceedings.--If the Attorney General has
instituted a proceeding or action for a violation of this Act
or any regulations thereunder, no attorney general of a State
may, during the pendency of such proceeding or action, bring
an action under this subsection against any defendant named
in such criminal proceeding or civil action for any violation
that is alleged in that proceeding or action.
(5) Rule of construction.--For purposes of bringing any
civil action under paragraph (1), nothing in this subsection
shall be construed to prevent an attorney general of a State
from exercising the powers conferred on such attorney general
by the laws of that State to--
(A) conduct investigations;
(B) administer oaths or affirmations; or
(C) compel the attendance of witnesses or the production of
documentary and other evidence.
(6) Venue; service of process.--
(A) Venue.--Any action brought under this subsection may be
brought in the district court of the United States that meets
applicable requirements relating to venue under section 1391
of title 28, United States Code.
(B) Service of process.--In an action brought under this
subsection process may be served in any district in which the
defendant--
(i) is an inhabitant; or
(ii) may be found.
SEC. 427. RELATION TO STATE LAWS.
(a) In General.--Except as provided in subsection (b), this
title does not annul, alter, affect, or exempt any person
subject to the provisions of this title from complying with
the laws of any State with respect to protecting consumers
from the risk of theft or misuse of personally identifiable
information, except to the extent that those laws are
inconsistent with any provisions of this title, and then only
to the extent of such inconsistency.
(b) Exceptions.--No requirement or prohibition may be
imposed under the laws of any State with respect to any
subject matter regulated under--
(1) section 3(9), relating to the definition of ``security
breach'';
(2) paragraphs (1)(A), (2), and (3) of subsection (a), and
subsection (b) of section 421, relating to the right to
notice of security breach;
(3) section 422, relating to notice procedures;
(4) section 423, relating to notice content, except that
nothing in this section shall prevent a State from requiring
notice of additional victim protection assistance by that
State; and
(5) section 424, relating to risk assessment and fraud
prevention notice exemptions.
SEC. 428. STUDY ON SECURING PERSONALLY IDENTIFIABLE
INFORMATION IN THE DIGITAL ERA.
(a) Requirement for Study.--Not later than 120 days after
the date of enactment of this Act, the Department of Justice
shall enter into a contract with the National Research
Council of the National Academies to conduct a study on
securing personally identifiable information in the digital
era.
(b) Matters to Be Assessed in Review.--The study required
under subsection (a) shall include--
(1) threats to the public posed by the unauthorized or
improper disclosure of personally identifiable information,
including threats to--
(A) law enforcement;
(B) homeland security;
(C) individual citizens; and
(D) commerce;
(2) an assessment of the benefits and costs of currently
available strategies for securing
[[Page S7629]]
personally identifiable information based on--
(A) technology;
(B) legislation;
(C) regulation; or
(D) public education;
(3) research needed to develop additional strategies;
(4) recommendations for congressional or other policy
actions to further minimize vulnerabilities to the threats
described in paragraph (1); and
(5) other relevant issues that in the discretion of the
National Research Council warrant examination.
(c) Time Line for Study and Requirement for Report.--Not
later than 18-month period beginning upon completion of the
performance of the contract described in subsection (a), the
National Research Council shall conduct the study and report
its findings, conclusions, and recommendations to Congress.
(d) Federal Department and Agency Compliance.--Federal
departments and agencies shall comply with requests made by
the National Science Foundation, National Research Council,
and National Academies for information that is necessary to
assist in preparing the report required by subsection (c).
(e) Authorization of Appropriations.--Of the amounts
authorized to be appropriated to the Department of Justice
for Department-wide activities, $850,000 shall be made
available to carry out the provisions of this section for
fiscal year 2006.
SEC. 429. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated such sums as may be
necessary to cover the costs incurred by the United States
Secret Service to carry out investigations and risk
assessments of security breaches as required under this
subtitle.
SEC. 430. EFFECTIVE DATE.
This subtitle shall take effect 90 days after the date of
enactment of this Act.
TITLE V--PROTECTION OF SOCIAL SECURITY NUMBERS
SEC. 501. SOCIAL SECURITY NUMBER PROTECTION.
(a) In General.--No person may--
(1) display any individual's social security number to a
third party without the voluntary and affirmatively expressed
consent of such individual; or
(2) sell or purchase any social security number of an
individual without the voluntary and affirmatively expressed
consent of such individual.
(b) Prerequisites for Consent.--To obtain the consent of an
individual under paragraphs (1) or (2) of subsection (a), the
person displaying, selling, or attempting to sell,
purchasing, or attempting to purchase the social security
number of such individual shall--
(1) inform such individual of the general purpose for which
the social security number will be used, the types of persons
to whom the social security number may be available, and the
scope of transactions permitted by the consent; and
(2) obtain the affirmatively expressed consent
(electronically or in writing) of such individual.
(c) Harvested Social Security Numbers.--Subsection (a)
shall apply to any public record of a Federal agency that
contains social security numbers extracted from other public
records for the purpose of displaying or selling such numbers
to the general public.
(d) Exceptions.--Nothing in this section shall be construed
to prohibit or limit the display, sale, or purchase of a
social security number--
(1) as required, authorized, or excepted under Federal law;
(2) to the extent necessary for a public health purpose,
including the protection of the health or safety of an
individual in an emergency situation;
(3) to the extent necessary for a national security
purpose;
(4) to the extent necessary for a law enforcement purpose,
including the investigation of fraud and the enforcement of a
child support obligation;
(5) to the extent necessary for research conducted for the
purpose of advancing public knowledge, on the condition that
the researcher provides adequate assurances that--
(A) the social security numbers will not be used to harass,
target, or publicly reveal information concerning any
individual;
(B) information about individuals obtained from the
research will not be used to make decisions that directly
affect the rights, benefits, or privileges of specific
individuals; and
(C) the researcher has in place appropriate safeguards to
protect the privacy and confidentiality of any information
about individuals;
(6) if such a number is required to be submitted as part of
the process for applying for any type of Federal, State, or
local government benefit or program;
(7) when the transmission of the number is incidental to,
and in the course of, the sale, lease, franchising, or merger
of all or a portion of a business; or
(8) to the extent only the last 4 digits of a social
security number are displayed.
SEC. 502. LIMITS ON PERSONAL DISCLOSURE OF SOCIAL SECURITY
NUMBERS FOR COMMERCIAL TRANSACTIONS AND
ACCOUNTS.
(a) In General.--Part A of title XI of the Social Security
Act (42 U.S.C. 1301 et seq.) is amended by adding the
following:
``SEC. 1150A. LIMITS ON PERSONAL DISCLOSURE OF SOCIAL
SECURITY NUMBERS FOR COMMERCIAL TRANSACTIONS
AND ACCOUNTS.
``(a) Account Numbers.--
``(1) In general.--A business entity may not--
``(A) require an individual to use the social security
number of such individual as an account number or account
identifier when purchasing a commercial good or service; or
``(B) deny an individual goods or services for refusing to
accept the use of the social security number of such
individual as an account number or account identifier.
``(2) Existing account exception.--Paragraph (1) shall not
apply to any account number or account identifier established
prior to the date of enactment of this Act.
``(b) Social Security Number Prerequisites for Goods and
Services.--A business entity may not require an individual to
provide the social security number of such individual when
purchasing a commercial good or service or deny an individual
goods or services for refusing to provide that number except
for any purpose relating to--
``(1) obtaining a consumer report for any purpose permitted
under the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.);
``(2) a background check of the individual conducted by a
landlord, lessor, employer, or voluntary service agency;
``(3) law enforcement; or
``(4) a Federal, State, or local law requirement.
``(c) Application of Civil Money Penalties.--A violation of
this section shall be deemed to be a violation of section
1129(a).
``(d) Application of Criminal Penalties.--A violation of
this section shall be deemed to be a violation of section
208(a)(8).''.
SEC. 503. PUBLIC RECORDS.
(a) In General.--Except as provided in paragraph (2),
paragraphs (a) and (b) of section 501 shall apply to all
public records posted on the Internet or provided in an
electronic medium by, or on behalf of, a Federal agency.
(b) Exceptions.--
(1) Truncation and prior displays.--Section 501(a) shall
not apply to--
(A) a public record which displays only the last 4 digits
of the social security number of an individual; and
(B) any record or a category of public records first posted
on the Internet or provided in an electronic medium by, or on
behalf of, a Federal agency prior to the date of enactment of
this Act.
(2) Law enforcement.--Nothing in this subsection shall be
construed to prevent an entity acting pursuant to a police
investigation or regulatory power of a domestic governmental
unit from accessing the full social security number of an
individual.
SEC. 504. TREATMENT OF SOCIAL SECURITY NUMBERS ON GOVERNMENT
CHECKS AND PROHIBITION OF INMATE ACCESS.
(a) Prohibition of Use of Social Security Numbers on Checks
Issued for Payment by Governmental Entities.--
(1) In general.--Section 205(c)(2)(C) of the Social
Security Act (42 U.S.C. 405(c)(2)(C)) is amended by adding at
the end the following:
``(x) No Federal, State, or local agency may display the
social security account number of any individual, or any
derivative of such number, on any check issued for any
payment by the Federal, State, or local agency.''.
(2) Effective date.--The amendment made under paragraph (1)
shall apply with respect to checks issued after the date that
is 3 years after the date of enactment of this Act.
(b) Prohibition on Inmate Access to Social Security
Numbers.--
(1) In general.--Section 205(c)(2)(C) of the Social
Security Act (42 U.S.C. 405(c)(2)(C)), as amended by
subsection (b), is further amended by adding at the end the
following:
``(xi)(I) No Federal, State, or local agency may employ, or
enter into a contract for the use or employment of, prisoners
in any capacity that would allow such prisoners access to the
social security account numbers of other individuals.
``(II) For purposes of this clause, the term `prisoner'
means an individual confined in a jail, prison, or other
penal institution or correctional facility pursuant to
conviction of such individual of a criminal offense.''.
(2) Effective date.--The amendment made under paragraph (1)
shall apply with respect to employment of prisoners, or entry
into contract with prisoners, after the date that is 1 year
after the date of enactment of this Act.
SEC. 505. STUDY AND REPORT.
(a) By the Comptroller General.--The Comptroller General of
the United States (in this section referred to as the
``Comptroller General'') shall conduct a study and prepare a
report on--
(1) all of the uses of social security numbers permitted,
required, authorized, or excepted under any Federal law; and
(2) the uses of social security numbers in Federal, State,
and local public records.
(b) Content of Report.--The report required under
subsection (a) shall--
(1) identify users of social security numbers under Federal
law;
(2) include a detailed description of the uses allowed as
of the date of enactment of this Act;
(3) describe the impact of such uses on privacy and data
security;
[[Page S7630]]
(4) evaluate whether such uses should be continued or
discontinued by appropriate legislative action;
(5) examine whether States are complying with prohibitions
on the display and use of social security numbers--
(A) under the Privacy Act of 1974 (5 U.S.C. 552a et seq.);
and
(B) the Driver's Privacy Protection Act of 1994 (18 U.S.C.
2721 et seq.);
(6) include a review of the uses of social security numbers
in Federal, State, or local public records;
(7) include a review of the manner in which public records
are stored (with separate reviews for both paper records and
electronic records);
(8) include a review of the advantages, utility, and
disadvantages of public records that contain social security
numbers, including--
(A) impact on law enforcement;
(B) threats to homeland security; and
(C) impact on personal privacy and security;
(9) include an assessment of the costs and benefits to
State and local governments of truncating, redacting, or
removing social security numbers from public records,
including a review of current technologies and procedures for
truncating, redacting, or removing social security numbers
from public records (with separate assessments for both paper
and electronic records);
(10) include an assessment of the benefits and costs to
businesses, non-profit organizations, and the general public
of requiring truncation, redaction, or removal of social
security numbers on public records (with separate assessments
for both paper and electronic records);
(11) include an assessment of Federal and State
requirements to truncate social security numbers, and issue
recommendations on--
(A) how to harmonize those requirements; and
(B) whether to further extend truncation requirements,
taking into consideration the impact on accuracy and use;
(12) include recommendations regarding whether subsection
(a) should apply to any record or category of public records
first posted on the Internet or provided in an electronic
medium by, or on behalf of, a Federal agency prior to the
date of enactment of this Act; and
(13) include such recommendations for legislation based on
criteria the Comptroller General determines to be
appropriate.
(c) Required Consultation.--In developing the report
required under this subsection, the Comptroller General shall
consult with--
(1) the Administrative Office of the United States Courts;
(2) the Conference of State Court Administrators;
(3) the Department of Justice;
(4) the Department of Homeland Security;
(5) the Social Security Administration;
(6) Sate and local governments that store, maintain, or
disseminate public records; and
(7) other stakeholders, including members of the private
sector who routinely use public records that contain social
security numbers.
(d) Timing of Report.--Not later than 1 year after the date
of enactment of this Act, the Comptroller General shall
report to Congress its findings under this section.
SEC. 506. ENFORCEMENT.
(a) Civil Penalties.--
(1) In general.--Any person that violates the provisions of
sections 501 or 502 shall be subject to civil penalties of
not more than $5,000 per violation per day, with a maximum of
$35,000 per day, while such violations persist.
(2) Intentional or willful violation.--Any person who
intentionally or willfully violates the provisions of
sections 501 or 502 shall be subject to additional penalties
in the amount of $5,000 per violation per day, with a maximum
of an additional $35,000 per day, while such violations
persist.
(3) Equitable relief.--Any person who engages in interstate
commerce that violates this section may be enjoined from
further violations by a court of competent jurisdiction.
(4) Other rights and remedies.--The rights and remedies
available under this section are cumulative and shall not
affect any other rights and remedies available under law
(b) Injunctive Actions by the Attorney General.--
(1) In general.--Whenever it appears that a person to which
this title applies has engaged, is engaged, or is about to
engage, in any act or practice constituting a violation of
this title, the Attorney General may bring a civil action in
an appropriate district court of the United States to--
(A) enjoin such act or practice;
(B) enforce compliance with this title; and
(C) obtain damages--
(i) in the sum of actual damages, restitution, and other
compensation on behalf of the affected residents of a State;
and
(ii) punitive damages, if the violation is willful or
intentional; and
(D) obtain such other relief as the court determines to be
appropriate.
(2) Other injunctive relief.--Upon a proper showing in the
action under paragraph (1), the court shall grant a permanent
injunction or a temporary restraining order without bond.
(c) State Enforcement.--
(1) Civil actions.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of that State has been or is threatened or
adversely affected by an act or practice that violates this
section, the State may bring a civil action on behalf of the
residents of that State in a district court of the United
States of appropriate jurisdiction, or any other court of
competent jurisdiction, to--
(A) enjoin that act or practice;
(B) enforce compliance with this Act;
(C) obtain damages, restitution, or other compensation on
behalf of residents of that State; or
(D) obtain such other legal and equitable relief as the
court may consider to be appropriate.
(2) Notice.--
(A) In general.--Before filing an action under this
subsection, the attorney general of the State involved shall
provide to the Attorney General--
(i) a written notice of that action; and
(ii) a copy of the complaint for that action.
(B) Exception.--Subparagraph (A) shall not apply with
respect to the filing of an action by an attorney general of
a State under this subsection, if the attorney general of a
State determines that it is not feasible to provide the
notice described in this subparagraph before the filing of
the action.
(C) Notification when practicable.--In an action described
under subparagraph (B), the attorney general of a State shall
provide the written notice and the copy of the complaint to
the Attorney General as soon after the filing of the
complaint as practicable.
(3) Attorney general authority.--Upon receiving notice
under paragraph (2), the Attorney General shall have the
right to--
(A) move to stay the action, pending the final disposition
of a pending Federal proceeding or action as described in
paragraph (4);
(B) intervene in an action brought under paragraph (1); and
(C) file petitions for appeal.
(4) Pending proceedings.--If the Attorney General has
instituted a proceeding or action for a violation of this Act
or any regulations thereunder, no attorney general of a State
may, during the pendency of such proceeding or action, bring
an action under this subsection against any defendant named
in such criminal proceeding or civil action for any violation
that is alleged in that proceeding or action.
(5) Rule of construction.--For purposes of bringing any
civil action under paragraph (1), nothing in this Act shall
be construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by
the laws of that State to--
(A) conduct investigations;
(B) administer oaths and affirmations;
(C) or compel the attendance of witnesses or the production
of documentary and other evidence.
(6) Venue; service of process.--
(A) Venue.--Any action brought under this subsection may be
brought in the district court of the United States that meets
applicable requirements relating to venue under section 1391
of title 28, United States Code.
(B) Service of process.--In an action brought under this
subsection process may be served in any district in which the
defendant--
(i) is an inhabitant; or
(ii) may be found.
SEC. 507. RELATION TO STATE LAWS.
(a) In General.--Except as provided in subsection (b), this
title does not annul, alter, affect, or exempt any person
subject to the provisions of this title from complying with
the laws of any State with respect to protecting and securing
social security numbers, except to the extent that those laws
are inconsistent with any provisions of this title, and then
only to the extent of such inconsistency.
(b) Exceptions.--No requirement or prohibition may be
imposed under the laws of any State with respect to any
subject matter regulated under--
(1) section 501(b), relating to prerequisites for consent
for the display, sale, or purchase of social security
numbers;
(2) section 501(c), relating to harvesting of social
security numbers; and
(3) section 504, relating to treatment of social security
numbers on government checks and prohibition of inmate
access.
TITLE VI--GOVERNMENT ACCESS TO AND USE OF COMMERCIAL DATA
SEC. 601. GENERAL SERVICES ADMINISTRATION REVIEW OF
CONTRACTS.
(a) In General.--In considering contract awards entered
into after the date of enactment of this Act, the
Administrator of the General Services Administration shall
evaluate--
(1) the program of a contractor to ensure the privacy and
security of data containing personally identifiable
information;
(2) the compliance of a contractor with such program;
(3) the extent to which the databases and systems
containing personally identifiable information of a
contractor have been compromised by security breaches; and
(4) the response by a contractor to such breaches,
including the efforts of a contractor to mitigate the impact
of such breaches.
(b) Penalties.--In awarding contracts for products or
services related to access, use, compilation, distribution,
processing, analyzing, or evaluating personally identifiable
information, the Administrator of the General Services
Administration shall include the following:
[[Page S7631]]
(1) Monetary or other penalties--
(A) for failure to comply with subtitles A and B of title
IV of this Act;
(B) if a contractor knows or has reason to know that the
personally identifiable information being provided is
inaccurate, and provides such inaccurate information; or
(C) if a contractor is notified by an individual that the
personally identifiable information being provided is
inaccurate and it is in fact inaccurate.
(2) Accuracy update requirements that obligate a contractor
to provide notice to the Federal department or agency of any
changes or corrections to the personally identifiable
information provided under the contract.
SEC. 602. REQUIREMENT TO AUDIT INFORMATION SECURITY PRACTICES
OF CONTRACTORS AND THIRD PARTY BUSINESS
ENTITIES.
Section 3544(b) of title 44, United States Code, is
amended--
(1) in paragraph (7)(C)(iii), by striking ``and'' after the
semicolon;
(2) in paragraph (8), by striking the period and inserting
``; and''; and
(3) by adding at the end the following:
``(9) procedures for evaluating and auditing the
information security practices of contractors or third party
business entities supporting the information systems or
operations of the agency involving personally identifiable
information, and ensuring remedial action to address any
significant deficiencies.''.
SEC. 603. PRIVACY IMPACT ASSESSMENT OF GOVERNMENT USE OF
COMMERCIAL INFORMATION SERVICES CONTAINING
PERSONALLY IDENTIFIABLE INFORMATION.
(a) In General.--Section 208(b)(1) of the E-Government Act
of 2002 (44 U.S.C. 3501 note) is amended--
(1) in subparagraph (A)(i), by striking ``or''; and
(2) in subparagraph (A)(ii), by striking the period and
inserting ``; or''; and
(3) by inserting after clause (ii) the following:
``(iii) purchasing or subscribing for a fee to personally
identifiable information from a commercial entity (other than
news reporting or telephone directories).''.
(b) Limitation.--Notwithstanding any other provision of
law, commencing 60 days after the date of enactment of this
Act, no Federal department or agency may procure or access
any commercially available database consisting primarily of
personally identifiable information concerning United States
persons (other than news reporting or telephone directories)
unless the head of such department or agency--
(1) completes a privacy impact assessment under section 208
of the E-Government Act of 2002 (44 U.S.C. 3501 note), which
shall include a description of--
(A) such database;
(B) the name of the commercial entity from whom it is
obtained; and
(C) the amount of the contract for use;
(2) adopts regulations that specify--
(A) the personnel permitted to access, analyze, or
otherwise use such databases;
(B) standards governing the access analysis, or use of such
databases;
(C) any standards used to ensure that the personally
identifiable information accessed, analyzed, or used is the
minimum necessary to accomplish the intended legitimate
purpose of the Federal department or agency;
(D) standards limiting the retention and redisclosure of
personally identifiable information obtained from such
databases;
(E) procedures ensuring that such data meet standards of
accuracy, relevance, completeness, and timeliness;
(F) the auditing and security measures to protect against
unauthorized access, analysis, use, or modification of data
in such databases;
(G) applicable mechanisms by which individuals may secure
timely redress for any adverse consequences wrongly incurred
due to the access, analysis, or use of such databases;
(H) mechanisms, if any, for the enforcement and independent
oversight of existing or planned procedures, policies, or
guidelines; and
(I) an outline of enforcement mechanisms for accountability
to protect individuals and the public against unlawful or
illegitimate access or use of databases; and
(3) incorporates into the contract or other agreement with
the commercial entity, provisions--
(A) providing for penalties--
(i) if the entity knows or has reason to know that the
personally identifiable information being provided to the
Federal department or agency is inaccurate, and provides such
inaccurate information; or
(ii) if the entity is notified by an individual that the
personally identifiable information being provided to the
Federal department or agency is inaccurate and it is in fact
inaccurate; and
(B) requiring commercial entities to inform Federal
departments or agencies to which they sell, disclose, or
provide access to personally identifiable information of any
changes or corrections to the personally identifiable
information.
(c) Individual Screening Programs.--Notwithstanding any
other provision of law, commencing 60 days after the date of
enactment of this Act, no Federal department or agency may
use commercial databases to implement an individual screening
program unless such program is--
(1) congressionally authorized; and
(2) subject to regulations developed by notice and comment
that--
(A) establish a procedure to enable individuals, who suffer
an adverse consequence because the screening system
determined that they might pose a security threat, to appeal
such determination and correct information contained in the
system;
(B) ensure that Federal and commercial databases that will
be used to establish the identity of individuals or otherwise
make assessments of individuals under the system will not
produce a large number of false positives or unjustified
adverse consequences;
(C) ensure the efficacy and accuracy of all of the search
tools that will be used and ensure that the department or
agency can make an accurate predictive assessment of those
who may constitute a threat;
(D) establish an internal oversight board to oversee and
monitor the manner in which the system is being implemented;
(E) establish sufficient operational safeguards to reduce
the opportunities for abuse;
(F) implement substantial security measures to protect the
system from unauthorized access;
(G) adopt policies establishing the effective oversight of
the use and operation of the system; and
(H) ensure that there are no specific privacy concerns with
the technological architecture of the system.
(d) Study of Government Use.--
(1) Scope of study.--Not later than 180 days after the date
of enactment of this Act, the Comptroller General of the
United States shall conduct a study and audit and prepare a
report on Federal agency use of commercial databases,
including the impact on privacy and security, and the extent
to which Federal contracts include sufficient provisions to
ensure privacy and security protections, and penalties for
failures in privacy and security practices.
(2) Report.--A copy of the report required under paragraph
(1) shall be submitted to Congress.
SEC. 604. IMPLEMENTATION OF CHIEF PRIVACY OFFICER
REQUIREMENTS.
(a) Designation of the Chief Privacy Officer.--Pursuant to
the requirements under section 522 of the Transportation,
Treasury, Independent Agencies, and General Government
Appropriations Act, 2005 (Division H of Public Law 108-447;
118 Stat. 3199) that each agency designate a Chief Privacy
Officer, the Department of Justice shall implement such
requirements by designating a department-wide Chief Privacy
Officer, whose primary role shall be to fulfill the duties
and responsibilities of Chief Privacy Officer and who shall
report directly to the Deputy Attorney General.
(b) Duties and Responsibilities of Chief Privacy Officer.--
In addition to the duties and responsibilities outlined under
section 522 of the Transportation, Treasury, Independent
Agencies, and General Government Appropriations Act, 2005
(Division H of Public Law 108-447; 118 Stat. 3199), the
Department of Justice Chief Privacy Officer shall--
(1) oversee the Department of Justice's implementation of
the requirements under section 603 to conduct privacy impact
assessments of the use of commercial data containing
personally identifiable information by the Department;
(2) promote the use of law enforcement technologies that
sustain, rather than erode, privacy protections, and assure
that the implementation of such technologies relating to the
use, collection, and disclosure of personally identifiable
information preserve the privacy and security of such
information; and
(3) coordinate with the Privacy and Civil Liberties
Oversight Board, established in the Intelligence Reform and
Terrorism Prevention Act of 2004 (Public Law 108-458), in
implementing paragraphs (1) and (2) of this subsection.
Mr. LEAHY. Mr. President, today we introduce the Specter-Leahy
Personal Data Privacy and Security Act of 2005. Reforms are urgently
needed to protect Americans' privacy and to secure their personal data.
There have been steady waves of security breaches over the past 6
months, with the latest involving a database containing 40 million
credit card numbers at a company that most Americans never knew
existed.
These security breaches are a window on a broader, more challenging
trend. Advanced technologies have improved our lives and can help make
us safer. Private data about Americans has become a hot commodity. This
personal and financial information about each of us suddenly is a
treasure trove, valuable and vulnerable, but our privacy and security
laws have not kept pace. The reality is that in the digital era, a
robust market has developed for collecting and selling personal
information. Today, all types of corporate and governmental entities
routinely traffic in billions of digitized personal records about
Americans.
The data broker market has exploded in size to meet this demand.
Insecure databases are now low-hanging fruit for hackers looking to
steal identities and commit fraud. We are seeing a rise
[[Page S7632]]
in organized rings that target personal data to sell in online, virtual
bazaars.
In this information-saturated age, the use of personal data has
significant consequences for every American. People have lost jobs,
mortgages and control over their credit and identities because personal
information has been mishandled or listed incorrectly. This trend
raises new threats to our personal security as well as to our privacy.
In one disturbing case, a stalker purchased the Social Security number
of a woman with whom he was obsessed, used that information to track
her down. He killed her, and then shot himself.
Americans everywhere are wondering, ``Why do all these companies have
my personal information? What are they doing with it? Why aren't they
protecting it better?'' And they are right to wonder. It is time for
Congress to catch up with the data market and to show the American
people that we are aware of these threats and will protect the privacy
and security of their personal information.
Chairman Specter and I have worked closely together over many months
to craft comprehensive legislation to fix key vulnerabilities in our
information economy. We thought through these issues carefully and took
the time needed to develop well-balanced, focused legislation that
provides strong protections where necessary. We also provide tough
penalties and consequences for failing to protect Americans' most
personal information. Reforms like these are long overdue. This issue
and our legislation deserve to become a key part of this year's
domestic agenda so that we can achieve some positive changes in areas
that affect the everyday lives of Americans.
First, our bill requires data brokers to let people know what
information they have about them, and to allow people to correct
inaccurate information. These principles have precedent from the credit
report context, and we have adapted them in a way that makes sense for
the data brokering industry. It's a simple matter of fairness.
Second, we would require companies that have databases with personal
information on Americans to establish and implement data privacy and
security programs. Any company that wants to be trusted by the public
in this day and age must vigilantly protect databases housing
Americans' private data. They also have a responsibility in the next
link in the security chain, to make sure that contractors hired to
process data are on the up-and-up and secure. This is critical as
Americans' personal information is increasingly processed overseas.
Third, our bill requires notice when sensitive personal information
has been compromised. The American people have a right to know when
they are at risk because of corporate failures to protect their data,
or when a criminal has infiltrated data systems. The notice rules in
our bill were crafted carefully to ensure that the trigger for notice
is tied to risk and to recognize important fraud prevention techniques
that already exist. But our priority was making sure that victims have
that critical information as a roadmap providing the assistance
necessary to protect themselves, their families and their financial
well-being.
Fourth, our bill provides tough new protections for Social Security
numbers, which are the keys to unlocking so much of our financial and
personal lives. The use of Social Security numbers has expanded well
beyond the intended purposes. Some uses provide important benefits, but
others have made Americans vulnerable. Social Security numbers are for
sale online for small fees. Earlier this year, it was reported that a
payroll and benefits company put the Social Security numbers of 1,000
workers on postcards--on postcards--brazenly visible for anyone to see.
Worse still, those postcards described in detail how those Social
Security numbers could be used to access employee benefits online. This
is unacceptable, and this bill would make that kind of disregard and
sloppiness illegal.
Finally, our bill addresses the government's use of personal data. We
are living in a world where the government is increasingly looking to
the private sector to get personal data that it could not legally
collect on its own without oversight and appropriate protections. So
ingrained has the data broker-government partnership become that a
ChoicePoint executive stated, ``We do act as an intelligence agency,
gathering data, applying analytics.'' While these relationships can
help protect us, there must be oversight and appropriate protections.
The recent decision to award ChoicePoint an IRS contract highlights
this tension. It is especially galling right now to be rewarding firms
that have been so careless with the public's confidential information.
The dust has not yet settled and the investigations are incomplete on
ChoicePoint's lax security practices. We should at least take a pause
before rewarding such missteps with even more government contracts.
This bill would place privacy and security front and center in
evaluating whether data brokers can be trusted with government
contracts that involve sensitive information about the American people.
It would require contract reviews that include these considerations,
audits to ensure good practice, and contract penalties for failure to
protect data privacy and security.
The Specter-Leahy legislation meets other key goals. It provides
tough monetary and criminal penalties for compromising personal data or
failing to provide necessary protections. This creates an incentive for
companies to protect personal information, especially when there is no
commercial relationship between individuals and companies using their
data.
Our legislation also carefully balances the need for Federal
uniformity and State leadership. States are often on the forefront of
protecting privacy and spurring change. The California security breach
law has been an important lesson. My State of Vermont was among the
first--if not the first--to require individual consent before sharing
financial information with third parties, and to require a person or
business to obtain consent from individuals before reviewing their
credit reports. The role of States is important, and our bill
identifies areas that require uniformity while leaving the States free
to act elsewhere as they see fit. We also would authorize an additional
$100 million over 4 years to help state law enforcement fight misuse of
personal information.
This is a solid bill--a comprehensive bill--that not only deals with
providing Americans notice when they have already been hurt, but also
deals with the underlying problem of lax security and lack of
accountability in dealing with their most personal and private
information.
I commend Senator Specter for his leadership on this emerging
problem. A number of us have been working on these issues--Senator
Feinstein, Senator Nelson, Senator Cantwell and Senator Schumer, among
others. I appreciate and recognize their hard work and look forward to
making progress together. I am pleased to work closely with Senator
Specter on this and believe that we have a bill that significantly
advances the ball in protecting Americans.
I ask unanimous consent that a copy of the bill be printed in the
Record.
______
By Mr. CORNYN (for himself, Mrs. Lincoln, Mrs. Hutchison, Mr.
Talent, Mr. Santorum, Mr. Coleman, Mr. Isakson, Mr. Roberts,
Mr. Brownback, Mr. Bond, Mr. Hatch, Mr. Allard, Mr. Alexander,
Mr. Martinez, and Mr. Pryor):
S. 1333. A bill to amend the Agricultural Marketing Act of 1946 to
establish a voluntary program for country of origin labeling of meat,
and for other purposes; to the Committee on Agriculture, Nutrition, and
Forestry.
Mr. CORNYN. Mr. President, I rise today to introduce the Meat
Promotion Act of 2005.
This legislation is long overdue. When implemented, it will help
assist our producers of cattle, pork, and other livestock to market and
promote their products as born and raised in the United States. This
proposal provides an efficient and effective solution to the country-
of-origin labeling dilemma.
The Meat Promotion Act of 2005 will benefit U.S. food producers by
promoting American-grown foods. This bipartisan effort is widely
supported by producers, processors, and retailers as a means to finally
move country-of-origin labeling forward.
This legislation provides for USDA implementation of a labeling
program
[[Page S7633]]
that will be similar to the many voluntary labeling programs that
currently exist. Hundreds of programs that label products by region,
state, and U.S. brand have already proven their value for producers and
consumers alike. The Meat Promotion Act will put the marketplace in
charge by allowing producers to meet consumer demand. Where that demand
is demonstrated, more products labeled with country-of-origin will
become available.
Country-of-origin labeling has been an issue in the Senate for quite
awhile, and yet, after all this time, we're no closer to promoting U.S.
products than we were a decade ago. In reviewing the storied history of
this issue, it's clear that there is not a shortage of viewpoints. One
view overwhelmingly vocalized is that U.S. producers of beef and pork
want to market and promote their products as born and raised in the
United States of America. They are proud of what they produce, and they
should be: the U.S. produces the safest, most abundant food supply at
the most affordable price, and our livestock producers want to capture
the value they add to the market.
But just like every other debate in Washington, the debate over
country-of-origin labeling has been about the means to accomplish the
goal. It is not that we are fighting about whether or not promoting
U.S. product is a good idea. We are fighting about how to do it. Some
in the U.S. Senate and some around the country have said: ``If it isn't
mandatory, it's not labeling,'' or that the current mandatory labeling
law that passed in the 2002 Farm Bill is the only way labeling will
work. I strongly disagree.
The current mandatory law is an example of a good idea gone awry. The
warning signs of the negative impact of this law have long been on the
horizon. On a number of occasions the Government Accountability Office
published reports and studies, and testified before Congress about the
burdens of mandatory country-of-origin labeling.
In 1999--3 years before the current mandatory labeling law was
passed--GAO testified before Congress that ``There is going to be
significant costs associated with compliance and enforcement'' of
mandatory labeling. At that same hearing, a representative of the
Clinton administration testified that ``There are a variety of
regulatory regimes for country-of-origin labeling that could be
adopted.''
In 2000, the GAO released another study indicating that ``U.S.
Packers, processors, and grocers would, to the extent possible, pass
their compliance costs back to their suppliers--U.S. cattle and sheep
ranchers--in the form of lower prices or forward to consumers in the
form of higher retail prices.''
As if that was not enough, again in 2000, the USDA under President
Clinton released another report which stated: ``[C]ountry-of-origin
labeling is certain to impose at least some costs on an industry which
will either be passed back to producers in the form of lower prices or
forward to consumers via higher prices. There would also be compliance
and enforcement cost to the government. The extent of these costs would
vary depending on the nature of the regulatory scheme and the amount of
enforcement and compliance action.''
Yet despite the warning signs, the current law passed as part of the
2002 Farm Bill.
When USDA issued the proposed rule, it contained a cost-benefit
analysis that said implementation could cost up to $4 billion--with no
quantifiable benefit. The rule was followed by a letter from the
Director of Office of Information and Regulatory Affairs, Dr. John
Graham, which said ``this is one of the most burdensome rules to be
reviewed by this administration.''
And so, I am not surprised by how upset many of my constituents are,
and that they have come asked me to do something about the burdens this
law imposes on them. They ask: ``How can something so popular, like
marketing and promoting U.S. products be so expensive?'' I am
introducing this bill to help relieve that burden.
There has to be a better way to market and promote U.S. products, and
I believe the Meat Promotion Act of 2005 will provide a better
solution.
Some have said that voluntary labeling is like a voluntary speed
limit--that it won't work. On what basis do they make that claim?
Products like Certified Angus Beef, Angus Pride, Rancher's Reserve;
these are all labeled on a volunteer basis under existing USDA
programs. If producers want to have their products labeled, then they
should participate in a voluntary labeling program rather than impose a
costly burden on entire segments of our Nation's economy.
Others have argued that this is about food safety. Let's not kid
ourselves: country-of-origin labeling is a product-marketing program,
period. The security of our Nation's food supply is assured by a
science-based, food-safety inspection system, not by labeling programs.
In fact, the mandatory labeling law exempts food service and poultry.
If this debate is about food safety, why are all poultry and the
majority of beef imports for foodservice allowed an exemption? These
exemptions clearly demonstrate food safety is not at issue.
Some have also pointed to the mandatory labeling law now in effect on
seafood and fish, saying that the sky has not fallen on those
industries. That is subject to interpretation. GAO analysis of the
seafood provisions of the mandatory labeling law shows that the seafood
industry could face up to $89 million in start-up costs and up to $6.2
million in additional costs in year 10 of the program. Likewise, USDA
estimated total recordkeeping at $44.6 million for the first year and
$24.4 million in subsequent years. The Office of Management and Budget
found the rule to be an ``economically significant'' regulatory action
and USDA believes the rule would adversely affect--in a substantial
way--a key sector of the economy. GAO B-294914.
What do these numbers mean in a practical way? It means that these
expenses are paid for out of the pockets of hardworking Americans, to
fund a program that could be more efficient, more effective, and less
costly.
I stand with the livestock producers that want to market and promote
the products they are proud to raise. I believe they should be able to
market and promote their products as born, raised, and processed in the
United States, and I believe the Meat Promotion Act of 2005 provides
the most effective and efficient opportunity for them to do so, while
adding value to their bottom line and helping the economy of rural
America.
______
By Mr. BUNNING (for himself and Mr. Stevens):
S. 1334. A bill entitled ``The Professional Sports Integrity and
Accountability Act''; to the Committee on Commerce, Science, and
Transportation and the Committee on Finance.
Mr. STEVENS. Mr. President, I am pleased to support the efforts of my
colleague Senator Bunning in holding professional sports leagues in the
United States to a higher standard with respect to testing their
athletes for performance-enhancing drugs. Senator Bunning's bill, ``The
Professional Sports Integrity and Accountability Act,'' is another step
toward holding professional sports leagues accountable as custodians of
our Nation's pastimes. I have cosponsored a similar bill with Senator
McCain, and I look forward to working with both of them in the effort
to rid professional sports of performance-enhancing drugs and setting a
positive example for our youth who are using these substances at an
alarming rate.
Over the past few years, the Commerce Committee has taken a series of
actions to review the issue of performance-enhancing drug use at all
levels of athletic competition, professional and amateur. The results
of that review have been alarming. The evidence is clear that an
increasing number of young amateur and U.S. Olympic athletes are using
these substances for a multitude of reasons, but primarily to enhance
athletic performance. Some experts suggest that many of these young
athletes seek to emulate their professional sports heroes and are drawn
to whatever it takes to achieve similar athletic greatness. For those
skeptics who question this link and doubt the powerful effect that
athletes have on the lives of kids, I remind them of the five-fold
increase in the sales of the steroid-like substance androstenedione--
better known as ``andro''--that occurred after Mark McGwire admitted to
using the substance in 1998 while chasing Major League Baseball's home
run record.
[[Page S7634]]
Since then, the problem of harmful supplement use among children and
teenagers has reached epidemic proportions.
In 2004, more than 300,000 high school students used anabolic
steroids, which are scheduled as a controlled substances in the United
States. Evidence shows that teenagers are using these substances not
only for athletic performance enhancement, but also for vanity. Recent
news reports have indicated that when surveyed, an estimated 5 percent
of high school girls and 7 percent of middle school girls admitted
using anabolic steroids at some point in their lives. Steroid use has
doubled among high school students since the early 1990s.
The adverse health consequences associated with such use are
indisputable. Medical experts warn that the effects on children and
teenagers include stunted growth, scarring acne, hormonal imbalances,
liver and kidney damage, as well as an increased risk of heart disease
and stroke later in life. Psychologically, steroids have been
associated with increased aggression, suicide, and a greater propensity
to commit serious crimes.
Notwithstanding the dire health effects of anabolic steroids or
steroid-like substances, the use of any performance-enhancing substance
for the sole purpose of gaining a competitive edge over an opponent is
unfair. Professional sports leagues must be held to the highest
standard and be held accountable to their players, American consumers
who pay to see a fair competition on the playing field, and the young
athletes who are led by the example of professional athletes.
______
By Mr. DODD (for himself, Mr. Kennedy, Mr. Kerry, and Mr.
Bingaman):
S. 1335. A bill to amend title XVIII of the Social Security Act to
preserve access to appeals before administrative law judges under the
medicare program; to the Committee on Finance.
Mr. DODD. Mr. President, I rise today to introduce the Justice for
Medicare Beneficiaries Act of 2005, legislation that will ensure that
Medicare beneficiaries who are denied health-related benefits can
appeal these denials in a meaningful way. Very simply, this initiative
will ensure that Medicare beneficiaries have access to timely,
impartial, and in-person hearings before Administrative Law Judges.
Sec. 931 of the Medicare Prescription Drug, Improvement, and
Modernization Act requires the transfer of the Medicare appeals process
from the Social Security Administration (SSA) to the Department of
Health and Human Services (HHS). A proposed rule recently put forth
indicates that current HHS plans to bring about this transfer will
significantly and negatively affect Medicare beneficiaries' ability to
seek redress from the denial of benefits such as access to prescription
medicines, home health services, and services provided at skilled
nursing facilities.
Specifically, the Administration's proposed transfer plan, slated to
go into effect in only a handful of days on July 1, will reduce the
number of sites where these appeal hearings can take place to four from
the more than 140 sites currently operating nationwide. Today, Medicare
beneficiaries that have filed coverage appeals are granted a hearing
before an Administrative Law Judge (ALJ). Under the proposed transfer
plan, Medicare beneficiaries will now have their hearings heard via
video- or teleconference (VTC) and will only be allowed to appear in
person by request and if HHS determines that ``special or extraordinary
circumstances exist.'' Moreover, beneficiaries granted an in-person
hearing would not be assured that their cases would be heard within the
90-day window currently mandated by law. Lastly, the proposed transfer
plan will endanger the independence and impartiality of Administrative
Law Judges by requiring them to defer to program guidance provided by
the Centers for Medicare and Medicaid Services (CMS) rather than on the
Medicare statute and regulations, as they currently do.
Central to our system of justice is the right of aggrieved parties to
appear before an impartial judge in person to have their cases heard.
Appearing face-to-face before an impartial trier of fact is the best
way to ensure that a full and fair hearing occurs. In person hearings
allow parties to fully make their case. At the same time, they allow
judges to best evaluate the demeanor and condition of the parties, and
other aspects of a case. The Administration's proposed rule
transferring the Medicare appeals process from SSA to HHS greatly
endangers this right by gutting the current practice of guaranteeing
the right of Medicare beneficiaries to appear in person before an ALJ
when having their appeals heard and instead will now presume that these
hearings will be heard via video- or teleconference.
Often when we talk about the denial of Medicare benefits, we are
talking about the denial of services that literally have the ability to
save lives. Medicare provides a critical safety net for millions of
elderly and disabled beneficiaries and the proposed transfer plan's
almost wholesale reliance on novel VTC technology may endanger the
ability of many Medicare beneficiaries to accurately and personally
portray the severity of their own health conditions.
The Justice for Medicare Beneficiaries Act of 2005 will ensure those
Medicare beneficiaries that have filed coverage appeals have access to
timely, impartial, and in-person hearings before Administrative Law
Judges. Specifically, this initiative will ensure that Medicare appeals
will be heard in person before an ALJ, as they presently are. While all
Medicare beneficiaries will be entitled to appear in person for their
hearing, any beneficiary may choose to have their hearing heard via
video- or teleconference.
The legislation that I introduce today is in no way designed to
prevent the adoption of the promising technology represented by VTC.
Rather, this initiative simply seeks to preserve the critically
important ability of Medicare beneficiaries to appear before the very
judges charged with hearing their coverage appeals. By preventing the
great majority of Medicare beneficiaries from appearing in person
before the judge hearing their Medicare appeals, the Administration's
proposed plan will greatly harm their ability to accurately and
completely present all of the facts relevant to their case. And while I
understand that many Medicare beneficiaries will choose to have their
appeals heard via either video- or teleconference, I believe that we
must preserve for Medicare beneficiaries the ability to appear in
person before a judge when their cases are heard.
The legislation will also require that all Medicare coverage appeal
hearings, regardless of whether a Medicare beneficiary appears in
person or chooses to appear via video- or teleconference, will be heard
within 90 days as mandated by the Benefits Improvement and Protection
Act of 2000. All Medicare beneficiaries deserve to have their appeals
heard in a timely manner regardless of whether their cases are heard in
person or via utilizing VTC technology.
The Justice for Medicare Beneficiaries Act will also address the
Administration's plans to reduce the number of sites where Medicare
appeal hearings may be heard in person from the more than 140 sites
currently available to four. This legislation will require at least one
site for the hearing of in-person Medicare appeals in each state, the
District of Columbia, and territory, with the nation's five largest
states featuring two hearing sites geographically distributed
throughout the state.
Lastly, this legislation will ensure the independence and
impartiality of Administrative Law Judges by relieving them of the
proposed transfer plan's mandate to grant ``substantial deference'' to
CMS program guidance. Medicare beneficiaries appealing coverage
decisions should be fully confident that the judges deciding their
appeals are bound only by the merits of their case and not undue
pressure from agency of administration interference.
I want to thank Senators Kennedy, Kerry, and Bingaman for joining me
in sponsoring this important initiative. The Justice for Medicare
Beneficiaries Act is also supported by a number of national and local
organizations dedicated to preserving the continued ability of Medicare
beneficiaries to access needed health care services. Endorsing the
legislation that I introduce today are the Center for Medicare Advocacy
located in my own state of Connecticut, the National Health Law
Program, the National Senior Citizens Law Center, the Medicare Advocacy
Project of Vermont Legal Aid, the Medicare Advocacy Project of Greater
[[Page S7635]]
Boston Legal Services, and the Senior Citizens' Law Office of
Albuquerque, NM.
In Congress we far too rarely have the opportunity to stave off
problems before they occur. Rather, too often we are forced to involve
ourselves in matters only after they have already wreaked havoc on the
lives of our constituents. With passage of the Justice for Medicare
Beneficiaries Act of 2005, we have the opportunity to avoid the adverse
impact that the Administration's proposed transfer plan will likely
have on Medicare beneficiaries. This legislation will preserve for our
nation's 41 million Medicare beneficiaries the ability to timely appear
in person before judges who will impartially determine which health
care services they're entitled to receive under Medicare. Medicare
beneficiaries deserve no less than the vital protections offered by
this act and I ask for the support of my colleagues for this critically
important initiative.
______
By Mr. ENZI (for himself and Mr. Baucus):
S. 1337. A bill to restore fairness and reliability to the medical
justice system and promote patient safety by fostering alternatives to
current medical tort litigation, and for other purposes; to the
Committee on Health, Education, Labor, and Pensions.
Mr. ENZI. Mr. President, I rise today along with my colleague Senator
Baucus from Montana to introduce a bill that will help bring about a
more reliable system of medical justice for all Americans.
In the last Congress, we had three robust debates on a critical
issue--medical liability reform. Though a majority of the Members of
this body wanted to begin working to pass legislation, we didn't have
the 60 Senators necessary to invoke cloture and begin the real work on
the bills. That was disappointing, because skyrocketing medical
liability insurance premiums are forcing doctors to move their
practices to States with better legal environments and lower premiums.
This is endangering the availability of critical healthcare services in
many areas of Wyoming and other states.
Throughout our debate, I heard many of my colleagues say that they
wanted to work on this issue, but that they simply could not support
the bill as it stood. While I disagreed with their positions then, I
respected their opposition. I also trust that they sincerely wanted to
help solve our Nation's medical liability and litigation crisis.
During those debates, I noticed something interesting. While we
argued the ``pros and cons'' of the bills, no one stood up to defend
our current system of medical litigation. In fact, even some of the
lawyers in this body agreed that our medical litigation system needs
reform.
Why didn't we hear anyone defend the merits of our current medical
litigation system? It's because our system doesn't work. It simply
doesn't work for patients or for healthcare providers.
Compensation to patients injured by healthcare errors is neither
prompt nor fair. The randomness and delay associated with medical
litigation does not contribute to timely, reasonable compensation for
most injured patients. Some injured patients get huge jury awards,
while many others get nothing at all.
Let's look at the facts. In 1991, a group of researchers published a
study in the New England Journal of Medicine. The study, known as the
Harvard Medical Practice Study, was the basis for the Institute of
Medicine's estimate that nearly 100,000 people die every year from
healthcare errors.
As part of their study, the researchers reviewed the medical records
of a random sample of more than 31,000 patients in New York State. They
matched those records with statewide data on medical malpractice
claims. The researchers found that nearly 30 percent of injuries caused
by medical negligence resulted in temporary disability, permanent
disability or death. However, less than 2 percent of those who were
injured by medical negligence filed a claim. These figures suggest that
most people who suffer negligent injuries don't receive any
compensation.
When a patient does decide to litigate, only a few recover anything.
Only one of every ten medical malpractice cases actually goes to trial,
and of those cases, plaintiffs win less than one of every five. In
addition, patients who file suit and are ultimately successful must
wait a long time for their compensation--the average length of a
medical malpractice action filed in state court is about 30 months.
While the vast majority of malpractice cases that go to trial are
settled before the court hands down a verdict, the settlements even
then don't guarantee that patients are compensated fairly, particularly
after legal fees are subtracted. Research shows that for every dollar
paid in malpractice insurance premiums, about 40 cents in compensation
is actually paid to the plaintiff--the rest goes for legal fees, court
costs, and other administrative expenditures.
To sum up: most patients injured by negligence don't file claims or
receive compensation. Few of those that do file claims and go to court
recover anything, and those who are successful wait a long time for
their compensation. And those who settle out of court end up receiving
only 40 cents for every dollar that healthcare providers pay in
liability insurance premiums.
It's hard to say that our medical litigation system does right by
patients in light of those facts. Unfortunately, our system doesn't
work for healthcare providers either.
Earlier, I spoke about those Harvard researchers who found that fewer
than 2 percent of those who were injured by medical negligence even
filed a claim. As they reviewed the medical records for their study,
the researchers also found another interesting fact--most of the
providers against whom claims were eventually filed were not negligent
at all.
That's right--most providers who were sued had not committed a
negligent act.
In matching the records they reviewed to data on malpractice claims,
the Harvard researchers found 47 actual malpractice claims. In only 8
of the 47 claims did they find evidence that medical malpractice had
caused an injury. Even more amazingly, the physician reviewers found no
evidence of any medical injury, negligent or not, in 26 of the 47
claims. However, 40 percent of these cases where they found no evidence
of negligence nonetheless resulted in a payment by the provider.
Basically, the researchers found no positive relationship between
medical negligence and compensation.
That study was based on 1984 data. The same group of researchers
conducted another study in Colorado and Utah in 1992, and they found
the same thing. As in the 1984 study, they found that only 3 percent of
patients who suffered an injury as a result of negligence actually
sued. And again, physician reviewers could not find negligence in most
of the cases in which lawsuits were filed.
Now, I assume that the patients who sued had either an adverse
medical outcome, or at least an outcome that was less satisfactory than
the patient expected. But our medical litigation system is not supposed
to compensate patients for adverse outcomes or dissatisfaction--it's
supposed to compensate patients who are victims of negligent behavior.
It's supposed to be a deterrent to substandard medical care.
It's not fair to doctors and hospitals that they must pay to defend
against meritless lawsuits. Nor is it fair that they must face a choice
between settling for a small sum, even if they aren't at fault, so that
they avoid getting sucked into the whirlpool of our medical litigation
system.
It's not hard to understand why physicians and hospitals and their
insurers want to stay out of court. When they lose, the decisions are
increasingly resulting in mega-awards based on subjective ``non-
economic'' damages. The number of awards exceeding $1 million grew by
50 percent between the periods of 1994-1996 and 1999-2000. Today, more
than half of all jury awards exceed $1 million.
As a result, when a patient suffers a bad outcome and sues, providers
have an incentive to settle the case out of court, even if the provider
isn't at fault. But is this how our medical litigation system is
supposed to work--as a tool for shaking down our healthcare providers?
Let's face it--our medical litigation system is broken. It doesn't
work for
[[Page S7636]]
patients or providers. Even worse, it replaces the trust in the
provider-patient relationship with distrust.
Then, when courts and juries render verdicts with huge awards that
bear no relation to the conduct of the defendants, this destabilizes
the insurance markets and sends premiums skyrocketing. This forces many
physicians to curtail, move or drop their practices, leaving patients
without access to necessary medical care. This is a particular problem
in states like Wyoming, where we traditionally struggle with recruiting
doctors and other healthcare providers.
Perhaps we could live with this flawed system if litigation served to
improve quality or safety, but it doesn't. Litigation discourages the
exchange of critical information that could be used to improve the
quality and safety of patient care. The constant threat of litigation
also drives the inefficient, costly and even dangerous practice of
``defensive medicine.''
Yes, indeed, defensive medicine is dangerous. A recent study found
that one of every 1200 children who receive a CAT scan may die later in
life from radiation-induced cancer. Knowing this puts a physician faced
with anxious parents in a difficult situation. Does the doctor use his
or her professional judgment and tell the parents of a sick child not
to worry, or does the doctor order the CAT scan and subject the child
to radiation that is probably unnecessary, just to provide some
protection against a possible lawsuit?
We have a medical litigation system in which many patients who are
hurt by negligent actions receive no compensation for their loss. Those
who do receive compensation end up with about 40 cents of every premium
dollar after legal fees and other costs are subtracted. And the
likelihood and the outcomes of lawsuits and settlements bear little
relation to whether or not a healthcare provider was at fault.
We like to say that justice is blind. With respect to our medical
litigation system, I would say that justice is absent and nowhere to be
found.
During our debates in the last Congress, I said that the current
medical liability crisis and the shortcomings of our medical litigation
system make it clear that it is time for a major change. I also said
that regardless of how we voted, we all should work toward replacing
the current medical tort liability scheme with a more reliable and
predictable system of medical justice.
Today, Senator Baucus and I are introducing a bill that would help
achieve that goal.
Most of us are familiar with the report on medical errors from the
Institute of Medicine, also known as the IOM. Many of us may be less
familiar with another report that the IOM published in 2003. That
report is called ``Fostering Rapid Advances in Healthcare: Learning
from System Demonstrations.''
Our Secretary of Health and Human Services at that time, Tommy
Thompson, challenged the IOM to identify bold ideas that would
challenge conventional thinking about some of the most vexing problems
facing our healthcare system. In response, an IOM committee developed
this report, which identified a set of demonstration projects that
committee members felt would break new ground and yield a very high
return-on-investment in terms of dollars and health.
Medical liability was one of the areas upon which the IOM committee
focused. The IOM suggested that the federal government should support
demonstration projects in the states. These demonstrations should be
based on ``replacing tort liability with a system of patient-centered
and safety-focused non-judicial compensation.''
The bill we are introducing today is in the spirit of this IOM
report. This bill, the Fair and Reliable Medical Justice Act, would
authorize funding for States to create demonstration programs to test
alternatives to current medical tort litigation.
The funding to States under this bill would cover planning grants for
developing proposals based on the models or other innovative ideas.
Funding to States would also include the initial costs of getting the
alternatives up and running.
The Fair and Reliable Medical Justice Act would require participating
states and the Federal Government to collaborate in continuous
evaluations of the results of the alternatives as compared to
traditional tort litigation. This way, all States and the federal
government can learn from new approaches.
By funding demonstration projects, I believe Congress could enable
States to experiment with and learn from ideas that could provide long-
term solutions to the current medical liability and litigation crisis.
In introducing this bill, I wanted to provide some alternative ideas
that would contribute to the debate. As a result, the bill describes
three models to which states could look in designing their
alternatives.
For instance, a State could provide healthcare providers and
organizations with immunity from lawsuits if they disclose an error
that results in an injury and make a timely offer to compensate an
injured patient for his or her actual net economic loss, plus a payment
for pain and suffering if experts deem such a payment to be
appropriate. This could give a healthcare provider who makes an honest
mistake the chance to make amends financially with a patient, without
the provider fearing that their honesty would land them in a lawsuit.
Another idea would be for a state to set up classes of avoidable
injuries and a schedule of compensation for them, and then establish an
administrative board to resolve claims related to those injuries. A
scientifically rigorous process of identifying preventable injuries and
setting appropriate compensation would be preferable to the randomness
of the current system.
Still another option would be for a state to establish a special
healthcare court for adjudicating medical malpractice cases. For this
idea to work, the State would need to ensure that the presiding judges
have expertise in and an understanding of healthcare, and allow them to
make binding rulings on issues like causation compensation, and
standards of care.
We already have specialized courts for complicated issues like taxes
and highly charged issues like substance abuse and domestic violence.
With all the flaws in our current medical litigation system, perhaps we
should consider special courts for the complex and emotional issue of
medical malpractice.
I believe one thing in our medical liability debate is absolutely
clear--people are demanding change. The States are debating liability
reform, and a number of states have enacted new laws. States are
heeding this call for change, and Congress should support those
efforts.
My own State, Wyoming, had had a number of lively legislative debates
on medical liability reform over the past few years, but we have a
constitutional amendment that prohibits limits on the amounts that can
be recovered through lawsuits. The Wyoming Senate has considered bills
recently to amend our State's constitution to create a commission on
healthcare errors. That commission would have the power to review
claims, decide if healthcare negligence had occurred, and determine the
compensation for the death or injury according to a schedule or formula
provided by law.
According to the key sponsor of these bills, Senator Charlie Scott,
one of the biggest obstacles to passage is the uncertainty surrounding
this new idea. No one has any basis for knowing what a proper schedule
or formula for compensation would be. No one knows how much the system
might cost, or how much injured patients would recover compared to what
they recover now.
Senator Scott wrote me to say that federal support for finding
answers to these questions might help the bill's sponsors sufficiently
respond to the legitimate concerns of their fellow Wyoming legislators.
We should be helping state legislators like Senator Scott develop
thoughtful and innovative ideas such as the one he has proposed. That's
one of the reasons I am offering this bill.
Clearly, the American people and their elected representatives have
identified the need to reform our current medical litigation system.
There is a real medical liability crisis, and Congress needs to act
sooner rather than later.
My cosponsor Senator Baucus and I voted differently on medical
liability reform in the last Congress, but we
[[Page S7637]]
both agree that we ought to lend a hand to States that are working to
change their current medical litigation systems and to develop creative
alternatives that could work much better for patients and providers.
The States have been policy pioneers in many areas--workers'
compensation, welfare reform, and electricity deregulation, to name
three. Medical litigation should be the next item on the agenda of the
laboratories of democracy that are our 50 States.
No one questions the need to restore reliability to our medical
justice system. But how do we begin the process? One way is to foster
innovation by encouraging States to develop more rational and
predictable methods for resolving healthcare injury claims. And that is
what the Fair and Reliable Medical Justice Act aims to do.
In the long run, we would all be better off with a more reliable
system of medical justice than we have today. I know that my fellow
Senators recognize this, so I hope my colleagues on both sides of the
aisle will work with me and Senator Baucus on 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. 1337
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 ``Fair and Reliable Medical
Justice Act''.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to restore fairness and reliability to the medical
justice system by fostering alternatives to current medical
tort litigation that promote early disclosure of health care
errors and provide prompt, fair, and reasonable compensation
to patients who are injured by health care errors;
(2) to promote patient safety through early disclosure of
health care errors; and
(3) to support and assist States in developing such
alternatives.
SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES
TO CURRENT MEDICAL TORT LITIGATION.
Part P of title III of the Public Health Service Act (42
U.S.C. 280g et seq.) is amended by adding at the end the
following:
``SEC. 3990. STATE DEMONSTRATION PROGRAMS TO EVALUATE
ALTERNATIVES TO CURRENT MEDICAL TORT
LITIGATION.
``(a) In General.--The Secretary is authorized to award
demonstration grants to States for the development,
implementation, and evaluation of alternatives to current
tort litigation for resolving disputes over injuries
allegedly caused by health care providers or health care
organizations.
``(b) Duration.--The Secretary may award up to 10 grants
under subsection (a) and each grant awarded under such
subsection may not exceed a period of 5 years.
``(c) Conditions for Demonstration Grants.--
``(1) Requirements.--Each State desiring a grant under
subsection (a) shall--
``(A) develop an alternative to current tort litigation for
resolving disputes over injuries allegedly caused by health
care providers or health care organizations that may be 1 of
the models described in subsection (d); and
``(B) promote a reduction of health care errors by allowing
for patient safety data related to disputes resolved under
subparagraph (A) to be collected and analyzed by
organizations that engage in voluntary efforts to improve
patient safety and the quality of health care delivery.
``(2) Alternative to current tort litigation.--Each State
desiring a grant under subsection (a) shall demonstrate how
the proposed alternative described in paragraph (1)(A)--
``(A) makes the medical liability system more reliable
through prompt and fair resolution of disputes;
``(B) encourages the early disclosure of health care
errors;
``(C) enhances patient safety; and
``(D) maintains access to liability insurance.
``(3) Sources of compensation.--Each State desiring a grant
under subsection (a) shall identify the sources from and
methods by which compensation would be paid for claims
resolved under the proposed alternative to current tort
litigation, which may include public or private funding
sources, or a combination of such sources. Funding methods
shall to the extent practicable provide financial incentives
for activities that improve patient safety.
``(4) Scope.--
``(A) In general.--Each State desiring a grant under
subsection (a) may establish a scope of jurisdiction (such as
a designated geographic region, a designated area of health
care practice, or a designated group of health care providers
or health care organizations) for the proposed alternative to
current tort litigation that is sufficient to evaluate the
effects of the alternative.
``(B) Notification of patients.--A State proposing a scope
of jurisdiction under subparagraph (A) shall demonstrate how
patients would be notified that they are receiving health
care services that fall within such scope.
``(5) Preference in awarding demonstration grants.--In
awarding grants under subsection (a), the Secretary shall
give preference to States--
``(A) that have developed the proposed alternative through
substantive consultation with relevant stakeholders; and
``(B) in which State law at the time of the application
would not prohibit the adoption of an alternative to current
tort litigation.
``(d) Models.--
``(1) In general.--Any State desiring a grant under
subsection (a) that proposes an alternative described in
paragraph (2), (3), or (4) shall be deemed to meet the
criteria under subsection (c)(2).
``(2) Early disclosure and compensation model.--In the
early disclosure and compensation model, the State shall--
``(A) require that health care providers or health care
organizations notify a patient (or an immediate family member
or designee of the patient) of an adverse event that results
in serious injury to the patient, and that such notification
shall not constitute an acknowledgment or an admission of
liability;
``(B) provide immunity from tort liability to any health
care provider or health care organization that offers in good
faith to pay compensation in accordance with this section to
a patient for an injury incurred in the provision of health
care services (limited to claims arising out of the same
nucleus of operative facts as the injury, and except in cases
of fraud related to the provision of health care services, or
in cases of criminal or intentional harm);
``(C) set a limited time period during which a health care
provider or health care organization may make an offer of
compensation benefits under subparagraph (B), with
consideration for instances where prompt recognition of an
injury is unlikely or impossible;
``(D) require that the compensation provided under
subparagraph (B) include--
``(i) payment for the net economic loss of the patient, on
a periodic basis, reduced by any payments received by the
patient under--
``(I) any health or accident insurance;
``(II) any wage or salary continuation plan; or
``(III) any disability income insurance;
``(ii) payment for the non-economic damages of the patient,
if appropriate for the injury, based on a defined payment
schedule developed by the State in consultation with relevant
experts and with the Secretary in accordance with subsection
(g); and
``(iii) reasonable attorney's fees;
``(E) not abridge the right of an injured patient to seek
redress through the State tort system if a health care
provider does not enter into a compensation agreement with
the patient in accordance with subparagraph (B) or if the
compensation offered does not meet the requirements of
subparagraph (D) or is not offered in good faith;
``(F) permit a health care provider or health care
organization that offers in good faith to pay compensation
benefits to an individual under subparagraph (B) to join in
the payment of the compensation benefits any health care
provider or health care organization that is potentially
liable, in whole or in part, for the injury; and
``(G) permit any health care provider or health care
organization to contribute voluntarily in the payment of
compensation benefits to an individual under subparagraph
(B).
``(3) Administrative determination of compensation model.--
``(A) In general.--In the administrative determination of
compensation model--
``(i) the State shall--
``(I) designate an administrative entity (in this paragraph
referred to as the `Board') that shall include
representatives of--
``(aa) relevant State licensing boards;
``(bb) patient advocacy groups;
``(cc) health care providers and health care organizations;
and
``(dd) attorneys in relevant practice areas;
``(II) set up classes of avoidable injuries, in
consultation with relevant experts and with the Secretary in
accordance with subsection (g), that will be used by the
Board to determine compensation under clause (ii)(II);
``(III) modify tort liability, through statute or contract,
to bar negligence claims in court against health care
providers and health care organizations for the classes of
injuries established under subclause (II), except in cases of
fraud related to an injury, or in cases of criminal or
intentional harm;
``(IV) outline a procedure for informing patients about the
modified liability system described in this paragraph and, in
systems where participation by the health care provider,
health care organization, or patient is voluntary, allow for
the decision by the provider, organization, or patient of
whether to participate to be made prior to the provision of,
use of, or payment for the health care service;
``(V) provide for an appeals process to allow for review of
decisions; and
``(VI) establish procedures to coordinate settlement
payments with other sources of payment;
``(ii) the Board shall--
[[Page S7638]]
``(I) resolve health care liability claims for certain
classes of avoidable injuries as determined by the State and
determine compensation for such claims;
``(II) develop a schedule of compensation to be used in
making such determinations that includes--
``(aa) payment for the net economic loss of the patient, on
a periodic basis, reduced by any payments received by the
patient under any health or accident insurance, any wage or
salary continuation plan, or any disability income insurance;
``(bb) payment for the non-economic damages of the patient,
if appropriate for the injury, based on a defined payment
schedule developed by the State in consultation with relevant
experts and with the Secretary in accordance with subsection
(g); and
``(cc) reasonable attorney's fees; and
``(III) update the schedule under subclause (II) on a
regular basis.
``(B) Appeals.--The State, in establishing the appeals
process described in subparagraph (A)(i)(V), may choose
whether to allow for de novo review, review with deference,
or some opportunity for parties to reject determinations by
the Board and elect to file a civil action after such
rejection. Any State desiring to adopt the model described in
this paragraph shall indicate how such review method meets
the criteria under subsection (c)(2).
``(C) Timeliness.--The State shall establish timeframes to
ensure that claims handled under the system described in this
paragraph provide for adjudication that is more timely and
expedited than adjudication in a traditional tort system.
``(4) Special health care court model.--In the special
health care court model, the State shall--
``(A) establish a special court for the timely adjudication
of disputes over injuries allegedly caused by health care
providers or health care organizations in the provision of
health care services;
``(B) ensure that such court is presided over by judges
with health care expertise who meet applicable State
standards for judges and who agree to preside over such court
voluntarily;
``(C) provide authority to such judges to make binding
rulings on causation, compensation, standards of care, and
related issues with reliance on independent expert witnesses
commissioned by the court;
``(D) provide for an appeals process to allow for review of
decisions; and
``(E) at its option, establish an administrative entity
similar to the entity described in paragraph (3)(A)(i)(I) to
provide advice and guidance to the special court.
``(e) Application.--
``(1) In general.--Each State desiring a grant under
subsection (a) shall submit to the Secretary an application,
at such time, in such manner, and containing such information
as the Secretary may require.
``(2) Review panel.--
``(A) In general.--In reviewing applications under
paragraph (1), the Secretary shall consult with a review
panel composed of relevant experts appointed by the
Comptroller General.
``(B) Composition.--
``(i) Nominations.--The Comptroller General shall solicit
nominations from the public for individuals to serve on the
review panel.
``(ii) Appointment.--The Comptroller General shall appoint,
at least 11 but not more than 15, highly qualified and
knowledgeable individuals to serve on the review panel and
shall ensure that the following entities receive fair
representation on such panel:
``(I) Patient advocates.
``(II) Health care providers and health care organizations.
``(III) Attorneys with expertise in representing patients
and health care providers.
``(IV) Insurers.
``(V) State officials.
``(C) Chairperson.--The Comptroller General, or an
individual within the Government Accountability Office
designated by the Comptroller General, shall be the
chairperson of the review panel.
``(D) Availability of information.--The Comptroller General
shall make available to the review panel such information,
personnel, and administrative services and assistance as the
review panel may reasonably require to carry out its duties.
``(E) Information from agencies.--The review panel may
request directly from any department or agency of the United
States any information that such panel considers necessary to
carry out its duties. To the extent consistent with
applicable laws and regulations, the head of such department
or agency shall furnish the requested information to the
review panel.
``(f) Report.--Each State receiving a grant under
subsection (a) shall submit to the Secretary a report
evaluating the effectiveness of activities funded with grants
awarded under such subsection at such time and in such manner
as the Secretary may require.
``(g) Technical Assistance.--
``(1) In general.--The Secretary shall provide technical
assistance to the States awarded grants under subsection (a).
``(2) Requirements.--Technical assistance under paragraph
(1) shall include--
``(A) the development of a defined payment schedule for
non-economic damages (including guidance on the consideration
of individual facts and circumstances in determining
appropriate payment), the development of classes of avoidable
injuries, and guidance on early disclosure to patients of
adverse events; and
``(B) the development, in consultation with States, of
common definitions, formats, and data collection
infrastructure for States receiving grants under this section
to use in reporting to facilitate aggregation and analysis of
data both within and between States.
``(3) Use of common definitions, formats, and data
collection infrastructure.--States not receiving grants under
this section may also use the common definitions, formats,
and data collection infrastructure developed under paragraph
(2)(B).
``(h) Evaluation.--
``(1) In general.--The Secretary, in consultation with the
review panel established under subsection (e)(2), shall enter
into a contract with an appropriate research organization to
conduct an overall evaluation of the effectiveness of grants
awarded under subsection (a) and to annually prepare and
submit a report to the appropriate committees of Congress.
Such an evaluation shall begin not later than 18 months
following the date of implementation of the first program
funded by a grant under subsection (a).
``(2) Contents.--The evaluation under paragraph (1) shall
include--
``(A) an analysis of the effect of the grants awarded under
subsection (a) on the number, nature, and costs of health
care liability claims;
``(B) a comparison of the claim and cost information of
each State receiving a grant under subsection (a); and
``(C) a comparison between States receiving a grant under
this section and States that did not receive such a grant,
matched to ensure similar legal and health care environments,
and to determine the effects of the grants and subsequent
reforms on--
``(i) the liability environment;
``(ii) health care quality;
``(iii) patient safety; and
``(iv) patient and health care provider and organization
satisfaction with the reforms.
``(i) Option to Provide for Initial Planning Grants.--Of
the funds appropriated pursuant to subsection (k), the
Secretary may use a portion not to exceed $500,000 per State
to provide planning grants to such States for the development
of demonstration project applications meeting the criteria
described in subsection (c). In selecting States to receive
such planning grants, the Secretary shall give preference to
those States in which State law at the time of the
application would not prohibit the adoption of an alternative
to current tort litigation.
``(j) Definitions.--In this section:
``(1) Health care services.--The term `health care
services' means any services provided by a health care
provider, or by any individual working under the supervision
of a health care provider, that relate to--
``(A) the diagnosis, prevention, or treatment of any human
disease or impairment; or
``(B) the assessment of the health of human beings.
``(2) Health care organization.--The term `health care
organization' means any individual or entity which is
obligated to provide, pay for, or administer health benefits
under any health plan.
``(3) Health care provider.--The term `health care
provider' means any individual or entity--
``(A) licensed, registered, or certified under Federal or
State laws or regulations to provide health care services; or
``(B) required to be so licensed, registered, or certified
but that is exempted by other statute or regulation.
``(4) Net economic loss.--The term `net economic loss'
means--
``(A) reasonable expenses incurred for products, services,
and accommodations needed for health care, training, and
other remedial treatment and care of an injured individual;
``(B) reasonable and appropriate expenses for
rehabilitation treatment and occupational training;
``(C) 100 percent of the loss of income from work that an
injured individual would have performed if not injured,
reduced by any income from substitute work actually
performed; and
``(D) reasonable expenses incurred in obtaining ordinary
and necessary services to replace services an injured
individual would have performed for the benefit of the
individual or the family of such individual if the individual
had not been injured.
``(5) Non-economic damages.--The term `non-economic
damages' means losses for physical and emotional pain,
suffering, inconvenience, physical impairment, mental
anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium (other than
loss of domestic service), injury to reputation, and all
other non-pecuniary losses of any kind or nature, to the
extent permitted under State law.
``(k) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this section such
sums as may be necessary. Amounts appropriated pursuant to
this subsection shall remain available until expended.''.
Mr. BAUCUS. Mr. President, I rise today to join Senator ENZI in
introducing the Fair and Reliable Medical Justice Act of 2005. We have
debated the medical liability issue in this chamber for years now. But
the Senate has failed to take action to make the situation better. We
need to deal with the issue of rising liability costs, and I think this
bill is a good place to start.
[[Page S7639]]
One of my top priorities in the Senate is ensuring appropriate access
to affordable, quality health care. In a rural State such as Montana,
where health care providers are often few and far between, that is a
tall order. It is a job that is made all the harder by rising medical
liability insurance premiums.
To ensure proper access to care, we need to make certain that our
health care providers can afford their medical liability insurance. We
also need to make sure that patients who are harmed by medical mistakes
have access to timely, reasonable compensation for their injuries.
The Fair and Reliable Medical Justice Act promotes the testing of
alternatives to current medical tort liability litigation. It aims to
increase the number of injured patients who receive compensation for
their injuries, and make such compensation more accurate and more
timely, all at lower administrative costs than current systems. The
bill also encourages patient safety by promoting disclosure of medical
errors, unlike the current system which does not encourage disclosure.
The Fair and Reliable Medical Justice Act would establish State-based
demonstration programs to help States test alternative systems of
health care-related dispute resolution under three different models:
early disclosure and compensation; administrative determination of
compensation; and special health care courts. Under the bill, states
may develop other alternative plans for resolving health care related
disputes as well.
The first model involves a system of early disclosure, which
encourages providers to disclose medical errors that harm patients and
offer just compensation for injuries. This model would maintain
patients' access to the traditional legal system if claims cannot be
resolved by early disclosure, or in cases resulting from criminal or
intentional harm or fraud.
The second model would establish a board made up of providers and
health care organizations, advocates, and attorneys. The board would
establish classes of avoidable injuries and determine compensation
rates for each, including economic and non-economic losses, and
attorneys' fees.
The third model involves special health care courts, presided over by
judges with special health care expertise, and assisted by independent
experts. The judges would be subject to the same criteria as other
State judges and sit on the court voluntarily.
These models are based on innovative efforts currently underway in
the private sector and in some States, where success is already being
achieved. I think it is time for us to try to encourage more innovation
and expand the range of options being considered. State-based
demonstrations provide a great setting for experimentation and
learning. The Institute of Medicine suggested as much in its 2002
report entitled ``Fostering Rapid Advances in Health Care: Learning
from System Demonstrations.''
I thank Senator Enzi for his leadership on this issue. I am proud to
have worked with him to develop legislation that I believe will enhance
patient safety. It is unacceptable that around 100,000 Americans die
annually as a result of medical errors. And it is unacceptable that
many patients hurt by medical errors receive no compensation for their
injuries
This bill is a good opportunity for us to make progress on both
fronts--to look at the medical liability issue from a new perspective,
through a set of commonsense pilot projects centered on improving
patient safety. I urge my colleagues to support this important effort.
______
By Ms. MURKOWSKI (for herself and Mr. Stevens):
S. 1338. A bill to require the Secretary of the Interior, acting
through the Bureau of Reclamation and the United States Geological
Survey, to conduct a study on groundwater resources in the State of
Alaska, and for other purposes; to the Committee on Energy and Natural
Resources.
Ms. MURKOWSKI. Mr. President, I rise today to introduce a measure of
benefit to my home State of Alaska, the Alaska Water Resources Act of
2005. The importance of water resource data collection to a State that
has a resource-based economy cannot be overstated. Economic development
is predicated on access to an adequate water supply, and in my State
there is inadequate hydrologic data upon which to secure both economic
development and the health and welfare of Alaskan citizens.
Alaska is an amazing State from a hydrological viewpoint. It is home
to more than 3 million lakes--only about 100 being larger than 10
square miles--more than 12,000 rivers and uncounted thousands of
streams, creeks and ponds. Together these water bodies hold about one-
third of all the fresh water found in the United States.
Alaska is home to a number of large rivers. The Yukon, which
originates in western Canada, runs 1,400 miles--discharging from 25,000
cubic feet of water per second in early spring to more than 600,000
cubic feet per second in May during the spring thaw. The Yukon drains
roughly 330,000 square miles of Alaska and Canada, about one-third of
the State. Besides the Yukon, Alaska is home to nine other major rivers
and creeks all running more than 300 miles in length: the Porcupine,
Koyukuk, Kuskokwim, Tanana, Innoko, Colville, Noatak, Kobuk and Birch
Creek.
Alaska residents from early spring to fall face substantial flood
threats, from spring flooding caused by breakup and ice damming to
fall's heavy rains, but the State has fewer than 100 stream gaging
stations operated by the U.S. Geological Survey--Alaska having less
than 10 percent of the stream flow information that is taken for
granted by all other States in the Nation. Alaska averages one working
gage for each 10,000 square miles, while, as an example, Pacific
Northwest States average one gage for each 365 square miles. To
emphasize the lack of data now available for Alaska, I would point out
that to equal the stream gage density of the Pacific Northwest States,
my State would need to have over 1,600 total gage sites.
Alaska also supports the Nation's least modern and undeveloped
potable water distribution system. Water for Alaska towns outside of
the more densely populated ``Railbelt'' comes predominately from
surface water sources Surface water sources often result in supply/
storage problems since these surface sources freeze and are unavailable
for up to half the year. The chances for water-borne contaminants to
affect potable water supplies, including fecal matter from Alaska's
plentiful wildlife populations, human waste from inadequate or
nonexistent sewage treatment facilities, and natural mineral deposits
(natural arsenic levels in mineralized zone creeks frequently exceeding
EPA standards) are present and increasing. In areas that predominately
depend on groundwater sources, such as the ``Railbelt,'' there is only
very limited knowledge of the nature and extent of the aquifers that
support those critical groundwater supplies. Extensive permafrost
further complicates the potential for adverse impacts to Alaska. In
portions of Southcentral Alaska where there is a dependence on
groundwater as the source for an adequate healthy water supply, the
availability of that supply is starting to be in jeopardy. Allocations
of water need to be based on scientific data, and the data needed upon
which the allocations are made is unavailable. Users of water are only
beginning to realize the potential conflicts that may arise, and the
limits on future economic development that may result from inadequate
knowledge of the water resource, particularly in the Matanuska-Susitna
Borough, on the Kenai Peninsula and to a lesser extent in portions of
the Municipality of Anchorage where groundwater provided by wells is a
crucial part of the State's water distribution system and where there
is little known about the size, capacity, extent and recharge
capability of the aquifers that these wells tap.
Alaska, according to the Alaska Department of Environmental
Conservation, still has some 16,000 homes in 71 generally Native
villages not being served by piped water or enclosed water haul
systems. There are still 55 villages in Alaska where up to 29 percent
of the residents are not served by sanitary water systems, with more
than 60 percent of residents not being served in 16 villages. Even
though since Statehood the State and Federal governments have spent
$1.3 billion on rural water-sanitation system improvements in Alaska,
the state has an estimated need for nearly $650 million in
[[Page S7640]]
additional funding to complete installation of a modern water-
sanitation system.
Planning and engineering for those locations cannot be completed
without better information as to the availability and extent of supply
of water and better analysis of new technologies that could be used for
water system installations, including possible desalination for some
island and coastal communities.
For all these reasons, today I am introducing legislation authorizing
the Department of the Interior's Commissioner of Reclamation and the
Director of the U.S. Geological Survey to conduct a series of water
resource studies in Alaska. The studies will include a survey of water
treatment needs and technologies including desalination treatment,
which may be applicable to the water resources development in Alaska.
The study will review the need for enhancement of the National
Streamflow Information Program administered by the U.S. Geological
Survey. The Streamflow review will determine whether more stream gaging
stations are necessary for flood forecasting, aiding resource
extraction, determining the risk to the state's transportation system
and for wildfire management. Groundwater resources will also be further
evaluated and documented to determine the availability of water, the
quality of that groundwater, and the extent of the aquifers in urban
areas.
This type of study, already conducted for most all other Sates in the
Nation, should help Alaska better plan and design water systems and
transportation infrastructure and also better prepare for floods and
summer wildfires.
There is literally ``water, water everywhere'' in Alaska, but too
often, especially in communities such as Ketchikan that take water from
surface sources, or the rapidly growing Mat-Su Valley, there may be
less water to drink during unusually dry summers, There is a real and
growing problem of maintaining an adequate supply of sufficient, pure
water. This problem is only going to grow with a growing population and
economy. This bill is designed to provide more information to help
communities plan for future water needs and to help State officials
plan for flood and fire safety concerns and economic development.
______
By Mr. LEAHY (for himself, Ms. Collins, Mr. Jeffords, Mrs. Boxer,
Mr. Kerry, Mr. Biden, Ms. Cantwell, Mr. Carper, Mr.
Rockefeller, Mr. Corzine, Mr. Dayton, Mr. Reid, Mr. Dodd, Mrs.
Clinton, Mr. Durbin, Mr. Feingold, Mrs. Feinstein, Mr. Harkin,
Mr. Kennedy, Mr. Kohl, Mr. Obama, Mr. Lautenberg, Mr. Levin,
Mr. Lieberman, Ms. Mikulski, Mrs. Murray, Mr. Reed, Mr.
Sarbanes, Mr. Schumer, Mr. Wyden, Mr. Akaka, and Ms. Snowe):
S.J. Res. 20. A joint resolution disapproving a rule promulgated by
the Administrator of the Environmental Protection Agency to delist coal
and oil-direct utility units from the source category list under the
Clean Air Act; to the Committee on Environment and Public Works.
Mr. LEAHY. Mr. President, along with Senator Collins and 28 of our
colleagues, today I am introducing this resolution to halt the Bush
administration's flawed and dangerous new rule on toxic mercury
emissions. I am pleased that another leading cosponsor of this
resolution is the ranking member of the Committee on Environment and
Public Works, Senator Jeffords.
The Bush administration's new rule will continue to allow mercury, a
substance so toxic that it causes birth defects and IQ loss, to
continue to poison children and pregnant women. This disastrous rule
should not be allowed to stand as the law of the land.
The bipartisan work that produced the Clean Air Act and the 1990
amendments established a process for us to begin cleaning up the toxic
mercury spewing out of dirty power plants across the country. The 1990
amendments require the Environmental Protection Agency, EPA, to control
each power plant's emissions of mercury and other toxics by 2008 at the
latest. The act requires each plant to use the ``maximum achievable
control technology'' on every generating unit. That is the law of the
land. Anything less means more pollution.
But instead of working to enforce and implement the Clean Air Act, as
two previous administrations had, the Bush administration has turned
the Clean Air Act on its head. With this rule the administration
revokes a 2000 EPA finding that it is ``necessary and appropriate'' to
require that each power plant apply technology to reduce mercury
emissions.
Let me repeat those plain, startling facts: By revoking the earlier
EPA finding and deciding instead to coddle the biggest mercury
polluters, the administration is saying it is no longer necessary or
appropriate to adequately control mercury emissions. Although I am
somewhat impressed that they can make this statement with straight
faces, I am appalled at their audacious disregard for the health of the
American people, and, like the scientific community, I am baffled by
their gymnastic arguments.
The plain and simple truth is that this rule will allow more mercury
into our environment than does the current law. Hundreds of the oldest,
dirtiest power plants will not even control mercury emissions for more
than a decade. That is what this rule gives us: More pollution, for
longer than the Clean Air Act allows.
This rule is all the more shameful because the evidence of public
health and environmental damage from mercury and other toxics is clear
enough for action right now. We do not need to wait 10 or 20 years to
know the facts about mercury's threats to human health. In fact EPA
itself admits these threats. Look at EPA's own estimate of the number
of newborns at risk of elevated mercury exposure, which has doubled to
630,000. EPA also found that 1 in 6 pregnant women has mercury levels
in her blood above EPA's safe threshold. The National Academy of
Sciences has confirmed scientific research showing that maternal
consumption of unsafe levels of mercury in fish can cause neuro-
developmental harm in children, resulting in learning disabilities,
poor motor function, mental retardation, seizures and cerebral palsy.
Yet it seems the majority in Congress and this administration want to
avoid any public daylight on this flawed rule. The Environment and
Public Works Committee has refused to even hold a single hearing on
this rule. Their aim is to keep the public in the dark, and I would
guess that most Americans in fact do not yet know what EPA and the big
polluters have been up to with this rule.
One reason for the administration's lack of candor clearly is the
discovery that this rule has polluting industries' fingerprints all
over it. EPA's first proposal for these rules lifted exact texts from
memorandum provided by utility industry lobbyists. Another reason may
be because the American people would find a process where the lobbyists
are shut in and the public is shut out, where the scientific and
economic analysis was manipulated, and where the public's health was
ignored.
But the administration's arrogance does not stop there. EPA's own
inspector general and the Government Accountability Office criticized
almost every aspect of how EPA drafted this rule. Unfortunately, their
recommendations to improve it were also ignored. So were more than
680,000 public comments--a record for any EPA rule. So were the
comments of many state environment departments, attorneys general,
doctors, educators, sportsmen groups and EPA's own advisory committees.
And, although it should not come as a surprise after 4 years working
with this administration, the comments of 45 Senate and 184 House
members were also ignored.
Many of us in the Senate have spent the past 2 years--working with 3
different administrators--trying to make the administration follow the
Clean Air Act and produce a rule that puts the public's health over the
profits of special interests. A rule that heeds the science and
encourages available technologies to solve this problem. They failed on
all fronts, big time.
Instead they produced a rule that will do nothing for at least a
decade, despite years of analysis by EPA showing the need for quick
action. According to EPA's own regulatory impact analysis, we will be
lucky if 1 percent of power plant capacity will have mercury controls
by 2015, and only 3 percent by 2020.
[[Page S7641]]
As a Vermonter I know it is ``appropriate and necessary'' to limit
the pollution plumes from grandfathered power plants. You cannot even
see my state on EPA's maps showing mercury pollution because so much of
it is being dumped on us from upwind power plants. Vermonters and New
Englanders have been waiting for decades for EPA to take action so that
our lakes can be cleaned up.
For all their talk of family values, the administration has yet again
put the value of corporate contributions--not families--first. It is
not a family value to tell a whole generation of women that their
health is not important. It is not a family value to put another
generation of young kids at risk of learning disabilities. These
mercury rules do just that.
It is time to put people first, and to stop letting the big polluters
and the special interests write the rules and run the show over at EPA.
This resolution will ensure that the health and safety of U.S.
citizens are fully considered, before EPA rescinds its commitment to
protect public health from the dangers of mercury pollution. To leave
mercury pollution from power plants as the only source of toxic air
pollution that is allowed to avoid rigorous emissions standards under
the Clean Air Act is a risk to the public's health that we need not,
and should not, accept.
I urge my colleagues to support this resolution.
____________________