[Congressional Record Volume 151, Number 106 (Friday, July 29, 2005)]
[Senate]
[Pages S9472-S9537]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. BOND:
S. 1553. A bill to amend the Internal Revenue Code of 1986 to enhance
tax incentives for small property and casualty insurance companies; to
the Committee on Finance.
Mr. BOND. Mr. President, I rise today to introduce a bill that
addresses an inequity and helps clarify a tax exemption that exists for
small property and casualty (P&C) insurance companies under the
Internal Revenue Code Sections 501(c)( 15) and 831(b). These small P&C
insurers, often originally organized as mutual companies to offer
insurance coverage to specific groups, mainly serve rural areas and
farming communities that otherwise may not have been able to obtain
affordable coverage. This tax exemption helps to provide additional
surplus and cash flow for these small companies.
The Pension Funding Equity Act of 2004, ``2004 Act'', amended the
small P&C insurer exemption because there were concerns that certain
investment companies offering only a small amount of insurance could
use the exemption to improperly shelter investment income from federal
income tax. Now, under current law, the exemption applies only to P&C
(i.e., non-life) insurance companies if their ``gross receipts'' for
the taxable year do not exceed $600,000 and if premiums make up more
than 50 percent of those gross receipts. A mutual P&C insurance company
also may be exempt if its premiums make up more than 35 percent of its
gross receipts and its gross receipts do not exceed $150,000.
Additionally, P&C companies that have direct or net written premiums,
whichever is greater, exceeding $350,000 but not exceeding $1.2
million, Income Election Limit, can elect to be taxed under a similar
tax structure on their net investment income.
While the 2004 Act helped to close a potential loophole, the special
provisions for small P&C insurers are in need of further clarification
or reform. The term ``gross receipts'' is not defined uniformly for
purposes of the Internal Revenue Code and the Income Election Limit has
not been adjusted for inflation since the Tax Reform Act of 1986.
Without a clear definition of the term ``gross receipts,'' many
unanswered questions remain with respect to determining whether a small
P&C insurance company qualifies for exemption under section 501(c)(15).
For example, such a company typically invests a large portion of its
assets in government bonds. If the gross proceeds on the sale of an
asset are included in the measure of ``gross receipts,'' based on a
broad cash-flow definition of gross receipts, the mere maturation of
bonds and reinvestment could cause a small P&C insurance company to
fall out of the exemption even though there has been no change in the
size of the business and even if the company realizes a loss on the
sale or redemption. On the other hand, this arbitrary result would not
occur if a definition of gross receipts that includes gains from the
sale or exchange of assets is used. Such a definition of gross receipts
looks to the size of the business in terms of income and overall
profitability, which in turn ties into the reason for the tax
exemption.
If the Income Election Limit is not adjusted to keep pace with
inflation, the impact could be severe. Take, for instance, a small P&C
insurer in my State that started insuring the local farmers in the late
1980s. Over the ensuing years, the company's client base changed very
little, but the insurance premiums increased gradually to keep pace
with inflationary pressures. As a result, while the business itself has
not grown in absolute terms, its premium base has, therefore resulting
in the loss of the elective alternative and simpler tax on investment
income.
For the farmers and consumers covered by the small P&C insurer, this
loss of the tax exemption or a simpler, more limited tax structure is
certain to mean higher insurance premiums, leaving the client with the
choice of cutting coverage or paying higher costs, neither of which is
a preferred option. This is the last thing our agricultural community
needs.
The legislation I am introducing today addresses both of these
concerns. This legislation would add definitional language for ``gross
receipts'' clarifying that gross receipts means premiums, plus gross
investment income. In addition, the proposal simply increases the
Income Election Limit from $1.2 million to $1.971 million, and indexes
it annually for inflation.
According to the National Association of Mutual Insurance Companies,
this legislation will help hundreds of small P&C insurance companies
nationwide. Under this proposed legislation, at least 56 of the 82
small insurance companies in my State will be covered, thereby enabling
them to continue providing critical insurance coverage to small
businesses across Missouri.
With this legislation, we have an opportunity to infuse some fairness
into our tax code and at the same time help the thousands of farmers,
homeowners, and entrepreneurs covered by small P&C insurers in this
country. I ask my colleagues to support this legislation, and I look
forward to working with the Finance Committee to see it enacted into
law.
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. 1553
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. CLARIFICATION OF DEFINITION OF GROSS RECEIPTS FOR
PURPOSES OF DETERMINING TAX EXEMPTION OF SMALL
PROPERTY AND CASUALTY INSURANCE COMPANIES.
(a) In General.--Section 501(c)(15) of the Internal Revenue
Code is amended by adding at the end the following:
``(D) For purposes of subparagraph (A), the term `gross
receipts' means the gross amount received during the taxable
year from the items described in section 834(b) and premiums
(including deposits and assessments).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 2. INCREASE IN LIMITATION FOR ALTERNATIVE TAX LIABILITY
FOR SMALL PROPERTY AND CASUALTY INSURANCE
COMPANIES.
(a) In General.--Clause (i) of section 831(b)(2)(A) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(i) the net written premiums (or, if greater, direct
written premiums) for the taxable year do not exceed
$1,971,000, and''.
(b) Inflation Adjustment.--Paragraph (2) of section 831(b)
of such Code is amended by adding at the end the following
new subparagraph:
``(C) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, the $1,971,000
amount set forth in subparagraph (A) shall be increased by an
amount equal to--
``(i) $1,971,000, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2005' for `calendar year 1992' in subparagraph
(B) thereof. If the amount as adjusted under the preceding
sentence is not a multiple of $1,000, such amount shall be
rounded to the next lowest multiple of $1,000.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2005.
By Ms. CANTWELL (for herself, Ms. Collins, Mr. Bingaman, Mrs. Murray,
Ms. Mikulski, Mr. Kohl, and Mr. Corzine):
S. 1555. A bill to amend the Farm Security and Rural Investment Act
of 2002 to reform funding for the Seniors Farmers' Market Nutrition
Program, and for other purposes; to the Committee on Agriculture,
Nutrition, and Forestry.
Ms. CANTWELL. Mr. President, I am proud to rise today with my
colleagues Senators Collins, Bingaman, Murray, Mikulski, Kohl and
Corzine, to introduce bipartisan legislation enhancing the Seniors
Farmers' Market Nutrition Program. As all of my colleagues
[[Page S9473]]
know, the Seniors Farmers' Market Nutrition Program (SFMNP) was created
through the Farm Security and Rural Investment Act of 2002 (P.L. 107-
171). It is a program that provides grants to States, territories, and
Native American tribal governments to provide coupons to low-income
seniors to purchase fresh, locally grown fruits, vegetables, and herbs
from farmers' markets, roadside stands, and community supported
agricultural programs. The purpose of the program is to make healthy
foods available to low-income seniors while simultaneously assisting
domestic farmers.
Scientific research increasingly confirms that what we eat may have a
significant impact on our health, quality of life, and longevity. In
the United States, high intakes of fat and saturated fat, and low
intakes of calcium and fiber-containing foods such as whole grains,
vegetables and fruits are associated with several chronic health
conditions that can impair the quality of life and hasten mortality.
According to the United States Department of Agriculture, research
continues to find strong links between eating lots of fruits and
vegetables and preventing chronic diseases such as cancer, heart
disease, and stroke. Eating more fruits and vegetables may also play a
role in preventing other diseases such as high blood pressure and
osteoporosis, to name just two.
Two studies, one here in the U.S. and the other in the Netherlands,
found eating a diet rich in vitamins E and C may help to lower your
risk of Alzheimer's disease. Both found that eating foods high in
vitamin E may reduce your risk of Alzheimer's, a degenerative brain
disease. The U.S. study found that people with the highest vitamin E
intake in their diet had a 70 percent lower frequency of Alzheimer's
than those with the lowest amounts of vitamin E in their diet.
Vitamin A, which is found in many different fruits and vegetables, is
very important to the health of your eyes. Other nutrients in produce,
such as carotenoids, also play a role in maintaining healthy eyes and
good vision. An example of a carotenoid is lutein. Lutein is found in
dark green leafy vegetables like spinach.
While the health benefits of eating fruits and vegetables may seem
obvious, only 27 percent of women and 19 percent of men eat the
recommended 5 servings of fruits and vegetables every day.
The U.S. Department of Agriculture (USDA) Food and Nutrition Service
administers the Seniors Farmers' Market Nutrition Program; and in
fiscal year 2003, approximately 800,000 people received SFMNP coupons
throughout the country. The food made available for sale came from an
estimated 14,000 farmers at more than 2,000 farmers' markets as well as
nearly 1,800 roadside stands and 200 community supported agricultural
programs. In fiscal year 2005, 46 States, U.S. Territories, and
federally recognized Indian tribal governments will operate the SFMNP.
Close to 900,000 eligible seniors are expected to receive benefits that
can be used at over 4,000 markets, roadside stands and community
supported agricultural programs during the 2005 harvest season.
In Washington State, the Seniors Farmers' Market Nutrition Program
has been incredibly successful in ensuring access to healthy foods for
seniors, as well as bolstering the state's farmers and our farmers'
markets. In fact, according to the Washington State University
Nutrition Education program, in Washington State, the Senior Farmers'
Market Nutrition Program reaches about 8,000 lower-income older adults
each year in 35 of my State's 39 counties. In 2003, 472 farms, 49
farmers markets, four roadside stands and one community supported
agriculture program participated in the SFMNP and the participating
seniors in Washington state purchased approximately 90 tons of fresh
produce while learning about the role of nutrition in their health in
preventing chronic disease.
The bill that I am introducing today aims to better address the
growing demand and need for the Seniors Farmers' Market Nutrition
Program in four ways.
First, the bill would increase funding from $15 million to $25
million for the program in fiscal year 2005 and continue to expand the
program by $25 million each year, until the program's expiration in
2007, meaning that the SFMNP would be funded at not less than $50
million in fiscal year 2006, and at not less than $75 million in 2007.
Second, the bill specifies that funds made available through this act
will remain available to the program until exhausted. As such, any
remaining funds from one fiscal year will roll over into the subsequent
fiscal year budget for the SFMNP.
Third, provisions in the bill support administrative costs. Not more
than ten percent of available funds in a fiscal year can be used to
cover the operating expenses of the SFMNP.
Finally, the bill grants authority to the Secretary of Agriculture to
expand the list of foods eligible for purchase to include minimally
processed foods, such as honey, as deemed appropriate.
We should not forget, too, that an obvious, positive outgrowth of the
program is the inherent ability of the SFMNP program to strengthen
local economies and communities while at the same time works to
preserve farmland and open spaces. I sincerely appreciate that the
Washington Association of Area Agencies on Aging, as well as the
Washington State Farmers Market Association, are supporting this
legislation.
The legislation I am introducing today will go a long way in
expanding the amount of funding available for the Senior Farmers'
Market Nutrition Program. We all know that value and importance that
individuals of all ages eat their requisite servings of vegetables and
fruit each day. Such foods are high in fiber and lower the risk of
chronic diseases such as heart disease and type 2 diabetes, in addition
to colon and rectal cancer, high blood pressure, and obesity. However,
food costs can be a significant barrier to developing and maintaining a
healthy lifestyle. In establishing the Senior Farmers' Market Nutrition
Program in 2002, Congress recognized that it is important to provide a
means for low-income seniors to have access to fruits and vegetables.
The legislation I introduce today will further our nation's commitment
to ensuring the health of our nation's seniors, and I urge my
colleagues to join me in cosponsoring 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. 1555
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SENIORS FARMERS' MARKET NUTRITION PROGRAM.
(a) Funding.--Section 4402 of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 3007) is amended by striking
subsection (a) and inserting the following:
``(a) Establishment.--The Secretary of Agriculture shall
use funds available to the Commodity Credit Corporation to
carry out and expand a seniors farmers' market nutrition
program in the following amounts, to remain available until
expended:
``(1) For fiscal year 2005, not less than $25,000,000.
``(2) For fiscal year 2006, not less than $50,000,000.
``(3) For fiscal year 2007, not less than $75,000,000.''.
(b) Purposes.--Section 4402(b)(1) of that Act (7 U.S.C.
3007(b)(1)) is amended--
(1) by striking ``unprepared'' and inserting ``minimally
processed''; and
(2) by striking ``and herbs'' and inserting ``herbs, and
other locally-produced farm products, as the Secretary
considers appropriate''.
(c) Administrative Costs; Unexpended Funds.--Section 4402
of the Farm Security and Rural Investment Act of 2002 (7
U.S.C. 3007) is amended by adding at the end the following:
``(d) Administrative Costs.--Not more than 10 percent of
the funds made available for a fiscal year under subsection
(a) may be used to pay the administrative costs of carrying
out this section.''.
______
By Mr. WYDEN:
S. 1556. A bill to amend the Specialty Crops Competitiveness Act of
2004 to increase the authorization of appropriations for grants to
support the competitiveness of specialty crops, to amend the
Agricultural Risk Protection Act of 2000 to improve the program of
value-added agricultural product market development grants by routing
funds through State departments of agriculture, to amend the Federal
Crop Insurance Act to require a nationwide expansion of the adjusted
gross revenue insurance program, and
[[Page S9474]]
for other purposes; to the Committee on Agriculture, Nutrition, and
Forestry.
Mr. WYDEN. Mr. President, today I introduce legislation that will
safeguard and promote specialty crops and value-added agriculture in
Oregon and in the United States. The great farmers and ranchers of
Oregon produce over 200 commodities. This bill intends to improve their
marketing opportunities, help Oregon farmers and processors get better
prices for their products, and help Oregon farmers and processors
compete in an increasingly global market. As it will help Oregon
farmers so it will help specialty crop farmers from New York to
Florida, Wisconsin to California.
I introduce this bill as my colleague from Oregon, Congresswoman
Hooley, introduces the same bill in the House of Representatives.
In the increasingly technological world of microchips, products like
potato chips and other agricultural commodities still remain a large
part of Oregon's economy. In fact, agriculture is Oregon's second
largest traded sector and Oregon's second largest export, behind the
electronics industry. Oregon agriculture creates more than $8 billion
of direct and indirect economic activity, in both urban and rural areas
in the state.
At the center of this bill is the expansion of a specialty crop grant
program, authorized by Congress in 2001, of which Oregon producers have
already made use. Oregon received about $3.2 million that was used for
over 50 projects involving product development, marketing, research,
and export promotion. The Oregon Department of Agriculture estimates
that over 3000 producers benefited from these projects. They also
estimate that enhanced sales resulting from these projects reached $20
million--about six times what was invested.
The problem with this pilot program was the grants were only
available once. Last year Congress passed legislation that reinstated
these specialty crop grants but at funding level that would provide
only around $500,000 to Oregon. This legislation raises the authorized
level to $500 million and makes the grant program permanent. Under this
expansion Oregon has the potential to receive $5 million a year in
specialty crop grants.
The bill I am introducing today also improves USDA's value added
grant program. Right now this program is run by bureaucrats in
Washington, DC who have probably never been to Oregon and probably
couldn't name the top Oregon specialty crops. My office has heard
numerous complaints that this program is unwieldy, bureaucratic, and
difficult to navigate. Last year every applicant from Oregon was
disqualified on a technicality. This bill would make one simple but
very important change: instead of having the Federal Government
distribute the money, each State would get a share of the money to hand
out to their chosen priorities.
Between these two grant programs each State in the union should have
plenty of money to implement agricultural promotion strategies that
match the needs of its individual growers, processors, and citizens.
This bill also authorizes funds for farmers and processors to become
``certified.'' Certification comes in many forms like ``Good
Agricultural Practices,'' ``Good Handling Practices,'' or ``Organic.''
Often getting certified is necessary before farmers or processors can
effectively market products whether in local grocery stores or to
foreign countries. Certified products often fetch premium prices. To
encourage farmers to get these certifications and increase their market
share this legislation would have the USDA reimburse half the cost of
the certifications.
Last, this legislation improves opportunities for specialty crop
farmers to get crop insurance, increase loan availability, provide
additional funding for export promotion, and make sure that American
trade policy takes specialty crops into account.
I know that Oregonians doing a great job growing some of the best
quality crops in the world. There are a lot of challenges facing
agriculture: cheap imports, low commodity prices, taxation, labor, and
dozens of others. This bill won't solve everything, but I think it will
make an important contribution to improving Oregon agriculture by
making it more competitive on a global level and helping farmers get a
decent price for what they produce. I look forward to working with my
colleagues to assure the enactment of 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. 1556
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 ``Specialty Crop and Value-
Added Agriculture Promotion Act''.
SEC. 2. DEFINITION OF SPECIALTY CROP.
Section 3(1) of the Specialty Crops Competitiveness Act of
2004 (Public 108-465; 7 U.S.C. 1621 note) is amended--
(1) by inserting ``fish and shellfish whether farm-raised
or harvested in the wild,'' after ``dried fruits,''; and
(2) by adding at the end the following: ``The term includes
specialty crops that are organically produced (as defined in
section 2103 of the Organic Foods Production Act of 1990 (7
U.S.C. 6502).''.
SEC. 3. PERMANENT AUTHORIZATION OF APPROPRIATIONS FOR STATE
SPECIALTY CROP BLOCK GRANTS.
Section 101 of the Specialty Crops Competitiveness Act of
2004 (Public 108-465; 7 U.S.C. 1621 note) is amended by
striking subsection (i) and inserting the following:
``(i) Authorization of Appropriations.--For fiscal year
2006 and every fiscal year thereafter, there is authorized to
be appropriated to the Secretary of Agriculture $500,000,000
to make grants under this section.''.
SEC. 4. BLOCK GRANTS TO STATES FOR VALUE-ADDED AGRICULTURAL
PRODUCT MARKET DEVELOPMENT.
(a) In General.--Section 231 of the Agricultural Risk
Protection Act of 2000 (Public Law 106-224; 7 U.S.C. 1621
note) is amended by striking subsection (b) and inserting the
following:
``(b) Grant Program.--
``(1) State defined.--In this subsection, the term `State'
means each of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States Virgin
Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
``(2) Block grants to states.--
``(A) Amount of grant to state.--From the amount made
available under paragraph (7) for a fiscal year, the
Secretary shall provide to each State, subject to
subparagraph (B), a grant in an amount equal to the product
obtained by multiplying the amount made available for that
fiscal year by the result obtained by dividing--
``(i) the total value of the agricultural commodities and
products made in the State during the preceding fiscal year;
by
``(ii) the total value of the agricultural commodities and
products made in all of the States during the preceding
fiscal year.
``(B) Limitation.--The total grant provided to a State for
a fiscal year under subparagraph (A) shall not exceed
$3,000,000.
``(3) Use of grant funds by states.--A State shall use the
grant funds to award competitive grants--
``(A) to an eligible independent producer (as determined by
the State) of a value-added agricultural product to assist
the producer--
``(i) in developing a business plan for viable marketing
opportunities for the value-added agricultural product; or
``(ii) in developing strategies that are intended to create
marketing opportunities for the producer; and
``(B) to an eligible agricultural producer group, farmer or
rancher cooperative, or majority-controlled producer-based
business venture (as determined by the State) to assist the
entity--
``(i) in developing a business plan for viable marketing
opportunities in emerging markets for a value-added
agricultural product; or
``(ii) in developing strategies that are intended to create
marketing opportunities in emerging markets for the value-
added agricultural product.
``(4) Amount of competitive grant .--
``(A) In general.--The total amount provided under
paragraph (3) to a grant recipient shall not exceed $500,000.
``(B) Majority-controlled producer-based business
ventures.--The amount of grants provided by a State to
majority-controlled producer-based business ventures under
paragraph (3)(B) for a fiscal year may not exceed 10 percent
of the amount of funds that are used by the State to make
grants for the fiscal year under paragraph (3).
``(5) Grantee strategies.--A recipient of a grant under
paragraph (3) shall use the grant funds--
``(A) to develop a business plan or perform a feasibility
study to establish a viable marketing opportunity for a
value-added agricultural product; or
``(B) to provide capital to establish alliances or business
ventures that allow the producer of the value-added
agricultural product to better compete in domestic or
international markets.
[[Page S9475]]
``(6) Reports.--Not later than 90 days after the end of a
fiscal year for which funds are provided to a State under
paragraph (2), the State shall submit to the Committee on
Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate a
report describing how the funds were used.
``(7) Funding.--On October 1 of each fiscal year, of the
funds of the Commodity Credit Corporation, the Secretary
shall make available to carry out this subsection
$100,000,000, to remain available until expended.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 2005.
SEC. 5. REIMBURSEMENT OF CERTIFICATION COSTS.
(a) Incentive Program.--
(1) In general.--The Secretary of Agriculture shall
establish an incentive program to encourage the independent
third-party certification of agricultural producers and
processors for product qualities, production practices, or
other product or process attributes that increase
marketability or value of an agricultural commodity.
(2) Inclusions.--The Secretary shall include independent
third-party certification systems, including programs such as
Good Agricultural Practices, Good Handling Practices, and
Good Manufacturing Practices programs, that the Secretary
finds will provide 1 or more measurable social,
environmental, or marketing advantages.
(b) Standards.--The Secretary shall set standards regarding
the types of certifications, and the types of certification-
related expenses, that will qualify for reimbursement under
the program.
(c) Limitation on Amount of Reimbursement.--An agricultural
producer or processor may not receive reimbursement for more
than 50 percent of the qualified expenses incurred by the
producer or processor related to accepted certifications.
SEC. 6. NATIONWIDE EXPANSION OF RISK MANAGEMENT AGENCY
ADJUSTED GROSS REVENUE INSURANCE PROGRAM.
(a) Expansion.--Section 523(e) of the Federal Crop
Insurance Act (7 U.S.C. 1523(e)) is amended by adding at the
end the following:
``(3) Permanent nationwide operation.--
``(A) In general.--Effective beginning with the 2006
reinsurance year, the Corporation shall carry out the
adjusted gross revenue insurance pilot program as a permanent
program under this title and may expand the program to cover
any county in which crops are produced.
``(B) Temporary premium subsidies.--To facilitate the
expansion of the program nationwide, the Corporation may
grant temporary premium subsidies for the purchase of a
policy under the program to producers whose farm operations
are located in a county that has a high level of specialty
crop production and has not had a high-level of participation
in the purchase of crop insurance coverage.''.
(b) Comptroller General Study.--The Comptroller General
shall conduct a study of the Federal crop insurance program--
(1) to determine how well the program under section
523(e)(3) of the Federal Crop Insurance Act (as added by
subsection (a)) serves specialty crop producers; and
(2) to recommend such changes as the Comptroller General
considers appropriate to improve the program for specialty
crop producers.
SEC. 7. EXPANSION OF FRUIT AND VEGETABLE PROGRAM IN SCHOOL
LUNCH PROGRAMS.
The Richard B. Russell National School Lunch Act is
amended--
(1) in section 18 (42 U.S.C. 1769), by striking subsection
(g); and
(2) by inserting after section 18 the following:
``SEC. 19. FRUIT AND VEGETABLE PROGRAM.
``(a) In General.--The Secretary shall make available in
not more than 100 schools in each State, and in elementary
and secondary schools on 1 Indian reservation, free fresh and
dried fruits and vegetables and frozen berries to be served
to school children throughout the school day in 1 or more
areas designated by the school.
``(b) Priority in Allocation.--In selecting States to
participate in the program, the Secretary shall give priority
to States that produce large quantities of specialty crops.
``(c) Publicity.--A school participating in the program
authorized by this section shall publicize in the school the
availability of free fruits and vegetables under the program.
``(d) Authorization of Appropriations.--There is authorized
to be appropriated for to carry out this section $20,000,000
for each of fiscal years 2006 and 2007.''.
SEC. 8. INCREASE IN LIMIT ON DIRECT OPERATING LOANS;
INDEXATION TO INFLATION.
Section 313 of the Consolidated Farm and Rural Development
Act (7 U.S.C. 1943) is amended--
(1) in subsection (a)(1), by striking ``$200,000'' and
inserting ``$500,000 (increased, beginning with fiscal year
2007, by the inflation percentage applicable to the fiscal
year in which the loan is made)''; and
(2) in subsection (b), by striking paragraph (2) and
inserting the following:
``(2) the average of such index (as so defined) for the 12-
month period ending on--
``(A) in the case of a loan other than a loan guaranteed by
the Secretary, August 31, 2005; or
``(B) in the case of a loan guaranteed by the Secretary,
August 31, 1996.''.
SEC. 9. TRADE OF SPECIALTY CROPS.
(a) Assistant USTR for Specialty Crops.--Section 141(c) of
the Trade Act of 1974 (19 U.S.C. 2171(c)) is amended by
adding at the end the following:
``(6) Assistant ustr for specialty crops.--
``(A) Establishment.--There is established in the Office
the position of Assistant United States Trade Representative
for Specialty Crops.
``(B) Appointment.--The Assistant United States Trade
Representative for Specialty Crops shall be appointed by the
United States Trade Representative.
``(C) Primary function.--The primary function of the
Assistant United States Trade Representative for Specialty
Crops shall be--
``(i) to promote the trade interests of specialty crop
businesses;
``(ii) to remove foreign trade barriers that impede
specialty crop businesses; and
``(iii) to enforce existing trade agreements beneficial to
specialty crop businesses.
``(D) Pay.--The Assistant United States Trade
Representative for Specialty Crops shall be paid at the level
of a member of the Senior Executive Service with equivalent
time and service.''.
(b) Study of Uruguay Round Table Agreement Benefits.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the benefits of the agreements
approved by Congress under section 101(a)(1) of the Uruguay
Round Agreements Act (19 U.S.C. 3511(a)(1)) to specialty crop
businesses.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report describing the results of the study
conducted under paragraph (1).
(c) Foreign Market Access Strategy.--Not later than 1 year
after the date of the enactment of this Act, the Secretary of
Agriculture shall develop and implement a foreign market
access strategy to increase exports of specialty crops to
foreign markets.
SEC. 10. INCREASED AUTHORIZATION FOR TECHNICAL ASSISTANCE FOR
SPECIALTY CROPS.
Section 3205(d) of the Farm Security and Rural Investment
Act of 2002 (7 U.S.C. 5680(d)) is amended by striking
``$2,000,000'' and inserting ``$10,000,000''.
______
By Ms. COLLINS (for herself and Mr. Lieberman):
S. 1558. A bill to amend the Ethics in Government Act of 1978 to
protect family members of filers from disclosing sensitive information
in a public filing and extend the public filing requirement for 5
years; to the Committee on Homeland Security and Governmental Affairs.
Ms. COLLINS. Mr. President, I rise today to introduce legislation
that would preserve an important means of protecting the safety of
those who work in the Federal judiciary system.
This legislation, which I am pleased to sponsor with my distinguished
colleague, Senator Lieberman, pertains to information on Federal
financial disclosure forms.
This legislation would amend the Ethics in Government Act to extend
for five years the authority to redact financial disclosure statements
filed by judges, and other officers and employees of the Federal
judiciary. This redaction occurs after a finding is made by the
Judicial Conference, in consultation with the United States Marshals
Service, that revealing personal and sensitive information could
endanger the filer. In such cases, this legislation would allow
redactions of information that could put the filer or his or her family
at risk.
In 1988, Congress recognized the potential for threats against
individual judges. As a result, Congress authorized the judicial branch
to redact, when circumstances require, certain information from
individual financial disclosure reports before they are released to the
public. The redaction provision was set to expire at the end of 2001,
but Congress extended the redaction authority for an additional four
years. The current authority expires at the end of this year.
The five-year extension in this legislation will help Congress ensure
that the Judicial Conference carries out the authority in a manner that
achieves the appropriate balance between safety measures and public
disclosure. Given recent incidents of violence against judges and their
families, the inclusion of threats to the filer's family is necessary
to provide security and peace of mind.
The record shows that this redaction authority has been used
sparingly and wisely. In its report to the Committee on Homeland
Security and Governmental Affairs, the Judicial Conference reported
that, of the 3,942 Federal judiciary employees required to file
financial disclosure reports in 2004, only 177
[[Page S9476]]
reports were partially redacted before release.
For 40 judges, the approved redaction requests were based on specific
threats such as high-threat trials, ongoing protective investigations,
identify theft, and continuing threats from criminal defendants and
disgruntled civil litigants. For 137 judges, the approved redaction
requests were based on general threats and the disclosure of a family
member's unsecured place of work, the judge's regular presence at an
unsecured location, or information that would reveal the residence of
the judge or members of the judge's family.
In response to a request by our Committee, the Government
Accountability Office reviewed redaction requests from 1999 through
2002. GAO found that less than 10 percent of annual judicial filers
requested any type of redaction.
In each instance where a report was redacted in its entirety, the
determination was made that the judge who filed the report was subject
to a specific, active security threat. Redactions of information
identifying assets, gifts, reimbursements or creditor listings were
allowed in only a very limited number of cases, and then only until the
specifically identified threat ceased. According to the Judicial
Conference, the most frequent redaction requests now relate to
information that would reveal where a judge or a member of the judge's
family can regularly be found.
A fair and impartial judiciary requires a safe and secure
environment. This legislation will help ensure the judicial branch has
procedures in place to protect personal information while ensuring the
public retains its right to access to the annual disclosure reports. I
look forward to working with my colleagues on this important
legislation.
______
By Mr. SANTORUM:
S. 1560. A bill to establish a Congressional Commission on Expanding
Social Service Delivery Options; to the Committee on Health, Education,
Labor, and Pensions.
Mr. SANTORUM. Mr. President, I rise to introduce a bill that would
establish a Congressional Commission to explore the expansion of social
services delivery options.
The bipartisan and bicameral Congressional Commission would undertake
a thoughtful review of existing federal social service programs and
make recommendations for program areas that would be appropriate for
beneficiary-selected or beneficiary-directed options. The goal is to
expand consumer choice and to minimize Constitutional concerns while
partnering with faith-based and community providers. The importance of
this commission is highlighted by its inclusion in the Senate's anti-
poverty agenda.
Expanding options for social services is essential to help those in
need. I have advocated similar proposals in the past during my time in
the United States Senate as it relates to the Corporation for National
and Community Service. In 2001, I introduced the AmeriCorps Reform and
Charitable Expansion Act. The goal of this legislation was to
dramatically increase the scope of service opportunities and charitable
locations that would be eligible for voucher recipients and to focus
efforts more on assisting low-income communities.
A current example of the success of this type of program is Section 8
Housing vouchers. The largest federal program designed to provide
affordable housing to low-income families is the Section 8 Housing
Choice Voucher program serving over 2 million households. Low-income
families use Section 8 vouchers tenant-based subsidies in the private
market to lower their rental costs to 30 percent of their incomes. As
you know, the modern program began in the early 1980s and has grown to
replace public housing as the primary tool for subsidizing the housing
costs of low-income families. This approach, has opened up more
communities and housing options for low-income families.
Since the 1996 welfare reauthorization, I have worked to ensure that
faith-based and community organizations are full partners in social
service delivery. Our nation needs more, not less, involvement from
faith and community organizations. Faith-based organizations are many
times the best-equipped institutions in their community to improve the
lives of those in need, but have not always been able to receive any
help from the government. This bill provides an opportunity to level
the playing field for these providers by determining where we can
engage the community and allow beneficiaries to be full participants in
choosing their provider. The current discrimination against faith-based
programs at the federal level prevents our communities from using all
our resources to improve and even save lives. And for those are most in
need, we need to use every resource we have.
Expanding social service delivery options should be a simple matter
of common sense. The formula is simple: the more opportunity
organizations have to deliver aid, the more options people have to get
services, the more people we can help. For this reason, I encourage my
colleagues to support the creation of this commission.
______
By Mr. CORZINE (for himself, Mr. Lautenberg, and Ms. Landrieu):
S. 1561. A bill to amend title 36, United States Code, to grant a
Federal charter to the Irish American Cultural Institute; to the
Committee on the Judiciary.
Mr. CORZINE. Mr. President, today I am proud to introduce a bill,
along with Senators Lautenberg and Landrieu, to grant a Federal Charter
to the Irish American Cultural Institute, an organization that promotes
appreciation and recognition of the important contributions Irish-
Americans have played throughout the history of the United States. A
longstanding goal of the Irish American Cultural Institute been to
establish a museum of Irish-American history and culture in Washington,
DC, and I am pleased to help lay the foundation for achieving that
goal.
The Irish American Cultural Institute is a national organization
founded in 1962, with local chapters in 17 States, including New
Jersey. The Institute has spent the last 40 years fighting to promote,
preserve and educate about Irish and Irish-American culture. Those
involved with the Institute do this, in part, by fostering strong
cultural and educational ties between the United States and Ireland--
sending American high school students to Ireland, and bringing Irish
scholars, musicians, craftspeople, actors, and artists to the Untied
States. They also fund academic research projects that raise awareness
about Irish-American history, and provide fellowships for American
professors to spend a year as a visiting scholar at the National
University of Ireland. In short, the Irish American Cultural Institute
serves as an important educational, informational, and financial
resource for key initiatives important to the Irish and the Irish-
American community in the United States.
Irish-Americans comprise more than 17 percent of the population of
the United States, and have made enormous contributions to our Nation
in countless ways. In my home State, more than 1.3 million New Jersey
residents trace their roots back to Ireland. A Federal Charter would be
an important step in the Irish American Cultural Institute's quest to
promote activities that recognize and celebrate the heritage of Irish-
Americans. I ask my colleagues to join me in supporting this
legislation, and 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. 1561
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. CHARTER FOR IRISH AMERICAN CULTURAL INSTITUTE.
Part B of subtitle II of title 36, United States Code, is
amended--
(1) by redesignating chapter 1001 as chapter 1003;
(2) by redesignating sections 100101 through 100110, and
the items relating thereto in the table of sections, as
sections 100301 through 100310, respectively; and
(3) by inserting after chapter 901 the following new
chapter:
``CHAPTER 1001--IRISH AMERICAN CULTURAL INSTITUTE
``Sec.
``100101. Organization.
``100102. Purposes.
``100103. Membership.
``100104. Governing body.
``100105. Powers.
``100106. Exclusive right to name, seals, emblems, and badges.
[[Page S9477]]
``100107. Restrictions.
``100108. Duty to maintain tax-exempt status.
``100109. Principal office.
``100110. Records and inspection.
``100111. Service of process.
``100112. Liability for acts of officers and agents.
``100113. Annual report.
``SECTION 100101. ORGANIZATION.
``(a) Federal Charter.--The Irish American Cultural
Institute (in this chapter, the `corporation'), incorporated
in New Jersey, is a federally chartered corporation.
``(b) Expiration of Charter.--If the corporation does not
comply with any provision of this chapter, the charter
granted by this chapter expires.
``SECTION 100102. PURPOSES.
``The purposes of the corporation are as provided in the
articles of incorporation and include--
``(1) establishing the Museum of Irish America in
Washington, DC, as the center of Irish American thought,
dialogue, debate, and reflection;
``(2) recognizing and recording a living memorial to the
contributions of Irish-born and Irish Americans to the
development of the United States;
``(3) providing a focal point for all Irish Americans, who
make up 17 percent of the United States population, according
to the 2000 census;
``(4) exploring past, current, and future events in Ireland
and the United States, as they relate to Irish Americans and
society as a whole;
``(5) documenting the tremendous contributions of Irish
immigrants to the United States in the areas of architecture,
military, politics, religion, labor, sports, literature, and
art;
``(6) providing ongoing studies to ensure that the
experiences of the past will benefit the future of both
Ireland and the United States; and
``(7) establishing an Irish American Studies Program for
students from both Ireland and the United States.
``SECTION 100103. MEMBERSHIP.
``Eligibility for membership in the corporation and the
rights and privileges of membership are as provided the
bylaws.
``SECTION 100104. GOVERNING BODY.
``(a) Board of Directors.--The board of directors and the
responsibilities of the board are as provided in the articles
of incorporation.
``(b) Officers.--The officers and the election of officers
are as provided in the articles of incorporation.
``SECTION 100105. POWERS.
``The corporation shall have only the powers provided in
its bylaws and articles of incorporation filed in each State
in which it is incorporated.
``SECTION 100106. EXCLUSIVE RIGHT TO NAME, SEALS, EMBLEMS,
AND BADGES.
``The corporation has the exclusive right to use the name
`Irish American Cultural Institute' and any seals, emblems,
and badges relating thereto that the corporation adopts.
``SECTION 100107. RESTRICTIONS.
``(a) Stock and Dividends.--The corporation may not issue
stock or declare or pay a dividend.
``(b) Political Activities.--The corporation or a director,
or officer as such may not contribute to, support, or
participate in any political activity or in any manner
attempt to influence legislation.
``(c) Distribution of Income or Assets.--The income or
assets of the corporation may not inure to the benefit of, or
be distributed to, a director, officer, or member during the
life of the charter granted by this chapter. This subsection
does not prevent the payment of reasonable compensation to an
officer or member in an amount approved by the board of
directors.
``(d) Loans.--The corporation may not make any loan to a
director, officer, or employee.
``(e) Claim of Governmental Approval or Authorization.--The
corporation may not claim congressional approval or the
authority of the United States Government for any of its
activities.
``SECTION 100108. DUTY TO MAINTAIN TAX-EXEMPT STATUS.
``The corporation shall maintain its status as an
organization exempt from taxation under the Internal Revenue
Code of 1986 (26 U.S.C. 1 et seq.).
``SECTION 100109. PRINCIPAL OFFICE.
``The principal office of the corporation shall be in
Morristown, New Jersey, or another place decided by the board
of directors.
``SECTION 100110. RECORDS AND INSPECTION.
``(a) Records.--The corporation shall keep--
``(1) correct and complete books and records of account;
``(2) minutes of the proceedings of its members, board of
directors, and committees having any of the authority of its
board of directors; and
``(3) at its principal office, a record of the names and
addresses of its members entitled to vote.
``(b) Inspection.--A member entitled to vote, or an agent
or attorney of the member, may inspect the records of the
corporation for any proper purpose, at any reasonable time.
``SECTION 100111. SERVICE OF PROCESS.
``The corporation shall comply with the law on service of
process of each State in which it is incorporated and each
State in which it carries on activities.
``SECTION 100112. LIABILITY FOR ACTS OF OFFICERS AND AGENTS.
``The corporation is liable for the acts of its officers
and agents acting within the scope of their authority.
``SECTION 100113. ANNUAL REPORT.
``The corporation shall submit an annual report to Congress
on the activities of the corporation during the prior fiscal
year. The report shall be submitted at the same time as the
report of the audit required by section 10101 of this title.
The report shall not be printed as a public document.''.
SEC. 2. CLERICAL AMENDMENTS.
The table of chapters at the beginning of subtitle II of
title 36, United States Code, is amended--
(1) in the item relating to chapter 1001, by striking
``1001'' and inserting ``1003'' and by striking ``100101''
and inserting ``100301''; and
(2) by inserting after the item relating to chapter 901 the
following new item:
`` ``1001. Irish American Cultural Institute..........................
100101''.''.''.
______
By Mr. ENZI (for himself, Mr. Johnson, Mr. Allard, and Mr.
Hagel):
S. 1562. A bill to provide for the merger of the bank and savings
association deposit insurance funds, to modernize and improve the
safety and fairness of the Federal deposit insurance system, and for
other purposes; to the Committee on Banking, Housing, and Urban
Affairs.
Mr. ENZI. Mr. President, today I rise to introduce the Safe and Fair
Deposit Insurance Act of 2005. As many of us in this chamber know,
reforming the operations of the Federal Deposit Insurance Corporation
has been an important but unfinished matter before the United States
Senate for many years. Today, we will take a step closer to a solution
by introducing this Act.
Wyoming is a rural State with small banks and lenders. Many people in
Wyoming have limited choices when they need to safely deposit their
hard-earned money. They usually depend on their local bank or credit
union. These financial institutions in turn depend on deposit insurance
to make sure that this money will be available in the case of a crisis.
This is a relationship based on trust. Customers trust their bank, and
banks trust their insurance.
This relationship is even more important in places like Gillette,
Wyoming. As Mayor of Gillette, I saw many coal miners retire with
considerable pensions that reflected years of hard work in the mines
around Gillette. However, these miners received their pensions as a
lump sum. Their retirement accounts are often much higher than the
maximum insurance levels under current law. In fact, more and more
retirement accounts are reaching this upper limit, not just in Wyoming.
Workers need a safe place to save their money and build retirement
security. That place should be in a local financial institution that
invests in its community and economy.
The current FDIC system is in desperate need of improvement. Over the
past twenty years, deposit insurance has been eroded by inflation and
growing deposits. As newer financial institutions have sprung up, they
have enjoyed this insurance without paying any premiums into the
system. As time passes, current FDIC coverage continues to weaken, and
so does the Agency's ability to respond to a deposit crisis, should one
arise. That is why it is so important to reform the system now, before
it is too late.
This bill will make changes to the deposit insurance system that will
make it more flexible and quicker to adapt to the unexpected. It will
apply an index that will protect coverage levels against future
inflation, and raise retirement coverage to protect earnings made over
a lifetime of hard work. It will also make premium charges fair by
recognizing those institutions who have paid into the system and those
who have not. Finally, it will merge the two primary deposit insurance
funds. This consolidation will make the system stronger and prevent
costly premium charges that will likely be assessed if the system is
not reformed.
I would like to thank Senator Johnson and Chairman Shelby for their
cooperation and hard work on this bill. I urge my colleagues to support
this bill and look forward to its passage with all deliberate speed.
______
By Mr. DeWINE (for himself and Mrs. Lincoln):
S. 1563. A bill to amend title XIX of the Social Security Act to
protect and
[[Page S9478]]
strengthen the safety net of children's public health coverage by
extending the enhanced Federal matching rate under the State children's
health insurance program to children covered by Medicaid at State
option and by encouraging innovations in children's enrollment and
retention, to advance quality and performance in children's public
health insurance programs, to provide payments for children's hospitals
to reward quality and performance, and for other purposes; to the
Committee on Finance.
Mr. DeWINE. Mr. President, today I join my friend and colleague from
Arkansas, Senator Lincoln, to introduce a bill called the Advancing
Better Coverage and Care for Children's Health Act or the ABCs for
Children's Health Act. It is an important piece of legislation designed
to help improve the access and quality of children's health services
around the country,'' including children's hospitals.
Children's Hospitals provide care to hundreds of thousands of
children across our Nation every day. They care for the great majority
of children who are seriously ill. They are the mainstay of the health
care safety net for low-income children.
But, a child who lacks health insurance is still much less likely to
have timely access to the medical care they need. That's not right.
Two-thirds of the more than 9 million uninsured children in the United
States are eligible for Medicaid or SCHIP. They should be enrolled in
public coverage when eligible, and we should streamline the eligibility
process to make it easier, not more difficult.
President Bush said in 2004, ``America's children must also have a
healthy start in life . . . we will lead an aggressive effort to enroll
millions of poor children who are eligible but not signed up for the
government's health insurance programs. We will not allow a lack of
attention or information to stand between these children and the health
care they need.'' The bill we are introducing today would do just that.
Our bill would provide the higher SCHIP federal match to states for
children covered by Medicaid at the State option so that States think
twice before removing children from the Medicaid rolls during State
budget cuts. It also would provide a 90/10 administrative-match to help
states update enrollment systems for children, including technology for
``express lane'' enrollment, the determination of eligibility for
Medicaid and SCHIP when a child applies for another public benefit,
like the school lunch program, and the allowance for enrollment by mail
or phone.
We also need to do more to help strengthen the system of care to
ensure quality and accountability for children's coverage. Our bill
would do this by supporting innovative ideas at children's hospitals.
Quality improvement funding shouldn't just be available to adult
hospitals. Children's hospitals have good ideas, too, and we should
support those good ideas.
Cincinnati Children's Hospital in Ohio is leading the way in
improving care for children with diabetes, cystic fibrosis and other
chronic conditions. The hospital is deeply committed to transforming
health care delivery to improve outcomes for children.
In 2001, they were selected as one of just seven hospitals in the
Pursuing Perfection initiative launched by the Robert Wood Johnson
Foundation, and with this funding from the Foundation, they have made
significant progress. They can document improvements in patient safety,
in the effectiveness of care, in operational efficiency, in timely
access to care, and in more patient-centered care. These are the
reforms we need to pursue for children in Medicaid and for all
children. Our bill would help Cincinnati Children's Hospital and our
other Children's Hospitals speed their journey to better, safer, more
cost-effective care.
A hospital that makes the effort to improve care and outcomes for
children should be compensated for that effort. We need to advance
quality and performance for children in Medicaid, like we are doing for
seniors in Medicare. The development of hospital quality measures,
testing their ability to gauge effective care and rewarding
performance, should apply to all hospitals, including children's
hospitals.
That's why we have worked with the National Association of Children's
Hospitals to introduce a bill that would provide grants to help improve
pediatric quality, so that Children's Hospitals can begin to establish
measures for quality care and share what works--and what doesn't work--
across hospital services for children nationwide.
Our bill would provide for a demonstration program in Medicaid to
evaluate evidenced-based quality and performance measures in children's
health services, with grants for States and/or providers in three
areas: health information technology and evidenced-based outcome
measures, disease management for children with chronic conditions, and
evidenced-based approaches to improving the delivery of hospital care
for children. The bill also would provide for a national Children's
Hospital pay-for-performance demonstration program, rewarding
Children's Hospitals, which provide critical access to services and
voluntarily participate, for reporting and meeting quality and
performance measures.
Evaluating the national measures of quality in Children's Hospitals,
their success in capturing performance, and their applicability to pay-
for-performance across States' varying methods of payments, would gives
States, the Federal Government, and Children's Hospitals an essential
base of information in measuring performance in children's hospital
care. And that is something we vitally need.
I urge my colleagues to support and co-sponsor this bill.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1563
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 ``Advancing Better Coverage
and Care for Children's Health Act of 2005'' or the ``ABCs
for Children's Health Act of 2005''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--COVERING CHILDREN
Sec. 101. Phased-in application of enhanced FMAP for children whose
eligibility is optional under medicaid.
Sec. 102. Enhanced matching rate for the effective enrollment and
retention of children under medicaid.
Sec. 103. Preserving comprehensive benefits appropriate to children's
needs.
TITLE II--ADVANCING QUALITY AND PERFORMANCE: INNOVATIONS IN CARE
Sec. 201. Purpose.
Sec. 202. National quality forum; advancing consensus-based pediatric
quality and performance measures.
Sec. 203. Research grant program; developing new pediatric quality and
performance measures.
Sec. 204. Medicaid demonstration program; evaluating evidence-based
quality and performance measures for children's health
services.
Sec. 205. Funding.
TITLE III--ENSURING ACCESS TO CARE
Sec. 301. Pay for performance for children's critical access hospitals.
Sec. 302. Inclusion of children's hospitals as covered entities for
purposes of limitation of purchased drug price.
TITLE I--COVERING CHILDREN
SEC. 101. PHASED-IN APPLICATION OF ENHANCED FMAP FOR CHILDREN
WHOSE ELIGIBILITY IS OPTIONAL UNDER MEDICAID.
(a) In General.--The first sentence of section 1905 of the
Social Security Act (42 U.S.C. 1396d) is amended--
(1) in subsection (b)--
(A) by striking ``and (4)'' and inserting ``(4)''; and
(B) by inserting before the period the following: ``, and
(5) the Federal medical assistance percentage shall be equal
to the applicable percentage determined under subsection (y)
with respect to medical assistance provided to children who
are eligible for such assistance on the basis of subsection
(a)(10)(A)(ii), (a)(10)(C), (e)(3), or (e)(9) of section
1902, or a waiver under subsection (c) or (e) of section
1915, or who are eligible for such assistance during a
presumptive eligibility period under section 1920A (but only
if the child is not eligible for medical assistance on the
basis of section 1902(a)(10)(A)(i))''; and
(2) by adding at the end the following:
``(y) For purposes of the fifth clause of the first
sentence of subsection (b), the applicable percentage
determined under this subsection is--
``(1) in the case of fiscal year 2006, the enhanced FMAP
determined under section
[[Page S9479]]
2105(b) by substituting `6 percent' for `30 percent' in such
section;
``(2) in the case of fiscal year 2007, the enhanced FMAP
determined under section 2105(b) by substituting `12 percent'
for `30 percent' in such section;
``(3) in the case of fiscal year 2008, the enhanced FMAP
determined under section 2105(b) by substituting `18 percent'
for `30 percent' in such section;
``(4) in the case of fiscal year 2009, the enhanced FMAP
determined under section 2105(b) by substituting `24 percent'
for `30 percent' in such section; and
``(5) in the case of fiscal year 2010 or any fiscal year
thereafter, the enhanced FMAP determined under section
2105(b).''.
(b) Effective Date.--The amendments made by subsection (a)
take effect on October 1, 2005.
SEC. 102. ENHANCED MATCHING RATE FOR THE EFFECTIVE ENROLLMENT
AND RETENTION OF CHILDREN UNDER MEDICAID.
(a) In General.--Section 1903(a)(3) of the Social Security
Act (42 U.S.C. 1396b(a)(3)) is amended--
(1) in subparagraph (E), by striking ``plus'' at the end
and inserting ``and''; and
(2) by adding at the end the following:
``(F) 90 percent of the sums expended during such quarter
which are attributable to the design, development,
implementation, and evaluation of such enrollment systems as
the Secretary determines are likely to provide more efficient
and effective administration of the plan's enrollment and
retention of eligible children, including--
``(i) `express lane' enrollment for children through
procedures to ensure that children's eligibility for medical
assistance is determined and expedited through the use of
technology and shared information with other public benefit
programs, such as the school lunch program under the Richard
B. Russell National School Lunch Act and the food stamp
program under the Food Stamp Act of 1977;
``(ii) a single, simplified application form for medical
assistance under this title and for children's health
assistance under title XXI;
``(iii) procedures which allow for the enrollment of
children by mail or through the Internet;
``(iv) the timely evaluation, assistance, and determination
of presumptive eligibility under section 1920A;
``(v) procedures which allow for passive reenrollment of
children to protect against the loss of coverage among
eligible children; and
``(vi) such other enrollment system changes as the
Secretary determines are likely to provide more efficient and
effective administration of the plan's enrollment and
retention of eligible children; plus''.
(b) Exclusion From Erroneous Excess Payment
Determination.--Section 1903(u)(1)(D) of such Act (42 U.S.C.
1396a(u)(1)(D)) is amended by adding at the end the
following:
``(vi)(I) Notwithstanding clauses (ii) and (iii), and
subject to subclause (II), in determining the amount of
erroneous excess payments, there shall not be included any
erroneous payments made with respect to medical assistance
provided to children who are erroneously enrolled or
erroneously provided with continued enrollment under this
title as a result of the application of enrollment systems
described in subsection (a)(3)(F).
``(II) Subclause (I) shall only apply with respect to
erroneous payments made during the first 5 fiscal years that
begin on or after the date of enactment of this clause.''.
SEC. 103. PRESERVING COMPREHENSIVE BENEFITS APPROPRIATE TO
CHILDREN'S NEEDS.
(a) In General.--Title XIX of the Social Security Act is
amended by inserting after section 1925 the following:
``CLARIFICATION OF AUTHORITY UNDER SECTION 1115
``Sec. 1926. The Secretary may not impose or approve under
the authority of section 1115 an elimination or modification
of the amount, duration, or scope of the services described
in section 1905(a)(4)(B) (relating to early and periodic
screening, diagnostic, and treatment services (as defined in
section 1905(r))) or of the requirements of subparagraphs (A)
through (C) of section 1902(a)(43).''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2),
section 1926 of the Social Security Act, as added by
subsection (a), shall apply to the approval on or after the
date of enactment of this Act of--
(A) a waiver, experimental, pilot, or demonstration project
under section 1115 of the Social Security Act (42 U.S.C.
1315); and
(B) an amendment or extension of such a project.
(2) Exception.--Section 1926 of the Social Security Act, as
so added, shall not apply with respect to any extension of
approval of a waiver, experimental, pilot, or demonstration
project with respect to title XIX of the Social Security Act
that was first approved before 1994 and that provides a
comprehensive and preventive child health program under such
project that includes screening, diagnosis, and treatment of
children who have not attained age 21.
TITLE II--ADVANCING QUALITY AND PERFORMANCE: INNOVATIONS IN CARE
SEC. 201. PURPOSE.
[The purpose of this title is to increase the quality of
the health care furnished to children under the health
insurance programs under titles XIX and XXI of the Social
Security Act].
SEC. 202. NATIONAL QUALITY FORUM; ADVANCING CONSENSUS-BASED
PEDIATRIC QUALITY AND PERFORMANCE MEASURES.
(a) In General.--The Secretary of Health and Human Services
(in this title referred to as the ``Secretary''), acting
through the Director of the Center for Medicaid and State
Operations of the Centers for Medicare & Medicaid Services,
shall enter into agreements with the National Quality Forum
to facilitate the development of consensus-based pediatric
quality and performance measures.
(b) Consultation.--In carrying out agreements under
subsection (a), the Director of the Center for Medicaid and
State Operations shall consult with--
(1) the Agency for Healthcare Research and Quality; and
(2) national pediatric provider groups.
SEC. 203. RESEARCH GRANT PROGRAM; DEVELOPING NEW PEDIATRIC
QUALITY AND PERFORMANCE MEASURES.
(a) In General.--The Secretary, acting through the
Administrator of the Agency for Healthcare Research and
Quality, shall award grants to eligible entities for the
development and evaluation of pediatric quality and
performance measures.
(b) Eligible Entity Defined.--In this section, the term
``eligible entity'' means--
(1) an institution or multiple institutions with
demonstrated expertise and capacity to evaluate pediatric
quality and performance measures;
(2) a National nonprofit association of pediatric academic
medical centers with demonstrated experience in working with
other pediatric provider and accrediting organizations in
developing quality and performance measures for children's
inpatient and outpatient care; and
(3) a collaboration of national pediatric organizations
working to improve quality and performance in pediatric
critical care.
(c) Application.--Each eligible entity desiring a grant
under this section shall submit an application to the
Secretary at such time, in such manner, and accompanied by
such information as the Secretary may require.
SEC. 204. MEDICAID DEMONSTRATION PROGRAM; EVALUATING
EVIDENCE-BASED QUALITY AND PERFORMANCE MEASURES
FOR CHILDREN'S HEALTH SERVICES.
(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Secretary, acting through the
Director of the Center for Medicaid and State Operations of
the Centers for Medicare & Medicaid Services, shall establish
demonstration projects in each of the 3 categories described
in subsection (c) to advance quality and performance in the
delivery of medical assistance provided to children under the
medicaid program established under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(b) Authority.--
(1) In general.--The Secretary is authorized to award
grants to States or providers to conduct such projects.
(2) Use of funds.--Funds provided under a grant awarded
under this section may be used for administrative costs,
including costs associated with the design, data collection,
and evaluation of the demonstration project conducted with
such funds, and other expenditures that are not otherwise
eligible for reimbursement under the medicaid program.
(3) Evidence of organizational commitment required for
award of grants.--A State or provider shall not be eligible
to receive a grant to conduct a demonstration project under
this section unless the State or provider demonstrates a
commitment to the concept of change and transformation in the
delivery of children's health services. Dedication of
financial resources of the State or provider to the project
may be deemed to demonstrate evidence of such a commitment.
(c) Project Categories Described.--The 3 demonstration
project categories described in this subsection are the
following:
(1) Projects that adopt and use health information
technology and evidenced-based outcome measures for pediatric
inpatient and sub-specialty physician care and evaluate the
impact of such technology and measures on the quality,
safety, and costs of such care.
(2) Projects that demonstrate and evaluate care management
for children with chronic conditions to determine the extent
to which such management promotes continuity of care,
stabilization of medical conditions, and functional outcomes,
prevents or minimizes acute exacerbations of chronic
conditions, and reduces adverse health outcomes and avoidable
hospitalizations.
(3) Projects that implement evidenced-based approaches to
improving efficiency, safety, and effectiveness in the
delivery of hospital care for children across hospital
services and evaluate the impact of such changes on the
quality and costs of such care.
(d) Sites.--To the extent practicable, the Secretary shall
use multiple sites in different geographical locations in
conducting each of the 3 demonstration project categories
described in subsection (c).
(e) Uniform Measures, Data, Project Evaluations.--Working
in consultation with
[[Page S9480]]
experts described in subsection (f) and with participating
States or providers, the Secretary shall establish uniform
measures (adjusted for patient acuity), collect data, and
conduct evaluations with respect to the 3 demonstration
project categories described in subsection (c).
(f) Consultation.--In developing and implementing
demonstration projects under this section, the Secretary
shall consult with national pediatric provider organizations,
consumers, and such other entities or individuals with
relevant expertise as the Secretary deems necessary.
(g) Report.--Not later than 6 months after the completion
of all demonstration projects conducted under this section,
the Secretary shall evaluate such projects and submit a
report to Congress that includes the findings of the
evaluation and recommendations with respect to--
(1) expanding the projects to additional sites; and
(2) the broad implementation of identified successful
approaches in advancing quality and performance in the
delivery of medical assistance provided to children under the
medicaid program.
SEC. 205. FUNDING.
In order to carry out the provisions of this title, out of
funds in the Treasury not otherwise appropriated, there are
appropriated to the Secretary--
(1) $25,000,000 for fiscal year 2006;
(2) $30,000,000 for fiscal year 2007; and
(3) $35,000,000 for each of the fiscal years 2008, 2009,
and 2010.
TITLE III--ENSURING ACCESS TO CARE
SEC. 301. PAY FOR PERFORMANCE FOR CHILDREN'S CRITICAL ACCESS
HOSPITALS.
(a) In General.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary''), acting
through the Administrator of the Centers for Medicare &
Medicaid Services (in this section referred to as the
``Administrator''), shall implement a 4-year program to
develop, implement, and evaluate a pay-for-performance
program for eligible children's hospitals providing critical
access to children eligible for medical assistance under the
medicaid program established under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(b) Consultation.--Measures of quality and performance
utilized in the program will be determined by the
Administrator in collaboration with participating eligible
children's hospitals and in consultation with States, the
National Association of Children's Hospitals and Related
Institutions, the Agency for Healthcare Research and Quality,
the National Quality Forum, and such other entities or
individuals with expertise in pediatric quality and
performance measures as the Administrator deems appropriate.
(c) Eligible Children's Hospitals.--For purposes of this
section, an eligible children's hospital is a children's
hospital that, not later than January 1, 2006, has submitted
an application to the Secretary to participate in the program
established under this section and has been certified by the
Secretary as--
(1) meeting the criteria described in subsection (d);
(2) agreeing to report data on quality and performance
measures; and
(3) meeting or exceeding such measures as are established
by the Secretary with respect to the provision of care by the
hospital.
(d) Criteria Described.--In order to be certified as
meeting the criteria described in this subsection, a hospital
shall be a general acute care children's hospital or a
specialty children's hospital as defined under
1886(d)(1)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B)(iii)), or a non-freestanding general acute
care children's hospital which shares a provider number with
another hospital or hospital system that--
(1) has 62 or more total pediatric beds;
(2) has 38 or more total combined pediatric general medical
or surgical and pediatric intensive care beds;
(3) has at least 4 pediatric intensive care beds;
(4) has a pediatric emergency room in the hospital or
access to an emergency room with pediatric services through
the hospital system; and
(5) provides a minimum of 25 percent of its days of care to
patients eligible for medical assistance under the medicaid
program.
(e) Payment Methodology.--
(1) In general.--An eligible children's hospital that
participates in the program established under this section
shall receive supplemental Federal payments for inpatient and
outpatient care (which shall be in addition to any other
payments the hospitals receive for such care under the
medicaid program) for cost reporting periods or portions of
such reporting periods occurring during fiscal years 2007
through 2010 in accordance with the following:
(A) Fiscal years 2007 and 2008.--
(i) In general.--For hospital cost reporting periods or
portions of such reporting periods occurring during fiscal
year 2007 or 2008, hospitals reporting data for quality and
performance measures established under the program and
participating in the development of pay-for-performance
methodology under this section, subject to clause (ii), shall
receive with respect to inpatient or outpatient care that is
determined to meet such measures, a Federal supplemental
payment increase equal to the amount received under the
medicaid program for such care multiplied by the market
basket percentage increase for the year (as defined under
section 1886(b)(3)(B)(iii) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(iii)).
(ii) Limitation.--The total amount of all Federal
supplemental payments made with respect to cost reporting
periods or portions of such periods described in clause (i)
shall not exceed the amounts appropriated under this section
for fiscal years 2007 and 2008.
(B) Fiscal years 2009 and 2010.--
(i) In general.--For cost reporting periods or portions of
such periods occurring during fiscal year 2009 or 2010,
hospitals shall receive supplemental Federal payments
reflecting measures of quality and performance and a pay-for-
performance methodology developed by the Secretary in
consultation with the entities described in subsection (b).
Such methodology shall recognize clinical measures, patient
satisfaction and adoption of information technology.
(ii) Limitation.--The total amount of all Federal
supplemental payments made for cost reporting periods or
portions of such periods described in clause (i) shall not
exceed the amounts appropriated under this section for fiscal
years 2009 and 2010.
(2) State maintenance of effort.--With respect to the
periods for payment of the Federal supplemental payments
established under paragraph (1), in no case shall a State--
(A) pay a participating hospital less for services for
children eligible for medical assistance under the medicaid
program than the hospital was paid with respect to the most
recent cost reporting period ending before the date of
enactment of this Act; or
(B) not provide an eligible children's hospital
participating in the program established under this section
(determined on a facility-specific basis) with the same
increase in payment that the State may provide to any other
hospital participating in the State medicaid program,
including any State-owned or operated hospital or any
hospital operated by a State university system.
(f) Appropriations.--
(1) In general.--Out of funds in the Treasury not otherwise
appropriated, there are appropriated for making payments
under this section--
(A) for fiscal year 2007, $80,000,000;
(B) for fiscal year 2008, $100,000,000; and
(C) for each of fiscal years 2009 and 2010, $120,000,000.
(2) Carryover.--Any amount appropriated under paragraph (1)
with respect to a fiscal year that remains unobligated as of
the end of that fiscal year, shall remain available for
obligation during the succeeding fiscal year, in addition to
the amount appropriated under that paragraph for such
succeeding fiscal year.
(g) Evaluation and Report.--Not later than September 1,
2010, the Secretary shall report to Congress on the program
established under this section. In providing such a report,
the Secretary shall--
(1) conduct an independent evaluation;
(2) consult with States, eligible children's hospitals
participating in the program, the National Association of
Children's Hospitals and Related Institutions, and other
national pediatric organizations and individuals with
expertise in pediatric measures of quality and performance;
(3) include a detailed description of the measures and
payment enhancements used in determining and rewarding
performance under the program;
(4) assess the impact of rewarding performance through the
Federal supplemental payments provided under the program,
including with respect to any improvements and innovations in
the delivery of children's hospital care and children's
access to appropriate care;
(5) assess how State hospital payment methodologies under
the medicaid program, including hospital and physician
payments and coverage, affect the capacity of the medicaid
program to reward performance; and
(6) include recommendations to the Committee on Finance of
the Senate and the Committee on Energy and Commerce of the
House of Representatives regarding the implementation and
design of the performance-based payments made under the
program, whether to continue such program, and potential
alternative approaches to making performance-based payments
to such hospitals.
SEC. 302. INCLUSION OF CHILDREN'S HOSPITALS AS COVERED
ENTITIES FOR PURPOSES OF LIMITATION OF
PURCHASED DRUG PRICE.
(a) In General.--Section 340B(a)(4) of the Public Health
Services Act (42 U.S.C. 256b(a)(4)) is amended by adding at
the end the following new subparagraph:
``(M) A children's hospital described in section
1886(d)(1)(B)(iii) of the Social Security Act which meets the
requirements of clauses (i) and (iii) of subparagraph (L) and
which would meet the requirements of clause (ii) of such
subparagraph if that clause were applied by taking into
account the percentage of care provided by the hospital to
patients eligible for medical assistance under the medicaid
program.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to drugs purchased on or after the date of
enactment of this Act.
Mrs. LINCOLN. Mr. President, I am pleased to join my colleague
Senator Mike DeWine to introduce ``The ABCs for Children's Health Act
of 2005,'' which seeks to expand access to quality health care for all
children who are
[[Page S9481]]
eligible for Medicaid. The bill also ensures that children get the best
health care at the right time.
Medicaid is the single largest insurer for children. Twenty-five
million children in America, one out of every four, depend on Medicaid
for their health care coverage. In Arkansas, more than half of the
births are financed by Medicaid. Over half of the children in Arkansas
are on Medicaid or received Medicaid services in the last year.
Medicaid covers half of the care, on average, that children's hospitals
provide. As a result, the availability and quality of health care for
all children relies greatly on Medicaid.
As a result of progress in children's Medicaid coverage and the
enactment of the State Children's Health Insurance Program, Congress
has achieved an essential health care safety net for lower income
children and children with special health care needs. Medicaid has
saved millions of children from being uninsured when parents are faced
with hard times and it has come to the aid of working families when
children have exceptional medical costs. I believe that we must
continue to build on that progress.
The ABCs for Children's Health Act of 2005 encourages States to
provide care for more children under Medicaid. It also helps states to
ensure that all eligible children are enrolled and that they get the
high quality care they need. The bill would provide the same
investments in quality and performance in children's health care
service's that are being made in Medicare. National quality and
performance measures for children are far behind those for adults.
I encourage my colleagues to join us as supporters of this important
legislation to ensure that children get the quality health care they
need to grow and prosper. Our Nation's children deserve the best health
care we can offer. And this is a step in the right direction.
______
By Mr. SARBANES:
S. 1564. A bill to provide for the disposition of the Federal
property located in Anne Arundel County, Maryland, a portion of which
is currently used by the District of Columbia as the Oak Hill juvenile
detention facility; to the Committee on Homeland Security and
Governmental Affairs.
Mr. SARBANES. Mr. President, today I am introducing legislation to
facilitate the orderly disposition of an 800 acre parcel of Federal
property located in Laurel, Maryland, a portion of which is currently
used by the District of Columbia as the Oak Hills Juvenile Detention
and Commitment Center. The legislation is a companion to a measure
which has been introduced in the House by Representative Benjamin
Cardin.
The Oak Hill Youth Center, located adjacent to the National Security
Agency and the Baltimore-Washington parkway, is a detention facility
for juvenile offenders from the District of Columbia between the ages
of 12 and 21. It has been plagued by facility and management problems
for many years. The buildings at the center are in deplorable condition
and fail to meet health and safety standards. Overcrowding,
mismanagement, escapes, drug use and abuse of detainees at the center
have been the subject of numerous investigations, press reports and
lawsuits over the years, and are of great concern to juvenile justice
advocates, families of detainees and local residents, alike. Nearly two
decades ago, a consent decree stemming from the lawsuit Jerry M. v.
District of Columbia, required the District to make improvements at the
facility and address the chronic neglect of its adolescent detainees.
Since the decree, ``sixty judicial orders, 44 monitoring reports and
almost $3 million in court imposed fines'' have been issued in
connection with the District's Youth Services Administration failure to
fully comply with the decree, according to a July 2001 article in the
Washington Post. Last year a report issued by the District's Inspector
General's office found that, ``many of the same types of problems that
resulted in the 1986 Jerry M. lawsuit still exist today . . .'' The
report documented numerous security problems, health issues,
deficiencies in management, failures to effectively maintain the safety
of female youth housed at the center, and drugs being smuggled into the
facility on a continual basis.
There is a consensus that the Oak Hill Youth Center should be
shutdown. A Blue Ribbon Commission on Youth Safety and Juvenile Justice
Reform, established by Mayor Williams in August 2000, recommended in
its final 2001 report that the Oak Hill Juvenile Detention center be
closed and demolished. The Justice for DC Youth coalition, whose
members include parents and juvenile justice advocates, has adamantly
supported closing the existing Oak Hill facility and replacing it with
a smaller, more homelike facility that is closer to the youth's homes.
This measure seeks to ensure the closure of the facility and the
orderly disposition of the property, while addressing the concerns of
Anne Arundel County, the NSA, the District of Columbia and all
surrounding neighborhoods and residences. Above all, it would serve the
youth currently being held at the facility by helping to place them in
an environment that is more suitable for successful rehabilitation. I
hope this measure can be acted upon quickly by the Congress and ask
unanimous consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1564
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. DISPOSITION OF OAK HILL PROPERTY.
(a) In General.--The Oak Hill property shall be disposed of
as follows:
(1) The portion of the property which is located west of
the Baltimore-Washington Parkway shall be transferred to the
jurisdiction of the Director of the National Park Service,
who shall use such portion for parkland purposes.
(2) Subject to subsection (b), the portion of the property
which is located east of the Baltimore-Washington Parkway and
200 feet and further north of the Patuxent River shall be
transferred to the Secretary of the Army (acting through the
Chief of Engineers) for use by the Director of the National
Security Agency, who may lease such portion to the District
of Columbia.
(3) The portion of the property which is located east of
the Baltimore-Washington Parkway and south of the portion
described in paragraph (2) shall be transferred to the
jurisdiction of the Administrator of General Services, who
shall in turn convey such portion to Anne Arundel County,
Maryland, in accordance with subsection (c).
(b) Payment for Construction of New Juvenile Detention
Facility for District of Columbia.--As a condition of the
transfer under subsection (a)(2), the Director of the
National Security Agency shall enter into an agreement with
the Mayor of the District of Columbia under which--
(1) the juvenile detention facility for the District of
Columbia currently located on the Oak Hill property shall be
closed; and
(2) subject to appropriations, the Agency shall pay for the
construction of a replacement facility at a site to be
determined, with priority given to a location within the
District of Columbia.
(c) Conveyance of Portion of Property to Anne Arundel
County.--
(1) In general.--The Administrator of General Services
shall convey, without consideration, to Anne Arundel County,
Maryland, all right, title, and interest of the United States
in and to that portion of the Oak Hill property referred to
in subsection (a)(3).
(2) Terms and conditions of conveyance.--The conveyance
under paragraph (1) shall be carried out under such terms and
conditions as may be agreed to by the Administrator and Anne
Arundel County, except that, as a condition of the
conveyance--
(A) Anne Arundel County shall agree to dedicate a portion
of the property which is adjacent to the Patuxent River to
parkland and recreational use; and
(B) Anne Arundel County shall agree to reimburse the
National Security Agency for the amounts paid by the Agency
under subsection (b) for the construction of a new juvenile
detention facility for the District of Columbia, but only if
the County makes 25 percent or more of the property conveyed
under this subsection available for purposes other than open
space or recreational use.
SEC. 2. OAK HILL PROPERTY DEFINED.
In this Act, the term ``Oak Hill property'' means the
Federal property consisting of approximately 800 acres near
Laurel, Maryland, a portion of which is currently used by the
District of Columbia as a juvenile detention facility, and
which is shown on Map Number 20 in the records of the
Department of Assessments and Taxation, Tax Map Division, of
Anne Arundel County.
______
By Mr. LEVIN (for himself, Mr. Coleman, and Mr. Obama):
S. 1565. A bill to restrict the use of abusive tax shelters and
offshore tax havens to inappropriately avoid Federal taxation, and for
other purposes; to the Committee on Finance.
[[Page S9482]]
Mr. LEVIN. Mr. President, tax shelter and tax haven abuses are
undermining the integrity of our tax system, robbing the Treasury of
tens of billions of dollars each year, and shifting the tax burden from
high income individuals and businesses onto the backs of middle income
families. These abuses account for a significant portion of the more
than $300 billion in taxes owed by individuals, businesses, and
organizations that goes unpaid each year. As a matter of fairness,
these abuses must be stopped. Today, I am introducing, with Senator
Norm Coleman, a comprehensive tax reform bill called the Tax Shelter
and Tax Haven Reform Act of 2005 that can help put an end to these
abuses. Senator Barack Obama is also an original cosponsor.
The Permanent Subcommittee on Investigations, on which I serve with
Senator Coleman, has worked for years to expose and combat abusive tax
shelters and tax havens. In the previous Congress, we introduced
legislation confronting these twin threats to U.S. tax compliance;
today's bill reflects not only the Subcommittee's additional
investigative work but also innovative ideas to stop unethical tax
advisers and tax havens from aiding and abetting U.S. tax evasion.
Abusive tax shelters are very different from legitimate tax shelters,
such as deducting the interest paid on your home mortgage or
Congressionally approved tax deductions for building affordable
housing. Abusive tax shelters are complicated transactions promoted to
provide large tax benefits unintended by the tax code. Abusive tax
shelters are marked by one characteristic: there is no real economic or
business rationale other than tax avoidance. As Judge Learned Hand
wrote in Gregory v. Helvering, they are ``entered upon for no other
motive but to escape taxation.''
Likewise, a tax haven is simply a country or jurisdiction that
imposes little or no tax on income and offers non-residents the ability
to escape taxes in their home country. The abuse of tax havens occurs
when income is attributed to that country, even though little or no
business activity actually occurs there. Tax havens are also
characterized by corporate, bank, and tax secrecy laws that make it
difficult for other countries to find out whether their citizens are
using the tax haven to cheat on their taxes.
Today's tax dodges are often tough to prosecute. Crimes such as
terrorism, murder, and fraud produce instant recognition of the
immorality involved. Abusive tax shelters and tax havens, by contrast,
are often ``MEGOs,'' meaning ``My Eyes Glaze Over.'' Those who cook up
these concoctions count on their complexity to escape scrutiny and
public ire. But regardless of how complicated or eye-glazing, the
hawking of abusive tax shelters by tax professionals like accountants,
bankers, investment advisers, and lawyers to thousands of people like
late-night, cut-rate T.V. bargains is scandalous and has got to stop.
Hiding tax schemes through offshore companies and bank accounts in tax
havens with secrecy laws also needs to be attacked with the full force
of the law.
Today, I would like to take a few minutes to try to cut through the
haze of these schemes to see them for what they really are and explain
what our bill would do to stop them. First, I will look at our
investigation into abusive tax shelters and discuss the provisions we
have included in this bill to combat them. Then, I will turn to tax
haven abuses and our proposed remedies.
For three years, the Permanent Subcommittee on Investigations has
been conducting an investigation into the design, sale, and
implementation of abusive tax shelters. While I initiated this
investigation when I was Chairman of our Subcommittee in 2002, it has
since had the support of our new Chairman, Senator Coleman.
In November 2003, our Subcommittee held two days of hearings and
released a report prepared by my staff that pulled back the curtain on
how even some respected accounting firms, banks, investment advisors,
and law firms had become the engines pushing the design and sale of
abusive tax shelters to corporations and individuals across this
country. In February 2005, the Subcommittee issued a report that
provided further details on the role these professional firms played in
the proliferation of these abusive shelters. Our Subcommittee report
was endorsed by the full Committee on Homeland Security and
Governmental Affairs in April.
The Subcommittee investigation found that many abusive tax shelters
were not dreamed up by the taxpayers who used them. Instead, most were
devised by tax professionals, such as accountants, bankers, investment
advisors, and lawyers, who then sold the tax shelter to clients for a
fee. In fact, as our investigation widened, we found hordes of tax
advisors cooking up one complex scheme after another, packaging them up
as generic ``tax products'' with boiler-plate legal and tax opinion
letters, and then undertaking elaborate marketing schemes to peddle
these products to literally thousands of persons across the country. In
return, these tax shelter promoters were getting hundreds of millions
of dollars in fees, while diverting billions of dollars in tax revenues
from the U.S. Treasury each year.
For example, one shelter investigated by the Subcommittee and
featured in the November 2003 Subcommittee hearings has since become
part of an IRS effort to settle cases involving a set of abusive tax
shelters known as ``Son of Boss.'' To date, more than 1,200 taxpayers
have admitted wrongdoing and agreed to pay back taxes, interest and
penalties totaling more than $3.7 billion. That's billions of dollars
the IRS has collected on just one type of tax shelter, demonstrating
both the depth of the problem and the potential for progress.
The Tax Shelter and Tax Haven Reform Act of 2005 that we are
introducing today contains a number of measures to curb abusive tax
shelters. The bill strengthens the penalties on promoters of abusive
tax shelters. It codifies and strengthens the economic substance
doctrine, which eliminates tax benefits for transactions that have no
real business purpose apart from avoiding taxes. The bill deters banks'
participation in abusive tax shelter activities by requiring regulators
to develop new examination procedures to detect and stop such
activities. It ends outdated communication barriers between key
enforcement agencies to allow the exchange of information relating to
tax evasion cases.
The bill also requires the Treasury Department to issue tougher
standards for tax shelter opinion letters. It increases incentives for
whistleblowers to report tax evasion to the IRS. The bill also provides
for increased disclosure of tax shelter information to Congress. It
simplifies and clarifies an existing prohibition on accountants being
paid contingent fees which increase as phony tax losses increase. And
it expresses the sense of the Senate that the IRS needs more funding to
combat tax shelter abuses.
Let me be more specific about these key provisions to curb abusive
tax shelters.
Title I of the bill strengthens two very important penalties that the
IRS can use in its fight against the professionals who make these
complex abusive shelters possible. A year ago, the penalty for
promoting an abusive tax shelter, as set forth in Section 6700 of the
tax code, was the lesser of $1,000 or 100 percent of the promoter's
gross income derived from the prohibited activity. That meant in most
cases the maximum fine was just $1,000.
Many abusive tax shelters sell for $100,000 or $250,000 apiece. Our
investigation uncovered some tax shelters that were sold for as much as
$2 million or even $5 million apiece, as well as instances in which the
same cookie-cutter tax opinion letter was sold to 100 or even 200
clients. There are big bucks to be made in this business, and a $1,000
fine is laughable.
The Senate acknowledged that last year when it adopted the Levin-
Coleman amendment to the JOBS Act, S. 1637, raising the Section 6700
penalty on abusive tax shelter promoters to 100 pefcent of the fees
earned by the promoter from the abusive shelter. A 100 percent penalty
would have ensured that the abusive tax shelter hucksters would not get
to keep a single penny of their ill-gotten gains. That figure, however,
was cut in half in the conference report, setting the penalty at 50
percent of the fees earned and allowing the promoters of abusive
shelters get to keep half of their illicit profits.
While 50 percent is an obvious improvement over $1000, this penalty
still
[[Page S9483]]
is inadequate and makes no sense. Why should anyone who pushes an
illegal tax shelter that robs our Treasury of much needed revenues get
to keep half of his ill-gotten gains? What deterrent effect is created
by a penalty that allows promoters to keep half of their fees if
caught, and of course, all of their fees if they are not caught? Tax
shelter promoters ought to face a penalty that is at least as harsh as
the penalty imposed on the person who purchased their tax product, not
only because the promoter is usually as culpable as the taxpayer, but
also so promoters think twice about pushing abusive tax schemes.
Effective penalties should make sure that the peddler of an abusive
tax shelter is deprived of every penny of profit earned from selling or
implementing the shelter and then is fined on top of that.
Specifically, Section 101 of this bill would increase the penalty on
tax shelter promoters to an amount up to the greater of either 150
percent of the promoters' gross income from the prohibited activity, or
the amount assessed against the taxpayer--including back-taxes,
interest and penalties.
A second penalty provision in the bill addresses what our
investigation found to be one of the biggest problems: the knowing
assistance of accounting firms, law firms, banks, and others to help
taxpayers understate their taxes. In addition to those who meet the
definition of ``promoters'' of abusive shelters, there are professional
firms that aid and abet the use of abusive tax shelters and enable
taxpayers to carry out the abusive tax schemes. For example, law firms
are often asked to write ``opinion letters'' to help taxpayers head off
IRS questioning and fines that they might otherwise confront for using
an abusive shelter. Currently, under Section 6701 of the tax code,
these aiders and abettors face a maximum penalty of only $1,000, or
$10,000 if the offender is a corporation. This penalty, too, is a joke.
When law firms are getting $50,000 for each of these cookie-cutter
opinion letters, it provides no deterrent whatsoever. A $1,000 fine is
like a jaywalking ticket for robbing a bank.
Section 102 of the bill would strengthen Section 6701 significantly,
subjecting aiders and abettors to a maximum fine up to the greater of
either 150 percent of the aider and abettor's gross income from the
prohibited activity, or the amount assessed against the taxpayer for
using the abusive shelter. This penalty would apply to all aiders and
abettors not just tax return preparers.
Again, the Senate has recognized the need to toughen this critical
penalty. In last year's JOBS Act, Senator Coleman and I successfully
increased this fine to 100 percent of the gross income derived from the
prohibited activity. Unfortunately, the conference report completely
omitted this change, allowing aiders and abettors to continue to profit
without penalty from their wrongdoing.
If further justification for toughening these penalties is needed,
one document uncovered by our investigation shows the cold calculation
engaged in by a tax advisor facing low fines. A senior tax professional
at accounting giant KPMG compared possible tax shelter fees with
possible tax shelter penalties if the firm were caught promoting an
illegal tax shelter. This senior tax professional wrote the following:
``[O]ur average deal would result in KPMG fees of $360,000 with a
maximum penalty exposure of only $31,000.'' He then recommended the
obvious: going forward with sales of the abusive tax shelter on a cost-
benefit basis.
Title III of the bill would strengthen legal prohibitions against
abusive tax shelters by codifying in Federal tax statutes for the first
time what is known as the economic substance doctrine. This anti-tax
abuse doctrine was fashioned by federal courts evaluating transactions
that appeared to have little or no business purpose or economic
substance apart from tax avoidance. It has become a powerful analytical
tool used by courts to invalidate abusive tax shelters. At the same
time, because there is no statute underlying this doctrine and the
courts have developed and applied it differently in different judicial
districts, the existing case law has many ambiguities and conflicting
interpretations.
Under the leadership of Senators Grassley and Baucus, the Chairman
and Ranking Member of the Finance Committee, the Senate has voted on
multiple occasions to enact this economic substance provision, but the
House conferees have rejected it each time. Since no tax shelter
legislation would be complete without addressing this issue, Title III
of this comprehensive bill proposes once more to include the economic
substance doctrine in the tax code. I hope that with continued
pressure, it will become law in this Congress.
The bill will also help fight abusive tax shelters that are disguised
as complex investment opportunities and use financing or securities
transactions provided by financial institutions. In reality, tax
shelter schemes lack the economic risks and rewards associated with a
true investment. These phony transactions instead often rely on the
temporary use of significant amounts of money in low risk schemes
mischaracterized as real investments. The financing or securities
transactions called for by these schemes are often supplied by a bank,
securities firm, or other financial institution.
Currently the tax code prohibits financial institutions from
providing products or services that aid or abet tax evasion or that
promote or implement abusive tax shelters. The agencies that oversee
these financial institutions on a daily basis, however, are experts in
banking and securities law and generally lack the expertise to spot tax
issues. Section 202 would crack down on financial institutions' illegal
tax shelter activities by requiring federal bank regulators and the SEC
to work with the IRS to develop examination techniques to detect such
abusive activities and put an end to them.
These examination techniques would be used at least every 2 years,
preferably in combination with routine regulatory examinations, and the
regulators would report potential violations to the IRS. The agencies
would also be required to prepare joint reports to Congress in 2007 and
2010 on preventing the participation of financial institutions in tax
evasion or tax shelter activities.
During hearings before the Permanent Subcommittee on Investigations
on tax shelters in November 2003, IRS Commissioner Mark Everson
testified that his agency was barred by Section 6103 of the tax code
from communicating information to other federal agencies that would
assist those agencies in their law enforcement duties. He pointed out
that the IRS was barred from providing tax return information to the
SEC, federal bank regulators, and the Public Company Accounting
Oversight Board (PCAOB)--even, for example, when that information might
assist the SEC in evaluating whether an abusive tax shelter resulted in
deceptive accounting in a public company's financial statements, might
help the Federal Reserve determine whether a bank selling tax products
to its clients had violated the law against promoting abusive tax
shelters, or help the PCAOB judge whether an accounting firm had
impaired its independence by selling tax shelters to its audit clients.
A recent example demonstrates how ill-conceived these information
barriers are. A few months ago the IRS offered a settlement initiative
to companies and corporate executives who participated in an abusive
tax shelter involving the transfer of stock options to family-
controlled entities. Over a hundred corporations and executives
responded with admissions of wrongdoing. In addition to tax violations,
their misconduct may be linked to securities law violations and
improprieties by corporate auditors or banks, but the IRS has informed
the Subcommittee that it is currently barred by law from sharing the
names of the wrongdoers with the SEC, banking regulators, or PCAOB.
These communication barriers are outdated, inefficient, and ill-
suited to stopping the torrent of tax shelter abuses now affecting or
being promoted by so many public companies, banks, and accounting
firms. To address this problem, Section 203 of this bill would
authorize the Treasury Secretary, with appropriate privacy safeguards,
to disclose to the SEC, Federal banking agencies, and the PCAOB, upon
request, tax return information related to abusive tax shelters,
inappropriate tax avoidance, or tax evasion. The
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agencies could then use this information only for law enforcement
purposes, such as preventing accounting firms or banks from promoting
abusive tax shelters, or detecting accounting fraud in the financial
statements of public companies.
Another finding of the Subcommittee investigation is that some tax
practitioners are circumventing current State and Federal constraints
on charging tax service fees that are dependent on the amount of
promised tax benefits. Traditionally, accounting firms charged flat
fees or hourly fees for their tax services. In the 1990s, however, they
began charging ``value added'' fees based on, in the words of one
accounting firm's manual, ``the value of the services provided, as
opposed to the time required to perform the services.'' In addition,
some firms began charging ``contingent fees'' that were calculated
according to the size of the paper ``loss'' that could be produced for
a client and used to offset the client's other taxable income--the
greater the so-called loss, the greater the fee.
In response, many States prohibited accounting firms from charging
contingent fees for tax work to avoid creating incentives for these
firms to devise ways to shelter substantial sums. The SEC and the
American Institute of Certified Public Accountants also issued rules
restricting contingent fees, allowing them in only limited
circumstances. Recently, the Public Company Accounting Oversight Board
sent the SEC for approval a similar rule prohibiting public accounting
firms from charging contingent fees for tax services provided to the
public companies they audit. Each of these Federal, State, and
professional ethics rules seeks to limit the use of contingent fees
under certain, limited circumstances.
The Subcommittee investigation found that tax shelter fees, which are
typically substantial and sometimes exceed $1 million, are often linked
to the amount of a taxpayer's projected paper losses which can be used
to shelter income from taxation. For example, in three tax shelters
examined by the Subcommittee, documents show that the fees were equal
to a percentage of the paper loss to be generated by the transaction.
In one case, the fees were typically set at 7 percent of the
transaction's generated ``tax loss'' that clients could use to reduce
other taxable income. In other words, the greater the loss that could
be concocted for the taxpayer or ``investor,'' the greater the profit
for the tax promoter. Think about that--greater the loss, the greater
the profit. How's that for turning capitalism on its head!
In addition, evidence indicated that, in at least one instance, a tax
advisor was willing to deliberately manipulate the way it handled
certain tax products to circumvent contingent fee prohibitions. An
internal document at an accounting firm related to a specific tax
shelter, for example, identified the States that prohibited contingent
fees. Then, rather than prohibit the tax shelter transactions in those
States or require an alternative fee structure, the memorandum directed
the firm's tax professionals to make sure the engagement letter was
signed, the engagement was managed, and the bulk of services was
performed ``in a jurisdiction that does not prohibit contingency
fees.''
Right now, the prohibitions on contingent fees are complex and must
be evaluated in the context of a patchwork of Federal, State, and
professional ethics rules. Section 201 of the bill would establish a
single enforceable rule, applicable nationwide, that would prohibit tax
practitioners from charging fees calculated according to a projected or
actual amount of tax savings or paper losses.
Past laws, such as the Whistleblower Protection Act and qui tam
lawsuits under the False Claims Act, demonstrate that individuals with
inside information can help expose serious misconduct that the U.S.
government might otherwise miss. The tax arena is no different. Persons
with inside information can help expose millions of dollars in tax
fraud if they are willing to step forward and tell the IRS what they
know about specific instances of misconduct.
Under current law, potential whistleblowers with inside information
about tax misconduct do not have an established IRS office that is
sensitive to their concerns, provides consistent treatment, and
oversees the calculation and payment of monetary rewards for important
information. Section 206 of this bill, which is very similar to a
provision developed by the Senate Finance Committee, would, among other
measures, establish a Whistleblowers Office within the IRS, codify
standards for the payment of monetary rewards, and exempt whistleblower
monetary payments from the alternative minimum tax.
Each of these measures is intended to increase incentives for persons
to blow the whistle on tax misconduct. The one key difference between
our bill and the Finance Committee provision is that we would continue
to give the IRS the discretion to determine the amount of money paid to
an individual whistleblower; our bill would not enable whistleblowers
to appeal to a court to obtain additional sums. The fact-specific
analysis that goes into evaluating a whistleblower's assistance and
calculating a reward makes court review inadvisable. The existence of
an appeal also invites litigation and necessitates the expenditure of
taxpayer dollars--not for tax enforcement but for a court dispute. The
new Whistleblowers Office is intended to promote the consistent,
equitable treatment of persons who report tax misconduct, without also
inviting expensive and time-consuming litigation.
Section 205 of the bill would direct the Treasury Department to issue
new standards for tax practitioners issuing opinion letters on the tax
implications of potential tax shelters as part of Circular 230. The
public has traditionally relied on tax opinion letters to obtain
informed and trustworthy advice about whether a tax-motivated
transaction meets the requirements of the law. The Permanent
Subcommittee on Investigations has found that, in too many cases, tax
opinion letters no longer contain disinterested and reliable tax
advice, even when issued by supposedly reputable accounting or law
firms.
Instead, some tax opinion letters have become marketing tools used by
tax shelter promoters and their allies to sell clients on their latest
tax products. In many of these cases, financial interests and biases
were concealed, unreasonable factual assumptions were used to justify
dubious legal conclusions, and taxpayers were misled about the risk
that the proposed transaction would later be designated an illegal tax
shelter. Reforms are essential to address these abuses and restore the
integrity of tax opinion letters.
The Treasury Department recently adopted standards that address a
number of the abuses affecting tax shelter opinion letters; however,
the standards do not take all the steps needed. Our bill would require
Treasury to issue standards addressing a wider spectrum of tax shelter
opinion letter problems, including: preventing concealed collaboration
among supposedly independent letter writers; avoiding conflicts of
interest that would impair auditor independence; ensuring appropriate
fee charges; preventing practitioners and firms from aiding and
abetting the understatement of tax liability by clients; and banning
the promotion of potentially abusive tax shelters. By addressing each
of these areas, a beefed-up Circular 230 could help reduce the ongoing
abusive practices related to tax shelter opinion letters.
The bill would also provide for increased disclosure of tax shelter
information to Congress. Section 204 would make it clear that companies
providing tax return preparation services to taxpayers cannot refuse to
comply with a Congressional document subpoena by citing Section 7216, a
consumer protection provision that prohibits tax return preparers from
disclosing taxpayer information to third parties. Several accounting
and law firms raised this claim in response to document subpoenas
issued by the Permanent Subcommittee on Investigations, contending they
were barred by the nondisclosure provision in Section 7216 from
producing documents related to the sale of abusive tax shelters to
clients for a fee.
The accounting and law firms maintained this position despite an
analysis provided by the Senate legal counsel showing that the
nondisclosure provision was never intended to create a privilege or to
override a Senate subpoena, as demonstrated in federal regulations
interpreting the provision. This
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bill would codify the existing regulations interpreting Section 7216
and make it clear that Congressional document subpoenas must be
honored.
Section 204 would also ensure Congress has access to information
about decisions by Treasury related to an organization's tax exempt
status. A 2003 decision by the D.C. Circuit Court of Appeals, Tax
Analysts v. IRS, struck down certain IRS regulations and held that the
IRS must disclose letters denying or revoking an organization's tax
exempt status. The IRS has been reluctant to disclose such information,
not only to the public, but also to Congress, including in response to
requests by the Permanent Subcommittee on Investigations.
For example, earlier this year the IRS revoked the tax exempt status
of four credit counseling firms, and, despite the Tax Analysts case,
claimed that it could not disclose to the Subcommittee the names of the
four firms or the reasons for revoking their tax exemption. Our bill
would make it clear that, upon receipt of a request from a
Congressional committee or subcommittee, the IRS must disclose
documents, other than a tax return, related to the agency's
determination to grant, deny, revoke or restore an organization's
exemption from taxation.
Section 208 of the bill would establish that it is the sense of the
Senate that additional funds should be appropriated for IRS
enforcement, and that the IRS should devote proportionately more of its
enforcement funds to combat rampant tax shelter and tax haven abuses.
Specifically, the bill would direct increased funding toward
enforcement efforts combating the promotion of abusive tax shelters and
the aiding and abetting of tax evasion; the involvement of accounting,
law and financial firms in such promotion and aiding and abetting; and
the use of offshore financial accounts to conceal taxable income.
Tax enforcement is an area where a relatively small increase in
spending pays for itself many times over. If we would hire adequate
enforcement personnel, close the tax loopholes, and put an end to tax
dodges, tens of billions in revenues that should support this country
would actually reach the Treasury.
In addition to abusive tax shelters, the bill addresses the abusive
tax havens that help taxpayers dodge their U.S. tax obligations through
using corporate, bank, and tax secrecy laws that impede U.S. tax
enforcement. The London-based Tax Justice Network recently estimated
that wealthy individuals worldwide have stashed $11.5 trillion of their
assets in tax havens. At one Subcommittee hearing in 2001, a former
owner of an offshore bank in the Cayman Islands testified that he
believed 100 percent of his former clients were engaged in tax evasion.
He said that almost all were from the United States and would take
elaborate measures to avoid IRS detection of their money transfers. He
also expressed confidence that the government that licensed his bank
would vigorously defend client secrecy in order to continue attracting
business to the islands.
Corporations are also using tax havens to reduce their U.S. tax
liability. A GAO report I released with Senator Dorgan last year found
that nearly two-thirds of the top 100 companies doing business with the
United States government now have one or more subsidiaries in a tax
haven. One company, Tyco International, had 115.
Data released by the Commerce Department further demonstrates the
extent of U.S. corporate use of tax havens, indicating that, as of
2001, almost half of all foreign profits of U.S. corporations were in
tax havens. A study released by the journal Tax Notes in September 2004
found that American companies were able to shift $149 billion of
profits to 18 tax haven countries in 2002, up 68 percent from $88
billion in 1999. Estimates show that funneling these profits from the
U.S. to tax havens deprives the U.S. Treasury of anywhere from $10
billion to $20 billion in lost tax revenue each year.
Here's just one simplified example of the gimmicks being used by
corporations to transfer taxable income from the United States to tax
havens to escape taxation. Suppose a profitable U.S. corporation
establishes a shell corporation in a tax haven. The shell corporation
has no office or employees, just a mailbox address. The U.S. parent
transfers a valuable patent to the shell corporation. Then, the U.S.
parent and all of its subsidiaries begin to pay a hefty fee to the
shell corporation for use of the patent, shifting taxable income out of
the United States to the shell corporation. The shell corporation
declares a portion of the fees as profit, but pays no tax since it is a
tax haven resident. The icing on the cake is that the shell corporation
can then ``lend'' the income it has accumulated from the fees back to
the U.S. companies for their use. The companies, in turn, pay
``interest'' on the ``loans'' to the shell corporation, shifting still
more taxable income out of the United States to the tax haven. This
example highlights just a few of the tax haven ploys being used by some
U.S. corporations to escape paying their fair share of taxes here at
home.
Sections 401 and 402 of our bill tackle the issue of tax havens by
removing U.S. tax benefits associated with jurisdictions that fail to
cooperate with U.S. tax enforcement efforts. Dozens of jurisdictions
around the world have enacted corporate, bank, and tax secrecy laws
that, in too many cases, have been used to justify failing to provide
timely information to U.S. officials investigating tax misconduct. Some
tax havens have refused to provide timely information about persons
suspected of either hiding funds in the jurisdiction's offshore bank
accounts or using offshore corporations and deceptive transactions to
disguise their income or create phony losses to shelter their U.S.
income from taxation.
Section 401 of the bill would give the Treasury Secretary the
discretion to designate such an offshore tax haven as ``uncooperative''
and to publish an annual list of these uncooperative tax havens. We
intend that the Treasury Secretary will develop this list by evaluating
the actual record of cooperation experienced by the United States in
its dealings with specific jurisdictions around the world. While many
offshore tax havens have signed treaties with the United States
promising to cooperate with U.S. civil and criminal tax enforcement,
the level of resulting cooperation varies. For example, after one
country signed a tax treaty with the United States, the government that
led the effort was voted out of office by treaty opponents. Treasury
needs a way to ensure that tax treaty obligations are met and to send a
message to jurisdictions that impede U.S. tax enforcement. This bill
gives Treasury the tools it needs to get the cooperation it needs.
Under Sections 401 and 402 of the bill, persons doing business in tax
havens designated by Treasury as uncooperative would be denied U.S. tax
benefits and incur increased disclosure requirements. First, the bill
would disallow the tax benefits of deferral and foreign tax credits for
income attributed to an uncooperative tax haven. Second, taxpayers
would be required to provide greater disclosure of their activities,
including disclosing on their returns any payment above $10,000 to a
person or account located in a designated haven. These restrictions
would not only deter U.S. taxpayers from doing business with
uncooperative tax havens, they would also provide the United States
with powerful weapons to convince tax havens to cooperate fully with
U.S. tax enforcement efforts and help end offshore tax evasion abuses.
Sections 403 and 404 further address offshore tax evasion. Section
403 would toughen penalties on eligible taxpayers who did not
participate in Treasury programs designed to encourage voluntary
disclosure of previously unreported income placed by the taxpayer in
offshore accounts and accessed by credit card or other financial
arrangements. Section 404 would authorize Treasury to promulgate
regulations to stop ongoing foreign tax credit abuses in which, among
other schemes, taxpayers claim credit on their U.S. tax returns for
paying foreign taxes, but then fail to report the income related to
those foreign taxes. Under the leadership of Senators Grassley and
Baucus, both Sections 403 and 404 passed the Senate earlier this year
as part of the Highway Bill, H.R. 3, but were dropped in conference.
The eyes of some people may glaze over when tax shelters and tax
havens are discussed, but unscrupulous taxpayers and tax professionals
see illicit
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dollar signs. Our commitment to crack down on their tax abuses must be
as strong as their determination to get away with ripping off America
and American taxpayers.
Our bill provides our government the tools to end the use of abusive
tax shelters and uncooperative tax havens and to punish the powerful
professionals who push them.
It's long past time for Congress to act to end the shifting of a
disproportionate tax burden onto the shoulders of honest Americans.
I ask unanimous consent that a summary of the bill's provisions and
the text of the bill be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Summary of Tax Shelter and Tax Haven Reform Act of 2005
TITLE I--Strengthening Tax Shelter Penalties
Strengthens the penalties for: promoting abusive tax shelters; and
knowingly aiding or abetting a taxpayer in understating tax liability.
TITLE II--Preventing Abusive Tax Shelter Transactions
Prohibit tax service fees dependant upon specific tax savings
Prohibits charging a fee for tax services in an amount that is
calculated according to or dependant upon a projected or actual amount
of tax savings or losses offsetting taxable income. Builds on
contingent fee prohibitions in more than 20 states, AICPA rules
applicable to accountants, SEC regulations applicable to auditors of
publicly traded corporations, and proposed PCAOB rules for auditors.
Based upon investigation by Permanent Subcommittee on Investigations
showing tax practitioners are circumventing current constraints.
Deter Financial Institution Participation in Abusive Tax Shelter
Activities
Requires Federal bank regulators and the SEC to develop examination
techniques to detect violations by financial institutions of the
prohibition against providing products or services that aid or abet tax
evasion or that promote or implement abusive tax shelters. Regulators
must use such techniques at least every 2 years in routine or special
examinations of specific institutions and report potential violations
to the IRS. The agencies must also prepare a joint report to Congress
in 2007 and 2010 on preventing the participation of financial
institutions in tax evasion or tax shelter activities.
Increase disclosure of certain tax shelter information
Authorizes Treasury to share certain tax return information with the
SEC, Federal bank regulators, or PCAOB, under certain circumstances, to
enhance tax shelter enforcement or combat financial accounting fraud.
Clarifies Congressional subpoena authority to obtain information (but
not a taxpayer return) from tax return preparers. Clarifies
Congressional authority to obtain certain tax information (but not a
taxpayer return) from Treasury related to an IRS decision to grant,
deny, revoke, or restore an organization's tax exempt status.
Require Tougher Tax Shelter Opinion Standards for Tax Practitioners
Codifies and expands Treasury's authority to beef up Circular 230
standards for tax practitioners providing ``opinion letters'' on
specific tax shelter transactions.
Increase Incentives for IRS Whistleblowers
Encourages persons to blow the whistle on tax misconduct by
establishing a Whistleblowers Office within the IRS to provide
consistent, equitable treatment of persons bringing information to the
IRS. Codifies standards for awarding a portion of proceeds collected
from actions based on information they bring to the IRS's attention.
Modeled on provision passed by the Senate in the Highway Bill.
Estimated to raise $407 million over 10 years.
Deny tax deduction for fines, penalties and settlements.
Clarifies that penalties, fines and settlements paid to the
government are not deductible. Passed by the Senate in the Highway
Bill. Estimated to raise $200 million over 10 years.
``Sense of the Senate'' on IRS Enforcement Priorities
Establishes the Sense of the Senate that additional funds should be
appropriated for IRS enforcement, and that the IRS should devote
proportionately more of its enforcement funds to combat: (I) the
promotion of abusive tax shelters for corporations and high net worth
individuals and the aiding or abetting of tax evasion, (2) the
involvement of accounting, law and financial firms in such promotion
and aiding or abetting, and (3) the use of offshore financial accounts
to conceal taxable income.
TITLE III--Requiring Economic Substance
Strengthen the Economic Substance Doctrine
Strengthens and codifies the economic substance doctrine to
invalidate transactions that have no economic substance or business
purpose apart from tax avoidance or evasion. Also increases penalties
for understatements attributable to a transaction lacking in economic
substance. Passed by the Senate in the Highway Bill. Estimated to raise
$15.9 billion over 10 years.
TITLE IV--Deterring Offshore Tax Evasion
Deter Use of Uncooperative Tax Havens
Deters taxpayer use of uncooperative tax havens with corporate, bank
or tax secrecy laws, procedures, or practices that impede U.S.
enforcement of its tax laws by: (1) requiring disclosure on taxpayer
returns of any payment above $10,000 to accounts or persons located in
such tax havens, and (2) ending the tax benefits of deferral and
foreign tax credits for any income earned in such tax havens. Gives
Treasury Secretary discretion to designate a tax haven as uncooperative
and publish an annual list of those jurisdictions. Estimated to raise
$87 million over 10 years.
Strengthen Penalties for Concealing Income in Offshore
Accounts
Toughens penalties on taxpayers who, despite being eligible, did not
participate in Treasury programs to encourage voluntary disclosure of
previously unreported income placed by the taxpayer in offshore
accounts and accessed through credit card or other financial
arrangements. Passed by the Senate in the Highway Bill. Estimated to
raise $10 million over 10 years.
Stop Schemes to get Foreign Tax Credit Without Reporting
Related Income
Authorizes Treasury to promulgate regulations to address abusive
foreign tax credit (FTC) schemes that involve the inappropriate
separation or stripping of foreign taxes from the related foreign
income so taxpayers get the benefit of the FTC but don't report the
related income. The provision becomes effective for transactions
entered into after the date of enactment. Passed by the Senate in the
Highway Bill. Estimated to raise $16 million over 10 years.
____
S. 1565
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Tax
Shelter and Tax Haven Reform Act of 2005''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; etc.
TITLE I--STRENGTHENING TAX SHELTER PENALTIES
Sec. 101. Penalty for promoting abusive tax shelters.
Sec. 102. Penalty for aiding and abetting the understatement of tax
liability.
TITLE II--PREVENTING ABUSIVE TAX SHELTERS
Sec. 201. Prohibited fee arrangement.
Sec. 202. Preventing tax shelter activities by financial institutions.
Sec. 203. Information sharing for enforcement purposes.
Sec. 204. Disclosure of information to Congress.
Sec. 205. Tax opinion standards for tax practitioners.
Sec. 206. Whistleblower reforms.
Sec. 207. Denial of deduction for certain fines, penalties, and other
amounts.
Sec. 208. Sense of the Senate on tax enforcement priorities.
TITLE III--REQUIRING ECONOMIC SUBSTANCE
Sec. 301. Clarification of economic substance doctrine.
Sec. 302. Penalty for understatements attributable to transactions
lacking economic substance, etc.
Sec. 303. Denial of deduction for interest on underpayments
attributable to noneconomic substance transactions.
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TITLE IV--DETERRING UNCOOPERATIVE TAX HAVENS
Sec. 401. Disclosing payments to persons in uncooperative tax havens.
Sec. 402. Deterring uncooperative tax havens by restricting allowable
tax benefits.
Sec. 403. Doubling of certain penalties, fines, and interest on
underpayments related to certain offshore financial
arrangements.
Sec. 404. Treasury regulations on foreign tax credit.
TITLE I--STRENGTHENING TAX SHELTER PENALTIES
SEC. 101. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.
(a) Penalty for Promoting Abusive Tax Shelters.--Section
6700 (relating to promoting abusive tax shelters, etc.) is
amended--
(1) by redesignating subsections (b) and (c) as subsections
(d) and (e), respectively,
(2) by striking ``a penalty'' and all that follows through
the period in the first sentence of subsection (a) and
inserting ``a penalty determined under subsection (b)'', and
(3) by inserting after subsection (a) the following new
subsections:
``(b) Amount of Penalty; Calculation of Penalty; Liability
for Penalty.--
``(1) Amount of penalty.--The amount of the penalty imposed
by subsection (a) shall not exceed the greater of--
``(A) 150 percent of the gross income derived (or to be
derived) from such activity by the person or persons subject
to such penalty, and
``(B) if readily subject to calculation, the total amount
of underpayment by the taxpayer (including penalties,
interest, and taxes) in connection with such activity.
``(2) Calculation of penalty.--The penalty amount
determined under paragraph (1) shall be calculated with
respect to each instance of an activity described in
subsection (a), each instance in which income was derived by
the person or persons subject to such penalty, and each
person who participated in such an activity.
``(3) Liability for penalty.--If more than 1 person is
liable under subsection (a) with respect to such activity,
all such persons shall be jointly and severally liable for
the penalty under such subsection.
``(c) Penalty Not Deductible.--The payment of any penalty
imposed under this section or the payment of any amount to
settle or avoid the imposition of such penalty shall not be
considered an ordinary and necessary expense in carrying on a
trade or business for purposes of this title and shall not be
deductible by the person who is subject to such penalty or
who makes such payment.''.
(b) Conforming Amendment.--Section 6700(a) is amended by
striking the last sentence.
(c) Effective Date.--The amendments made by this section
shall apply to activities after the date of the enactment of
this Act.
SEC. 102. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT
OF TAX LIABILITY.
(a) In General.--Section 6701(a) (relating to imposition of
penalty) is amended--
(1) by inserting ``the tax liability or'' after ``respect
to,'' in paragraph (1),
(2) by inserting ``aid, assistance, procurement, or advice
with respect to such'' before ``portion'' both places it
appears in paragraphs (2) and (3), and
(3) by inserting ``instance of aid, assistance,
procurement, or advice or each such'' before ``document'' in
the matter following paragraph (3).
(b) Amount of Penalty.--Subsection (b) of section 6701
(relating to penalties for aiding and abetting understatement
of tax liability) is amended to read as follows:
``(b) Amount of Penalty; Calculation of Penalty; Liability
for Penalty.--
``(1) Amount of penalty.--The amount of the penalty imposed
by subsection (a) shall not exceed the greater of--
``(A) 150 percent of the gross income derived (or to be
derived) from such aid, assistance, procurement, or advice
provided by the person or persons subject to such penalty,
and
``(i) if readily subject to calculation, the total amount
of underpayment by the taxpayer (including penalties,
interest, and taxes) in connection with the understatement of
the liability for tax.
``(2) Calculation of penalty.--The penalty amount
determined under paragraph (1) shall be calculated with
respect to each instance of aid, assistance, procurement, or
advice described in subsection (a), each instance in which
income was derived by the person or persons subject to such
penalty, and each person who made such an understatement of
the liability for tax.
``(3) Liability for penalty.--If more than 1 person is
liable under subsection (a) with respect to providing such
aid, assistance, procurement, or advice, all such persons
shall be jointly and severally liable for the penalty under
such subsection.''.
(c) Penalty Not Deductible.--Section 6701 is amended by
adding at the end the following new subsection:
``(g) Penalty Not Deductible.--The payment of any penalty
imposed under this section or the payment of any amount to
settle or avoid the imposition of such penalty shall not be
considered an ordinary and necessary expense in carrying on a
trade or business for purposes of this title and shall not be
deductible by the person who is subject to such penalty or
who makes such payment.''.
(d) Effective Date.--The amendments made by this section
shall apply to activities after the date of the enactment of
this Act.
TITLE II--PREVENTING ABUSIVE TAX SHELTERS
SEC. 201. PROHIBITED FEE ARRANGEMENT.
(a) In General.--Section 6701, as amended by this Act, is
amended--
(1) by redesignating subsections (f) and (g) as subsections
(g) and (h), respectively,
(2) by striking ``subsection (a).'' in paragraphs (2) and
(3) of subsection (g) (as redesignated by paragraph (1)) and
inserting ``subsection (a) or (f).'', and
(3) by inserting after subsection (e) the following new
subsection:
``(f) Prohibited Fee Arrangement.--
``(1) In general.--Any person who makes an agreement for,
charges, or collects a fee which is for services provided in
connection with the internal revenue laws, and the amount of
which is calculated according to, or is dependent upon, a
projected or actual amount of--
``(A) tax savings or benefits, or
``(B) losses which can be used to offset other taxable
income,
shall pay a penalty with respect to each such fee activity in
the amount determined under subsection (b).
``(2) Rules.--The Secretary may issue rules to carry out
the purposes of this subsection and may provide exceptions
for fee arrangements that are in the public interest.''.
(b) Effective Date.--The amendments made by this section
shall apply to fee agreements, charges, and collections made
after the date of the enactment of this Act.
SEC. 202. PREVENTING TAX SHELTER ACTIVITIES BY FINANCIAL
INSTITUTIONS.
(a) Examinations.--
(1) Development of examination techniques.--Each of the
Federal banking agencies and the Commission shall, in
consultation with the Internal Revenue Service, develop
examination techniques to detect potential violations of
section 6700 or 6701 of the Internal Revenue Code of 1986, by
depository institutions, brokers, dealers, and investment
advisers, as appropriate.
(2) Frequency.--Not less frequently than once in each 2-
year period, each of the Federal banking agencies and the
Commission shall implement the examination techniques
developed under paragraph (1) with respect to each of the
depository institutions, brokers, dealers, or investment
advisers subject to their enforcement authority. Such
examination shall, to the extent possible, be combined with
any examination by such agency otherwise required or
authorized by Federal law.
(b) Report to Internal Revenue Service.--In any case in
which an examination conducted under this section with
respect to a financial institution or other entity reveals a
potential violation, such agency shall promptly notify the
Internal Revenue Service of such potential violation for
investigation and enforcement by the Internal Revenue Service
in accordance with applicable provisions of law.
(c) Report to Congress.--The Federal banking agencies and
the Commission shall submit a joint written report to
Congress in 2007 and 2010 on their progress in preventing
violations of sections 6700 and 6701 of the Internal Revenue
Code of 1986, by depository institutions, brokers, dealers,
and investment advisers, as appropriate.
(d) Definitions.--For purposes of this section--
(1) the terms ``broker'', ``dealer'', and ``investment
adviser'' have the same meanings as in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c);
(2) the term ``Commission'' means the Securities and
Exchange Commission;
(3) the term ``depository institution'' has the same
meaning as in section 3(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(c));
(4) the term ``Federal banking agencies'' has the same
meaning as in section 3(q) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)); and
(5) the term ``Secretary'' means the Secretary of the
Treasury.
SEC. 203. INFORMATION SHARING FOR ENFORCEMENT PURPOSES.
(a) Promotion of Prohibited Tax Shelters or Tax Avoidance
Schemes.--Section 6103(h) (relating to disclosure to certain
Federal officers and employees for purposes of tax
administration, etc.) is amended by adding at the end the
following new paragraph:
``(7) Disclosure of returns and return information related
to promotion of prohibited tax shelters or tax avoidance
schemes.--
``(A) Written request.--Upon receipt by the Secretary of a
written request which meets the requirements of subparagraph
(B) from the head of the United States Securities and
Exchange Commission, an appropriate Federal banking agency as
defined under section 1813(q) of title 12, United States
Code, or the Public Company Accounting Oversight Board, a
return or return information shall be disclosed to such
requestor's officers and employees who are personally and
directly engaged in an investigation, examination, or
proceeding by such requestor to evaluate, determine,
penalize, or deter conduct by a financial institution,
issuer, or public accounting firm, or associated person, in
connection with a potential or actual violation of section
6700 (promotion of abusive tax shelters), 6701 (aiding and
abetting understatement of tax liability), or
[[Page S9488]]
activities related to promoting or facilitating inappropriate
tax avoidance or tax evasion. Such disclosure shall be solely
for use by such officers and employees in such investigation,
examination, or proceeding.
``(B) Requirements.--A request meets the requirements of
this subparagraph if it sets forth--
``(i) the nature of the investigation, examination, or
proceeding,
``(ii) the statutory authority under which such
investigation, examination, or proceeding is being conducted,
``(iii) the name or names of the financial institution,
issuer, or public accounting firm to which such return
information relates,
``(iv) the taxable period or periods to which such return
information relates, and
``(v) the specific reason or reasons why such disclosure
is, or may be, relevant to such investigation, examination or
proceeding.
``(C) Financial institution.--For the purposes of this
paragraph, the term `financial institution' means a
depository institution, foreign bank, insured institution,
industrial loan company, broker, dealer, investment company,
investment advisor, or other entity subject to regulation or
oversight by the United States Securities and Exchange
Commission or an appropriate Federal banking agency.''.
(b) Financial and Accounting Fraud Investigations.--Section
6103(i) (relating to disclosure to Federal officers or
employees for administration of Federal laws not relating to
tax administration) is amended by adding at the end the
following new paragraph:
``(9) Disclosure of returns and return information for use
in financial and accounting fraud investigations.--
``(A) Written request.--Upon receipt by the Secretary of a
written request which meets the requirements of subparagraph
(B) from the head of the United States Securities and
Exchange Commission or the Public Company Accounting
Oversight Board, a return or return information shall be
disclosed to such requestor's officers and employees who are
personally and directly engaged in an investigation,
examination, or proceeding by such requester to evaluate the
accuracy of a financial statement or report or to determine
whether to require a restatement, penalize, or deter conduct
by an issuer, investment company, or public accounting firm,
or associated person, in connection with a potential or
actual violation of auditing standards or prohibitions
against false or misleading statements or omissions in
financial statements or reports. Such disclosure shall be
solely for use by such officers and employees in such
investigation, examination, or proceeding.
``(B) Requirements.--A request meets the requirements of
this subparagraph if it sets forth--
``(i) the nature of the investigation, examination, or
proceeding,
``(ii) the statutory authority under which such
investigation, examination, or proceeding is being conducted,
``(iii) the name or names of the issuer, investment
company, or public accounting firm to which such return
information relates,
``(iv) the taxable period or periods to which such return
information relates, and
``(v) the specific reason or reasons why such disclosure
is, or may be, relevant to such investigation, examination or
proceeding.''.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures and to information and document
requests made after the date of the enactment of this Act.
SEC. 204. DISCLOSURE OF INFORMATION TO CONGRESS.
(a) Disclosure by Tax Return Preparer.--
(1) In general.--Subparagraph (B) of section 7216(b)(1)
(relating to disclosures) is amended to read as follows:
``(B) pursuant to any 1 of the following documents, if
clearly identified:
``(i) The order of any Federal, State, or local court of
record.
``(ii) A subpoena issued by a Federal or State grand jury.
``(iii) An administrative order, summons, or subpoena which
is issued in the performance of its duties by--
``(I) any Federal agency, including Congress or any
committee or subcommittee thereof, or
``(II) any State agency, body, or commission charged under
the laws of the State or a political subdivision of the State
with the licensing, registration, or regulation of tax return
preparers.''.
(2) Effective date.--The amendment made by this subsection
shall apply to disclosures made after the date of the
enactment of this Act pursuant to any document in effect on
or after such date.
(b) Disclosure by Secretary.--Paragraph (2) of section
6104(a) (relating to inspection of applications for tax
exemption or notice of status) is amended to read as follows:
``(2) Inspection by congress.--
``(A) In general.--Upon receipt of a written request from a
committee or subcommittee of Congress, copies of documents
related to a determination by the Secretary to grant, deny,
revoke, or restore an organization's exemption from taxation
under section 501 shall be provided to such committee or
subcommittee, including any application, notice of status, or
supporting information provided by such organization to the
Internal Revenue Service; any letter, analysis, or other
document produced by or for the Internal Revenue Service
evaluating, determining, explaining, or relating to the tax
exempt status of such organization (other than returns,
unless such returns are available to the public under this
section or section 6103 or 6110); and any communication
between the Internal Revenue Service and any other party
relating to the tax exempt status of such organization.
``(B) Additional information.--Section 6103(f) shall apply
with respect to--
``(i) the application for exemption of any organization
described in subsection (c) or (d) of section 501 which is
exempt from taxation under section 501(a) for any taxable
year and any application referred to in subparagraph (B) of
subsection (a)(1) of this section, and
``(ii) any other papers which are in the possession of the
Secretary and which relate to such application,
as if such papers constituted returns.''.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures and to information and document
requests made after the date of the enactment of this Act.
SEC. 205. TAX OPINION STANDARDS FOR TAX PRACTITIONERS.
Section 330(d) of title 31, United States Code, is amended
to read as follows:
``(d) The Secretary of the Treasury shall impose standards
applicable to the rendering of written advice with respect to
any listed transaction or any entity, plan, arrangement, or
other transaction which has a potential for tax avoidance or
evasion. Such standards shall address, but not be limited to,
the following issues:
``(1) Independence of the practitioner issuing such written
advice from persons promoting, marketing, or recommending the
subject of the advice.
``(2) Collaboration among practitioners, or between a
practitioner and other party, which could result in such
collaborating parties having a joint financial interest in
the subject of the advice.
``(3) Avoidance of conflicts of interest which would impair
auditor independence.
``(4) For written advice issued by a firm, standards for
reviewing the advice and ensuring the consensus support of
the firm for positions taken.
``(5) Reliance on reasonable factual representations by the
taxpayer and other parties.
``(6) Appropriateness of the fees charged by the
practitioner for the written advice.
``(7) Preventing practitioners and firms from aiding or
abetting the understatement of tax liability by clients.
``(8) Banning the promotion of potentially abusive or
illegal tax shelters.''.
SEC. 206. WHISTLEBLOWER REFORMS.
(a) In General.--Section 7623 (relating to expenses of
detection of underpayments and fraud, etc.) is amended--
(1) by striking ``The Secretary'' and inserting ``(a) in
general.--The Secretary'',
(2) by striking ``and'' at the end of paragraph (1) and
inserting ``or'',
(3) by striking ``(other than interest)'', and
(4) by adding at the end the following new subsections:
``(b) Awards to Whistleblowers.--
``(1) In general.--If the Secretary proceeds with any
administrative or judicial action described in subsection (a)
based on information brought to the Secretary's attention by
an individual, such individual shall, subject to paragraph
(2), receive as an award at least 15 percent but not more
than 30 percent of the collected proceeds (including
penalties, interest, additions to tax, and additional
amounts) resulting from the action (including any related
actions) or from any settlement in response to such action.
The determination of the amount of such award by the
Whistleblower Office shall depend upon the extent to which
the individual substantially contributed to such action, and
shall be determined at the sole discretion of the
Whistleblower Office.
``(2) Award in case of less substantial contribution.--
``(A) In general.--In the event the action described in
paragraph (1) is one which the Whistleblower Office
determines to be based principally on disclosures of specific
allegations (other than information provided by the
individual described in paragraph (1)) resulting from a
judicial or administrative hearing, from a governmental
report, hearing, audit, or investigation, or from the news
media, the Whistleblower Office may award such sums as it
considers appropriate, but in no case more than 10 percent of
the collected proceeds (including penalties, interest,
additions to tax, and additional amounts) resulting from the
action (including any related actions) or from any settlement
in response to such action, taking into account the
significance of the individual's information and the role of
such individual and any legal representative of such
individual in contributing to such action.
``(B) Nonapplication of paragraph where individual is
original source of information.--Subparagraph (A) shall not
apply if the information resulting in the initiation of the
action described in paragraph (1) was originally provided by
the individual described in paragraph (1).
``(3) Application of this subsection.--This subsection
shall apply with respect to any action--
``(A) against any taxpayer, but in the case of any
individual, only if such individual's gross income exceeds
$200,000 for any taxable year subject to such action, and
[[Page S9489]]
``(B) if the tax, penalties, interest, additions to tax,
and additional amounts in dispute exceed $20,000.
``(4) Additional rules.--
``(A) No contract necessary.--No contract with the Internal
Revenue Service is necessary for any individual to receive an
award under this subsection.
``(B) Representation.--Any individual described in
paragraph (1) or (2) may be represented by counsel.
``(C) Award not subject to individual alternative minimum
tax.--No award received under this subsection shall be
included in gross income for purposes of determining
alternative minimum taxable income.
``(c) Whistleblower Office.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Whistleblower
Office' which--
``(A) shall analyze information received from any
individual described in subsection (b) and either investigate
the matter itself or assign it to the appropriate Internal
Revenue Service office,
``(B) shall monitor any action taken with respect to such
matter,
``(C) shall inform such individual that it has accepted the
individual's information for further review,
``(D) may require such individual and any legal
representative of such individual to not disclose any
information so provided,
``(E) may ask for additional assistance from such
individual or any legal representative of such individual,
and
``(F) shall determine the amount to be awarded to such
individual under subsection (b).
``(2) Funding for office.--From the amounts available for
expenditure under subsection (a), the Whistleblower Office
shall be credited with an amount equal to the awards made
under subsection (b). These funds shall be used to maintain
the Whistleblower Office and also to reimburse other Internal
Revenue Service offices for related costs, such as costs of
investigation and collection.
``(3) Request for assistance.--
``(A) In general.--Any assistance requested under paragraph
(1)(E) shall be under the direction and control of the
Whistleblower Office or the office assigned to investigate
the matter under subparagraph (A). To the extent the
disclosure of any returns or return information to the
individual or legal representative is required for the
performance of such assistance, such disclosure shall be
pursuant to a contract entered into between the Secretary and
the recipients of such disclosure subject to section 6103(n).
``(B) Funding of assistance.--From the funds made available
to the Whistleblower Office under paragraph (2), the
Whistleblower Office may reimburse the costs incurred by any
legal representative in providing assistance described in
subparagraph (A).''.
(b) Effective Date.--The amendments made by this section
shall apply to information provided on or after the date of
the enactment of this Act.
SEC. 207. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES,
AND OTHER AMOUNTS.
(a) In General.--Subsection (f) of section 162 (relating to
trade or business expenses) is amended to read as follows:
``(f) Fines, Penalties, and Other Amounts.--
``(1) In general.--Except as provided in paragraph (2), no
deduction otherwise allowable shall be allowed under this
chapter for any amount paid or incurred (whether by suit,
agreement, or otherwise) to, or at the direction of, a
government or entity described in paragraph (4) in relation
to the violation of any law or the investigation or inquiry
by such government or entity into the potential violation of
any law.
``(2) Exception for amounts constituting restitution.--
Paragraph (1) shall not apply to any amount which--
``(A) the taxpayer establishes constitutes restitution
(including remediation of property) for damage or harm caused
by or which may be caused by the violation of any law or the
potential violation of any law, and
``(B) is identified as restitution in the court order or
settlement agreement.
Identification pursuant to subparagraph (B) alone shall not
satisfy the requirement under subparagraph (A). This
paragraph shall not apply to any amount paid or incurred as
reimbursement to the government or entity for the costs of
any investigation or litigation.
``(3) Exception for amounts paid or incurred as the result
of certain court orders.--Paragraph (1) shall not apply to
any amount paid or incurred by order of a court in a suit in
which no government or entity described in paragraph (4) is a
party.
``(4) Certain nongovernmental regulatory entities.--An
entity is described in this paragraph if it is--
``(A) a nongovernmental entity which exercises self-
regulatory powers (including imposing sanctions) in
connection with a qualified board or exchange (as defined in
section 1256(g)(7)), or
``(B) to the extent provided in regulations, a
nongovernmental entity which exercises self-regulatory powers
(including imposing sanctions) as part of performing an
essential governmental function.
``(5) Exception for taxes due.--Paragraph (1) shall not
apply to any amount paid or incurred as taxes due.''.
(b) Effective Date.--The amendment made by this section
shall apply to amounts paid or incurred on or after the date
of the enactment of this Act, except that such amendment
shall not apply to amounts paid or incurred under any binding
order or agreement entered into before such date. Such
exception shall not apply to an order or agreement requiring
court approval unless the approval was obtained before such
date.
SEC. 208. SENSE OF THE SENATE ON TAX ENFORCEMENT PRIORITIES.
It is the sense of the Senate that additional funds should
be appropriated for Internal Revenue Service enforcement
efforts and that the Internal Revenue Service should devote
proportionately more of its enforcement funds--
(1) to combat the promotion of abusive tax shelters for
corporations and high net worth individuals and the aiding
and abetting of tax evasion,
(2) to stop accounting, law, and financial firms involved
in such promotion and aiding and abetting, and
(3) to combat the use of offshore financial accounts to
conceal taxable income.
TITLE III--REQUIRING ECONOMIC SUBSTANCE
SEC. 301. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General.--Section 7701 is amended by redesignating
subsection (o) as subsection (p) and by inserting after
subsection (n) the following new subsection:
``(o) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In any case in which a court determines
that the economic substance doctrine is relevant for purposes
of this title to a transaction (or series of transactions),
such transaction (or series of transactions) shall have
economic substance only if the requirements of this paragraph
are met.
``(B) Definition of economic substance.--For purposes of
subparagraph (A)--
``(i) In general.--A transaction has economic substance
only if--
``(I) the transaction changes in a meaningful way (apart
from Federal tax effects) the taxpayer's economic position,
and
``(II) the taxpayer has a substantial nontax purpose for
entering into such transaction and the transaction is a
reasonable means of accomplishing such purpose.
In applying subclause (II), a purpose of achieving a
financial accounting benefit shall not be taken into account
in determining whether a transaction has a substantial nontax
purpose if the origin of such financial accounting benefit is
a reduction of income tax.
``(ii) Special rule where taxpayer relies on profit
potential.--A transaction shall not be treated as having
economic substance by reason of having a potential for profit
unless--
``(I) the present value of the reasonably expected pre-tax
profit from the transaction is substantial in relation to the
present value of the expected net tax benefits that would be
allowed if the transaction were respected, and
``(II) the reasonably expected pre-tax profit from the
transaction exceeds a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees and other
transaction expenses and foreign taxes shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--The form
of a transaction which is in substance the borrowing of money
or the acquisition of financial capital directly or
indirectly from a tax-indifferent party shall not be
respected if the present value of the deductions to be
claimed with respect to the transaction is substantially in
excess of the present value of the anticipated economic
returns of the person lending the money or providing the
financial capital. A public offering shall be treated as a
borrowing, or an acquisition of financial capital, from a
tax-indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with tax-
indifferent parties.
``(B) Artificial income shifting and basis adjustments.--
The form of a transaction with a tax-indifferent party shall
not be respected if--
``(i) it results in an allocation of income or gain to the
tax-indifferent party in excess of such party's economic
income or gain, or
``(ii) it results in a basis adjustment or shifting of
basis on account of overstating the income or gain of the
tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term `economic
substance doctrine' means the common law doctrine under which
tax benefits under subtitle A with respect to a transaction
are not allowable if the transaction does not have economic
substance or lacks a business purpose.
``(B) Tax-indifferent party.--The term `tax-indifferent
party' means any person or entity not subject to tax imposed
by subtitle A. A person shall be treated as a tax-indifferent
party with respect to a transaction if the items taken into
account with respect to the transaction have no substantial
impact on such person's liability under subtitle A.
``(C) Exception for personal transactions of individuals.--
In the case of an individual, this subsection shall apply
only to transactions entered into in connection
[[Page S9490]]
with a trade or business or an activity engaged in for the
production of income.
``(D) Treatment of lessors.--In applying paragraph
(1)(B)(ii) to the lessor of tangible property subject to a
lease--
``(i) the expected net tax benefits with respect to the
leased property shall not include the benefits of--
``(I) depreciation,
``(II) any tax credit, or
``(III) any other deduction as provided in guidance by the
Secretary, and
``(ii) subclause (II) of paragraph (1)(B)(ii) shall be
disregarded in determining whether any of such benefits are
allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of
this subsection shall be construed as being in addition to
any such other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''.
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after the date of
the enactment of this Act.
SEC. 302. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662A the following new section:
``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
``(a) Imposition of Penalty.--If a taxpayer has an
noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal
to 40 percent of the amount of such understatement.
``(b) Reduction of Penalty for Disclosed Transactions.--
Subsection (a) shall be applied by substituting `20 percent'
for `40 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect
to which the relevant facts affecting the tax treatment of
the item are adequately disclosed in the return or a
statement attached to the return.
``(c) Noneconomic Substance Transaction Understatement.--
For purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be
an understatement under section 6662A(b)(1) if section 6662A
were applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction
if--
``(A) there is a lack of economic substance (within the
meaning of section 7701(o)(1)) for the transaction giving
rise to the claimed benefit or the transaction was not
respected under section 7701(o)(2), or
``(B) the transaction fails to meet the requirements of any
similar rule of law.
``(d) Rules Applicable to Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (2) and
(3) of section 6707A(d) shall apply for purposes of paragraph
(1).
``(e) Coordination With Other Penalties.--Except as
otherwise provided in this part, the penalty imposed by this
section shall be in addition to any other penalty imposed by
this title.
``(f) Cross References.--
``(1) For coordination of penalty with understatements under section
6662 and other special rules, see section 6662A(e)...................
``(2) For reporting of penalty imposed under this section to the
Securities and Exchange Commission, see section 6707A(e).''..........
(b) Coordination With Other Understatements and
Penalties.--
(1) The second sentence of section 6662(d)(2)(A) is amended
by inserting ``and without regard to items with respect to
which a penalty is imposed by section 6662B'' before the
period at the end.
(2) Subsection (e) of section 6662A is amended--
(A) in paragraph (1), by inserting ``and noneconomic
substance transaction understatements'' after ``reportable
transaction understatements'' both places it appears,
(B) in paragraph (2)(A), by inserting ``and a noneconomic
substance transaction understatement'' after ``reportable
transaction understatement'',
(C) in paragraph (2)(B), by inserting ``6662B or'' before
``6663'',
(D) in paragraph (2)(C)(i), by inserting ``or section
6662B'' before the period at the end,
(E) in paragraph (2)(C)(ii), by inserting ``and section
6662B'' after ``This section'',
(F) in paragraph (3), by inserting ``or noneconomic
substance transaction understatement'' after ``reportable
transaction understatement'', and
(G) by adding at the end the following new paragraph:
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).''.
(3) Subsection (e) of section 6707A is amended--
(A) by striking ``or'' at the end of subparagraph (B), and
(B) by striking subparagraph (C) and inserting the
following new subparagraphs:
``(C) is required to pay a penalty under section 6662B with
respect to any noneconomic substance transaction, or
``(D) is required to pay a penalty under section 6662(h)
with respect to any transaction and would (but for section
6662A(e)(2)(C)) have been subject to penalty under section
6662A at a rate prescribed under section 6662A(c) or under
section 6662B,''.
(c) Clerical Amendment.--The table of sections for part II
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6662A the following new item:
``Sec. 6662B. Penalty for understatements attributable to transactions
lacking economic substance, etc.''.
(d) Effective Date.--The amendments made by this section
shall apply to transactions entered into after the date of
the enactment of this Act.
SEC. 303. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS
ATTRIBUTABLE TO NONECONOMIC SUBSTANCE
TRANSACTIONS.
(a) In General.--Section 163(m) (relating to interest on
unpaid taxes attributable to nondisclosed reportable
transactions) is amended--
(1) by striking ``attributable'' and all that follows and
inserting the following: ``attributable to--
``(1) the portion of any reportable transaction
understatement (as defined in section 6662A(b)) with respect
to which the requirement of section 6664(d)(2)(A) is not met,
or
``(2) any noneconomic substance transaction understatement
(as defined in section 6662B(c)).'', and
(2) by inserting ``and noneconomic substance transactions''
after ``transactions''.
(b) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
TITLE IV--DETERRING UNCOOPERATIVE TAX HAVENS
SEC. 401. DISCLOSING PAYMENTS TO PERSONS IN UNCOOPERATIVE TAX
HAVENS.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 is amended by inserting after section 6038C the
following new section:
``SEC. 6038D. DETERRING UNCOOPERATIVE TAX HAVENS THROUGH
LISTING AND REPORTING REQUIREMENTS.
``(a) In General.--Each United States person who transfers
money or other property directly or indirectly to any
uncooperative tax haven, to any financial institution
licensed by or operating in any uncooperative tax haven, or
to any person who is a resident of any uncooperative tax
haven shall furnish to the Secretary, at such time and in
such manner as the Secretary shall by regulation prescribe,
such information with respect to such transfer as the
Secretary may require.
``(b) Exceptions.--Subsection (a) shall not apply to a
transfer by a United States person if the amount of money
(and the fair market value of property) transferred is less
than $10,000. Related transfers shall be treated as 1
transfer for purposes of this subsection.
``(c) Uncooperative Tax Haven.--For purposes of this
section--
``(1) In general.--The term `uncooperative tax haven' means
any foreign jurisdiction which is identified on a list
maintained by the Secretary under paragraph (2) as being a
jurisdiction--
``(A) which imposes no or nominal taxation either generally
or on specified classes of income, and
``(B) has corporate, business, bank, or tax secrecy or
confidentiality rules and practices, or has ineffective
information exchange practices which, in the judgment of the
Secretary, effectively limit or restrict the ability of the
United States to obtain information relevant to the
enforcement of this title.
``(2) Maintenance of list.--Not later than November 1 of
each calendar year, the Secretary shall issue a list of
foreign jurisdictions which the Secretary determines qualify
as uncooperative tax havens under paragraph (1).
``(3) Ineffective information exchange practices.--For
purposes of paragraph (1), a jurisdiction shall be deemed to
have ineffective information exchange practices if the
Secretary determines that during any taxable year ending in
the 12-month period preceding the issuance of the list under
paragraph (2)--
``(A) the exchange of information between the United States
and such jurisdiction was inadequate to prevent evasion or
avoidance of United States income tax by United States
persons or to enable the United States effectively to enforce
this title, or
``(B) such jurisdiction was identified by an
intergovernmental group or organization of
[[Page S9491]]
which the United States is a member as uncooperative with
international tax enforcement or information exchange and the
United States concurs in the determination.
``(d) Penalty for Failure to File Information.--If a United
States person fails to furnish the information required by
subsection (a) with respect to any transfer within the time
prescribed therefor (including extensions), such United
States person shall pay (upon notice and demand by the
Secretary and in the same manner as tax) an amount equal to
20 percent of the amount of such transfer.
``(e) Simplified Reporting.--The Secretary may by
regulations provide for simplified reporting under this
section for United States persons making large volumes of
similar payments.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for such
subpart A is amended by inserting after the item relating to
section 6038C the following new item:
``Sec. 6038D. Deterring uncooperative tax havens through listing and
reporting requirements.''.
(c) Effective Date.--The amendments made by this section
shall apply to transfers after the date which is 180 days
after the date of the enactment of this Act.
SEC. 402. DETERRING UNCOOPERATIVE TAX HAVENS BY RESTRICTING
ALLOWABLE TAX BENEFITS.
(a) Limitation on Deferral.--
(1) In general.--Subsection (a) of section 952 (defining
subpart F income) is amended by striking ``and'' at the end
of paragraph (4), by striking the period at the end of
paragraph (5) and inserting ``, and'', and by inserting after
paragraph (5) the following new paragraph:
``(6) an amount equal to the applicable fraction (as
defined in subsection (e)) of the income of such corporation
other than income which--
``(A) is attributable to earnings and profits of the
foreign corporation included in the gross income of a United
States person under section 951 (other than by reason of this
paragraph or paragraph (3)(A)(i)), or
``(B) is described in subsection (b).''.
(2) Applicable fraction.--Section 952 is amended by adding
at the end the following new subsection:
``(e) Identified Tax Haven Income Which Is Subpart F
Income.--
``(1) In general.--For purposes of subsection (a)(6), the
term `applicable fraction' means the fraction--
``(A) the numerator of which is the aggregate identified
tax haven income for the taxable year, and
``(B) the denominator of which is the aggregate income for
the taxable year which is from sources outside the United
States.
``(2) Identified tax haven income.--For purposes of
paragraph (1), the term `identified tax haven income' means
income for the taxable year which is attributable to a
foreign jurisdiction for any period during which such
jurisdiction has been identified as an uncooperative tax
haven under section 6038D(c).
``(3) Regulations.--The Secretary shall prescribe
regulations similar to the regulations issued under section
999(c) to carry out the purposes of this subsection.''.
(b) Denial of Foreign Tax Credit.--Section 901 (relating to
taxes of foreign countries and of possessions of United
States) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following new subsection:
``(m) Reduction of Foreign Tax Credit, Etc., for Identified
Tax Haven Income.--
``(1) In general.--Notwithstanding any other provision of
this part--
``(A) no credit shall be allowed under subsection (a) for
any income, war profits, or excess profits taxes paid or
accrued (or deemed paid under section 902 or 960) to any
foreign jurisdiction if such taxes are with respect to income
attributable to a period during which such jurisdiction has
been identified as an uncooperative tax haven under section
6038D(c), and
``(B) subsections (a), (b), (c), and (d) of section 904 and
sections 902 and 960 shall be applied separately with respect
to all income of a taxpayer attributable to periods described
in subparagraph (A) with respect to all such jurisdictions.
``(2) Taxes allowed as a deduction, etc.--Sections 275 and
78 shall not apply to any tax which is not allowable as a
credit under subsection (a) by reason of this subsection.
``(3) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection, including regulations which
treat income paid through 1 or more entities as derived from
a foreign jurisdiction to which this subsection applies if
such income was, without regard to such entities, derived
from such jurisdiction.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 403. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST
ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE
FINANCIAL ARRANGEMENTS.
(a) Determination of Penalty.--
(1) In general.--Notwithstanding any other provision of
law, in the case of an applicable taxpayer--
(A) the determination as to whether any interest or
applicable penalty is to be imposed with respect to any
arrangement described in paragraph (2), or to any
underpayment of Federal income tax attributable to items
arising in connection with any such arrangement, shall be
made without regard to the rules of subsections (b), (c), and
(d) of section 6664 of the Internal Revenue Code of 1986, and
(B) if any such interest or applicable penalty is imposed,
the amount of such interest or penalty shall be equal to
twice that determined without regard to this section.
(2) Applicable taxpayer.--For purposes of this subsection--
(A) In general.--The term ``applicable taxpayer'' means a
taxpayer which--
(i) has underreported its United States income tax
liability with respect to any item which directly or
indirectly involves--
(I) any financial arrangement which in any manner relies on
the use of an offshore payment mechanism (including credit,
debit, or charge cards) issued by a bank or other entity in a
foreign jurisdiction, or
(II) any offshore financial arrangement (including any
arrangement with foreign banks, financial institutions,
corporations, partnerships, trusts, or other entities), and
(ii) has not signed a closing agreement pursuant to the
Voluntary Offshore Compliance Initiative established by the
Department of the Treasury under Revenue Procedure 2003-11 or
voluntarily disclosed its participation in such arrangement
by notifying the Internal Revenue Service of such arrangement
prior to the issue being raised by the Internal Revenue
Service during an examination.
(B) Authority to waive.--The Secretary of the Treasury or
the Secretary's delegate may waive the application of
paragraph (1) for any taxpayer if the Secretary or the
Secretary's delegate determines that--
(i) the use of such offshore payment mechanism or financial
arrangement was incidental to the transaction,
(ii) in the case of a trade or business, such use took
place in the ordinary course of the trade or business of the
taxpayer, and
(iii) such waiver would serve the public interest.
(C) Issues raised.--For purposes of subparagraph (A)(ii),
an item shall be treated as an issue raised during an
examination if the individual examining the return--
(i) communicates to the taxpayer knowledge about the
specific item, or
(ii) has made a request to the taxpayer for information and
the taxpayer could not make a complete response to that
request without giving the examiner knowledge of the specific
item.
(b) Definitions and Rules.--For purposes of this section--
(1) Applicable penalty.--The term ``applicable penalty''
means any penalty, addition to tax, or fine imposed under
chapter 68 of the Internal Revenue Code of 1986.
(2) Fees and expenses.--The Secretary of the Treasury may
retain and use an amount not in excess of 25 percent of all
additional interest, penalties, additions to tax, and fines
collected under this section to be used for enforcement and
collection activities of the Internal Revenue Service. The
Secretary shall keep adequate records regarding amounts so
retained and used. The amount credited as paid by any
taxpayer shall be determined without regard to this
paragraph.
(c) Report by Secretary.--The Secretary shall each year
conduct a study and report to Congress on the implementation
of this section during the preceding year, including
statistics on the number of taxpayers affected by such
implementation and the amount of interest and applicable
penalties asserted, waived, and assessed during such
preceding year.
(d) Effective Date.--The provisions of this section shall
apply to interest, penalties, additions to tax, and fines
with respect to any taxable year if, as of the date of the
enactment of this Act, the assessment of any tax, penalty, or
interest with respect to such taxable year is not prevented
by the operation of any law or rule of law.
SEC. 404. TREASURY REGULATIONS ON FOREIGN TAX CREDIT.
(a) In General.--Section 901 (relating to taxes of foreign
countries and of possessions of United States), as amended by
section 402, is amended by redesignating subsection (n) as
subsection (o) and by inserting after subsection (m) the
following new subsection:
``(n) Regulations.--The Secretary may prescribe regulations
disallowing a credit under subsection (a) for all or a
portion of any foreign tax, or allocating a foreign tax among
2 or more persons, in cases where the foreign tax is imposed
on any person in respect of income of another person or in
other cases involving the inappropriate separation of the
foreign tax from the related foreign income.''.
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after the date of
the enactment of this Act.
Mr. COLEMAN. Mr. President, today I rise to join Senator Levin in
introducing the Tax Shelter and Tax Haven Reform Act of 2005. This bill
addresses abusive tax shelters and offshore tax havens which allow tax
evaders to avoid paying their fair share. These abuses increase the
amount of taxes for everyone else. By increasing the penalty for these
shelters, this legislation
[[Page S9492]]
will do much to ensure that the public trust in our tax laws is
restored.
Two years ago, as Chairman of the Permanent Subcommittee on
Investigations, I held Subcommittee hearings on abusive tax shelters.
It became clear to the Subcommittee that some tax avoidance schemes are
clearly abusive. These abusive shelters relied on sham transactions
with no financial or economic utility other than to manufacture tax
benefits.
Abusive tax shelters hurt the American people. For example, a recent
IRS study estimates the Nation's ``tax gap''--the difference between
the amount of taxes owed and the amount collected was $353 billion in
2001. The study also found that over 80 percent of the ``tax gap'' is
due to taxpayers underreporting their taxes. This means that honest
taxpayers are forced to pay more to make up for those taxpayers who
dodge Uncle Sam.
The use of abusive tax shelters exploded during the high-flying
1990s, when many firms were awash in cash and were more concerned with
generating fees than remaining compliant with the code. The lure of
millions of dollars in fees clearly played a role in the decision on
the part of tax professionals to drive a Brinks truck through any
purported tax loophole.
Abusive tax shelters require accountants and financial advisors who
develop and structure transactions to take advantage of loopholes in
the tax code. Lawyers provide cookie cutter tax opinions deeming the
transactions to be legal. Bankers provide loans with little or no
credit risk, yet the amount of the loan creates a multi-million dollar
tax loss.
This became a game. Reputable professionals were able to earn huge
profits by providing services that offered a ``veneer of legitimacy''
to the transactions. The parties involved were careful to hide the
transactions from IRS detection by failing to register and failing to
provide lists of clients who used the transactions to the IRS.
It was clear to the Subcommittee that the promoters of these tax
shelters failed to register transactions with the IRS partly because
the penalties for failing to register were so low compared to the
expected profits. In other words, the risk-benefit ratio was entirely
lopsided in the favor of the promoters. This bill will end this
advantage and will strengthen the enforcement tools that are at Uncle
Sam's disposal.
Current law provides for penalties that amount to 50 percent of the
gains of those who market, plan, implement and sell sham tax shelters
to individuals and corporations. However, I agree with my esteemed
colleague, Senator Levin, that even stronger penalties are needed. The
provision to substantially increase penalties to the promoters and
aiders and abettors who manufacture and implement these sham
transactions so that they must give back more than just half of their
ill-gotten gains is vital to restoring the integrity of our tax laws
and deterring future tax avoidance.
This is not a victimless crime. It is not the government that loses
the money. It is working moms and dads who bear the brunt of lost
revenue so that a handful of lawyers, accountants, investment advisors,
bankers and their clients can manipulate legitimate business practices
to make a profit.
We need to give honest, hard working Americans a better deal--by
cracking down on those who choose not to pay their fair share of taxes.
This bill is a step in the right direction.
Mr. OBAMA. Mr. President, I rise today to speak about the ``Tax
Shelter and Tax Haven Reform Act of 2005,'' of which I am a cosponsor.
This bill seeks to improve the fairness of our tax system by deterring
the use of tax avoidance strategies with no economic justification
other than to reduce tax liability and shirk responsibility.
Abusive tax shelters and tax havens cost this country tens of
billions of dollars each year and may be the largest single source of
the $300 billion tax gap between what is owed and what is collected by
the U.S. Treasury. The investigation by my colleagues on the Senate
Permanent Subcommittee on Investigations found that more than half of
all federal contractors may have subsidiaries in tax havens and that
almost half of all foreign profits of U.S. corporations in a recent
year were in tax havens. My esteemed colleagues also heard testimony
that between 1-2 million individual taxpayers may be hiding funds in
offshore tax havens. Many of these tax havens refuse to cooperate with
U.S. tax enforcement officials.
This is not a political issue of how low or high taxes ought to be.
This is a basic issue of fairness and integrity. Corporate and
individual taxpayers alike must have confidence that those who
disregard the law will be identified and adequately punished. Those who
enforce the law need the tools and resources to do so. We cannot
reasonably expect an American business to subject itself to a
competitive disadvantage by following the law while watching its
competitors defy the law without repercussion.
This bill cracks down on those individuals and businesses that
establish virtual residences in tax havens abroad while taking unfair
advantage of the very real advantages of actual residence here in the
United States.
This bill clarifies that the sole purpose of a transaction cannot
legitimately be to evade tax liability.
This bill increases the penalties for those who profit by
manipulating and exploiting our tax laws, resulting in higher rates and
greater complexity for the rest of us.
My mother taught me that there is no such thing as a free lunch--
someone always has to pay. And when one of us shirks our duty to pay,
the burden gets shifted to others, in this case to ordinary taxpayers
and working Americans without access to sophisticated tax preparers or
corporate loopholes.
This bill strengthens our ability to stop shifting the tax burden to
working families. The money saved by this bill, for example, can reduce
the burden on American children of unnecessary budget deficits being
financed by rising debt to foreign nations.
The money saved by this bill can also be used to protect children in
low income families from unfair tax increases caused by inequities in
the child tax credit. In fact, this fall, I intend to introduce
legislation to ensure that the child tax credit is not reduced solely
because a family's income fails to keep pace with inflation. With less
than half of the savings generated by this bill, we can shield more
than four million children from the annual tax increase their families
face as a result of stagnant wages and inflation under current law.
All of us should pay our fair share of American taxes. There is no
excuse for benefiting from the laws and services, institutions and
economic structure of our nation while evading your responsibility to
do your part for this country. I believe it is our job to keep the
system fair, and that's what this bill seeks to do.
I commend Senator Levin and Senator Coleman for their leadership on
this important issue. I am proud to be a cosponsor of this bill and
urge my colleagues to support it.
______
By Mr. ROBERTS (for himself and Mr. Kennedy):
S. 1570. A bill to promote employment of individuals with severe
disabilities through Federal Government contracting and procurement
processes, and for other purposes; to the Committee on Homeland
Security and Governmental Affairs.
Mr. ROBERTS. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1570
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 ``Employer Work Incentive Act
for Individuals with Severe Disabilities''.
SEC. 2. PURPOSE.
The purpose of this Act is to promote employment
opportunities for individuals with severe disabilities, by
requiring Federal agencies to offer incentives to Government
contractors and subcontractors that employ substantial
numbers of individuals with severe disabilities.
SEC. 3. JOBS INITIATIVE FOR INDIVIDUALS WITH SEVERE
DISABILITIES.
(a) Preference for Contractors Employing Individuals With
Severe Disabilities.--The Office of Federal Procurement
Policy Act (41 U.S.C. 403 et seq.) is amended by adding at
the end the following new section:
[[Page S9493]]
``SEC. 42. PREFERENCE FOR CONTRACTORS EMPLOYING INDIVIDUALS
WITH SEVERE DISABILITIES.
``(a) Preference.--In entering into a contract, the head of
an executive agency shall give a preference in the source
selection process to each offeror that submits with its offer
for the contract a written pledge that the contractor is an
eligible business for purposes of this section.
``(b) Uniform Pledge.--The Federal Acquisition Regulation
shall set forth the pledge that is to be used in the
administration of this section.
``(c) Responsibility of the Secretary of Labor.--(1) The
Secretary of Labor shall maintain on the Internet web site of
the Department of Labor a list of contractors that have
submitted the pledge as described in subsection (a).
``(2) The head of each executive agency receiving a pledge
as described in subsection (a) shall transmit a copy of the
pledge to the Secretary of Labor.
``(d) Definitions.--In this section:
``(1)(A) The term `eligible business' means a nonprofit or
for-profit business entity that--
``(i) except as provided in subparagraph (B), demonstrates
that it has established an integrated employment setting, as
defined by the Secretary of Labor;
``(ii) employs individuals with severe disabilities in not
less than 25 percent of the full-time equivalent positions of
the business, on average;
``(iii)(I) pays wages to each of the individuals with
severe disabilities at not less than the applicable rate
described in section 6(a)(1) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 206(a)(1)), regardless of whether the
individuals are engaged in supported employment, or training,
under a contract with an executive agency or a program that
receives Federal funds; and
``(II) does not employ any individual with a severe
disability pursuant to a special certificate issued under
section 14(c) of the Fair Labor Standards Act of 1938 (29
U.S.C. 214(c)); and
``(iv) makes contributions for at least 50 percent of the
total cost of the annual premiums for health insurance
coverage for its employees.
``(B) In the case of an entity that has a contract with an
executive agency in effect on the date of enactment of the
Employer Work Incentive Act for Individuals with Severe
Disabilities, subparagraph (A)(i) shall not apply until 3
years after that date of enactment.
``(2)(A) The term `individual with a severe disability'
means an individual who is a disabled beneficiary (as defined
in section 1148(k)(2) of the Social Security Act (42 U.S.C.
1320b-19(k)(2)) or an individual who would be considered to
be such a disabled beneficiary but for having income or
assets in excess of the income or asset eligibility limits
established under title II or XVI of the Social Security Act,
respectively (42 U.S.C. 401 et seq., 1381 et seq.).
``(B) The term `individuals with severe disabilities' means
more than 1 individual with a severe disability.''.
(b) Clerical Amendment.--The table of contents in section
1(b) of such Act is amended by adding at the end the
following new item:
``Sec. 42. Preference for contractors employing individuals with severe
disabilities.''.
______
By Mr. CORZINE (for himself and Mr. Lautenberg):
S. 1571. A bill to amend title 38, United States Code, to establish a
comprehensive program for testing and treatment of veterans for the
Hepatitis C virus; to the Committee on Veterans' Affairs.
Mr. CORZINE. Mr. President, I rise today along with my colleague,
Senator Lautenberg, to introduce the Veterans Comprehensive Hepatitis C
Health Care Act. This bill would fundamentally change the way the
Department of Veterans Affairs is addressing the growing Hepatitis C
epidemic, and would create a national standard for testing and treating
veterans with the virus.
Hepatitis C is a disease of the liver caused by contact with the
Hepatitis C virus. It is primarily spread by contact with infected
blood. The CDC estimates that 1.8 percent of the population is infected
with the Hepatitis C virus, and that number is much higher among
veterans. Vietnam-era veterans are considered to be at greater risk
because many were exposed to Hepatitis C-infected blood as a result of
combat-related surgical care during the Vietnam War. In fact, data from
the Veterans Administration suggests that as many as 18 percent of all
veterans and 64 percent of Vietnam veterans are infected with the
Hepatitis C Virus (HCV). Veterans living in the New York-New Jersey
metropolitan area have the highest rate of Hepatitis C in the Nation.
For many of those infected, Hepatitis C leads to liver failure,
transplants, liver cancer, and death.
And yet, most veterans who have Hepatitis C don't even know it--and
often do not get treatment until it's too late. Despite recent advances
in treating Hepatitis C, the VA still lacks a comprehensive,
consistent, uniform approach to testing and treating veterans for the
virus. Only a fraction of the eight million veterans enrolled
nationally in the VA Health Care System have been tested to date. Part
of the problem stems from a lack of qualified, full-time medical
personnel to administer and analyze the tests. Most of the 172 VA
hospitals in this country have only one doctor, working a half day a
week, to conduct and analyze all the tests. At this rate, it will take
years to test the entire enrolled population--years that many of these
veterans may not have.
To address this growing problem, I am again introducing the Veterans
Comprehensive Hepatitis C Health Care Act. This legislation will
improve access to Hepatitis C testing and treatment for all veterans,
ensure that the VA spends all allocated Hepatitis C funds on testing
and treatment, and sets new, national policies for Hepatitis C care.
Congressman Rodney Frelinghuysen from New Jersey has introduced
companion legislation in the House of Representatives.
The bill would improve testing and treatment for veterans by
requiring annual screening tests for Vietnam-era veterans enrolled in
the VA health system, and providing annual tests, upon request, to
other veterans enrolled in the system. Further, it would require the VA
to treat any enrolled veteran who tests positive for the Hepatitis C
virus, regardless of service-connected disability status or priority
group categorization. The VA would be required to provide at least one
dedicated health care professional--a doctor and a nurse--at each VA
Hospital for testing and treatment of this disease.
This bill would also increase the amount of money dedicated to
Hepatitis C testing and treatment, and would make sure these funds are
spent where they are needed most. Beginning in FY06, Hepatitis C
funding would be shifted to the Specific Purpose account under the
Veterans Health Administration, and would be dedicated solely for the
purpose of paying for the costs associated with treating veterans with
the Hepatitis C virus. The bill would allocate these funds to the 22
Veterans Integrated Service Networks (VISN) based on each VISN's
Hepatitis C incidence rate, or the number of veterans infected with the
virus.
In addition, this bill will end the confusing patchwork of policies
governing the care of veterans with Hepatitis C throughout the nation.
This legislation directs the VA to develop and implement a
standardized, national Hepatitis C policy for its testing protocol,
treatment options and education and notification efforts. The bill
further directs the VA to develop an outreach program to notify
veterans who have not been tested for the Hepatitis C virus of the need
for such testing and the availability of such testing through the VA.
And finally, this legislation would establish Hepatitis C Centers of
Excellence in geographic areas with high incidence of Hepatitis C
infection.
The VA currently lacks a comprehensive national strategy for
combating this deadly disease. The Veterans Comprehensive Hepatitis C
Health Care Act will ensure that veterans will finally be provided with
the access to testing and treatment that they have more than earned and
deserve. And, the Federal Government will actually save money in the
long run by testing and treating this infection early. The alternative
is much more costly treatment of end-stage liver disease and the
associated complications, or other disorders.
The VA has known about the problem of Hepatitis C among veterans
since 1992, but they have not acted. We must address this critical
issue for the brave men and women who have placed their lives in danger
to protect the United States. I urge my colleagues to join me in
supporting this crucial 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. 1571
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[[Page S9494]]
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans Comprehensive
Hepatitis C Health Care Act''.
SEC. 2. COMPREHENSIVE HEPATITIS C HEALTH CARE TESTING AND
TREATMENT PROGRAM FOR VETERANS.
(a) In General.--Chapter 17 of title 38, United States
Code, is amended by inserting after section 1720E the
following new section:
``Sec. 1720F. Hepatitis C testing and treatment
``(a) Initial Testing.--(1) During the 1-year period
beginning on the date of the enactment of the Veterans
Comprehensive Hepatitis C Health Care Act, the Secretary
shall provide a blood test for the Hepatitis C virus to--
``(A) each veteran who--
``(i)(I) served in the active military, naval, or air
service during the Vietnam era; or
``(II) is considered to be `at risk,';
``(ii) is enrolled to receive care under section 1710 of
this title; and
``(iii)(I) requests the test; or
``(II) is otherwise receiving a physical examination or any
care or treatment from the Secretary; and
``(B) any other veteran who requests the test.
``(2) After the end of the period referred to in paragraph
(1), the Secretary shall provide a blood test for the
Hepatitis C virus to any veteran who requests the test.
``(b) Followup Testing and Treatment.--In the case of any
veteran who tests positive for the Hepatitis C virus, the
Secretary shall provide--
``(1) such followup tests as are considered medically
appropriate; and
``(2) appropriate treatment for that veteran in accordance
with the national protocol for the treatment of Hepatitis C.
``(c) Status of Care.--(1) Treatment shall be provided
under subsection (b) without regard to whether the Hepatitis
C virus is determined to be service-connected and without
regard to priority group categorization of the veteran. No
copayment may be charged for treatment under subsection (b),
and no third-party reimbursement may be sought or accepted,
under section 1729 of this title or under any other provision
of law, for testing or treatment under subsection (a) or (b).
``(2) Paragraph (1) shall cease to be in effect upon the
effective date of a determination by the Secretary or by
Congress that the occurrence of the Hepatitis C virus in
specified veterans shall be presumed to be service-connected.
``(d) Staffing.--(1) The Secretary shall require that each
Department medical center employ at least 1 full-time
gastroenterologist, hepatologist, or other qualified
physician to provide tests and treatment for the Hepatitis C
virus under this section.
``(2) The Secretary shall, to the extent practicable,
ensure that each Department medical center has at least 1
staff member assigned to work, in coordination with Hepatitis
C medical personnel, to coordinate treatment options for
Hepatitis C patients and provide information and counseling
for those patients and their families. Such a staff member
should preferably be trained in psychology or psychiatry or
be a social worker.
``(3) In order to improve treatment provided to veterans
with the Hepatitis C virus, the Secretary shall provide
increased training options to Department health care
personnel.''.
(b) Clerical Amendment.--The table of sections at the
beginning of such chapter is amended by inserting after the
item relating to section 1720E the following new item:
``1720F. Hepatitis C testing and treatment.''.
SEC. 3. FUNDING FOR HEPATITIS C PROGRAMS OF THE DEPARTMENT OF
VETERANS AFFAIRS.
(a) Program Account.--Beginning with fiscal year 2006,
amounts appropriated for the Department of Veterans Affairs
for Hepatitis C detection and treatment shall be provided,
within the ``Medical Care'' account, through the ``Specific
Purpose'' subaccount, rather than the ``VERA'' subaccount.
(b) Allocation of Funds to VISNs.--In allocating funds
appropriated for the Department of Veterans Affairs for the
``Medical Care'' account to the Veterans Integrated Service
Networks, the Secretary of Veterans Affairs shall allocate
funds for detection and treatment of the Hepatitis C virus
based upon incidence rates of that virus among veterans
(rather than based upon the overall population of veterans)
in each such network.
(c) Limitation on Use of Funds.--Amounts appropriated for
the Department of Veterans Affairs for Hepatitis C detection
and treatment through the ``Specific Purpose'' subaccount may
not be used for any other purpose.
SEC. 4. NATIONAL POLICY.
(a) Standardized Nationwide Policy.--The Secretary of
Veterans Affairs shall develop and implement a standardized
policy to be applied throughout the Department of Veterans
Affairs health care system with respect to the Hepatitis C
virus. The policy shall include the testing protocol for the
Hepatitis C virus, treatment options, education and
notification efforts, and establishment of a specific
Hepatitis C diagnosis code for measurement and treatment
purposes.
(b) Outreach.--The Secretary shall, on an annual basis,
take appropriate actions to notify veterans who have not been
tested for the Hepatitis C virus of the need for such testing
and the availability of such testing from the Department of
Veterans Affairs.
SEC. 5. HEPATITIS C CENTERS OF EXCELLENCE.
(a) Establishment.--The Secretary of Veterans Affairs shall
establish at least 1, and not more than 3, additional
Hepatitis C centers of excellence or additional sites at
which activities of Hepatitis C centers of excellence are
carried out. Each such additional center or site shall be
established at a Department of Veterans Affairs medical
center in 1 of the 5 geographic service areas (known as a
Veterans Integrated Service Network) with the highest case
rate of Hepatitis C in fiscal year 1999.
(b) Funding.--Funding for the centers or sites established
under subsection (a) shall be provided from amounts available
to the Central Office of the Department of Veterans Affairs
and shall be in addition to amounts allocated for Hepatitis C
pursuant to section 3.
______
By Mr. JOHNSON (for himself and Mr. Bingaman):
S. 1572. A bill to amend title XIX of the Social Security Act to
clarify the application of the 100 percent Federal medical assistance
percentage under the Medicaid program for services provided by the
Indian Health Service or an Indian tribe or tribal organization
directly or through referral, contract, or other arrangement; to the
Committee on Finance.
Mr. JOHNSON. Mr. President, today I am introducing legislation that
will make a necessary clarification to current law regarding the
application of the federal medical assistance percentage or FMAP. I am
joined by Senator Bingaman in introducing this bill.
The Indian Health Care Improvement Act, IHCIA, provides for 100
percent Federal medical assistance percentage, FMAP, applicable to
Medicaid services ``received through an Indian Health Service
facility.'' This definition has created some issues for state Medicaid
programs when applying for the full FMAP rate for services provided to
Native Americans that are referred by an Indian Health Service facility
to a non-IRS facility.
North Dakota and South Dakota have been in the courts with the
Centers for Medicare and Medicaid Services or CMS over this issue.
Since last year when CMS determined that the 100 percent FMAP was not
allowable for referred services, North Dakota and South Dakota appealed
and prevailed in a lawsuit at the district court level. The Federal
appeals court has now reversed the district court's decision and
affirmed that those states must repay CMS for the excess payments.
While the court sided in favor of CMS, the decision states that there
is a lack of clarity in the statute pertaining to how referred patients
are covered through the Federal match.
CMS disallowed $4 million in payments that South Dakota's Department
of Social Services had billed Medicaid through the 100 percent FMAP for
Indian patients seen in non-IHS facilities through referrals. At issue
is a lack of specificity regarding how far ``received through'' should
extend. The most recent court decision even states ``the statutory
language is susceptible to multiple interpretations.''
The legislation I am introducing today will clarify the statute and
make it completely clear that any services provided under a state
Medicaid plan which are referred by any Indian Health Service facility,
whether operated by the IHS or by and Indian tribe or tribal
organization are to be covered by the 100 percent FMAP amount. Any
previous disallowance of a claim or claims by CMS will be reviewed by
the Department of Health and Human Services within 90 days of enactment
of this legislation and payments adjusted accordingly if the claim
meets the standards set forth in this bill.
The Senate Indian Affairs Committee, of which I am a member, will be
considering the IHCIA this fall. It is my hope that this legislation
will be considered within the broader context of the debate on IHCIA.
Clearly the Federal government has an obligation to live up to the
treaties and responsibilities to our tribes and all Native Americans. I
see this legislation as an extension of the obligation.
______
By Ms. CANTWELL (for herself, Mr. Bingaman, Mr. Rockefeller, Mrs.
Lincoln, Mrs. Murray, and Mr. Corzine):
S. 1574. A bill to amend title XVIII of the Social Security Act to
provide for a minimum update for physicians' services for 2006 and
2007; to the Committee on Finance.
[[Page S9495]]
Ms. CANTWELL. Mr. President, I am proud to rise today with my
colleagues Senators Bingaman, Rockefeller, Lincoln, Murray and Corzine
to introduce the ``Affordable Access to Medicare Providers Act.''
Securing access to affordable healthcare, especially for our Nation's
seniors, is critical and it remains to be one of my top priorities.
Access to healthcare is impacted by two key factors: we must have
enough well qualified healthcare providers that are willing and able to
accept Medicare patients, and the beneficiaries must be able to afford
the premiums required to utilize their Medicare benefits. This bill
addresses both of these issues--it will provide some stability in
physician Medicare payment rates so that physicians can continue to
offer high quality healthcare services while ensuring that the Medicare
beneficiaries are not saddled with the cost and even higher premiums
for physicians services.
Medicare was written to cover the most basic health care for seniors.
When the original bill passed in 1965, the legislation's conference
report explicitly stated that the intent of the program is to provide
adequate ``medical aid . . . for needy people, and should ``make the
best of modem medicine more readily available to the aged.''
While the Medicare Modernization Act provided some improvements such
as: It also had some unfortunate consequences on the Medicare
beneficiaries in Washington State. Medicare payments per beneficiary
will be further exacerbated and continue to penalize Washington state
for our efficient healthcare system. Fifty-seven percent of Washington
state physicians are limiting or dropping Medicare patients from their
practices. Washington falling to 45th in the Nation on reimbursements
will not help the situation.
A survey conducted by the Medicare Payment Advisory Council, MedPAC,
found that 22 percent of patients already have some problems finding a
primary care physician and 27 percent report delays getting an
appointment. Physicians are the foundation of our Nation's health care
system. Continual cuts, or even the threat of repeated cuts, put
Medicare patient access to physicians' services at risk. They also
threaten to destabilize the Medicare program and create a ripple effect
across other programs. Indeed, Medicare cuts jeopardize access to
medical care for millions of our active duty military family members
and military retirees because their TRICARE insurance ties its payment
rates to Medicare.
Now we are told by the Medicare board of Trustees that if Congress
does not act by the end of the year, the Medicare physician payment
formula will likely produce a 4.3 percent decrease next year with
similar reductions to follow in the years to come. The Medicare Board
of Trustees also estimates that the cost of providing medical care will
increase by an estimated 15 percent over the next six years, while
current reimbursement levels are scheduled to drop by an estimated 26
percent over the same time period.
After adjusting for inflation, Medicare payments to physicians in
2013 will be less than half of what they were in 1991. That declining
reimbursement rate would likely mean a growing percentage of family
physicians would decline to see new Medicare patients and, as a result,
access to care would suffer.
Washington stands to lose $39 million in 2006 and 1.9 billion from
2006-2014 if these cuts go through. For physicians in Washington, the
cuts over this period will average $13,000 per year for each physician
in the State.
The American Medical Association conducted a survey of physicians in
February and March 2005 concerning significant Medicare pay cuts from
2006 through 2013 (as forecast in the 2004 Medicare Trustees report).
Results from the survey indicate that if the projected cuts in Medicare
physician payment rates begin in 2006: more than a third of physicians
(38 percent) plan to decrease the number of new Medicare patients they
accept; more than half of physicians (54 percent) plan to defer the
purchase of information technology, which is necessary to make value-
based purchasing work; a majority of physicians (53 percent) will be
less likely to participate in a Medicare Advantage plan; about a
quarter of physicians plan to close satellite offices (24 percent) and/
or discontinue rural outreach services (29 percent) if payments are cut
in 2006. If the pay cuts continue through 2013, close to half of
physicians plan to close satellite offices (42 percent) and/or
discontinue rural outreach (44 percent); and one-third of physicians
(34 percent) plan to discontinue nursing home visits if payments are
cut in 2006. By the time the cuts end, half (50 percent) of physicians
will have discontinued nursing home visits.
Physicians can simply not absorb cuts these cuts and still deliver
high quality care. We must ensure our doctors have the resources they
need to ensure that our seniors have access to their physicians.
There have been efforts made to address the physician payment issue
however; they have not addressed the impact on Medicare beneficiaries
and their premiums. I'm concerned some of the proposals would result in
an additional burden being placed on the Medicare beneficiary by way of
a $24 billion increase in part B premiums in 2006 and a $60 billion
increase in 2007.
This happens because by law, the monthly Part B premium is set at 25
percent of the part B Trust Fund costs. Administrative or legal changes
to increase physician payment rates that don't include a hold-harmless
clause, increase Medicare part B expenditures and ultimately, the Part
B premiums paid by beneficiaries.
This is not a viable solution either as the beneficiaries are already
being hit with premium increases and additional cost sharing due to
implementation of the prescription drug benefit. For this reason, along
with my colleagues, I have chosen to introduce legislation that
provides the update for physician reimbursement rates but also holds
the part B premiums harmless.
I look forward to working my colleagues to pass this legislation to
ensure that access to care for our seniors is preserved and enhanced.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1574
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 ``Affordable Access to
Medicare Providers Act of 2005''.
SEC. 2. MINIMUM UPDATE FOR PHYSICIANS' SERVICES FOR 2006 AND
2007.
(a) Minimum Update.--
(1) In general.--Section 1848(d) of the Social Security Act
(42 U.S.C. 1395w-4(d)) is amended by adding at the end the
following new paragraphs:
``(6) Update for 2006.--The update to the single conversion
factor established in paragraph (1)(C) for 2006 shall not be
less than 2.7 percent.
``(7) Update for 2007.--
``(A) In general.--The update to the single conversion
factor established in paragraph (1)(C) for 2007 shall not be
less than the product of--
``(i) 1 plus the Secretary's estimate of the percentage
change in the value of the input price index (as provided
under subparagraph (B)(ii)) for 2007 (divided by 100); and
``(ii) 1 minus the Secretary's estimate of the productivity
adjustment factor under subparagraph (C) for 2007.
``(B) Input price index.--
``(i) Establishment.--Taking into account the mix of goods
and services included in computing the medicare economic
index (referred to in the fourth sentence of section
1842(b)(3)), the Secretary shall establish an index that
reflects the weighted-average input prices for physicians'
services for 2006. Such index shall only account for input
prices and not changes in costs that may result from other
factors (such as productivity).
``(ii) Annual estimate of change in index.--The Secretary
shall estimate, before the beginning of 2007, the change in
the value of the input price index under clause (i) from 2006
to 2007.
``(C) Productivity adjustment factor.--The Secretary shall
estimate, and cause to be published in the Federal Register
not later than November 1, 2006, a productivity adjustment
factor for 2007 that reflects the Secretary's estimate of
growth in multifactor productivity in the national economy,
taking into account growth in productivity attributable to
both labor and nonlabor factors. Such adjustment may be based
on a multi-year moving average of productivity (based on data
published by the Bureau of Labor Statistics).''.
(2) Conforming amendment.--Section 1848(d)(4)(B) of the
Social Security Act (42 U.S.C. 1395w-4(d)(4)(B)) is amended,
in the matter preceding clause (i), by striking ``and
[[Page S9496]]
paragraph (5)'' and inserting ``paragraphs (5), (6), and
(7)''.
(b) Exclusion of Costs From Determination of Part B Monthly
Premium.--Section 1839(g) (42 U.S.C. 1395r(g)) is amended--
(1) in paragraph (1), by striking ``and'' at the end;
(2) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(3) the application of the amendments made by section
2(a) of the Affordable Access to Medicare Providers Act of
2005 (relating to a minimum update for physicians' services
in 2006 and 2007).''.
______
Mr. BINGAMAN (for himself, Mr. Cornyn, Ms. Mikulski, Ms. Collins,
Mr. Jeffords, Mrs. Murray, Mr. Reed, Mr. Nelson of Nebraska,
Ms. Cantwell, Mr. Durbin, Mr. Corzine, Ms. Landrieu, Mr. Kerry,
Mr. Lautenberg, and Mr. Inouye):
S. 1575. A bill to amend the Public Health Service Act to authorize a
demonstration program to increase the number of doctorally-prepared
nurse faculty; to the Committee on Health, Education, Labor, and
Pensions.
Mr. BINGAMAN. Mr. President, today I introduce legislation that will
help address the critical nurse faculty shortage facing our Nation
today. The Bureau of Labor statistics estimates that 1,000,000 new and
replacement nurses will be needed by 2012. With a nurse faculty
workforce that averages 53.5 years of age, we cannot and must not wait
any longer to address nurse faculty shortages. Quite simply, we need to
educate more doctoral level faculty, or we, as a Nation, will not have
enough trained nurses to meet the needs of our aging society.
In a 2002 report, the Commission on Higher Education and the
University of New Mexico Health Sciences Center assembled nursing
educators, healthcare providers, business organizations, professional
associations, legislators, and New Mexico state agencies to develop a
statewide strategic framework for addressing New Mexico's nursing
shortage. The initiative revealed that 72 percent of hospitals have
curtailed services, 38 percent of home care agencies have refused
referrals, 15 percent of long term care facilities have refused
admissions, and public health offices have decreased public health
services. The number one priority listed in the statewide initiative
was to double the number of licensed nursing graduates in the State.
And yet, this one simple priority is not so simple. With a doctoral
nurse faculty of 53.4 years of age, on average, and 46 vacant nurse
faculty positions, in New Mexico, the necessary expansion of programs
is not possible. New Mexico is not alone in facing nurse and nurse
faculty shortages. The nationwide nursing shortage is expected to more
than triple, because the average age of the workforce is near
retirement, the population is aging and has increasing healthcare
needs, and the shortage is one that affects the entire nation.
There is a well-known saying, ``a problem clearly stated is a problem
half solved.'' In 2004-2005, over 30,000 qualified nursing school
applicants were not accepted into nursing baccalaureate programs.
Estimates from the National League for Nursing indicate that over
123,000 qualified applications could not be accommodated in registered
nurse educational programs in 2004. The primary reason students are not
admitted is lack of trained faculty, funds, and program resources. The
real nursing workforce problem that we need to address at the current
time is lack of an adequate number of qualified nurse faculty members.
The Nurse Faculty Education Act will amend the Nurse Reinvestment
Act, P.L. 107-205, to help alleviate the faculty shortage by providing
funds to help nursing schools increase enrollment and graduation from
nursing doctoral programs. The act will increase partnering
opportunities, enhance cooperative education, help support marketing
outreach, and strengthen mentoring programs. The bill will increase the
number of nurses who complete nursing doctoral programs and seek
employment as faculty members and nursing leaders in academic
institutions. By addressing the faculty shortage, we are addressing the
nursing shortage.
The provisions of the Nurse Faculty Education Act are vital to
overcoming nursing workforce challenges. By addressing nurse faculty
shortages, we will enhance both access to care and the quality of care.
Our families and our Nation will be well-served by integration of the
Nurse Faculty Education Act into the Nurse Reinvestment Act.
Mr. President, I ask unanimous consent that the text of this bill be
printed the Record at this point.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1575
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 ``Nurse Faculty Education Act
of 2005''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) The Nurse Reinvestment Act (Public Law 107-205) has
helped to support students preparing to be nurse educators.
Yet, nursing schools nationwide are forced to deny admission
to individuals due to lack of qualified nurse faculty.
(2) According to the February 2004 Monthly Labor Review of
the Bureau of Labor Statistics, more than 1,000,000 new and
replacement nurses will be needed by 2012.
(3) According to the American Association of Colleges of
Nursing, in the 2004-2005 academic year, 29,425 individuals,
or 35 percent of the qualified applicants were not accepted
into nursing baccalaureate programs. 2,748 potential nursing
master's students and over 200 nurses qualified for admission
to doctoral programs were not accepted. Estimates from the
National League of Nursing indicate that over 123,000
qualified applications could not be accommodated in associate
degree, diploma, and baccalaureate registered nurse
educational programs in 2004.
(4) Seventy-six percent of schools report insufficient
faculty as the primary reason for not accepting qualified
applicants. The primary reasons for lack of faculty are lack
of funds to hire new faculty, inability to identify, recruit
and hire faculty in the current competitive job market, and
lack of nursing faculty available in different geographic
areas.
(5) Despite the fact that 75 percent of graduates of
doctoral nursing program enter education roles (versus about
5 percent of graduates of nursing master's programs), the 93
doctoral programs nationwide produce only 400 graduates. This
annual graduation rate is insufficient to meet current needs
for nurse faculty. In keeping with other professional
academic disciplines, nurse faculty at colleges and
universities are typically doctorally-prepared.
(6) With the average age of nurse faculty at retirement at
62.5 years of age and the average age of doctorally-prepared
faculty currently at 53.5 years, the health care system faces
unprecedented workforce and health access challenges with
current and future shortages of deans, nurse educators, and
nurses.
SEC. 3. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.
Part D of title VIII of the Public Health Service Act (42
U.S.C. 296p et seq.) is amended by adding at the end the
following:
``SEC. 832. NURSE FACULTY EDUCATION.
``(a) Establishment.--The Secretary, acting through the
Health Resources and Services Administration, shall establish
a Nurse Faculty Education Program to ensure an adequate
supply of nurse faculty through the awarding of grants to
eligible entities to--
``(1) provide support for the hiring of new faculty, the
retaining of existing faculty, and the purchase of
educational resources;
``(2) provide for increasing enrollment and graduation
rates for students from doctoral programs; and
``(3) assist graduates from the entity in serving as nurse
faculty in schools of nursing;
``(b) Eligibility.--To be eligible to receive a grant under
subsection (a), an entity shall--
``(1) be a school of nursing that offers a doctoral degree
in nursing in a State or territory;
``(2) submit to the Secretary an application at such time,
in such manner, and containing such information as the
Secretary may require;
``(3) develop and implement a plan in accordance with
subsection (c);
``(4) agree to submit an annual report to the Secretary
that includes updated information on the doctoral program
involved, including information with respect to--
``(A) student enrollment;
``(B) student retention;
``(C) graduation rates;
``(D) the number of graduates employed part-time or full-
time in a nursing faculty position; and
``(E) retention in nursing faculty positions within 1 year
and 2 years of employment;
``(5) agree to permit the Secretary to make on-site
inspections, and to comply with the requests of the Secretary
for information, to determine the extent to which the school
is complying with the requirements of this section. and
``(6) meet such other requirements as determined
appropriate by the Secretary.
``(c) Use of Funds.--Not later than 1 year after the
receipt of a grant under this section, an entity shall
develop and implement a plan for using amounts received under
this
[[Page S9497]]
grant in a manner that establishes not less than 2 of the
following:
``(1) Partnering opportunities with practice and academic
institutions to facilitate doctoral education and research
experiences that are mutually beneficial.
``(2) Partnering opportunities with educational
institutions to facilitate the hiring of graduates from the
entity into nurse faculty, prior to, and upon completion of
the program.
``(3) Partnering opportunities with nursing schools to
place students into internship programs which provide hands-
on opportunity to learn about the nurse faculty role.
``(4) Cooperative education programs among schools of
nursing to share use of technological resources and distance
learning technologies that serve rural students and
underserved areas.
``(5) Opportunities for minority and diverse student
populations (including aging nurses in clinical roles)
interested in pursuing doctoral education.
``(6) Pre-entry preparation opportunities including
programs that assist returning students in standardized test
preparation, use of information technology, and the
statistical tools necessary for program enrollment.
``(7) A nurse faculty mentoring program.
``(8) A Registered Nurse baccalaureate to Ph. D. program to
expedite the completion of a doctoral degree and entry to
nurse faculty role.
``(9) Career path opportunities for 2nd degree students to
become nurse faculty.
``(10) Marketing outreach activities to attract students
committed to becoming nurse faculty.
``(d) Priority.--In awarding grants under this section, the
Secretary shall give priority to entities from States and
territories that have a lower number of employed nurses per
100,000 population.
``(e) Number and Amount of Grants.--Grants under this
section shall be awarded as follows:
``(1) In fiscal year 2006, the Secretary shall award 10
grants of $100,000 each.
``(2) In fiscal year 2007, the Secretary shall award an
additional 10 grants of $100,000 each and provide continued
funding for the existing grantees under paragraph (1) in the
amount of $100,000 each.
``(3) In fiscal year 2008, the Secretary shall award an
additional 10 grants of $100,000 each and provide continued
funding for the existing grantees under paragraphs (1) and
(2) in the amount of $100,000 each.
``(4) In fiscal year 2009, the Secretary shall provide
continued funding for each of the existing grantees under
paragraphs (1) through (3) in the amount of $100,000 each.
``(5) In fiscal year 2010, the Secretary shall provide
continued funding for each of the existing grantees under
paragraphs (1) through (3) in the amount of $100,000 each.
``(f) Limitations.--
``(1) Payment.--Payments to an entity under a grant under
this section shall be for a period of not to exceed 5 years.
``(2) Improper use of funds.--An entity that fails to use
amounts received under a grant under this section as provided
for in subsection (c) shall, at the discretion of the
Secretary, be required to remit to the Federal Government not
less than 80 percent of the amounts received under the grant.
``(g) Reports.--
``(1) Evaluation.--The Secretary shall conduct an
evaluation of the results of the activities carried out under
grants under this section.
``(2) Reports.--Not later than 3 years after the date of
the enactment of this section, the Secretary shall submit to
Congress an interim report on the results of the evaluation
conducted under paragraph (1). Not later than 6 months after
the end of the program under this section, the Secretary
shall submit to Congress a final report on the results of
such evaluation.
``(h) Study.--
``(1) In general.--Not later than 3 years after the date of
the enactment of this section, the Comptroller General of the
United States shall conduct a study and submit a report to
Congress concerning activities to increase participation in
the nurse educator program under the section.
``(2) Contents.--The report under paragraph (1) shall
include the following:
``(A) An examination of the capacity of nursing schools to
meet workforce needs on a nationwide basis.
``(B) An analysis and discussion of sustainability options
for continuing programs beyond the initial funding period.
``(C) An examination and understanding of the doctoral
degree programs that are successful in placing graduates as
faculty in schools of nursing.
``(D) An analysis of program design under this section and
the impact of such design on nurse faculty retention and
workforce shortages.
``(E) An analysis of compensation disparities between
nursing clinical practitioners and nurse faculty and between
higher education nurse faculty and higher education faculty
overall.
``(F) Recommendations to enhance faculty retention and the
nursing workforce.
``(i) Authorization of Appropriations.--
``(1) In general.--For the costs of carrying out this
section (except the costs described in paragraph (2), there
are authorized to be appropriated $1,000,000 for fiscal year
2006, $2,000,000 for fiscal year 2007, and $3,000,000 for
each of fiscal years 2008 through 2010.
``(2) Administrative costs.--For the costs of administering
this section, including the costs of evaluating the results
of grants and submitting reports to the Congress, there are
authorized to be appropriated such sums as may be necessary
for each of fiscal years 2006 through 2010.''.
______
By Mr. BURNS (for himself, Mr. Dorgan, Mr. Johnson, Mr. Dayton,
Mr. Baucus, and Mr. Conrad):
S. 1579. A bill to amend the Federal Insecticide, Fungicide, and
Rodentcide Act to permit the distribution and sale of certain
pesticides that are registered in both the United States and another
country; to the Committee on Agriculture, Nutrition, and Forestry.
Mr. BURNS. Mr. President, today I am introducing, along with my
colleague Senator Dorgan, a bill that addresses a persistent inequity
in the agriculture industry.
Since the passage of the North American Free Trade Agreement--in
fact, even before then--Montana farmers have battled against false
barriers to trade that harm their ability to compete in a global
market. While most inputs to production agriculture--fertilizer, seed,
equipment--can move easily across the U.S.-Canadian border, pesticides
remain segmented. The pesticide industry has a vested interest in
preserving these borders, because the barriers allow for price
distortions that harm producers on both sides of the border.
The legislation I am introducing today is designed to tear down these
barriers, and begin the process of harmonizing the pesticide
registration process. The bill establishes a process by which
interested growers can petition the Environmental Protection Agency to
require a pesticide to be jointly labeled, if the product is already
registered in both countries. See--there's the problem. We are talking
here about the exact same chemical, produced by the same company, but
priced at very different levels. Because the products have two
different labels, the lower-price chemical remains out of reach of U.S.
growers. When Montana farmers have to compete against Canadian growers
who are getting their pesticides at a substantially lower price, that
is an example of free trade gone wrong. In addition, this bill gives
EPA the authority needed to require a joint label on a new product that
is being introduced into the market.
It is important to note that this legislation is not restricted to
Canada, so as not to violate U.S. trade agreements. The bill authorizes
EPA to enter into negotiations to harmonize regulatory processes and
requirements with other countries, as appropriate. The United States
and Canada have been working for over a decade to streamline their
registration processes, harmonize the requirements, and develop
protocols for work sharing and joint reviews. A lot of groundwork has
already been done between the U.S. and Canada, so we can move quickly
towards development of a joint label between our two countries.
And there is no reason not to. Again, we are talking about the exact
same product, being sold at two different prices to growers who have to
compete against each other in the world market. NAFTA was supposed to
tear down borders between the U.S., Canada, and Mexico, and yet this
barrier remains. It is an irritant to Montana growers who are farming
along the border.
It is also a problem for Canadian growers, and I look forward to
working with Canada to resolve this issue in a mutually beneficial way.
There are times when pesticides are cheaper in the U.S., and U.S.
growers often have access to a wider variety of products. So there is a
shared interest in tearing down this barrier to free trade.
A recent study done by Montana State University underscored this
point. For 13 pesticides widely used in Montana and Alberta, seven were
less expensive in Canada, five were less expensive in the U.S., and
one, glyphosate, showed little or no difference in price. False
barriers that prevent pesticides from moving across the border are
creating significant price distortions in the market, and those
barriers need to come down.
Certainly, there are a number of factors that impact pricing, but
there can be no doubt that trade barriers allow price differentiation,
and that's not right. There will always be some price fluctuations--
they exist now, between
[[Page S9498]]
states, even between communities in the same state. But for a person
farming along the Montana-Alberta border, who can see his competitor
across that border and knows that his competitor's input costs are
lower for no other reason than a trade barrier that should have been
eliminated, that's going to bother him. If the guy one town over has
better prices on pesticides, I can drive to get those, or negotiate
with my local dealer. But if the guy across the border has better
prices, I have no options, no bargaining power. That's just not right.
This is not an anti-industry bill. Growers need the crop protection
industry, and it is important that the research and innovation in that
sector continue. This bill will help to streamline regulatory processes
and reduce the obstacles to registration, by requiring only one label.
It simplifies distribution systems, by allowing companies to have just
one label for the same product, even when it is being sold in two
countries. So while this bill will address the sort of price
distortions that farmers on the northern border find unfair, it also
reduces cost to industry, and will ideally result in smoother
registration processes.
In fact, representatives of the crop protection industry have said
that the solution to trade barriers along the northern border is a
joint label, and have testified in support of regulatory harmonization
before the Senate Agriculture Committee. Since the passage of NAFTA, a
technical working group on pesticide harmonization has worked
diligently on the development of joint registration and labeling
procedures, and has enjoyed the cooperation of the industry in those
discussions. This bill accomplishes what both the industry and the
producers have said is needed: regulatory harmonization between two
nations, joint registration, and joint labeling.
This legislation is supported by the National Association of Wheat
Growers, the National Barley Growers Association, the U.S. Durum
Growers Association, the National Farmers Union, the Montana Grain
Growers Association, and the North Dakota Grain Growers Association. It
is time these barriers be eliminated. If we are going to have free
trade in grain, then we need free train in the input costs for
production agriculture. This bill accomplishes that. I ask Members to
take a close look at this bill, and consider it seriously. Our growers
deserve an end to the practice of artificially inflating the price of
pesticides simply to take advantage of false barriers.
Mr. DORGAN. Mr. President, today I am reintroducing bipartisan
legislation to remedy a long-standing and glaring inequity in our so-
called free-trade system. There are significant and costly differences
in prices between agricultural chemicals sold in Canada and similar--
and in some cases, identical--chemicals sold in the United States. This
disparity in prices puts an extra burden on American farmers, and it
puts them at a distinct disadvantage when it comes to competing in the
world market.
Currently, American and Canadian farmers use many of the same
products on their fields. These products use the same chemicals, are
made by the same company, and are sometimes even marketed under the
same name; but they are often sold at a much lower cost north of the
border.
For example, U.S. farmers use the pesticide Garlon, which is sold as
Remedy in Canada. It is manufactured by the same company, with the same
chemicals. But American farmers pay $8.02 more per acre than their
Canadian counterparts. The pesticide Puma, which is widely used on
wheat and barley, costs farmers in North Dakota $2.82 more per acre
than Canadian farmers pay for Puma 120 Super, which is the same
product, made by the same company. That means North Dakota farmers paid
nearly $7.9 million more to treat their fields with Puma than they
would have paid if they could have accessed it at prices paid by
Canadian farmers.
This legislation would address that inequity by setting up a process
that would allow American farmers to access these chemicals, which are
lower priced, but identical to those already approved for use in the
United States.
Data collected by the North Dakota Department of Agriculture show
that farmers in just my home State of North Dakota alone would have
saved nearly $11 million last year if they had been able to access
agricultural chemicals at Canadian prices.
But this problem does not just affect farmers in North Dakota.
Farmers all across the northern tier of the United States would benefit
if they were able to access U.S.-approved pesticides at Canadian
prices.
I have come before the Senate time and again to talk about the hidden
inequities of trade. For trade to benefit our country, it must be fair.
But the pricing inequities in the Canadian and U.S. pesticide markets
are a failure of our current trade system.
This legislation I am introducing today, along with the Senator from
Montana, Mr. Burns, authorizes the Environmental Protection Agency to
require that certain agricultural chemicals which have already been
approved in the U.S. carry a joint label, which would allow them to
cross the border freely.
The new labels would still be under the strict scrutiny of the
Environmental Protection Agency, as would the use of these products.
The EPA would continue to insure the health and safety standards that
govern the products we use in our food supply. This bill keeps those
priorities intact.
This bill is not an ending but a beginning. Hidden trade barriers and
schemes riddle the fabric of our trade agreements. We cannot continue
to accept trade practices that, on the one hand, hamstring Americans,
and on the other hand, unduly promote our competitors. We ought not
accept second best all of the time, and this bill is a step in bringing
American producers back to a level playing field.
______
By Mr. AKAKA (for himself, Mr. Reid, Mr. Durbin, Mr. Bingaman,
Mr. Corzine, Mrs. Murray, Mr. Kennedy, Ms. Landrieu, Mr.
Lautenberg, Mr. Inouye, Mr. Pryor, Ms. Mikulski, Mr. Obama, Mr.
Dodd, Mr. Lieberman, and Mrs. Clinton):
S. 1580. A bill to improve the health of minority individuals; to the
Committee on Finance.
Mr. AKAKA. Mr. President, I am proud to introduce the Healthcare
Equality and Accountability Act, along with my colleagues Senators
Reid, Durbin, Bingaman, Corzine, Murray, Kennedy, Landrieu, Lautenberg,
Inouye, Pryor, Mikulski, Obama, Dodd, Lieberman, and Clinton. I want to
thank them, as well as my colleagues in the other body, for all of
their contributions to this important legislation.
This bill will improve access to and the quality of health care for
indigenous people and racial and ethnic minorities who often lack
access and suffer disproportionately from certain diseases. It is
essential that we expand and improve the health care safety net so that
everyone can access the health care services that they need. This
legislation will expand health coverage and includes provisions that
will increase access to culturally-appropriate and relevant services
for our communities.
In addition to improving treatments for the diseases that
disproportionately effect indigenous people and racial and ethnic
minorities, we need to also focus on preventing these diseases in the
first place. This legislation will help combat heart disease, asthma,
HIV/AIDS, and diabetes. Diabetes is a disease that disproportionately
affects Pacific Islanders, including Native Hawaiians. Among
populations in Hawaii, Native Hawaiians had the highest age-adjusted
mortality rates due to diabetes for the years 2000 to 2002.
Statistics for U.S.-related Pacific Jurisdictions are difficult to
obtain due to underdeveloped reporting and data collection systems.
However, available data suggests that diabetes and its complications
are growing problems that are creating a greater burden on the health
care delivery systems of the Pacific Jurisdictions. For example, in the
Republic of the Marshall Islands, mortality data for 1996-2000 reflects
that complications from diabetes are the leading cause of death and
accounted for 30 percent of all deaths during that period. In American
Samoa, mortality data for 1998-2001 shows that diabetes is the third
leading cause of death accounting for nine percent of all deaths for
that period. In
[[Page S9499]]
Guam, diabetes has been identified as the fifth leading cause of death
and the prevalence rate has been estimated to be seven times that of
the United States. Local governments have had to focus on expensive
off-island tertiary hospital care and curative services, resulting in
the reduction of funds available for community-based primary preventive
care and pnblic health services throughout the Pacific Jurisdictions.
There is a need for more comprehensive diabetes awareness education
efforts targeted at communities with Native Hawaiian and other Pacific
Islander populations. Papa Ola Lokahi, a non-profit agency created in
1988 that functions as a consortium with private and state agencies in
Hawaii to improve the health status of Native Hawaiians and other
Pacific Islanders, has established the Pacific Diabetes Today Resource
Center. Pacific Diabetes Today is designed to provide community members
with basic knowledge and skills to plan and implement community-based
diabetes prevention and control activities. Since 1998, the Pacific
Diabetes Today program has provided training and technical assistance
to 11 communities in Hawaii and the Pacific Jurisdictions. However,
more can be done to ensure that the diabetic health needs of Native
Hawaiians and other Pacific Islanders are being met.
Community-based diabetes programs need to be better integrated into
the larger infrastructure of diabetes prevention and control.
Comprehensive, specific programs are needed to mobilize Native Hawaiian
and other Pacific Islander communities and develop appropriate
interventions for diabetes complications prevention and improve
diabetes care. My bill, therefore, includes a provision that would
authorize a comprehensive program to prevent and better manage the
overlapping health problems that are often related to diabetes such as
obesity, hypertension, and cardiovascular disease.
I am also pleased that a provision has been included in this bill
that would restore Medicaid eligibility for Freely Associated States,
FAS, citizens in the United States. The political relationship between
the United States and the FAS is based on mutual support. In exchange
for the United States having strategic denial and a defense veto over
the FAS, the United States provides military and economic assistance to
the Republic of Marshall Islands, Federated States of Micronesia and
Palau with the goal of assisting these countries in achieving economic
self-sufficiency following the termination of their status as U.N.
Trust territories. Pursuant to the Compact, FAS citizens are allowed to
freely enter the United States. They come to seek economic opportunity,
education, and health care. Unfortunately, FAS citizens lost many of
their public benefits as a result of the Personal Responsibility and
Work Opportunity Act, PRWORA, of 1996, including Medicaid coverage. FAS
citizens were previously eligible for Medicaid as aliens permanently
residing under color of law in the United States.
After the enactment of PRWORA, the State of Hawaii was informed that
it could not claim Federal matching funds for services rendered to FAS
citizens. Since then, the State of Hawaii, and the territories of Guam,
American Samoa, and the Commonwealth of the Northern Mariana Islands,
CNMI, have continued to incur substantial costs to meet the health care
needs of FAS citizens that have immigrated to these areas.
The Federal Government must provide Federal resources to help States
meet the healthcare needs of the FAS citizens that have been brought
about by a Federal commitment. It is inequitable for a state or
territory to be responsible for all of the financial burden of
providing necessary social services to individuals that are residing
there due to a Federal commitment. Mr. President, FAS citizen
eligibility must be restored. Furthermore, the State of Hawaii, and the
territories of Guam, American Samoa, and the CNMI, should be reimbursed
for all of the Medicaid expenses of FAS citizens, and must not be
responsible for the costs of providing essential health care services
for FAS citizens.
Finally, there is another provision in this bill is of extreme
importance to the State of Hawaii, taken from legislation that my
colleague from Hawaii, Senator Inouye, has introduced. The provision
would provide a 100 percent Federal Medicaid Assistance Percentage,
FMAP, of health care costs of Native Hawaiians who receive health care
from Federally Qualified Health Centers or the Native Hawaiian Health
Care System. This would provide similar treatment for Native Hawaiians
as already granted to Native Alaskans by the Indian Health Service or
tribal organizations. The increased FMAP will ensure that Native
Hawaiians have access to the essential health services provided by
community health centers and the Native Hawaiian Health Care System.
This bill would significantly improve the quality of life for
indigenous people and ethnic and racial minorities, and I encourage all
of my colleagues to support this legislation.
Mr. KENNEDY. Mr. President, it is a privilege to join Senator Akaka
and Senator Reid in introducing the Healthcare Equality and
Accountability Act. Our goal is to eliminate racial and ethnic
disparities in health care, so that all citizens, regardless of income
or background, have the best possible health care our Nation can
provide.
The Institute of Medicine has documented the severity of ethnic and
racial disparities in health care. People of color face unequal
treatment and unequal outcomes in heart disease, infant mortality, HIV/
AIDS, diabetes, asthma, and other serious illnesses. The health care
needs of communities of color are often more severe than those of white
Americans. Minorities often face significant obstacles, including
poverty and the lack of health insurance. We need to attack disparities
in all their forms.
A critical first step is to see that health insurance and decent
health care are available and affordable for all Americans. This bill
strengthens the health care safety net by expanding access to Medicaid
and the Children's Health Insurance Program, and improving health care
for Indian tribes, migrant workers, and farm workers.
The bill also contains essential measures for removing cultural and
linguistic barriers to good care. The United States is a Nation of
immigrants, and all Americans deserve to understand what their doctor
is telling them. Interpreter and translator services save money in the
long run by avoiding harm when patients do not understand their
diagnosis or the health advice they receive. Health care institutions
deserve to be reimbursed for providing these critically needed
services.
Other important initiatives to reduce health disparities include
diversifying the health care workforce. Minority providers are more
likely to serve low-income communities of color, and this bill
addresses the shortage of these providers.
Federal agencies can do more in this battle too. The bill requires
all Federal health agencies to develop specific plans to eliminate
disparities. The bill expands the Office of Civil Rights and the Office
of Minority Health at the Department of Health and Human Services, and
creates minority health offices within the Food and Drug Administration
and the Centers for Medicare and Medicaid Services.
In addition, the bill strengthens investments in prevention and
behavioral health and improves research and data collection. It
strengthens health institutions that serve communities of color,
provides grants for community initiatives, and funds programs on
chronic disease. In each of these ways, we can reduce the gap in health
care between people of color and whites, so that all Americans can
benefit from the remarkable advances being made in modern health care.
It's time for Congress, the administration, and the Nation to end the
shameful inequality in health care that plagues the lives of so many
people in our society. This bill contains numerous provisions intended
to make that happen, and it can have a major impact on the lives of
millions of Americans. I commend Senators Akaka and Reid for their
leadership on this important health issue. We intend to do all we can
in this Congress to see that effective legislation to combat health
disparities is enacted into law and funded adequately to do the job.
______
By Mr. BINGAMAN (for himself and Mr. Bunning):
[[Page S9500]]
S. 1581. A bill to facilitate the development of science parks, and
for other purposes; to the Committee on Finance.
Mr. BINGAMAN. Mr. President, I rise today with my colleague, Senator
Bunning, to introduce the Science Park Administration Act of 2005.
This legislation is a result of my travels to Taiwan, China, Hong
Kong, and India to learn more about their science and technology
policies, as well as to discover how they have successfully encouraged
similar industries and research entities to work so closely together in
these research parks.
Let me discuss some findings from my fact finding trips regarding the
role of science parks in economic development.
Last summer, I visited the Hong Kong Science and Technology Park
which the Hong Kong Government is funding at $423 million. By 2006,
this investment will help construct 10 buildings, over 1 million square
feet of office and laboratory space, that will cluster IC design,
photonics, biotechnology and information technology.
This science park, like the others I visited in Asia, teams up with
the local universities on collaborative research efforts. It has an
incubation center with 83 start-up companies, and provides them low
cost space, business planning, marketing, and employee training, as
well as research and development grants from the Hong Kong Government
to overcome the ``valley of death'' challenges so many new technology
companies frequently face.
One of the most impressive features of this park is the Integrated
Circuit, IC, Design and Development Support Center. This is a user
facility with shared state of the art equipment to support the entire
IC product development cycle, from initiation design to production
release. For example, as many as 16 vendors can combine their designs
onto a single wafer, thus reducing initial prototype foundry costs by
94 percent.
I was also briefed on the Hong Kong Cyber Port, another science park
devoted solely to information technology, IT, and multimedia companies
that trains employees and conducts collaborative research. The Hong
Kong Government is investing $2 billion between 2000 and 2007 to house
10,000 IT professionals and 100 IT companies in over 1 million square
feet of work space.
The Hong Kong Government's combined investment in developing the
infrastructure to attract science-based companies to these two parks is
about $400 million annually over a period of six years. On a comparable
GDP scale, the United States would have to spend $31 billion annually
for that same period for a total of $186 billion.
This past January, I spent 10 days in India reviewing their science
and technology policies, and was particularly impressed with their
development of Software Technology Parks. These parks were first
developed in 1991 by the Ministry of Information Technology and
Communications as a semiautonomous entity to promote India's developing
IT industry. They provide the infrastructure in terms of space,
internet access, tax breaks and-one stop clearances for government
approvals. Generous tax considerations exempt companies until 2010 from
corporate income tax and excise duties on purchased goods.
As my colleagues are aware, the growth rate of India's IT industry
have been phenomenal. There are now more than 1,000 companies in 44
such software parks in India, the largest located around Hyderabad and
Bangalore considered to be India's ``Silicon Valleys.''. Last year
these parks had a combined net export value of $50 billion, up 37
percent from the prior year.
Companies such as Infosys, which maintains software for large firms
overseas, are located in these parks, and their 2004 revenues jumped by
50 percent. Last year, they received 1.2 million online job
applications; they gave a standardized test to 300,000, interviewed
30,000, and hired 10,000. Much of India's success in the IT industry
can be attributed not only to their universities, but to the
government's decision 1991 to establish these Software Technology
Parks.
Building on that success, and with the government's encouragement,
these Software Parks are now set to launch biotechnology parks.
Taiwan's success in the global market place is a result of building
the Hsinchu Science Park in the 1980s. Today, Hsinchu has over 100,000
technically trained people, 325 companies, 6 national labs and $22
billion in gross revenue. The government has duplicated these parks in
two other locations of the island. The science parks being built
throughout Asia are modeled after Taiwan's Hsinchu Science Park.
Let me note that these Asian science parks have several common
features:
First the Government commits to provide a first-class infrastructure
to accommodate all levels of science-based companies, from small start-
ups in incubators to large manufacturing plants.
Second, these parks align companies of similar interests to mutually
reinforce each other along the supply and management chain.
Third, the Government provides virtually one-stop shopping for
government approvals, even including loans.
Fourth, the Government provides tax incentives, usually in the form
of waiving taxes on the first several years of profit, and capital
gains on acquired stock.
Fifth, and most importantly, the Government takes the long view of
partnering with the local governments to ensure that a trained
workforce is readily available to support the parks' growth, by teaming
with universities and national laboratories.
If we fail to learn from these Asian success stories, we are in
danger of losing the very high technology industries we first started,
because the low cost manufacturing operations in Asia are now moving up
the value chain to research intensive industries, which the Government
facilitates by building science parks.
That leads me to the legislation we are introducing today.
The premise of the legislation is straight forward. It does not pick
industry winners or losers. Rather, it simply provides a synergistic
science-based infrastructure that companies may compete for and thrive
in. Just like in Asia, the government acts as a facilitator not
micromanager.
The legislation first proposes a series of competitively peer-
reviewed science park planning grants to local governments.
A revolving loan fund in six regional centers is proposed to allow
existing science parks to upgrade their infrastructure.
The legislation proposes a loan guarantee fund for the construction
of new science parks.
Additionally, the legislation proposes a Science Park Venture Capital
Fund similar to SBIC's, that would guarantee debentures issued by the
Fund to raise capital for start-up companies trying to bridge that
valley of death, where ideas must move from the laboratory to working
prototype.
Moreover, the legislation proposes several tax incentives to locate
in the park. The full cost of property placed in the park could be
deducted in the year it was purchased without regard to the existing
caps. Many times high-tech equipment is expensive and loses its value
quickly, and this provision would cover that loss. The legislation
proposes a flat 20 percent R&D tax credit without regard to any
expenditure in the base period to spur greater research investment on a
broader range of projects. Finally, the legislation ensures that the
status of tax exempt bonds used to fund science park infrastructure
remain tax exempt eliminating the uncertainty associated with its
interpretation under the Bayh-Dole Act.
I believe this legislation combines many of the best ideas I have
discovered on my Asian fact finding trips. I hope it attracts the
support from both sides of the aisle as a truly bipartisan effort as we
need this type of infrastructure investment more than ever before if we
are to successfully compete in today's global environment.
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. 1581
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 ``Science Park Administration
Act of 2005''.
[[Page S9501]]
SEC. 2. DEVELOPMENT OF SCIENCE PARKS.
(a) Finding.--Section 2 of the Stevenson-Wydler Technology
Innovation Act of 1980 (15 U.S.C. 3701) is amended by adding
at the end the following new paragraph:
``(12) It is in the best interests of the Nation to
encourage the formation of science parks to promote the
clustering of innovation through high technology
activities.''.
(b) Definition.--Section 4 of such Act (15 U.S.C. 3703) is
amended by adding at the end the following new paragraphs:
``(14) `Science park' means a group of interrelated
companies and institutions, including suppliers, service
providers, institutions of higher education, start-up
incubators, and trade associations that cooperate and compete
and are located in a specific area whose administration
promotes real estate development, technology transfer, and
partnerships between such companies and institutions, and
does not mean a business or industrial park.
``(15) `Business or industrial park' means primarily a for-
profit real estate venture of businesses or industries which
do not necessarily reinforce each other through supply chain
or technology transfer mechanisms.
``(16) `Science park infrastructure' means facilities that
support the daily economic activity of a science park.''.
(c) Promotion of Development of Science Parks.--Section
5(c) of such Act (15 U.S.C. 3704(c)) is amended--
(1) in paragraph (14), by striking ``and'' at the end;
(2) in paragraph (15), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(16) promote the formation of science parks.''.
(d) Science Parks.--Such Act is further amended by adding
at the end the following new section:
``SEC. 24. SCIENCE PARKS.
``(a) Development of Plans for Construction of Science
Parks.--
``(1) In general.--The Secretary shall award grants for the
development of feasibility studies and plans for the
construction of new or expansion of existing science parks.
``(2) Limitation on amount of grants.--The amount of a
grant awarded under this subsection may not exceed $750,000.
``(3) Award.--
``(A) Competition required.--The Secretary shall award any
grant under this subsection pursuant to a full and open
competition.
``(B) Advertising.--The Secretary shall advertise any
competition under this paragraph in the Commerce Business
Daily.
``(C) Selection criteria.--The Secretary shall publish the
criteria to be utilized in any competition under this
paragraph for the selection of recipients of grants under
this subsection. Such criteria shall include requirements
relating to--
``(i) the number of jobs to be created at the science park
each year for a period of 5 years;
``(ii) the funding to be required to construct or expand
the science park over the first 5 years;
``(iii) the amount and type of cost matching by the
applicant;
``(iv) the types of businesses and research entities
expected in the science park and surrounding community;
``(v) letters of intent by businesses and research entities
to locate in the science park;
``(vi) the capacity of the science park for expansion over
a period of 25 years;
``(vii) the quality of life at the science park for
employees at the science park;
``(viii) the capability to attract a well trained workforce
to the science park;
``(ix) the management of the science park;
``(x) expected risks in the construction and operation of
the science park;
``(xi) risk mitigation;
``(xii) transportation and logistics;
``(xiii) physical infrastructure, including
telecommunications;
``(xiv) ability to collaborate with other science parks
throughout the world.
``(4) Authorization of appropriations.--There is authorized
to be appropriated for each of fiscal years 2006 through
2011, $7,500,000 to carry out this subsection.
``(b) Revolving Loan Program for Development of Science
Park Infrastructure.--
``(1) In general.--The Secretary shall make grants to six
regional centers for the development of existing science park
infrastructure through the operation of revolving loan funds
by such centers.
``(2) Selection of centers.--
``(A) In general.--The Secretary shall select the regional
centers to be awarded grants under this subsection utilizing
such criteria as the Secretary shall prescribe.
``(B) Criteria.--The criteria prescribed by the Secretary
under this paragraph shall include criteria relating to
revolving loan funds and revolving loan fund operators under
paragraph (4), including--
``(i) the qualifications of principal officers;
``(ii) non-Federal cost matching requirements; and
``(iii) conditions for the termination of loan funds.
``(3) Limitation on loan amount.--The amount of any loan
for the development of existing science park infrastructure
that is funded under this subsection may not exceed
$3,000,000.
``(4) Revolving loan funds.--
``(A) In general.--A regional center receiving a grant
under this subsection shall fund the development of existing
science park infrastructure through the utilization of a
revolving loan fund.
``(B) Operation and integrity.--The Secretary shall
prescribe regulations to maintain the proper operation and
financial integrity of revolving loan funds under this
paragraph.
``(C) Efficient administration.--The Secretary may--
``(i) at the request of a grantee, amend and consolidate
grant agreements governing revolving loan funds to provide
flexibility with respect to lending areas and borrower
criteria;
``(ii) assign or transfer assets of a revolving loan fund
to a third party for the purpose of liquidation, and a third
party may retain assets of the fund to defray costs related
to liquidation; and
``(iii) take such actions as are appropriate to enable
revolving loan fund operators to sell or securitize loans
(except that the actions may not include issuance of a
Federal guaranty by the Secretary).
``(D) Treatment of actions.--An action taken by the
Secretary under this paragraph with respect to a revolving
loan fund shall not constitute a new obligation if all grant
funds associated with the original grant award have been
disbursed to the recipient.
``(E) Preservation of securities laws.--
``(i) Not treated as exempted securities.--No securities
issued pursuant to subparagraph (C)(iii) shall be treated as
exempted securities for purposes of the Securities Act of
1933 or the Securities Exchange Act of 1934, unless exempted
by rule or regulation of the Securities and Exchange
Commission.
``(ii) Preservation.--Except as provided in clause (i), no
provision of this paragraph or any regulation issued by the
Secretary under this paragraph shall supersede or otherwise
affect the application of the securities laws (as such term
is defined in section 2(a)(47) of the Securities Exchange Act
of 1934) or the rules, regulations, or orders of the
Securities and Exchange Commission or a self-regulatory
organization thereunder.
``(5) Authorization of appropriations.--There is authorized
to be appropriated for each of fiscal years 2006 through
2011, $60,000,000 to carry out this subsection.
``(c) Loan Guarantees for Science Park Infrastructure.--
``(1) In general.--The Secretary shall guarantee up to 80
percent of the loan amount for loans exceeding $10,000,000
for projects for the construction of science park
infrastructure.
``(2) Limitations on guarantee amounts.--The maximum amount
of loan principal guaranteed under this subsection may not
exceed--
``(A) $50,000,000 with respect to any single project; and
``(B) $500,000,000 with respect to all projects.
``(3) Selection of guarantee recipients.--The Secretary
shall select recipients of loan guarantees under this
subsection based upon the ability of the recipient to
collateralize the loan amount through bonds, equity,
property, and other such criteria as the Secretary shall
prescribe.
``(4) Terms and conditions for loan guarantees.--For
purposes of this section, the loans guaranteed shall be
subject to such terms and conditions as the Secretary may
prescribe, except that--
``(A) the final maturity of such loans made or guaranteed
shall not exceed (as determined by the Secretary) the lesser
of--
``(i) 30 years and 32 days, or
``(ii) 90 percent of the useful life of any physical asset
to be financed by such loan;
``(B) no loan made or guaranteed may be subordinated to
another debt contracted by the borrower or to any other
claims against the borrowers in the case of default;
``(C) no loan may be guaranteed unless the Secretary
determines that the lender is responsible and that adequate
provision is made for servicing the loan on reasonable terms
and protecting the financial interest of the United States;
``(D) no loan may be guaranteed if the income from such
loan is excluded from gross income for purposes of chapter 1
of the Internal Revenue Code of 1986, or if the guarantee
provides significant collateral or security, as determined by
the Secretary, for other obligations the income from which is
so excluded;
``(E) any guarantee shall be conclusive evidence that said
guarantee has been properly obtained, that the underlying
loan qualified for such guarantee, and that, but for fraud or
material misrepresentation by the holder, such guarantee
shall be presumed to be valid, legal, and enforceable;
``(F) the Secretary shall prescribe explicit standards for
use in periodically assessing the credit risk of new and
existing direct loans or guaranteed loans;
``(G) the Secretary must find that there is a reasonable
assurance of repayment before extending credit assistance;
and
``(H) new loan guarantees may not be committed except to
the extent that appropriations of budget authority to cover
their costs are made in advance, as required in section 504
of the Federal Credit Reform Act of 1990.
``(5) Payment of losses.--For purposes of this section--
``(A) In general.--If, as a result of a default by a
borrower under a guaranteed loan, after the holder thereof
has made such further collection efforts and instituted such
enforcement proceedings as the Secretary may require, the
Secretary determines that
[[Page S9502]]
the holder has suffered a loss, the Secretary shall pay to
such holder the percentage of such loss (not more than 80
percent) specified in the guarantee contract. Upon making any
such payment, the Secretary shall be subrogated to all the
rights of the recipient of the payment. The Secretary shall
be entitled to recover from the borrower the amount of any
payments made pursuant to any guarantee entered into under
this section.
``(B) Enforcement of rights.--The Attorney General shall
take such action as may be appropriate to enforce any right
accruing to the United States as a result of the issuance of
any guarantee under this section.
``(C) Forbearance.--Nothing in this section may be
construed to preclude any forbearance for the benefit of the
borrower which may be agreed upon by the parties to the
guaranteed loan and approved by the Secretary, if budget
authority for any resulting subsidy costs (as defined under
the Federal Credit Reform Act of 1990) is available.
``(D) Management of property.--Notwithstanding any other
provision of law relating to the acquisition, handling, or
disposal of property by the United States, the Secretary
shall have the right in the Secretary's discretion to
complete, recondition, reconstruct, renovate, repair,
maintain, operate, or sell any property acquired by the
Secretary pursuant to the provisions of this section.
``(6) Review.--The Comptroller General of the United States
shall, within 2 years of the date of enactment of this
section, conduct a review of the subsidy estimates for the
loan guarantees under this subsection, and shall submit to
Congress a report on the review conducted under this
paragraph.
``(7) Termination.--No loan may be guaranteed under this
subsection after September 30, 2011.
``(8) Authorization of appropriations.--There is authorized
to be appropriated--
``(A) such sums as may be necessary for the cost, as
defined in section 502(5) of the Federal Credit Reform Act of
1990, of guaranteeing $500,000,000 of loans under this
subsection, and
``(B) $6,000,000 for administrative expenses for fiscal
year 2006 and such sums as necessary thereafter for
administrative expenses in subsequent years.
``(d) National Academy of Sciences Evaluation.--
``(1) In general.--The Secretary shall enter into an
agreement with the National Academy of Sciences under which
the Academy shall evaluate, on a tri-annual basis, the
activities under this section.
``(2) Tri-annual report.--Under the agreement under
paragraph (1), the Academy shall submit to the Secretary a
report on its evaluation of science park development under
that paragraph. Each report may include such recommendations
as the Academy considers appropriate for additional
activities to promote and facilitate the development of
science parks in the United States.
``(e) Tri-annual Report.--Not later than March 31 of every
third year, the Secretary shall submit to Congress a report
on the activities under this section during the preceding 3
years, including any recommendations made by the National
Academy of Sciences under subsection (d)(2) during such
period. Each report may include such recommendations for
legislative or administrative action as the Secretary
considers appropriate to further promote and facilitate the
development of science parks in the United States.
``(f) Regulations.--
``(1) Regulations.--Consistent with Office of Management
and Budget Circular A-129, `Policies for Federal Credit
Programs and Non-Tax Receivables', the Secretary shall
prescribe regulations to carry out this section.
``(2) Deadline.--The Secretary shall prescribe such
regulations not later than one year after the date of
enactment of this section.''.
SEC. 3. SCIENCE PARK VENTURE CAPITAL FUND PILOT PROGRAM.
Title III of the Small Business Investment Act of 1958 (15
U.S.C. 681 et seq.) is amended by adding at the end the
following:
``PART C--SCIENCE PARK VENTURE CAPITAL FUND PILOT PROGRAM
``SEC. 1. DEFINITIONS.
``As used in this part, the following definitions shall
apply:
``(1) Business or industrial park.--The term `Business or
industrial park' means primarily a for-profit real estate
venture of businesses or industries which do not necessarily
reinforce each other through supply chain or technology
transfer mechanisms.
``(2) Equity capital.--The term `equity capital' means
common or preferred stock or a similar instrument, including
subordinated debt with equity features.
``(3) High-technology.--The term `high-technology' means
any of the high technology industries in the North American
Industrial Classification System, as listed in table 8-25 of
the National Science Board publication entitled `Science and
Engineering Indicators 2004', or as listed in any succeeding
editions of such publication.
``(4) Leverage.--The term `leverage' includes--
``(A) debentures purchased or guaranteed by the
Administrator;
``(B) participating securities purchased or guaranteed by
the Administrator; and
``(C) preferred securities outstanding as of the date of
enactment of this part.
``(5) Mezzanine financing.--The term `mezzanine financing'
means late-stage venture capital usually associated with the
final round of financing prior to an initial public offering.
``(6) Operational assistance.--The term `operational
assistance' means management, marketing, and other technical
assistance that assists high-technology start-up companies
with business development.
``(7) Participation agreement.--The term `participation
agreement' means an agreement, between the Administrator and
a company granted final approval by the Administrator under
section 374(e), that--
``(A) details the operating plan and investment criteria of
the company; and
``(B) requires the company to make investments in high-
technology start-up companies within a science park.
``(8) Private capital.--The term `private capital'--
``(A) means the total of--
``(i)(I) the paid-in capital and paid-in surplus of a
corporate science park venture capital company;
``(II) the contributed capital of the partners of a
partnership science park venture capital company; or
``(III) the equity investment of the members of a limited
liability company science park venture capital company; and
``(ii) unfunded binding commitments from investors that
meet criteria established by the Administrator to contribute
capital to the science park venture capital company, except
that--
``(I) unfunded commitments may be counted as private
capital for purposes of approval by the Administrator of any
request for leverage; and
``(II) leverage shall not be funded based on the
commitments; and
``(B) does not include--
``(i) any funds borrowed by a science park venture capital
company from any source;
``(ii) any funds obtained through the issuance of leverage;
or
``(iii) any funds obtained directly or indirectly from
Federal, State, or local government, except for--
``(I) funds obtained from the business revenues of any
federally chartered or government-sponsored enterprise
established before the date of enactment of this part;
``(II) funds invested by an employee welfare benefit plan
or pension plan; and
``(III) any qualified nonprivate funds, if the investors of
such funds do not directly or indirectly control the
management, board of directors, general partners, or members
of the science park venture capital company.
``(9) Program.--The term `Program' means the Science Park
Venture Capital Program established under section 372.
``(10) Qualified nonprivate funds.--The term `qualified
nonprivate funds' means--
``(A) any funds directly or indirectly invested in any
applicant or science park venture capital company on or
before the date of enactment of this part, by any Federal
agency other than the Administration, under a law explicitly
mandating the inclusion of those funds in the definition of
the term private capital; and
``(B) any funds invested in any applicant or science park
venture capital company by 1 or more entities of any State,
including any guarantee extended by any such entity, in an
aggregate amount not to exceed 33 percent of the private
capital of the applicant or science park venture capital
company.
``(11) Science park.--The term `science park' means a group
of interrelated companies and institutions, including
suppliers, service providers, institutions of higher
education, start-up incubators, and trade associations that
cooperate and compete and are located in a specific area
whose administration promotes real estate development,
technology transfer, and partnerships between such companies
and institutions, and does not mean a business or industrial
park.
``(12) Science park venture capital.--The term `science
park venture capital' means equity capital investments in
high-technology start-up businesses located in science parks
to foster economic development and technological innovation.
``(13) Science park venture capital company.--The term
`science park venture capital company' means a company that--
``(A) meets the requirements under section 373;
``(B) has been granted final approval by the Administrator
under section 374(e); and
``(C) has entered into a participation agreement with the
Administrator.
``(14) Start-up company.--The term `start-up company' means
a company that has developed intellectual property protection
of research and development, but has not reached the stage
associated with equity or securitized investments typical of
venture capital or mezzanine financing.
``(15) State.--The term `State' means each of the several
States of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana
Islands, and any other commonwealth, territory, or possession
of the United States.
``SEC. 2. ESTABLISHMENT.
``There is established a Science Park Venture Capital
Program, under which the Administrator may--
``(1) enter into participation agreements with companies
granted final approval under section 374(e);
``(2) guarantee the debentures issued by science park
venture capital companies under section 375; and
[[Page S9503]]
``(3) award grants to science park venture capital
companies under section 377.
``SEC. 3. REQUIREMENTS FOR SCIENCE PARK VENTURE CAPITAL
COMPANIES.
``(a) Organization.--For purposes of this part, a science
park venture capital company--
``(1) shall be an incorporated body, a limited liability
company, or a limited partnership organized and chartered, or
otherwise existing under State law solely for the purpose of
performing the functions and conducting the activities
authorized by this part;
``(2) if incorporated, shall have succession for a period
of not less than 30 years unless earlier dissolved by the
shareholders of the company;
``(3) if a limited partnership or a limited liability
company, shall have succession for a period of not less than
10 years; and
``(4) shall possess the powers reasonably necessary to
perform the functions and conduct the activities.
``(b) Articles.--The articles of any science park venture
capital company--
``(1) shall specify in general terms--
``(A) the purposes for which the company is formed;
``(B) the name of the company;
``(C) the area or areas in which the operations of the
company are to be carried out;
``(D) the place where the principal office of the company
is to be located; and
``(E) the amount and classes of the shares of capital stock
of the company;
``(2) may contain any other provisions consistent with this
part that the science park venture capital company may
determine to be appropriate to adopt for the regulation of
the business of the company and the conduct of the affairs of
the company; and
``(3) shall be subject to the approval of the
Administrator.
``(c) Capital Requirements.--
``(1) In general.--Except as provided in paragraph (2), the
private capital of each science park venture capital company
shall be not less than--
``(A) $5,000,000; or
``(B) $10,000,000, with respect to each science park
venture capital company authorized or seeking authority to
issue participating securities to be purchased or guaranteed
by the Administrator under this part.
``(2) Exception.--The Secretary may, in the discretion of
the Administrator, and based on a showing of special
circumstances and good cause, permit the private capital of
science park venture capital company described in paragraph
(1)(B) to be less than $10,000,000, but not less than
$5,000,000, if the Administrator determines that the action
would not create or otherwise contribute to an unreasonable
risk of default or loss to the Federal Government.
``(3) Adequacy.--In addition to the requirements under
paragraph (1), the Administrator shall--
``(A) determine whether the private capital of each science
park venture capital company is adequate to ensure a
reasonable prospect that the company will be operated soundly
and profitably, and managed actively and prudently in
accordance with the articles of the company;
``(B) determine that the science park venture capital
company will be able to comply with the requirements of this
part; and
``(C) ensure that the science park venture capital company
is designed primarily to meet equity capital needs of the
businesses in which the company invests and not to compete
with traditional financing by commercial lenders of high-
technology startup businesses.
``(d) Diversification of Ownership.--The Administrator
shall ensure that the management of each science park venture
capital company licensed after the date of enactment of this
part is sufficiently diversified from, and unaffiliated with,
the ownership of the company so as to ensure independence and
objectivity in the financial management and oversight of the
investments and operations of the company.
``SEC. 4. SELECTION OF SCIENCE PARK VENTURE CAPITAL
COMPANIES.
``(a) Eligibility.--A company is eligible to participate as
a science park venture capital company in the Program if the
company--
``(1) is a newly formed for-profit entity or a newly formed
for-profit subsidiary of an existing entity;
``(2) has a management team in the science park with
experience in development financing or relevant venture
capital financing;
``(3) has a primary objective of economic development of
the science park and its surrounding geographic area; and
``(4) promotes innovation of science and technology in the
science park.
``(b) Application.--Any eligible company that desires to
participate as a science park venture capital company in the
Program shall submit an application to the Administrator,
which shall include--
``(1) a business plan describing how the company intends to
make successful venture capital investments in start up
companies within the science park;
``(2) a description of the qualifications and general
reputation of the management of the company;
``(3) an estimate of the ratio of cash to in-kind
contributions of binding commitments to be made to the
company under the Program;
``(4) a description of the criteria to be used to evaluate
whether, and to what extent, the company meets the objectives
of the Program;
``(5) information regarding the management and financial
strength of any parent firm, affiliated firm, or other firm
essential to the success of the business plan of the company;
and
``(6) such other information as the Administrator may
require.
``(c) Status.--Not later than 90 days after the initial
receipt by the Administrator of an application under this
section, the Administrator shall provide to the applicant a
written report that describes the status of the applicants
and any requirements remaining for completion of the
application.
``(d) Matters Considered.--In reviewing and processing any
application under this section, the Administrator--
``(1) shall determine if--
``(A) the applicant meets the requirements under subsection
(e); and
``(B) the management of the applicant is qualified and has
the knowledge, experience, and capability necessary to comply
with this part;
``(2) shall take into consideration--
``(A) the need for and availability of financing for high-
technology start-up companies in the science park in which
the applicant is to commence business;
``(B) the general business reputation of the owners and
management of the applicant; and
``(C) the probability of successful operations of the
applicant, including adequate profitability and financial
soundness;
``(3) shall not take into consideration any projected
shortage or unavailability of grant funds or leverage; and
``(4) shall emphasize the promotion of regional science
park venture capital companies to serve multiple research
parks in order to avoid geographic dilution of management and
capital.
``(e) Approval; License.--The Administrator may approve an
applicant to operate as a science park venture capital
company under this part and license the applicant as a
science park venture capital company, if--
``(1) the Administrator determines that the application
satisfies the requirements under subsection (b);
``(2) the Administrator approves--
``(A) the area in which the science park venture capital
company is to conduct its operations; and
``(B) the establishment of branch offices or agencies (if
authorized by the articles); and
``(3) the applicant enters into a participation agreement
with the Administrator.
``SEC. 5. DEBENTURES.
``(a) Guarantees.--The Administrator may guarantee the
timely payment of principal and interest, as scheduled, on
debentures issued by any science park venture capital
company.
``(b) Terms and Conditions.--The Administrator may make
guarantees under this section on such terms and conditions as
the Administrator determines to be appropriate, except that
the term of any debenture guaranteed under this section shall
not exceed 15 years.
``(c) Full Faith and Credit of the United States.--The full
faith and credit of the United States is pledged to pay all
amounts that may be required to be paid under any guarantee
under this part.
``(d) Maximum Guarantee.--The Administrator may--
``(1) guarantee the debentures issued by a science park
venture capital company only to the extent that the total
face amount of outstanding guaranteed debentures of such
company does not exceed the lesser of--
``(A) 300 percent of the private capital of the company, or
``(B) $100,000,000; and
``(2) provide for the use of discounted debentures.
``SEC. 6. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.
``(a) Issuance.--The Administrator may issue trust
certificates representing ownership of all or a part of
debentures issued by a science park venture capital company
and guaranteed by the Administrator under this part, if such
certificates are based on and backed by a trust or pool
approved by the Administrator and composed solely of
guaranteed debentures.
``(b) Guarantee.--
``(1) In general.--The Administrator may, under such terms
and conditions as it deems appropriate, guarantee the timely
payment of the principal of and interest on trust
certificates issued by the Administrator or its agents for
purposes of this section.
``(2) Limitation.--Each guarantee under this subsection
shall be limited to the extent of principal and interest on
the guaranteed debentures that compose the trust or pool.
``(3) Prepayment or default.--
``(A) In general.--In the event that a debenture in a trust
or pool is prepaid, or in the event of default of such a
debenture, the guarantee of timely payment of principal and
interest on the trust certificates shall be reduced in
proportion to the amount of principal and interest such
prepaid debenture represents in the trust or pool.
``(B) Interest.--Interest on prepaid or defaulted
debentures shall accrue and be guaranteed by the
Administrator only through the date of payment of the
guarantee.
``(C) Redemption.--At any time during its term, a trust
certificate may be called for redemption due to prepayment or
default of all debentures.
``(c) Full Faith and Credit.--The full faith and credit of
the United States is pledged to pay all amounts that may be
required to be paid under any guarantee of a
[[Page S9504]]
trust certificate issued by the Administrator or its agents
under this section.
``(d) Subrogation and Ownership Rights.--
``(1) Subrogation.--If the Administrator pays a claim under
a guarantee issued under this section, it shall be subrogated
fully to the rights satisfied by such payment.
``(2) Ownership rights.--No provision of Federal, State, or
local law shall preclude or limit the exercise by the
Administrator of its ownership rights in the debentures
residing in a trust or pool against which 1 or more trust
certificates are issued under this section.
``(e) Management and Administration.--
``(1) Registration.--The Administrator may provide for a
central registration of all trust certificates issued under
this section.
``(2) Contracting of functions.--
``(A) In general.--Notwithstanding any other provision of
law, the Administrator may contract with an agent or agents
to carry out on behalf of the Administrator the pooling and
the central registration functions provided for in this
section, including--
``(i) maintenance, on behalf of and under the direction of
the Administrator, of such commercial bank accounts or
investments in obligations of the United States as may be
necessary to facilitate the creation of trusts or pools
backed by debentures guaranteed under this part; and
``(ii) the issuance of trust certificates to facilitate the
creation of such trusts or pools.
``(B) Fidelity bond or insurance requirement.--Any agent
performing functions on behalf of the Administrator under
this paragraph shall provide a fidelity bond or insurance in
such amounts as the Administrator determines necessary to
fully protect the interests of the United States.
``(C) Regulation of brokers and dealers.--The Administrator
may regulate brokers and dealers in trust certificates issued
under this section.
``(D) Electronic registration.--Nothing in this subsection
may be construed to prohibit the use of a book entry or other
electronic form of registration for trust certificates issued
under this section.
``SEC. 7. OPERATIONAL ASSISTANCE GRANTS.
``(a) In General.--
``(1) Grants authorized.--The Administrator may award
grants to science park venture capital companies and other
entities to provide operational assistance to high-technology
start-up companies financed, or expected to be financed, by
such companies.
``(2) Terms.--Grants under this subsection shall be made
over a period not to exceed 10 years, under such other terms
as the Administrator may require.
``(3) Grant amount.--Each grant awarded under this
subsection shall be equal to the lesser of--
``(A) 10 percent of the private capital raised by the
science park venture capital company; or
``(B) $1,000,000.
``(4) Other entities.--The amount of a grant made under
this subsection to any entity other than a science park
venture capital company shall be equal to the resources (in
cash or in kind) raised by the entity in accordance with the
requirements applicable to science park venture capital
companies under this part.
``(b) Supplemental Grants.--
``(1) In general.--The Administrator may award supplemental
grants to science park venture capital companies and other
entities, under such terms as the Administrator may require,
to provide additional operational assistance to start-up
companies financed, or expected to be financed, by such
companies or entities.
``(2) Matching requirement.--The Administrator may require,
as a condition of any supplemental grant made under this
subsection, that the company or entity receiving the grant
provide a matching contribution equal to 50 percent of the
amount of the supplemental grant from non-Federal cash or in-
kind resources.
``(c) Limitation.--None of the assistance made available
under this section may be used for any overhead or general
and administrative expense of a science park venture capital
company or other entity.
``SEC. 8. REPORTING REQUIREMENTS.
``(a) Science Park Venture Capital Companies.--Each science
park venture capital company shall provide the Administrator
with such information as the Administrator may require,
including information relating to the criteria described in
section 374(b)(4).
``(b) Public Reports.--
``(1) In general.--The Administrator shall prepare and make
available to the public an annual report on the Program,
which shall include detailed information on--
``(A) the number of science park venture capital companies
licensed by the Administrator during the previous fiscal
year;
``(B) the aggregate amount of leverage that science park
venture capital companies have received from the Federal
Government during the previous fiscal year;
``(C) the aggregate number of each type of leveraged
instruments used by science park venture capital companies
during the previous fiscal year, and how each such number
compares to the number in previous fiscal years;
``(D) for the previous fiscal year, the number of--
``(i) science park venture capital company licenses
surrendered; and
``(ii) the number of science park venture capital companies
placed in liquidation;
``(E) the amount and type of leverage each such company has
received from the Federal Government;
``(F) the amount of losses sustained by the Federal
Government as a result of operations under this part during
the previous fiscal year and an estimate of the total losses
that the Federal Government can reasonably expect to incur as
a result of the operations during the current fiscal year;
``(G) actions taken by the Administrator to maximize
recoupment of funds of the Federal Government expended to
implement and administer the Program during the previous
fiscal year and to ensure compliance with the requirements of
this part, including implementing regulations;
``(H) the amount of Federal Government leverage that each
licensee received in the previous fiscal year and the types
of leverage instruments used by each licensee;
``(I) for each type of financing instrument, the sizes,
types of geographic locations, and other characteristics of
the small business investment companies using the instrument
during the previous fiscal year, including the extent to
which the investment companies have used the leverage from
each instrument to make loans or equity investments in
science parks; and
``(J) the actions of the Administrator to carry out this
part.
``(2) Prohibition.--In compiling the report required under
paragraph (1), the Administrator may not--
``(A) compile the report in a manner that permits
identification of any particular type of investment by an
individual science park venture capital company in which a
science park venture capital company invests; or
``(B) release any information that is prohibited under
section 1905 of title 18, United States Code.
``SEC. 9. EXAMINATIONS.
``(a) In General.--Each science park venture capital
company that participates in the Program shall be subject to
examinations made at the direction of the Administrator, in
accordance with this section.
``(b) Assistance of Private Sector Entities.--An
examination under this section may be conducted with the
assistance of a private sector entity that has the
qualifications and expertise necessary to conduct such an
examination.
``(c) Costs.--
``(1) In general.--The Administrator may assess the cost of
an examination under this section, including compensation of
the examiners, against the science park venture capital
company examined.
``(2) Payment.--Any science park venture capital company
against which the Administrator assesses costs under this
subsection shall pay the costs assessed.
``(d) Deposit of Funds.--Funds collected under this
section--
``(1) shall be deposited in the account that incurred the
costs for carrying out this section;
``(2) shall be made available to the Administrator to carry
out this section, without further appropriation; and
``(3) shall remain available until expended.
``SEC. 10. BANK PARTICIPATION.
``(a) In General.--Except as provided under subsection (b),
any national bank, any member bank of the Federal Reserve
System, and, to the extent permitted under applicable State
law, any insured bank that is not a member of such system,
may invest in--
``(1) any science park venture capital company; or
``(2) any entity established to invest solely in science
park venture capital companies.
``(b) Limitation.--No bank described in subsection (a) may
make investments described in that subsection that are
greater than 5 percent of the capital and surplus of the
bank.
``SEC. 11. FEES.
``(a) In General.--Except as provided under subsection (b),
the Administrator may charge such fees as it determines to be
appropriate with respect to any guarantee or grant issued
under this part.
``(b) Exception.--The Administrator shall not collect a fee
for any guarantee of a trust certificate under this section.
Any agent of the Administrator may collect a fee, upon the
approval of the Administrator, for the functions described in
section 376(e)(2).
``SEC. 12. APPLICABLE LAW.
``(a) In General.--The provisions relating to New Market
Venture Capital companies under sections 361 through section
366 shall apply to science park venture capital companies.
``(b) Purchase of Guaranteed Obligations.--Section 318
shall not apply to any debenture issued by a science park
venture capital company under this part.
``SEC. 13. REGULATIONS.
``Not later than 12 months after the date of enactment of
this part, the Administrator shall issue such regulations as
it determines necessary to carry out this part.
``SEC. 14. AUTHORIZATIONS OF APPROPRIATIONS.
``(a) In General.--There are authorized to be appropriated
to the Administration for each of the fiscal years 2006
through 2011, to remain available until expended--
``(1) such sums as may be necessary for the cost, as
defined in section 502(5) of the Federal Credit Reform Act of
1990, of guaranteeing $500,000,000 of debentures under this
part; and
``(2) $50,000,000 to make grants under this part.
[[Page S9505]]
``(b) Funds Collected for Examinations.--Funds deposited
pursuant to section 362(d) may only be used for--
``(1) examinations under section 362; and
``(2) other oversight activities of the Program.''.
SEC. 4. TAX INCENTIVES FOR INVESTMENT IN SCIENCE PARKS.
(a) Expensing.--
(1) In general.--Section 179(d) of the Internal Revenue
Code of 1986 (relating to definitions and special rules) is
amended by adding at the end the following new paragraph:
``(11) Application of section to property placed in service
in science parks.--
``(A) In general.--In the case of any section 179 property
placed in service in any science park, this section shall be
applied without regard to paragraphs (1) and (2) of
subsection (b).
``(B) Science park.--
``(i) In general.--The term `science park' means a group of
interrelated companies and institutions, including suppliers,
service providers, institutions of higher education, start-up
incubators, and trade associations that cooperate and compete
and are located in a specific area whose administration
promotes real estate development, technology transfer, and
partnerships between such companies and institutions, and
does not mean a business or industrial park.
``(ii) Business or industrial park.--The term `business or
industrial park' means primarily a for-profit real estate
venture of businesses or industries which do not necessarily
reinforce each other through supply chain or technology
transfer mechanisms.''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to property placed in service after
the date of the enactment of this Act.
(b) Tax Credit for Research Activities.--
(1) In general.--Section 41(a) of the Internal Revenue Code
of 1986 (relating to credit for increasing research
activities) is amended by striking ``and'' at the end of
paragraph (1)(B), by striking the period at the end of
paragraph (2) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(3) 20 percent of the qualified research expenses paid or
incurred by the taxpayer during the taxable year in carrying
on any trade or business located in a science park.''.
(2) Science park.--Section 41(f) of such Code (relating to
special rules) is amended by adding at the end the following
new paragraph:
``(6) Science park.--
``(A) In general.--The term `science park' means a group of
interrelated companies and institutions, including suppliers,
service providers, institutions of higher education, start-up
incubators, and trade associations that cooperate and compete
and are located in a specific area whose administration
promotes real estate development, technology transfer, and
partnerships between such companies and institutions, and
does not mean a business or industrial park.
``(B) Business or industrial park.--The term `business or
industrial park' means primarily a for-profit real estate
venture of businesses or industries which do not necessarily
reinforce each other through supply chain or technology
transfer mechanisms.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(c) Private Business Use of a Bond-financed Facility Does
Not Include Performance of Research Using Federal Government
Funding in Such Facility.--
(1) In general.--Subparagraph (A) of section 141(b)(6) of
the Internal Revenue Code of 1986 (defining private business
use) is amended by inserting ``or use in the performance of
research using, in whole or in part, funds of the United
States or any agency or instrumentality thereof'' before
``shall not be taken into account''.
(2) Effective date.--
(A) In general.--The amendment made by this subsection
shall apply to any use on or after the date of the enactment
of this Act.
(B) No inference.--Nothing in the amendment made by this
subsection shall be construed to create any inference with
respect to the use of tax-exempt bond financed facilities
before the effective date of such amendment.
______
By Mr. CHAMBLISS (for himself and Mr. Roberts):
S. 1582. A bill to reauthorize the United States Grain Standards Act,
to facilitate the official inspection at export port locations of grain
required or authorized to be inspected under such Act, and for other
purposes; to the Committee on Agriculture, Nutrition, and Forestry.
Mr. CHAMBLISS. Mr. President, today I introduce legislation to
reauthorize the U.S. Grain Standards Act, which expires September 30,
2005.
The Secretary of Agriculture was granted authority by Congress to
establish grain standards in 1916. Sixty years later, Congress
authorized the Federal Grain Inspection Service in order to ensure the
development and maintenance of uniform U.S. standards, to develop
inspection and weighing procedures for grain in domestic and export
trade, and to facilitate grain marketing. The U.S. grain inspection
system is recognized worldwide for its accuracy and reliability.
On May 25, 2005, the Agriculture Committee held a hearing to review
the reauthorization of the Act during which the industry expressed its
desire to provide authority to the United States Department of
Agriculture, USDA, to utilize third-party entities at export terminals.
Inspections at these terminals are currently conducted by Federal
inspectors or employees of State Departments of Agriculture. Industry
proposes, and commodity groups support, granting USDA the authority to
utilize third-party entities at U.S. export terminals in order to
improve competitiveness of U.S. agriculture worldwide.
Congress has a unique opportunity to provide this authority to USDA,
and I have included the industry's proposal in this legislation. USDA
estimates that by 2009, 75 percent of Federal grain inspectors will be
eligible for retirement. The short-term staffing situation facing USDA
should ease the Department's transition in delivering inspection and
weighing services at export terminals.
In addition to providing USDA the authority to use third-party
entities at export terminal locations, this 5-year reauthorization bill
that I am introducing contains measures to ensure the integrity of the
Federal grain inspection system. The bill clearly states that official
inspections continue to be the direct responsibility of USDA. USDA will
also have the ability to issue rules and regulations to further enhance
the work and supervision of these entities. The ability of the U.S. to
increase long-term competitiveness coupled with a system that can
maintain its strong reputation worldwide certainly holds great
potential for success.
This bill is identical to the reauthorization bill recently
considered and approved unanimously by the Committee on Agriculture in
the House of Representatives. It is my hope that this measure will
garner equivalent support in this body as reauthorization of the U.S.
Grain Standards Act moves forward.
______
By Mr. SMITH (for himself, Mr. Dorgan, and Mr. Pryor):
S. 1583. A bill to amend the Communications Act of 1934 to expand the
contribution base for universal service, establish a separate account
within the universal service fund to support the deployment of
broadband service in unserved areas of the United States, and for other
purposes; to the Committee on Commerce, Science, and Transportation.
Mr. SMITH. Mr. President, I rise today with Senators Dorgan and Pryor
to introduce the ``Universal Service for the 21st Century Act.'' For
more than 70 years, the preservation and advancement of universal
service has been a fundamental goal of our telecommunications laws. In
order to ensure the long term sustainability of the fund and to add
support for broadband services that are increasingly important to our
Nation's economic development, our bill reforms the system of payments
into the universal service fund and creates a $500 million account to
bring broadband to unserved areas of the country.
The achievements of the universal service fund are undeniable.
Affordable telephone services are available in many remote and high
cost areas of the country, including Oregon, because of the fund. Large
and small telecommunications carriers serve sparsely populated rural
communities and schools and libraries receive affordable Internet
services because of the fund. The need for a robust and sustainable
universal service system certainly remains, but it has become
increasingly clear that major reforms are needed if the fund is to meet
the evolving communications needs of the American people.
In Section 706 of the Telecommunications Act of 1996, Congress
directed the Federal Communications Commission, FCC, and the States to
encourage deployment of advanced telecommunications services, including
broadband, on a reasonable and timely basis. Earlier this month, the
FCC released data on broadband connections that shows significant
gains, in deployment. According to the report, there were nearly 29
million broadband connections throughout the country in 2004.
[[Page S9506]]
But we can do more. Although there have been well documented
successes in the deployment of broadband services in many parts of the
country, others remain unserved, whether due to geography, low
population density or other reasons. These largely rural areas deserve
the benefits of an advanced communications infrastructure and
increasingly need that infrastructure to build and maintain robust
economies.
Accordingly, to meet the needs of these communities, we have created
a $500 million ``Broadband for Unserved Areas Account'' within the
universal service fund that will be used solely for the deployment of
broadband networks in unserved areas. This funding will be awarded
competitively based on merit to a single broadband provider in each
unserved area. The FCC will establish the guidelines for this new
account. All technologies will be eligible for funding.
The bill also directs the FCC to update its definition of broadband
to ensure that our communications policies are forward-looking and
competitive with the speeds and capabilities available in other
industrialized countries. The FCC will revisit its definition annually
and will prepare reports for Congress regarding gains in broadband
penetration in unserved areas and the need for an increase or decrease
in funding.
In addition, the bill addresses a crisis in the structure of the
universal service fund which has threatened its long term viability.
Currently, the burden of universal service fund contributions is placed
on a limited class of carriers, causing inequities in the system and
incentives to avoid contribution. As demands on the fund increase,
contributors are being forced to pay more. This tension threatens to
cripple the fund. Our bill therefore authorizes and directs the FCC to
establish a permanent mechanism to support universal service.
By reforming the universal service system and spurring the deployment
of broadband services, our legislation will ensure that our Nation's
communications infrastructure will continue to grow, and to be the
robust and connected network that Americans expect and deserve.
I ask that the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1583
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 ``Universal Service for the
21st Century Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The preservation and advancement of universal service
is a fundamental goal of the Communications Act of 1934 and
the Telecommunications Act of 1996.
(2) Access throughout the nation to high-quality and
advanced telecommunications and information services is
essential to secure the many benefits of our modern society.
(3) As the Internet becomes a critical element of any
economic and social growth, universal service should shift
from sustaining voice grade infrastructure promoting the
development of efficient and advanced networks that can
sustain advanced communications services.
(4) The current structure established by the Federal
Communications Commission has placed the burden of universal
service support on only a limited class of carriers, causing
inequities in the system, incentives to avoid contribution,
and a threat to the long term sustainability of the universal
service fund.
(5) Current fund contributors are paying an increasing
portion of their interstate and international service revenue
into the universal service fund.
(6) Any fund contribution system should be equitable,
nondiscriminatory and competitively neutral, and the funding
mechanism must be sufficient to ensure affordable
communications services for all.
SEC. 3. UNIVERSAL SERVICE FUND CONTRIBUTION REQUIREMENTS.
(a) Inclusion of Intrastate Revenues.--Section 254(d) of
the Communications Act of 1934 (47 U.S.C. 254(d)) is
amended--
(1) by striking ``Every'' and inserting ``Notwithstanding
section 2(b) of this Act, a'';
(2) by striking ``interstate'' each place it appears; and
(3) by adding at the end ``Nothing in this subsection
precludes a State from adopting rules or regulations to
preserve and advance universal service within that State as
permitted by section 2(b) and subsections (b) and (f) of this
section.''.
(b) Universal Service Proceeding.--
(1) Proceeding.--The Federal Communications Commission
shall initiate a proceeding, or take action pursuant to any
proceeding on universal service existing on the date of
enactment of this Act, to establish a permanent mechanism to
support universal service, that will preserve and enhance the
long term financial stability of universal service, and will
promote the public interest.
(2) Criteria.--In establishing such a permanent mechanism,
the Commission may include collection methodologies such as
total telecommunications revenues, the assignment of
telephone numbers and any successor identifier, connections
(which could include carriers with a retail connection to a
customer), and any combination thereof if the methodology--
(A) promotes competitive neutrality among providers and
technologies;
(B) to the greatest extent possible ensures that all
communications services that are capable of supporting 2-way
voice communications be included in the assessable base for
universal service support;
(C) takes into account the impact on low volume users, and
proportionately assesses high volume users, through a
capacity analysis or some other means; and
(D) ensures that a carrier is not required to contribute
more than once for the same transaction, activity, or
service.
(3) Excluded providers.--If a provider of communications
services that are capable of supporting 2-way voice
communications would not contribute under the methodology
established by the Commission, the Commission shall require
such a provider to contribute to universal service under an
equitable alternative methodology if exclusion of the
provider from the contribution base would jeopardize the
preservation, enhancement, and long term sustainability of
universal service.
(4) Deadline.--The Commission shall complete the proceeding
and issue a final rule not more than 6 months after the date
of enactment of this Act.
SEC. 4. INTERCARRIER COMPENSATION.
(a) Jurisdiction.--Notwithstanding section 2(b) of the
Communications Act of 1934 (47 U.S.C. 152(b)), the Federal
Communications Commission shall have exclusive jurisdiction
to establish rates for inter-carrier compensation payments
and shall establish rules providing a comprehensive, unified
system of inter-carrier compensation, including compensation
for the origination and termination of intrastate
telecommunications traffic.
(b) Criteria.--In establishing these rules, and in
conjunction with its action in its universal service
proceeding under section 3, the Commission, in consultation
with the Federal-State Joint Board on Universal Service,
shall--
(1) ensure that the costs associated with the provision of
interstate and intrastate telecommunications services are
fully recoverable;
(2) examine whether sufficient requirements exist to ensure
traffic contains necessary identifiers for the purposes of
inter-carrier compensation; and
(3) to the greatest extent possible, minimize opportunities
for arbitrage.
(c) Sufficient Support.--The Commission should, to the
greatest extent possible, ensure that as a result of its
universal service and inter-carrier compensation proceedings,
the aggregate amount of universal service support and inter-
carrier compensation provided to local exchange carriers with
fewer than 2 percent of the Nation's subscriber lines will be
sufficient to meet the just and reasonable costs of such
local exchange carriers.
(d) Negotiated Agreements.--Nothing in this section
precludes carriers from negotiating their own inter-carrier
compensation agreements.
(e) Deadline.--The Commission shall complete the pending
Intercarrier Compensation proceeding in Docket No. 01-92 and
issue a final rule not more than 6 months after the date of
enactment of this Act.
SEC. 5. ESTABLISHMENT OF BROADBAND ACCOUNT WITHIN UNIVERSAL
SERVICE FUND.
Part I of title II of the Communications Act of 1934 (47
U.S.C. 201 et seq.) is amended by inserting after section 254
the following:
``SEC. 254A. BROADBAND FOR UNSERVED AREAS ACCOUNT.
``(a) Account Established.--
``(1) In general.--There shall be, within the universal
service fund established pursuant to section 254, a separate
account to be known as the `Broadband for Unserved Areas
Account'.
``(2) Purpose.--The purpose of the account is to provide
financial assistance for the deployment of broadband
communications services to unserved areas throughout the
United States.
``(b) Implementation.--
``(1) In general.--The Commission shall by rule establish--
``(A) guidelines for determining which areas may be
considered to be unserved areas for purposes of this section;
``(B) criteria for determining which facilities-based
providers of broadband communications service, and which
projects, are eligible for support from the account;
``(C) procedural guidelines for awarding assistance from
the account on a merit-based and competitive basis;
``(D) guidelines for application procedures, accounting and
reporting requirements, and other appropriate fiscal controls
for assistance made available from the account; and
[[Page S9507]]
``(E) a procedure for making funds in the account available
among the several States on an equitable basis.
``(2) Study and annual reports on unserved areas.--
``(A) In general.--Within 6 months after the date of
enactment of the Universal Service for the 21st Century Act,
the Commission shall conduct a study to determine which areas
of the United States may be considered to be `unserved areas'
for purposes of this section. For purposes of the study and
for purposes of the guidelines to be established under
subsection (a)(1), the availability of broadband
communications services by satellite in an area shall not
preclude designation of that area as unserved if the
Commission determines that subscribership to the service in
that area is de minimis.
``(B) Annual updates.--The Commission shall update the
study annually.
``(C) Report.--The Commission shall transmit a report to
the Senate Committee on Commerce, Science, and Transportation
and the House of Representatives Committee on Energy and
Commerce setting forth the findings and conclusions of the
Commission for the study and each update under this paragraph
and making recommendations for an increase or decrease, if
necessary, in the amounts credited to the account under this
section.
``(3) State involvement.--The Commission may delegate the
distribution of funding under this section to States subject
to Commission guidelines and approval by the Commission.
``(c) Limitations.--
``(1) Annual amount.--Amounts obligated or expended under
subsection (c) for any fiscal year may not exceed
$500,000,000.
``(2) Use of funds.--To the extent that amounts in the
account are not obligated or expended for financial
assistance under this section, they shall be used to support
universal service under section 254.
``(3) Support limited to facilities-based single provider
per unserved area.--Assistance under this section may be
provided only to--
``(A) facilities-based providers of broadband
communications service; and
``(B) 1 facility-based provider of broadband communications
service in any unserved area.
``(d) Application With Sections 214, 254, and 410.--
``(1) Section 214(e).--Section 214(e) shall not apply to
the Broadband for Unserved Areas Account.
``(2) Section 254.--Section 254 shall be applied to the
Broadband for Unserved Areas Account--
``(A) by disregarding--
``(i) subsections (a) and (e) thereof; and
``(ii) any other provision thereof determined by the
Commission to be inappropriate or inapplicable to
implementation of this section; and
``(B) by reconciling, to the maximum extent feasible and in
accordance with guidelines prescribed by the Commission, the
implementation of this section with the provisions of
subsections (h) and (l) thereof.
``(3) Section 410.--Section 410 shall not apply to the
Broadband for Unserved Areas Account.
``(e) Definitions.--In this section:
``(1) Broadband.--
``(A) In general.--The term `broadband' shall be defined by
the Commission in accordance with the requirements of this
paragraph.
``(B) Revision of initial definition.--Within 30 days after
the date of enactment of the Universal Service for the 21st
Century Act, the Commission shall revise its definition of
broadband to require a data rate--
``(i) greater than the 200 kilobits per second standard
established in its Section 706 Report (14 FCC Rec. 2406); and
``(ii) consistent with data rates for broadband
communications services generally available to the public on
the date of enactment of that Act.
``(C) Annual review of definition.--The Commission shall
review its definition of broadband no less frequently than
once each year and revise that definition as appropriate.
``(2) Broadband communications service defined.--The term
`broadband communications service' means a high-speed
communications capability that enables users to originate and
receive high-quality voice, data, graphics, and video
communications using any technology.''.
SEC. 6. IMPLEMENTATION OF SECTION 254A.
The Federal Communications Commission shall complete a
proceeding and issue a final rule to implement section 254A
of the Communications Act of 1934 not more than 6 months
after the date of enactment of this Act.
Mr. DORGAN. Mr. President, today my colleagues Senators Smith, Pryor
and I are introducing legislation to ensure the sustainability and
longevity of the Universal Service Fund and to support the deployment
of broadband to unserved areas.
Section 254 of the 1996 Telecommunications Act sets forth the
principles of universal service. Section 254 states that all citizens,
including rural consumers, deserve access to telecommunications
services that are reasonably comparable to those services provided in
urban areas, at reasonably comparable rates.
This goal to ensure that rural consumers are not left behind
continues to be critical, particularly as technology advances in leaps
and bounds in this 21st century. Access to a robust communications
infrastructure is a necessity for all Americans.
Our bill will further that goal in two ways. First, it will ensure
that the Federal Communications Commission, FCC, will address reform of
universal service and intercarrier compensation to support the cost of
a national, quality communications network.
Over time, the Universal Service Fund has become increasingly
strained, with the burden of support placed on only a limited class of
carriers, creating inequities in the system and incentives to avoid
contribution.
Reform is needed, and our bill directs the FCC to embark upon this
reform, with specific guidelines to ensure equity and fairness and
continuing sufficient support for networks.
In addition, our legislation will set up an account within the
Universal Service Fund for broadband deployment to unserved areas. This
will enable deployment of broadband to areas of the country that remain
prohibitively expensive to serve, leaving consumers in those areas
behind the technological curve.
This legislation is only a starting point. I believe more dialogue is
necessary among my colleagues and industry, in order to achieve
comprehensive universal service reform. I invite my colleagues to join
me in this dialogue and in cosponsoring this bill.
Mr. President, I ask unanimous consent that a summary of this bill be
printed in the Record following my statement.
______
By Mr. BINGAMAN (for himself and Mr. Inouye):
S. 1585. A bill to amend title XIX of the Social Security Act to
reduce the costs of prescription drugs for enrollees of medicaid
managed care organizations by extending the discounts offered under
fee-for-service medicaid to such organizations; to the Committee on
Finance.
Mr. BINGAMAN. Mr. President, I am introducing legislation today with
Senator Inouye entitled the Medicaid Health Plan Rebate Act of 2005.
I ask unanimous consent that a summary of the legislation developed
by the Association for Community Affiliated Plans, a policy statement
by the American Public Human Services Association on the issue, and a
letter of support from the Medicaid Health Plans of America be printed
in the Record.
I further ask for unanimous consent that the text of the legislation
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Association for Community Affiliated plans--Reducing Medicaid Costs
Without Cutting Benefits or Beneficiaries: Congress Should Equalize
Description Drug Costs for Beneficiaries in Medicaid Managed Care
Request
As Congress and the States struggle to control the
skyrocketing costs of Medicaid, the Association for Community
Affiliated Plans (ACAP) supports a solution that will save
Federal, State governments and Medicaid Managed Care
Organizations (MCOs) up to $2 billion over ten years by
equalizing the treatment of prescription drug discounts
between Medicaid managed care and Medicaid fee- for-service.
In offering Medicaid managed care plans access to the
Medicaid drug rebate, Congress will provide relief for
federal and state budgets, thereby mitigating the need for
added cuts to Medicaid benefits or populations.
background
Created by the Omnibus Budget Reconciliation Act (OBRA) of
1990, the Medicaid Drug Rebate Program requires a drug
manufacturer to have a rebate agreement with the Secretary of
the Department of Health and Human Services for States to
receive federal funding for outpatient drugs dispensed to
Medicaid patients. At the time the law was enacted, managed
care organizations were excluded from access to the drug
rebate program. In 1990, only 2.8 million people were
enrolled in Medicaid managed care and so the savings lost by
the carve-out were relatively small. Today, 12 million people
are enrolled in capitated managed care plans. This migration
of beneficiaries into managed care has, in turn, increased
States' Medicaid pharmacy costs because fewer beneficiaries
have access to the drug rebate.
challenge for medicaid plans
Under the drug rebate, States receive between 18 and 20
percent discount on brand
[[Page S9508]]
name drug prices and between 10 and 11 percent for generic
drug prices. At the time the rebate was enacted, many of the
plans in Medicaid were large commercial plans who believed
that they could get better discounts than the federal rebate.
Today, Medicaid-focused plans are the fastest growing sector
in Medicaid managed care. According to a study by the Lewin
Group, Medicaid-focused MCOs typically only receive about a 6
percent discount on brand name drugs and no discount on
generics. Because many MCOs (particularly smaller Medicaid-
focused MCOs) do not have the capacity to negotiate deeper
discounts with drug companies, Medicaid is overpaying for
prescription drugs for enrollees in Medicaid health plans.
Opportunity or Medicaid Savings
The Lewin Group estimates that this proposal could save up
to $2 billion over 10 years. This legislation has been
endorsed by organizations representing both state government
and the managed care industry, including the National
Association of State Medicaid Directors, and the Association
for Community Affiliated Plans.
As Congress is forced to make tough choices to control the
costs of the Medicaid program, this proposal offers a ``no-
harm'' option to control costs and ensure that there is not a
prima facie pharmacy cost disadvantage states using managed
care as a cost effective alternative to Medicaid fee-for-
service.
____
American Public Human Services Association
National Association of State Medicaid Directors
Policy Statement: MCO Access to the Medicaid Pharmacy Rebate Program
Background
The Omnibus Budget Reconciliation Act of 1990 (OBRA `90)
established a Medicaid drug rebate program that requires
pharmaceutical manufacturers to provide a rebate to
participating state Medicaid agencies. In return, states must
cover all prescription drugs manufactured by a company that
participates in the rebate program. At the time of this
legislation, only a small percentage of Medicaid
beneficiaries were enrolled in capitated managed care plans
and were primarily served by plans that also had commercial
lines of business. These plans requested to be excluded from
the drug rebate program as it was assumed that they would be
able to secure a better rebate on their own. Though
regulations have not yet been promulgated, federal
interpretation to date has excluded Medicaid managed care
organizations from participating in the federal rebate
program.
Today, the situation is quite different. 58% of all
Medicaid beneficiaries are enrolled in some type of managed
care delivery system, many in capitated health plans. Some
managed care plans, especially Medicaid-dominated plans that
make up a growing percentage of the Medicaid marketplace, are
looking at the feasibility of gaining access to the Medicaid
pharmacy rebate. However, a number of commercial plans remain
content to negotiate their own pharmacy rates and are not
interested in pursuing the Medicaid rebate.
Policy Statement
The National Association of State Medicaid Directors is
supportive of Medicaid managed care organizations (MCOs), in
their capacity as an agent of the state, being able to
participate fully in the federal Medicaid rebate program. To
do so, the MCO must adhere to all of the federal rebate rules
set forth in OBRA '90 and follow essentially the same
ingredient cost payment methodology used by the state. The
state will have the ability to make a downward adjustment in
the MCO's capitation rate based on the assumption that the
MCO will collect the full rebate instead of the state.
Finally, if a pharmacy benefit manager (PBM) is under
contract with an MCO to administer the Medicaid pharmacy
benefit for them, then the same principal shall apply, but in
no way should both the MCO and the PBM be allowed to claim
the rebate.
____
Medicaid Health Plans of America,
Washington, DC, April 7, 2005.
Margaret A. Murray,
Executive Director, Association for Community Affiliated
Plans, Washington, DC.
Dear Ms. Murray: The Medicaid Health Plans of America
(MHPOA) supports your proposed initiative to provide Medicaid
managed care organizations with access to the Medicaid drug
rebate found in Section 1927 of the Social Security Act. We
support this effort and urge Congress to enact this common
sense provision.
Medicaid Health Plans of America, formed in 1993 and
incorporated in 1995, is a trade association representing
health plans and other entities participating in Medicaid
managed care throughout the country It's primary focus is to
provide research, advocacy, analysis, and organized forums
that support the development of effective policy solutions to
promote and enhance the delivery of quality healthcare. The
Association initially coalesced around the issue of national
healthcare reform, and as the policy debate changed from
national healthcare reform to national managed care reform,
the areas of focus shifted to the changes in Medicaid managed
care.
Your proposal to allow Medicaid managed care organizations
access to the Medicaid drug rebate makes sense given the
migration of Medicaid beneficiaries from fee-for-service to
managed care since 1990. Increasingly, states have not been
able to take advantage of the drug rebate for those enrollees
in managed care, thus driving up federal and state Medicaid
costs. The savings estimated in the Lewin Group study are
significant and may help to mitigate the needs for other cuts
in the program. In addition, it demonstrates a proactive
effort to offer solutions to improving the Medicaid program.
We applaud this effort.
MHPOA is proud to support this legislative proposal and
will endorse any legislation in Congress to enact this
proposal.
Sincerely,
Thomas Johnson,
Executive Director.
____
S. 1585
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 ``Medicaid Health Plan Rebate
Act of 2005''.
SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES
OF MEDICAID MANAGED CARE ORGANIZATIONS.
(a) In General.--Section 1927(j) of the Social Security Act
(42 U.S.C. 1396r-8(j)) is amended--
(1) by striking paragraph (1);
(2) by redesignating paragraphs (2) and (3) as paragraphs
(1) and (2), respectively, and realigning the left margins of
such paragraphs accordingly;
(3) in paragraph (1) (as redesignated by paragraph (2) of
this section), by striking ``The State'' and inserting ``In
general.--The State''; and
(4) in paragraph (2) (as so redesignated), by striking
``Nothing'' and inserting ``Rule of construction.--Nothing''.
(b) Effective Date.--The amendments made by this section
take effect on the date of enactment of this Act and apply to
rebate agreements entered into or renewed under section 1927
of the Social Security Act (42 U.S.C. 1396r-8) on or after
such date.
Mr. REID. Mr. President, I rise to express my support for the
Healthcare Equality and Accountability Act that Senator Akaka and I are
introducing today. We are pleased that Congressman Honda, Chair of the
Congressional Asian Pacific American Caucus, is introducing this
legislation in the House of Representatives with the support of the
Congressional Black Caucus, the Congressional Hispanic Caucus, and the
Congressional Native American Caucus.
My first elected position was on the board of trustees of the largest
public hospital in Southern Nevada--a hospital known today as
University Medical Center (UMC) of Southern Nevada.
Since my time on the hospital board, Nevada has become not just one
of the fastest growing states in the nation, but one of the most
diverse. The Asian and Hispanic populations have grown by over 200
percent, and the African-American population in Nevada has increased by
91 percent. As a result, health care providers are struggling to meet
the needs of Nevada's diverse population.
In one example, a woman arrived at a Las Vegas emergency room
hemorrhaging. Doctors determined that she needed a hysterectomy, but
she did not speak English. Her young son had to interpret, but was
embarrassed to explain the diagnosis, so instead he told his mother she
had a tumor in her stomach.
In areas with rapidly growing diverse populations, miscommunications
like this one are all too common.
In another incident, a woman at a lab in Las Vegas was diagnosed with
breast cancer, but lab employees couldn't find anyone to explain her
test results to her in Spanish.
Unfortunately, a shortage of interpreters and translated material is
just one problem that contributes to the high rate of health
disparities among racial and ethnic groups.
According to a recent report by the Centers for Disease Control,
African-Americans are 30 percent more likely to die from heart disease
and cancer than whites, and 40 percent more likely to die from stroke.
Yet, despite a substantial need for health care, minority groups are
less likely to have health insurance and are less likely to receive
appropriate care.
If we do nothing, the health care divide will only get worse. Since
2000, millions more Americans are without health insurance and health
care cost have skyrocketed. About 33 percent of Hispanics, 19 percent
of African Americans and 19 percent of Asians are uninsured.
In just one year--from 2002 to 2003--the number of Hispanics without
health insurance increased by one million people.
[[Page S9509]]
And for the first time in four decades, infant mortality rates in
this nation have increased. The infant mortality rate for African
Americans is more than twice as high than for whites; and is 70 percent
higher for American Indian and Alaska Native infants.
The legislation we are introducing today will help to: expand the
health care safety net, diversify the health care work force, combat
diseases that disproportionately affect racial and ethnic minorities,
emphasize prevention and behavioral health, promote the collection and
dissemination of data and enhance medical research, and provide
interpreters and translation services in the delivery of health care.
Everyone deserves equal treatment in health care. I hope that all of
my colleagues will support the Healthcare Equality and Accountability
Act so we may begin to close the health care divide.
______
By Mr. BINGAMAN (for himself, Mr. Domenici, Mrs. Murray, Mr.
Jeffords, Mr. Alexander, Ms. Cantwell, Mr. Akaka, Mr. Reed, Mr.
Chafee, Mr. Leahy, Mr. Dodd, and Mr. Dayton):
S. 1587. A bill to amend title XXI of the Social Security Act to
permit qualifying States to use a portion of their allotments under the
State children's health insurance program for any fiscal year for
certain medicaid expenditures; to the Committee on Finance.
Mr. BINGAMAN. Mr. President, today with Senators Domenici, Murray,
Jeffords, Alexander, Cantwell, Akaka, Reed, Chafee, Leahy, Dodd, and
Dayton we introduce legislation entitled the ``Children's Health Equity
Act of 2005.''
This legislation would extend provisions that were included in Public
Laws #108-74 and 108-127 that amended the State Children's Health
Insurance Program, or SCHIP, to permit the states of Connecticut,
Hawaii, Maryland, Minnesota, New Hampshire, New Mexico, Rhode Island,
Tennessee, Vermont, Washington, and Wisconsin to apply some of their
enhanced SCHIP matching funds toward the coverage of certain children
enrolling in Medicaid that were part of expansions of coverage to
children through Medicaid in those 11 states prior to the enactment of
SCHIP.
As a article in the September/October 2004 issue of Health Affairs by
Genevieve Kenney and Debbie Chang points out, when SCHIP was created,
``Inequities were . . . introduced across states because those that had
already expanded Medicaid coverage to children could not receive the
higher SCHIP matching rate for these children . . . [and this] meant
that states that had been ahead of the curve in expanding Medicaid
eligibility for children were penalized financially relative to states
that expanded coverage after SCHIP.''
The article adds that ``additional cross-state inequities were
introduced'' during the creation of SCHIP because three states had
their prior expansions grandfathered in during the bill's
consideration. Left behind were the aforementioned 11 states.
Fortunately, with the passage of Public Laws #108-74 and 108-127 in
2003, the inequity was recognized and the 11 states, including New
Mexico, were allowed to use up to 20 percent of our State's enhanced
SCHIP allotments to pay for Medicaid eligible children above 150
percent of poverty that were part of Medicaid expansions prior to the
enactment of SCHIP. As the Congressional Research Service notes, ``The
primary purpose of the 20 percent allowance was to enable qualifying
states to receive the enhanced FMAP [Federal Medical Assistance
Percentage] for certain children who likely would have been covered
under SCHIP had the state not expanded their regular Medicaid coverage
before SCHIP's enactment in August 1997.''
Unfortunately, one major problem with the compromise was that it only
allowed the 11 states flexibility with their SCHIP funds for allotments
between 1998 and 2001 and not in the future. Therefore, the inequity
continues with SCHIP allotments from 2002 and on. In fact, with the
expiration of SCHIP funds from FY 1998-2000 as of September 2004, that
leaves the 11 states with only the ability to spend FY 2001 SCHIP
allotments on expansion children. For those states, such as Vermont and
Rhode Island, that have already spent their 2001 SCHIP allotments, they
no longer benefit from the passage of this provision. Furthermore, the
FY 2001 funds will also expire at the end of September 2005. Thus,
under current law, no spending under these provisions will be permitted
in fiscal year 2006 or thereafter.
Therefore, our legislation today prevents the full expiration of this
provision for our 11 states and ensures that the compromise language is
extended in the future. It is important to states such as New Mexico
that have been severely penalized for having expanded coverage to
children through Medicaid prior to the enactment of SCHIP. In fact, due
to the SCHIP inequity, New Mexico has been allocated $266 million from
SCHIP between fiscal years 1998 and 2002, and yet, has only been able
to spend slightly over $26 million as of the end of last fiscal year.
In other words, New Mexico has been allowed to spend less than 10
percent of its federal SCHIP allocations because the expansion children
have been previously ineligible for the enhanced SCHIP matching funds.
As the health policy statement by the National Governors' Association
reads, ``The Governors believe that it is critical that innovative
states not be penalized for having expanded coverage to children before
the enactment of S-CHIP, which provides enhanced funding to meet these
goals. To this end, the Governors support providing additional funding
flexibility to states that had already significantly expanded coverage
to the majority of uninsured children in their states.''
It is important to note the bill does not take money from other
states' CHIP allotments. It simply allows our states to spend our
States' specific CHIP allotments from the federal government on our
uninsured children--just as other states across the country are doing.
According to an analysis by the Congressional Research Service, thus
far eight states have benefited financially from the passage of the
legislation. In the fourth quarter of 2003 and for all four quarters in
2004, Hawaii reported federal SCHIP expenditures using the 20 percent
allowance in the amount of $380,000, Maryland received $106,000, New
Hampshire received $2.1 million, New Mexico received $2.3 million,
Rhode Island received $485,000, Tennessee received $4.5 million,
Vermont received $475,000, and Washington received $22.2 million.
I urge that this very important provision for our states be included
in the budget reconciliation package the Congress is preparing to
consider in September and ask unanimous consent that the text of the
bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1587
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Children's Health Equity
Technical Amendment Act of 2005''.
SEC. 2. AUTHORITY FOR QUALIFYING STATES TO USE PORTION OF
SCHIP ALLOTMENT FOR ANY FISCAL YEAR FOR CERTAIN
MEDICAID EXPENDITURES.
(a) In General.--Section 2105(g)(1)(A) of the Social
Security Act (42 U.S.C. 1397ee(g)(1)(A)) is amended by
striking ``fiscal year 1998, 1999, 2000, or 2001'' and
inserting ``a fiscal year''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if enacted on October 1, 2004.
______
By Mr. BINGAMAN (for himself, Mr. Rockefeller, Mr. Feingold, Mr.
Corzine, Mr. Kohl, Ms. Mikulski, Mr. Durbin, and Mr. Harkin):
S. 1589. A bill to amend title XVIII of the Social Security Act to
provide for reductions in the medicare part B premium through
elimination of certain overpayments to Medicare Advantage
organizations; to the Committee on Finance.
S. 1589
Mr. BINGAMAN. Mr. President, I am introducing legislation today with
Senators Rockefeller and Feingold that is similar to S. 2906 in the
108th Congress and will have more to say about this legislation when we
return in September.
[[Page S9510]]
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. 1589
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 ``Affordability in Medicare
Premiums Act of 2005''.
SEC. 2. REDUCTION OF MEDICARE PART B PREMIUM FOR INDIVIDUALS
NOT ENROLLED IN A MEDICARE ADVANTAGE PLAN.
Section 1839(a) of the Social Security Act (42 U.S.C.
1395r(a)) is amended--
(1) in paragraph (3), in the first sentence, by striking
``The Secretary'' and inserting ``Subject to paragraph (5),
the Secretary''; and
(2) by adding at the end the following new paragraph:
``(5)(A) For each year (beginning with 2006), the Secretary
shall reduce the monthly premium rate determined under
paragraph (3) for each month in the year for individuals who
are not enrolled in a Medicare Advantage plan (including such
individuals subject to an increased premium under subsection
(b) or (i)) so that the aggregate amount of such reductions
in the year is equal to the aggregate amount of reduced
expenditures from the Federal Supplementary Medicare
Insurance Trust Fund that the Secretary estimates would
result in the year if the annual Medicare+Choice capitation
rate for the year was equal to the amount specified under
subparagraph (D) of section 1853(c)(1), and not subparagraph
(A), (B), or (C) of such section.
``(B) In order to carry out subsections (a)(1) and (b)(1)
of section 1840, the Secretary shall transmit to the
Commissioner of Social Security and the Railroad Retirement
Board by the beginning of each year (beginning with 2006),
such information determined appropriate by the Secretary, in
consultation with the Commissioner of Social Security and the
Railroad Retirement Board, regarding the amount of the
monthly premium rate determined under paragraph (3) for
individuals after the application of subparagraph (A).''.
SEC. 3. FUNDING REDUCTIONS IN THE MEDICARE PART B PREMIUM
THROUGH REDUCTIONS IN PAYMENTS TO MEDICARE
ADVANTAGE ORGANIZATIONS.
Section 1839(a) of the Social Security Act (42 U.S.C.
1395r(a)), as amended by section 2, is amended--
(1) in paragraph (3), in the first sentence, by striking
``paragraph (5)'' and inserting ``paragraphs (5) and (6)'';
and
(2) by adding at the end the following new paragraph:
``(6) For each year (beginning with 2006), the Secretary
shall reduce the monthly premium rate determined under
paragraph (3) for each month in the year for each individual
enrolled under this part (including such an individual
subject to an increased premium under subsection (b) or (i))
so that the aggregate amount of such reductions in the year
is equal to an amount equal to--
``(A) the aggregate amount of reduced expenditures from the
Federal Supplementary Medicare Insurance Trust Fund in the
year that the Secretary estimates will result from the
provisions of, and the amendments made by, sections 4 and 5
of the Affordability in Medicare Premiums Act of 2005; minus
``(B) the aggregate amount of reductions in the monthly
premium rate in the year pursuant to paragraph (5)(A).''.
SEC. 4. APPLICATION OF RISK ADJUSTMENT REFLECTING
CHARACTERISTICS FOR THE ENTIRE MEDICARE
POPULATION IN PAYMENTS TO MEDICARE ADVANTAGE
ORGANIZATIONS.
Effective January 1, 2006, in applying risk adjustment
factors to payments to organizations under section 1853 of
the Social Security Act (42 U.S.C. 1395w-23), the Secretary
of Health and Human Services shall ensure that payments to
such organizations are adjusted based on such factors to
ensure that the health status of the enrollee is reflected in
such adjusted payments, including adjusting for the
difference between the health status of the enrollee and
individuals enrolled under the original medicare fee-for-
service program under parts A and B of title XVIII of such
Act. Payments to such organizations must, in aggregate,
reflect such differences.
SEC. 5. ELIMINATION OF MA REGIONAL PLAN STABILIZATION FUND
(SLUSH FUND).
(a) In General.--Subsection (e) of section 1858 of the
Social Security Act (42 U.S.C. 1395w-27a) is repealed.
(b) Conforming Amendment.--Section 1858(f)(1) of the Social
Security Act (42 U.S.C. 1395w-27a(f)(1)) is amended by
striking ``subject to subsection (e),''.
(c) Effective Date.--The amendments made by this section
shall take effect as if included in the enactment of section
221(c) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173; 117 Stat.
2181).
______
By Mr. BAUCUS (for himself and Mr. Grassley):
S. 1591. A bill to amend the Internal Revenue Code of 1986 to modify
the rules relating to the suspension of interest and certain penalties
where the taxpayer is not contacted by the Internal Revenue Service
within 18 months; to the Committee on Finance.
Mr. BAUCUS. Mr. President, last year, the Senate passed significant
legislation aimed at shutting down tax shelters. We ramped up
disclosure requirements that make it easier for IRS to find those who
promoted and invested in these deals. We greatly increased penalties.
We made law firms and accounting firms responsible for their part in
perpetuating this distasteful business.
Another thing we did was to take a break on interest expense away
from participants in listed transactions and those who fail to disclose
a reportable transaction.
Usually, if the IRS audits your tax return and doesn't tell you about
any adjustments to your tax bill within 18 months after the return is
filed, the interest on that tax bill stops. It stops until the IRS does
tell you what you owe. It is called ``the 18 month interest suspension
rule'' and became law so taxpayers wouldn't have to pay excessive
interest if the IRS took a long time to figure out what they owed.
But, people who get involved with tax shelters play hide and seek
with the IRS. They hope the game lasts until the time for auditing a
tax return has passed. This means that the IRS often doesn't know a
taxpayer has bought into a tax shelter until well after 18 months has
gone by.
And, this problem is made even worse by those who sell the shelters.
Promoters are supposed to keep a list of those who buy their shelters.
The IRS can ask for the list--it's one way the IRS can find those who
get into these bad deals.
But, often the promoter won't turn that list over to the IRS right
away. Once again, it is well after that 18 month mark before the IRS
learns about the investment and can do the audit.
It is not right that taxpayers benefit from this 18 month interest
suspension rule when the delays are the result of their own hand.
Taxpayers involved in deals that abuse our tax system should not
benefit from their own fun and games.
That is why we took the interest suspension break away from these
taxpayers in last year's Jobs Act. But we only took it away for
interest charges after October 3, 2004.
Today, my good friend Chuck Grassley and I introduce a proposal that
takes this one step further and eliminates the interest suspension
break for interest charges on or before October 3, 2004. Why should
these folks get any break when they have manipulated the system in the
first place?
The only exception is for taxpayers who have decided to take the IRS
up on a published settlement initiative to unwind their transaction.
Those taxpayers would continue to qualify for suspension of their
accrued interest expense through the October 3 date. The IRS has found
these settlement initiatives are a useful way to get these old cases
resolved and off the table. I think we should help this process along
so the IRS can deal with other aspects of the tax gap.
Our proposal also will plug up another unintended loophole in the
interest suspension rules. Earlier this year, the IRS ruled that
taxpayers filing amended returns showing a balance due more than 18
months after the original return was filed were also entitled to
interest suspension--this applies to all taxpayers, not just those with
tax shelters. Since the IRS wouldn't have any way of knowing these
taxpayers even owed more tax, it doesn't make sense to give them a
break on interest charges.
Over the past several years this country has experienced a scourge of
tax shelters. With hard work, we have come a long way in our fight
against them. We must be relentless in our quest to wipe them out. We
need to remove any incentives that might encourage people to get into
these abusive deals. Our proposal is one more blow in our fight to
maintain fairness and integrity in our system of tax administration. We
request your support for this bill.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
[[Page S9511]]
S. 1591
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. MODIFICATIONS OF SUSPENSION OF INTEREST AND
PENALTIES WHERE INTERNAL REVENUE SERVICE FAILS
TO CONTACT TAXPAYER.
(a) Effective Date of Exception From Suspension Rules for
Certain Listed and Reportable Transactions.--
(1) In general.--Paragraph (2) of section 903(d) of the
American Jobs Creation Act of 2004 is amended to read as
follows:
``(2) Exception for reportable or listed transactions.--
``(A) In general.--The amendments made by subsection (c)
shall apply with respect to interest accruing after October
3, 2004.
``(B) Special rule for certain listed and reportable
transactions.--
``(i) In general.--Except as provided in clause (ii) or
(iii), the amendments made by subsection (c) shall also apply
with respect to interest accruing on or before October 3,
2004.
``(ii) Participants in settlement initiatives.--Clause (i)
shall not apply to any transaction if, pursuant to a
published settlement initiative which is offered by the
Secretary of the Treasury to a group of similarly situated
taxpayers claiming benefits from the transaction, the
taxpayer has entered into a settlement agreement with respect
to the tax liability arising in connection with the
transaction.
``(iii) Closed transactions.--Clause (i) shall not apply to
a transaction if, as of July 29, 2005 (May 9, 2005 in the
case of a listed transaction)--
``(I) the assessment of all Federal income taxes for the
taxable year in which the tax liability to which the interest
relates arose is prevented by the operation of any law or
rule of law, or
``(II) a closing agreement under section 7121 has been
entered into with respect to the tax liability arising in
connection with the transaction.''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if included in the provisions of the
American Jobs Creation Act of 2004 to which it relates.
(b) Treatment of Amended Returns and Other Similar Notices
of Additional Tax Owed.--
(1) In general.--Section 6404(g)(1) of the Internal Revenue
Code of 1986 (relating to suspension) is amended by adding at
the end the following new sentence: ``If, after the return
for a taxable year is filed, the taxpayer provides to the
Secretary 1 or more signed written documents showing that the
taxpayer owes an additional amount of tax for the taxable
year, clause (i) shall be applied by substituting the date
the last of the documents was provided for the date on which
the return is filed.''
(2) Effective date.--The amendment made by this subsection
shall apply to documents provided on or after July 29, 2005.
______
By Ms. SNOWE (for herself, Mr. Conrad, Mrs. Lincoln, and Ms.
Collins):
S. 1592. A bill to amend title XIX of the Social Security Act to
permit States to obtain reimbursement under the Medicaid program for
care or services required under the Emergency Medical Treatment and
Active Labor Act that are provided in a nonpublicly owned or operated
institution for mental diseases; to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise today to introduce the Medicaid
Emergency Psychiatric Care Act of 2005, which will serve to improve
access to mental health treatment and remove an unfunded mandate on our
private mental health treatment centers. I am particularly pleased to
introduce this bill with several of my colleagues, Senators Conrad,
Lincoln, and Collins, who share my belief that we must improve access
to treatment for many of the 18.5 million Americans who are afflicted
with a mental health disorder.
Our bill will move a step closer to achieving this goal by requiring
the Medicaid program to provide reimbursement to private mental health
facilities that receive patients under the Emergency Medical Treatment
and Labor Act, known as EMTALA. EMTALA requires hospitals to provide
emergency care to patients, regardless of their ability to pay.
However, this stands in conflict with Medicaid law, which in most cases
prohibits payment for psychiatric treatment for people between the ages
of 21 to 65 years. Our legislation will remedy that situation by
providing Medicaid coverage for emergency treatment for mental illness,
thus expanding access for acute psychiatric care and ensuring that
patients with mental disorders receive the assistance they vitally need
in a timely fashion.
Under current law, Medicaid payment for psychiatric treatment for
patients between the ages of 21 and 65 years is restricted to hospitals
that have an in house psychiatric ward. If a patient seeks care from a
private psychiatric hospital or is transferred to a private facility
from a community hospital, Medicaid does not provide reimbursement due
to the so-called Institutions for Mental Disease, IMD, exclusion. In
comparison, if the same patient seeks care under EMTALA from a hospital
because of a physical ailment, Medicaid provides coverage regardless of
the type of facility that provides the treatment. I have therefore
joined together with Senator Conrad, Senator Lincoln, and Senator
Collins to introduce legislation that will require Medicaid to pay for
the cost of care associated with emergency psychiatric treatment
necessary to comply with EMTALA. No longer will private entities be
required to shoulder the burden of this Federal mandate, and no longer
will Medicaid-eligible beneficiaries go without access to necessary and
appropriate emergency care.
This bipartisan legislation has been carefully crafted with input
from both the provider and beneficiary communities to ensure that
assistance is directed to those who are most in need and to ensure that
the coverage only extends to people who require emergency treatment.
The definition in the EMTALA statute of an emergency is straightforward
for psychiatric patients. Patients must present as a danger to
themselves or others--for example, as being suicidal or threatening
physical harm to others.
Our bill also offers a targeted and low-cost solution to ease the
crisis in emergency departments. Emergency department overcrowding is a
growing and severe problem in the United States, and dedicated
physicians and nurses who work in emergency rooms are reaching a
breaking point where they may not have the resources or surge capacity
to respond effectively. Patients often face a long wait in the
emergency room, sometimes for days, because there is no bed or other
appropriate setting available. Tens of thousands of dollars every day
are being spent inefficiently on extended treatment in emergency rooms
that is not the most appropriate or clinically effective care.
This crisis in emergency departments impacts everyone's access to
lifesaving care. According to a May 2005 report by the Centers for
Disease Control and Prevention, the number of annual emergency
department visits increased 26 percent over a 10-year period, from 90.3
million in 1993 to 113.9 million visits in 2003--an average increase of
more than 2 million visits per year. During the same time, the number
of hospital emergency departments decreased by more than 12 percent,
resulting in a greater number of visits to emergency departments that
remain open.
How do these problems affect emergency care for all of us?
Overcrowded emergency rooms result in reduced availability of
physicians, nurses, and healthcare staff; fewer available examination
areas and beds; longer waits for patients and their families; and
hospitals more frequently having to divert patients by ambulance to
other hospitals.
The existing situation is not only jeopardizing access to emergency
rooms and treatment but ultimately, in many cases, it is overwhelming
the criminal justice system. The U.S. Department of Justice estimates
that, on average, 16 percent of inmates in local jails suffer from a
mental illness, and in Maine, the National Alliance for the Mentally
III, NAMI, an advocacy group for persons with mental illness, estimates
that figure is as high as 50 percent. In my home state of Maine, 65,000
people have a severe mental illness but with the severe shortage of
psychiatric beds in the State, many people go without treatment. We
must take action to provide the mentally ill with better access to
care, and we must start by ensuring that Medicaid reimburses the
facilities that provide treatment.
Passing the Medicaid Emergency Psychiatric Care Act and providing
Medicaid coverage for emergency psychiatric treatment in both general
and psychiatric hospitals will accomplish several goals. First, and
most importantly, it will result in better psychiatric emergency care
for patients. Second, it will result in more efficient and effective
use of both Federal and State Medicaid dollars. Third, by resolving the
current conflict in Federal law between EMTALA requirements and the
Medicaid IMD exclusion from reimbursement, the bill will enable
[[Page S9512]]
freestanding psychiatric hospitals to receive reimbursement for
Medicaid psychiatric patients on the same basis as general hospitals
and help preserve the viability of these hospitals.
We have received strong support from a number of leading national
mental health and medical associations who confirm the critical need
for this legislation, including NAMI, the National Association of
County Behavioral Health Directors, the American Psychiatric
Association, the American College of Emergency Physicians, the American
Hospital Association, and the National Association of Psychiatric
Health Systems. I am especially pleased to have also received
endorsements from a number of Maine organizations, including the Maine
Hospital Association, Spring Harbor Hospital, and NAMI Maine.
This legislative change is vitally important to ensure that Medicaid
patients with mental illness receive the right care at the right time
in the right setting, instead of prolonged stays in emergency rooms and
in hospital settings without psychiatric specialty care. The cost of
achieving a more efficient, effective, and clinically appropriate care
system for psychiatric emergencies is small and well worth it. I urge
my colleagues to join us in cosponsoring the bill.
I ask unanimous consent that these letters of support be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
National Alliance
for the Mentally Ill,
Arlington, VA, July 11, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the 210,000 members and
1,200 affiliates of the National Alliance for the Mentally
Ill (NAMI), I am writing to express support for your
legislation, the Medicaid Emergency Psychiatric Care Act of
2005. NAMI strongly supports this important effort to address
the growing crisis in access to acute care services for non-
elderly adults living with severe mental illness. As the
nation's largest organization representing individuals with
severe mental illness and their families, NAMI is pleased to
support this important measure.
As NAMI's consumer and family membership knows first-hand,
the acute care crisis for inpatient psychiatric care is
growing in this country. This disturbing trend was identified
in the recently released Bush Administration New Freedom
Initiative Mental Health Commission report. Over the past 15-
20 years, states have closed inpatient units and drastically
reduced the number of acute care beds. Also, general
hospitals, due to severe budget constraints, have had to
close psychiatric units or reduce the number of beds. This
has resulted in a growing shortage of acute inpatient
psychiatric beds in many communities.
The Medicaid Emergency Psychiatric Care Act will address an
important conflict in federal policy that has contributed to
restricted access to needed inpatient services--the Medicaid
Institution for Mental Diseases (IMD) Exclusion and the
Emergency Medical and Labor Treatment Act (EMTALA). EMTALA
requires hospitals to stabilize patients in an emergency
medical condition, while the IMD exclusion prevents certain
hospitals (psychiatric hospitals) from receiving Medicaid
reimbursement for Medicaid beneficiaries between the ages of
21-64 in these circumstances.
This important measure will allow Medicaid funding to be
directed to non-publicly owned and operated psychiatric
hospitals (IMDs) for Medicaid beneficiaries between the ages
of 21-64 who require stabilization in these settings as
required by EMTALA. Today, these hospitals are denied payment
for care required under the EMTALA rules. The result is that
psychiatric hospitals are forced to absorb these added costs
of care to their already growing un-reimbursed care even
though these patients have insurance through Medicaid.
This legislation will go a long way in addressing the
growing psychiatric acute inpatient crisis, while creating
fairness in the reimbursement structure for psychiatric
hospitals under the limited circumstances required by the
EMTALA law. Your leadership in carefully crafting and
introducing this targeted legislation addressing a critical
problem for persons with serious mental illnesses is much
appreciated. NAMI looks forward to working with you and your
Senate colleagues to ensure passage of this important
legislation.
Sincerely,
Michael J. Fitzpatrick, M.S.W.,
Executive Director.
____
July 26, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: The National Association of County
Behavioral Health and Developmental Disability Directors
(NACBHD), which is the behavioral health affiliate of the
National Association of Counties, and the National
Association of Counties (NACo) are writing to strongly
support The Medicaid Emergency Psychiatric Care Act--
legislation you are introducing to alleviate the crisis in
access to acute hospital inpatient psychiatric services. A
lack of acute inpatient services was recently highlighted in
President Bush's New Freedom Commission on Mental Health
report and is a problem in many counties. In twenty of the
most populous states, counties have the designated
responsibility to plan and implement mental health services.
Over the past 20 years most states have closed many of
their state hospitals and returned individuals to the
community for care. General hospitals have over the past 10-
15 years have also begun to close psychiatric inpatient
units. Freestanding psychiatric hospitals have been
significantly reduced due to the reimbursements rates brought
about with the advent of managed care. Overall, the
availability of acute psychiatric beds, in many states, has
decreased dramatically in the last 10 years. Given the
shortage of inpatient acute beds, many individuals with
serious psychiatric disorders end up in county jails or
homeless rather than receiving basic psychiatric services in
hospital.
Your legislation specifically addresses the conflict in
federal law between the Emergency Medical Treatment and Labor
Act (EMTALA) Medicaid Institution for Mental Disease (IMD).
Your legislation will enable psychiatric hospitals to receive
reimbursement on the same basis as general hospitals for
Medicaid patients who meet EMTALA standards of a medical
crisis. The legislation offers a low-cost solution to
alleviate the crisis in emergency rooms in general hospitals
caused by an overflow of individuals in need of psychiatric
care because inpatient beds are not available.
NACBHD and NACo appreciate your leadership in introducing
this specific legislation that will address this inherent
conflict in federal requirements and will assist in promoting
access to acute psychiatric inpatient services. We look
forward to working with you and your colleagues in getting
this legislation passed through this Congress.
Sincerely,
Larry E. Naake,
Executive Director, National Association of Counties.
Melissa Staats,
President & CEO, National Association of County Behavioral
Health and Developmental Disability Directors.
____
American Hospital Association,
Washington, DC, July 20, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the American Hospital
Association's (AHA) members--4,800 hospitals, health systems
and other health care organizations, and 33,000 individuals--
I am writing to express our support for your bill, the
Medicaid Emergency Psychiatric Care Act of 2005.
As you know, the Emergency Medical and Labor Treatment Act
(EMTALA) require all hospitals, including psychiatric
hospitals, to stabilize patients who come in with an
emergency medical condition. But Medicaid's Institution for
Mental Diseases (IMD) exclusion does not allow Medicaid
reimbursement to non-public psychiatric hospitals for
stabilizing care delivered to Medicaid patients between the
ages of 21-64. This exclusion burdens these facilities with
an unfunded mandate in fulfilling their EMTALA obligations
for this patient population.
Your legislation would eliminate the IMD exclusion and
allow non-public psychiatric hospitals to receive appropriate
reimbursement for care provided under EMTALA to Medicaid
beneficiaries between the ages of 21-64. This will relieve
overcrowding in emergency departments and provide the
appropriate care these patients deserve in a more timely
manner.
Thank you for addressing this important issue. We support
the Medicaid Emergency Psychiatric Care Act of 2005 and look
forward to working with you and your colleagues to ensure
swift passage of this legislation. If you have further
questions, please contact the AHA's Curtis Rooney at (202)
626-2678, or [email protected].
Sincerely,
Rick Pollack,
Executive Vice President.
____
American Psychiatric
Association,
Arlington, VA, July 19, 2005.
Hon. Olympia Snowe,
U.S. Senator, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the 36,000 physician
members of the American Psychiatric Association (APA), and
most particularly on behalf of the patients they treat,
please accept my gratitude for your Senate sponsorship of the
Medicaid Emergency Psychiatric Care Act.
The Emergency Medical and Labor Treatment Act, which
requires hospitals to stabilize patients in an emergency
medical condition, directly conflicts with the Medicaid
Institution for Mental Diseases (IMD) exclusion. The IMD
exclusion prevents non-public psychiatric hospitals from
receiving Medicaid reimbursement for Medicaid patients
[[Page S9513]]
between the ages of 21-64 that have required stabilization as
a result of EMTALA regulations.
Your legislation will allow non-public psychiatric
hospitals to receive appropriate reimbursement for Medicaid
beneficiaries between the ages of 21-64 who require emergency
treatment and stabilization as required by EMTALA.
Thank you for your foresight and leadership in your lead
sponsorship of the Medicaid Emergency Psychiatric Care Act.
Thanks are also due to the outstanding work by Sue Walden,
who ably represents you. The APA looks forward to continue
working with you to progress this important legislation for
Medicaid psychiatric patients and providers.
Sincerely,
Steven S. Sharfstein, M.D.,
President, American Psychiatric Association.
____
American College
of Emergency Physicians,
Washington, DC, July 11, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the 23,000 members and 53
chapters of the American College of Emergency Physicians
(ACEP), I am writing to express support for your legislation,
the Medicaid Emergency Psychiatric Care Act of 2005. ACEP
strongly support this important effort to address the growing
crisis in access to acute care services for non-elderly
adults living with severe mental illness. As the nation's
largest emergency medicine organization, we believe your
legislation will provide needed attention and support to an
area inadequately addressed to date.
The Medicaid Emergency Psychiatric Care Act will address an
important conflict in federal policy that has contributed to
restricted access to needed inpatient services--the Medicaid
Institution for Mental Diseases (IMD) Exclusion and the
Emergency Medical and Labor Treatment Act (EMTALA). EMTALA
requires hospitals to stabilize patients in an emergency
medical condition, while the IMD exclusion prevents certain
hospitals (psychiatric hospitals) from receiving Medicaid
reimbursement for Medicaid beneficiaries between the ages of
21-64 in these circumstances. Your bill will allow Medicaid
funding to be directed to non-publicly owned and operated
psychiatric hospitals (IMDs) for Medicaid beneficiaries
between those ages who require stabilization in these
settings as required by EMTALA.
We commend you and the many colleagues we hope will support
this important measure and we stand prepared to do what we
can to ensure its enactment.
Sincerely yours,
Robert E. Suter, DO, MHA, FACEP,
President.
____
National Association of
Psychiatric Health Systems,
Washington, DC, July 19, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the members of the
National Association of Psychiatric Health Systems (NAPHS)
and the individuals and families that our members serve, we
strongly endorse the Medicaid Emergency Psychiatric Care Act
of 2005. This legislation, if approved by Congress, would
result in patients receiving appropriate care for psychiatric
emergencies instead of prolonged stays in emergency rooms.
We want to recognize your leadership in developing this
legislation, which provides a targeted and cost-effective
solution to the problem of overcrowding in emergency rooms
for all, but particularly for those with mental illness. The
measure has won bipartisan support from members of Congress
as well as the support of key national organizations for its
thoughtful approach.
Every day patients with serious mental illness are being
``boarded'' in hospital emergency departments or transferred
to other hospitals by ambulance because of a lack of
appropriate care.
This bill will enable psychiatric hospitals to receive
reimbursement on the same basis as general hospitals for
Medicaid patients who are in a crisis and present a danger to
themselves or others. This will help general hospitals to
address part of their overflow issues and ensure that
patients receive appropriate treatment. It will resolve a
current conflict in federal law between the Emergency Medical
Treatment and Labor Act (EMTALA) and the Medicaid Institution
for Mental Disease (IMD) exclusion.
Passage of the Medicaid Emergency Psychiatric Care Act is
an investment that will pay off in more appropriate care for
patients and more effective use of Medicaid dollars.
Sincerely,
Mark Covall,
Executive Director.
____
Maine Hospital Association,
Augusta, ME, July 29, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the Maine Hospital
Association's 39 acute-care and specialty hospitals, I am
writing in support of your bill, the Medicaid Emergency
Psychiatric Care Act of 2005.
As you know, the Medicaid program, through the Institution
for Mental Diseases (IMD) exclusion, prevents non-public
psychiatric hospitals from receiving Medicaid reimbursement
for Medicaid patients between the ages of 21-64 who require
stabilization. When the Federal Government created Medicaid
they prohibited Medicaid funding for services at IMDs because
Washington viewed mental health services to be the
responsibility of the State--particularly since at that time
most psychiatric hospitals were State-owned hospitals. The
Federal Government did provide funding through the DSH-IMD
(Disproportionate Share Hospital Fund for Institutes for
Mental Disease). Initially these funds were used solely by
the private IMDs, however, in 1991, Maine, in response to a
severe budget shortfall, began to shift costs associated with
Augusta Mental Health Institute (AMHI) and Bangor Mental
Health Institute (BMHI) into the Federal DSH-IMD pool rather
than funding those costs with all general fund dollars.
In the mid-1990s the State passed a rule that entitled AMHI
and BMHI to be paid first out of the DSH-IMD pool leaving the
remainder for the two private hospitals. With a declining
Federal cap on the DSH-IMD pool and increasing hospital
expenses, there was less and less money with which to
reimburse the two private psychiatric hospitals for services
provided to this indigent population.
Maine has two private psychiatric hospitals: Spring Harbor
Hospital in South Portland and The Acadia Hospital in Bangor.
For fiscal year 2005, Acadia had inpatient admissions of
1,731 and Spring Harbor had 3,208. Adults between the ages of
21 and 64 represented nearly 75 percent of all Spring Harbor
admissions in fiscal year 2005, up from 69% in 2004. In
addition, Spring Harbor estimates that in fiscal year 2006,
patients between the ages of 21 and 64 who cannot afford to
pay for their care at Spring Harbor will receive close to $6
million in free hospital services. Both hospitals also
provide a significant amount of outpatient services.
The two private hospitals play a pivotal role in the
delivery of mental health services especially for low-income
individuals. As the State has desired to encourage greater
behavior services within communities, the Department of
Behavioral and Developmental Services worked with both of
these hospitals to increase the number of beds and services
available to allow for certain patients to be placed in these
hospitals rather than the State institutes. The inability of
these two hospitals to effectively meet these patient needs
would have a detrimental impact throughout the State
especially because communities are already stressed
attempting to develop needed community-based services.
Your legislation will allow non-public psychiatric
hospitals to receive appropriate reimbursement for Medicaid
beneficiaries between the ages of 21-64 who require emergency
treatment and stabilization as required by EMTALA. This will
relieve overcrowding in emergency departments and provide the
appropriate care these patients deserve in a more timely
manner.
Thank you for addressing this important issue. We support
the Medicaid Emergency Psychiatric Care Act of 2005 and look
forward to working with you and your colleagues to ensure
swift passage of this legislation.
Sincerely,
Steven R. Michaud,
President.
____
Spring Harbor Hospital,
Westbrook, ME, July 26, 2005.
Hon. Olympia J. Snowe,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator Snowe: Writing as CEO on behalf of Spring
Harbor Hospital in Maine, and a past President of the
National Association of Psychiatric Health Systems, I would
like to thank you for supporting legislation to enable
freestanding private psychiatric hospitals in the US to
receive payment for the emergency stabilization services they
provide each year to thousands of Medicaid-eligible adult
clients under the Emergency Medical Treatment And Labor Act
(EMTALA).
As you know, it is becoming increasingly difficult for
freestanding private psychiatric facilities to absorb the
cost of treating Medicaid-eligible adults between the ages of
21 and 64 who are referred to them for emergency
stabilization under EMTALA. At Spring Harbor alone, the cost
of serving this population last year was close to $6 million.
Faced with both diminishing reimbursement streams and a
concurrent rise in demand for inpatient stabilization
services from overflowing emergency rooms across the country,
private freestanding psychiatric facilities are quite
literally caught between a rock and a hard place. In Maine
and in many other places, freestanding private psychiatric
hospitals are protecting their financial health by offering
fewer and fewer adult psychiatric services in the inpatient
setting. This tactic simply skirts the issue and creates a
further void of services for individuals with acute mental
illness, precisely at a time when it is widely accepted that
the availability of mental health services in this country is
substandard.
When all is said and done, these financial figures pale in
comparison to the ultimate cost to our society when these
adults fail to receive the treatment they deserve. It has
been estimated that the lifetime cost of providing for an
individual with an untreated serious mental illness is $10
million. Though this figure includes the financial impact of
[[Page S9514]]
lost work days and the cost of providing Social Security
disability benefits, it does not even begin to speak to the
emotional toll of mental illness on friends or the scars
mental illness can have on loved ones for generations to
come. If we could quantify these numbers adequately, I am
certain that I would not need to be writing to you today.
In closing, I would like to acknowledge the receptiveness
of your office and that of Senator Collins to issues
concerning the plight of the one in four adults and one in
ten children in the US who will experience a mental illness
this year. It is high time that the issues surrounding this
illness were addressed with understanding, compassion, and a
concern for our country's long-term mental health. I am both
pleased and proud that the Maine congressional delegation is
leading the way on these critical Issues.
Best regards,
Dennis P. King,
Chief Executive Officer, Past President (2003), National
Association of Psychiatric Health Systems.
____
National Alliance
for the Mentally Ill of Maine,
Augusta, ME, July 27, 2005.
Hon. Olympia Snowe,
U.S. Senate, Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the 1.400 members and 20
affiliates of the National Alliance for the Mentally Ill of
Maine (NAMI Maine), I write to express support for your
legislation, the Medicaid Emergency Psychiatric Care Act of
2005. NAMI Maine strongly supports your effort to address the
growing crisis in access to acute care services for non-
elderly adults living with severe mental illness. NAMI
Maine's mission is to improve the quality of life of all
people affected by mental illness and in this regard, we see
this legislation as an attempt to address an important issue.
We know firsthand in Maine the dire consequences that occur
when access to psychiatric care is not available. Like the
rest of the country, Maine has dramatically reduced the
number of state run psychiatric beds. One of the most
appalling results of this has been the significant increase
in the numbers of people with mental illness who are living
in Maine's jails. A snapshot review of the Cumberland County
jail last spring showed that 60 percent of the inmates were
taking medication for mental health problems; a spring survey
of the Kennebec County jail had the same result. Sadly, most
of these people are in jail for non-violent crimes connected
to their illness and their inability to obtain services to
treat that illness. Maine is one of the states with the
highest rates in the nation of incarceration for people with
mental illness. Unfortunately, the outcomes for people with
mental illness who are jailed instead of treated are
abysmal--and the financial costs are also very high. It is
not unusual for a person in need of a psychiatric bed in
Maine t0 wait several days in the emergency room for a bed to
open. Despite these statistics, the recent state budget has
significantly reduced funding for mental health services.
This will result in a growing shortage of community mental
health services--placing additional stress on hospitals,
emergency rooms, and people with mental illness and their
families. The inadequate number of acute inpatient
psychiatric beds will continue to be a significant problem.
Tne Medicaid Emergency Psychiatric Care Act will address an
important conflict in federal policy that has contributed to
restricted access to needed inpatient services--the Medicaid
Institution for Mental Diseases (IMD) Exclusion and the
Emergency Medical and Labor Treatment Act (EMTALA). EMTALA
requires hospitals to stabilize patients in an emergency
medical condition, while the IMD exclusion prevents certain
hospitals (psychiatric hospitals) from receiving Medicaid
reimbursement for Medicaid beneficiaries between the ages of
21-64 in these circumstances.
This important measure will allow Medicaid funding to be
directed to non-publicly owned and operated psychiatric
hospitals (IMDs) for Medicaid beneficiaries between the ages
of 21-64 who require stabilization in these settings as
required by EMTALA. Today, these hospitals are denied payment
for care required under the EMTALA rules. The result is that
psychiatric hospitals are forced to absorb these added costs
of care to their already growing un-reimbursed care even
though these patients have insurance through Medicaid.
Sometimes it means that patients are discharged too soon, as
a cost savings measure, only to return them to their families
in a similar condition to when they were admitted.
This legislation will go a long way in addressing the
growing psychiatric acute inpatient crisis, while creating
fairness in the reimbursement structure for psychiatric
hospitals under the limited circumstances required by the
EMTALA law. Your leadership in carefully crafting and
introducing this targeted legislation addressing a critical
problem for persons with serious mental illness is much
appreciated. NAMI looks forward to working with you and your
Senate colleagues to ensure passage of this important
legislation.
Sincerely,
Carol Carothers,
Executive Director.
______
By Ms. SNOWE (for herself and Mr. Bingaman):
S. 1593. A bill to amend title XVIII of the Social Security Act to
enhance the access of Medicare beneficiaries who live in medically
underserved areas to critical primary and preventive health care
benefits at Federally qualified health centers; to the Committee on
Finance.
Ms. SNOWE. Mr. President, I rise today to introduce the Medicare
Payment Adjustment To Community Health Centers, PATCH, Act of 2005. I
am particularly pleased to introduce this bill with my good friend and
colleague, Senator Bingaman. Two years ago we introduced a more
comprehensive version of this legislation, S. 654. I am happy to report
that many of the provisions in S. 654 were included in the Medicare
Modernization Act of 2003. The bill I am introducing today reflects two
key provisions which remain the priorities of our community health
centers.
This legislation will improve Medicare beneficiaries' access to
primary care services and preventive treatments by increasing access to
Community Health Centers. Local, non-profit, commnnity-owned health
centers, also known as Federally Qualified Health Center, FCHQs,
furnish essential primary and preventive care services to low income
and medically underserved communities. In many cases, community health
centers are the only source of primary and preventive services to which
Medicare beneficiaries have access. This is especially true for people
living in America's medically underserved rural areas.
For nearly 40 years, the national network of health centers has
provided high-quality, affordable primary care and preventive services.
Community health centers are located in areas where care is needed but
scarce, and they improve access to care for millions of Americans
regardless of their insurance status or ability to pay. Their costs of
care rank among the lowest, and they reduce the need for more expensive
emergency, in-patient, and specialty care, saving billions for dollars
for taxpayers.
Community health centers are increasingly becoming important
providers of primary care and prevent1ve services to seniors--as well
as providers of on-site dental, pharmaceu ical, and mental health
services. In short, community health centers provide the ease of ``one-
stop health care shopping,'' meaning that seniors, instead of moving
from location to location to receive comprehensive primary hearh
services, can usually receive all of their essential primary care in
one place.
The PATCH Act will ensure that community health centers can fully
participate in the Medicare program and provide seniors with these
vital services. Ensuring that Medicare pays its fair share is important
to the stability of community health centers. While 17 percent of
health center patients in Maine are Medicare beneficiaries, the
Medicare program pays only 78 cents on the dollar for the health center
costs incurred in delivering comprehensive primary care services to
them. For health centers to remain a viable part of the health care
delivery system, we must make changes.
Over the last 15 years, Congress has made many improvements to the
Medicare program through the addition of new primary and preventive
benefits, including screening mammograms, pap smears, colorectal and
prostate cancer screenings, flu and pneumococcal vaccinations, bone
mass measurement, and glucose monitoring and nutrition therapy for
diabetics. However, Congress has not updated the Medicare law to add
these crucial services to the health center reimbursement package, so
health centers are denied payment for these services when provided to
Medicare beneficiaries. This lack of reimbursement has caused
significant losses for health centers every time they deliver these
services to Medicare patients. Our bill will add these essential
services to the health center package of benefits so that they can
receive payment for these services.
The Medicare law has also neglected to include health care for the
homeless grantees as Federal qualified health centers. The bill would
also restore these centers for recognition within the Medicare statute.
Our legislation is strongly supported by the National Association of
Community Health Centers, and I ask unanimous consent that their letter
of support be printed in the Record at the conclusion of my remarks.
[[Page S9515]]
The PATCH Act makes these two technical and straightforward changes
to the Medicare program to ensure that Community Health Centers can
fully participate in Medicare and provide seniors with these vital
primary and preventive services. These changes are vitally important in
my state of Maine and also to health centers throughout our nation. By
making these two straightforward changes, we will be able to enhance
the care that all Medicare beneficiaries receive, especially those
living in rural and medically underserved communities. I urge my
colleagues to cosponsor the bill.
There being no objection, the material was ordered to be printed in
the Record, as follows:
National Association of
Community Health Centers, Inc.,
Washington, DC, July 29, 2005.
Hon. Olympia Snowe,
Russell Senate Office Building,
Washington, DC.
Dear Senator Snowe: On behalf of the National Association
of Community Health Centers (NACHC), I am writing to express
our support for your bill, the Medicare Payment Adjustment to
Community Health Centers (PATCH) Act of 2005. We sincerely
appreciate your continued commitment to improve the Medicare
program for all health centers.
Community health centers are local, non-profit, community-
oriented health care providers serving low income and
medically underserved communities. For nearly 40 years, the
national network of health centers has provided high-quality,
affordable primary care and preventive services, and often
provide on-site dental, pharmaceutical, mental health and
substance abuse services. America's health centers provide
care to nearly one million Medicare beneficiaries; furnishing
essential primary and preventive care services in underserved
areas of the country. Health centers provide ``one-stop
health care,'' allowing seniors to receive all of their
essential primary care in one convenient location.
Over the last 15 years, Congress has made many improvements
to the Medicare program through the addition of new primary
and preventive benefits, including: screening mammograms, pap
smears, colorectal & prostate cancer screenings, flu/
pneumococcal vaccinations, glucose monitoring and self
management training for diabetics, bone mass measurement, and
medical nutrition therapy for diabetics. Unfortunately,
Congress did not update the Medicare law to add these vital
services to the health center reimbursement package, thus
denying health centers payment for these services when
provided to Medicare beneficiaries. This lack of
reimbursement has caused significant losses for health
centers every time they deliver these services to Medicare
patients, even though it was the clear intent of Congress to
cover these services for all beneficiaries.
Health Centers are pleased that your bill remedies this
issue by updating the Medicare law to add these essential
services to the health center package of benefits. We
strongly believe that this will allow health centers to build
on their record of providing quality care to seniors.
We also are appreciative that your legislation would
correct a long-standing oversight relating to Health Care for
the Homeless grantees. Your legislation would ensure that the
original intent of Congress was reflected in the law.
Thank you for your leadership in addressing these critical
issues and we stand ready to assist you in your efforts to
enact this important legislation.
Sincerely,
Daniel R. Hawkins, Jr.
Vice President for Federal, State,
and Public Affairs.
______
By Mr. CORZINE:
S. 1594. A bill to require financial services providers to maintain
customer information security systems and to notify customers of
unauthorized access to personal information, and for other purposes; to
the Committee on Banking, Housing, and Urban Affairs.
Mr. CORZINE. Mr. President, identity theft is a serious and growing
concern facing our Nation's consumers. According to the Federal Trade
Commission, nearly 10 million Americans were the victims of identity
theft in 2003, which represents a tripling of the number of victims
from just 3 years earlier. Research shows that there are more than 13
identity thefts every minute.
According to the Identity Theft Resource Center, identity theft
victims spend on average nearly 600 hours recovering from the crime.
Additional research indicates the costs of lost wages and income as a
result of the crime can soar as high as $16,000 per incident. No one
wants to suffer this kind of hardship.
Technological innovation has delivered tremendous benefits to our
economy in the form of increased efficiency, expanded access, and lower
costs. And it has spurred the creation of an entire industry of data
collectors and brokers who profit from the packaging and
commoditization of one's personal and financial information. But,
regrettably, this technology has also provided identity thieves with an
attractive target, and relative anonymity, with which to ply their
sinister trade.
While many sectors of our economy are affected, financial
institutions face a particularly difficult challenge. By definition,
the information they use to conduct their daily business is sensitive,
because it is tied so closely to their customers' finances. A breach of
this data has the potential to cause large and damaging losses in a
very short amount of time.
Events over the past several months have further served to highlight
how serious this risk has become. The announcement not long ago by
Citigroup that a box of computer tapes containing information on 3.9
million customers was lost by United Parcel Service in my own state of
New Jersey while in transit to a credit reporting agency is the latest
in a line of recent, high profile incidents. In fact, I myself was a
victim of a similar loss of computer tapes by Bank of America earlier
this year.
In both of these cases, Citigroup and Bank of America acted
responsibly and notified possible victims in a prompt and timely
manner. But this is not always the case. And both of these cases
involved accidental loss--not even active attempts to steal personal
financial information.
At the very least consumers deserve to be made aware when their
personal information has been compromised. Right now, they must hope
that the laws of a few individual states, such as California, apply to
their case, or that victimized institutions will act responsibly on
their own.
In the event that an information breach does occur, the legislation I
am introducing today, the ``Financial Privacy Protection Act of 2005,''
would require prompt notification of all victims in all cases, subject,
of course, to the concerns of law enforcement agencies. Based on this
notification, victims could then take immediate action to include an
extended fraud alert in their credit files to minimize the damage done.
But on top of notification, customers need to know that if they trust
a bank with their sensitive personal information--which they must do in
order to engage in a financial transaction--that that bank will be
doing everything in its power to protect their information.
For that purpose, the ``Financial Privacy Protection Act of 2005''
would also direct financial regulators, in concert with the Federal
Trade Commission, to establish strong and meaningful standards for the
protection of information maintained by financial institutions on
behalf of their customers. Because these measures are so important, the
chief executive officer or the chief compliance officer of every
institution must personally attest as to the effectiveness of these
safeguards.
It is imperative that we take action to combat the growing threat of
identity theft. This crime harms individuals and families, and drags
down our economy in the form of lost productivity and capital. We can
do more and we must do more.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1594
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 ``Financial Privacy Protection
Act of 2005''.
SEC. 2. PREVENTION OF IDENTITY THEFT; NOTIFICATION OF
UNAUTHORIZED ACCESS TO CUSTOMER INFORMATION.
Subtitle B of title V of the Gramm-Leach-Bliley Act (15
U.S.C. 6821 et seq.) is amended--
(1) by striking section 525;
(2) by redesignating sections 522 through 524 as sections
523 through 525, respectively;
(3) in section 525, as redesignated, by striking ``section
522'' and inserting ``section 523''; and
(4) by inserting after section 521 the following:
``SEC. 522. PREVENTION OF IDENTITY THEFT; NOTIFICATION OF
UNAUTHORIZED ACCESS TO CUSTOMER INFORMATION.
``(a) Customer Information Security System Required.--
[[Page S9516]]
``(1) In general.--In accordance with regulations issued
under paragraph (2), each financial institution shall develop
and maintain a customer information security system,
including policies, procedures, and controls designed to
prevent any breach with respect to the customer information
of the financial institution.
``(2) Regulations.--
``(A) In general.--Each of the Federal functional
regulators shall issue regulations regarding the policies,
procedures, and controls required by paragraph (1) applicable
to the financial institutions that are subject to their
respective enforcement authority under section 523.
``(B) Specific requirements.--The regulations required by
subparagraph (A) shall--
``(i) require the chief compliance officer or chief
executive officer of a financial institution to personally
attest that the customer information security system of the
financial institution is in compliance with Federal and other
applicable standards and is subject to an ongoing system of
monitoring;
``(ii) require audits by the issuing agency (or submitted
to the issuing agency by an independent auditor paid for by
the financial institution to audit the financial institution
on behalf of the issuing agency) of the customer information
security system of a financial institution not less
frequently than once every 5 years;
``(iii) require the imposition by the issuing agency of
appropriate monetary penalties for failure to comply with
applicable customer information security standards; and
``(iv) include such other requirements or restrictions as
the issuing agency considers appropriate to carry out this
section.
``(C) Effective date.--Regulations issued under this
paragraph shall become effective 6 months after the effective
date of the Financial Privacy Protection Act of 2005.
``(b) Notification to Customers of Unauthorized Access to
Customer Information.--
``(1) Financial institution requirement.--In any case in
which there has been a breach at a financial institution, or
such a breach is reasonably believed to have occurred, the
financial institution shall promptly notify--
``(A) each customer whose customer information was or is
reasonably believed to have been accessed in connection with
the breach or suspected breach;
``(B) the appropriate Federal functional regulator or
regulators with respect to the financial institutions that
are subject to their respective enforcement authority;
``(C) each consumer reporting agency described in section
603(p) of the Fair Credit Reporting Act; and
``(D) appropriate law enforcement agencies, in any case in
which the financial institution has reason to believe that
the breach or suspected breach affects a large number of
customers, including as described in paragraph (5)(A)(iii),
subject to regulations of the Federal Trade Commission.
``(2) Other entities.--For purposes of paragraph (1), any
person that maintains customer information for or on behalf
of a financial institution shall promptly notify the
financial institution of any case in which such customer
information has been, or is reasonably believed to have been,
breached.
``(3) Timeliness of notification.--Notification required by
this subsection shall be made--
``(A) promptly and without unreasonable delay, upon
discovery of the breach or suspected breach; and
``(B) consistent with--
``(i) the legitimate needs of law enforcement, as provided
in paragraph (4); and
``(ii) any measures necessary to determine the scope of the
breach or restore the reasonable integrity of the customer
information security system of the financial institution.
``(4) Delays for law enforcement purposes.--Notification
required by this subsection may be delayed if a law
enforcement agency determines that the notification would
seriously impede a criminal investigation, and in any such
case, notification shall be made promptly after the law
enforcement agency determines that it would not compromise
the investigation.
``(5) Form of notice.--Notification required by this
subsection may be provided--
``(A) to a customer--
``(i) in writing;
``(ii) in electronic form, if the notice provided is
consistent with the provisions regarding electronic records
and signatures set forth in section 101 of the Electronic
Signatures in Global and National Commerce Act;
``(iii) if the number of people affected by the breach
exceeds 500,000 or the cost of notification exceeds $500,000,
or a higher number or numbers determined by the Federal Trade
Commission, such that the cost of providing notifications
relating to a single breach or suspected breach would make
other forms of notification prohibitive, or in any case in
which the financial institution certifies in writing to the
Federal Trade Commission that it does not have sufficient
customer contact information to comply with other forms of
notification with respect to some customers, then for those
customers, in the form of--
``(I) a conspicuous posting on the Internet website of the
financial institution, if the financial institution maintains
such a website; and
``(II) notification through major media in all major cities
and regions in which the customers whose customer information
is suspected to have been breached reside, that a breach has
occurred, or is suspected, that compromises the security,
confidentiality, or integrity of customer information of the
financial institution; or
``(iv) in such additional forms as the Federal Trade
Commission may by rule prescribe; and
``(B) to consumer reporting agencies and law enforcement
agencies (where appropriate), in such form as the Federal
Trade Commission shall by rule prescribe.
``(6) Content of notification.--Each notification to a
customer under this subsection shall include--
``(A) a statement that--
``(i) credit reporting agencies have been notified of the
relevant breach or suspected breach; and
``(ii) notwithstanding any other provision of law, the
customer may elect to place a fraud alert in the file of the
consumer to make creditors aware of the breach or suspected
breach, and to inform creditors that the express
authorization of the customer is required for any new
issuance or extension of credit (in accordance with section
605A of the Fair Credit Reporting Act); and
``(B) such other information as the Federal Trade
Commission determines is appropriate.
``(7) Compliance.--Notwithstanding paragraph (5), a
financial institution shall be deemed to be in compliance
with this subsection, if--
``(A) the financial institution has established a
comprehensive customer information security system that is
consistent with the standards prescribed by the appropriate
Federal functional regulator under subsection (a);
``(B) the financial institution notifies affected customers
and consumer reporting agencies in accordance with its own
internal information security policies in the event of a
breach or suspected breach; and
``(C) such internal security policies incorporate
notification procedures that are consistent with the
requirements of this subsection and the rules of the Federal
Trade Commission under this subsection.
``(8) Rules of construction.--
``(A) In general.--Compliance with this subsection by a
financial institution shall not be construed to be a
violation of any provision of subtitle A, or any other
provision of Federal or State law prohibiting the disclosure
of financial information to third parties.
``(B) Limitation.--Except as specifically provided in this
subsection, nothing in this subsection requires or authorizes
a financial institution to disclose information that it is
otherwise prohibited from disclosing under subtitle A or any
other applicable provision of Federal or State law.
``(c) Civil Penalties.--
``(1) Damages.--Any customer adversely affected by an act
or practice that violates this section may institute a civil
action to recover damages arising from that violation.
``(2) Injunctions.--Actions of a financial institution in
violation or potential violation of this section may be
enjoined.
``(3) Cumulative effect.--The rights and remedies available
under this section are in addition to any other rights and
remedies available under any other provision of applicable
State or Federal law.
``(d) Civil Actions by State Attorneys General.--
``(1) Authority of state attorneys general.--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--
``(A) to enjoin that act or practice;
``(B) to enforce compliance with this section;
``(C) to 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) Rule of construction.--For purposes of bringing any
civil action under paragraph (1), nothing in this section
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--
``(A) to conduct investigations;
``(B) to administer oaths and affirmations; or
``(C) to compel the attendance of witnesses or the
production of documentary and other evidence.
``(3) 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.
``(4) Service of process.--In an action brought under this
subsection, process may be served in any district in which
the defendant--
``(A) is an inhabitant; or
``(B) may be found.''.
SEC. 3. DEFINITIONS.
Section 527 of the Gramm-Leach-Bliley Act (15 U.S.C. 6827)
is amended--
(1) by redesignating paragraph (4) as paragraph (6);
[[Page S9517]]
(2) by redesignating paragraphs (1) through (3) as
paragraphs (2) through (4), respectively;
(3) by inserting before paragraph (2), as redesignated, the
following:
``(1) Breach.--The term `breach'--
``(A) means the unauthorized acquisition, disclosure, or
loss of computerized data or paper records which compromises
the security, confidentiality, or integrity of customer
information, including activities proscribed under section
521; and
``(B) does not include a good faith acquisition of customer
information by an employee or agent of a financial
institution for a business purpose of the institution, if the
customer information is not subject to further unauthorized
disclosure.'';
(4) in paragraph (2), as redesignated--
(A) by striking ``person) to whom'' and inserting the
following: ``person)--
``(A) to whom''; and
(B) by striking the period at the end and inserting the
following: ``; and
``(B) with respect to whom the financial institution
maintains information in any form, regardless of whether the
financial institution is providing a product or service to or
on behalf of that person.'';
(5) in paragraph (3), as redesignated--
(A) by striking ``institution' means any'' and inserting
the following: ``institution'--
``(A) means any'';
(B) by inserting ``(regardless of whether the financial
institution is providing any product or service to or on
behalf of that customer)'' before ``and is identified''; and
(C) by striking the period at the end and inserting the
following: ``; and
``(B) for purposes of section 522, includes the last name
of an individual in combination with any 1 or more of the
following data elements, when either the name or the data
elements are not encrypted:
``(i) Social security number.
``(ii) Driver's license number or State identification
number.
``(iii) Account number, credit or debit card number, or any
required security code, access code, or password that would
permit access to a financial account of the individual.
``(iv) Such other information as the Federal functional
regulators determine is appropriate with respect to the
financial institutions that are subject to their respective
enforcement authority.''; and
(6) by inserting before paragraph (6), as redesignated, the
following:
``(5) Federal functional regulator.--The term `Federal
functional regulator' has the same meaning as in section 509,
and includes the Federal Trade Commission.''.
SEC. 4. INCLUSION OF FRAUD ALERTS IN CONSUMER CREDIT REPORTS.
Section 605A of the Fair Credit Reporting Act (15 U.S.C.
1681c-1) is amended--
(1) in subsection (b)(1), by inserting ``or proof of a
notification of a breach or suspected breach under section
522(b)(1)(C) of the Gramm-Leach-Bliley Act'' after ``theft
report''; and
(2) by adding at the end the following:
``(i) No Adverse Action Based Solely on Fraud Alert.--It
shall be a violation of this title for the user of a consumer
report to take any adverse action with respect to a consumer
based solely on the inclusion of a fraud alert, extended
alert, or active duty alert in the file of that consumer, as
required by this subsection.''.
SEC. 5. STUDIES AND REPORTS ON IMPROVING PROTECTION OF
CUSTOMER INFORMATION.
(a) Alternative Information Storage Methods.--
(1) Study.--The Federal Trade Commission shall conduct a
study of alternative technologies, including biometrics, that
may be used by financial institutions and other businesses to
enhance the safeguarding of the customer information of
financial institutions and other sensitive personal
information. Such study shall include an analysis of how to
ensure that such information does not become widespread or
subject to theft.
(2) Report to congress.--The Commission shall submit a
report to the Congress on the results of the study conducted
under paragraph (1) not later than 6 months after the date of
enactment of this Act.
(b) Transportation of Customer Information.--
(1) Study.--The Comptroller General of the United States,
in consultation with the Federal functional regulators and
appropriate law enforcement agencies, shall conduct a study
of the cross country transport of the customer information of
financial institutions and other sensitive personal
information by or on behalf of financial institutions and
other businesses.
(2) Report to congress.--The Comptroller General shall
submit a report to the Congress on the results of the study
conducted under paragraph (1) not later than 6 months after
the date of enactment of this Act, including any
recommendations on ways that financial institutions may best
reduce the risk of compromise, breach, or loss of the
customer information of financial institutions and other
sensitive personal information during transport.
SEC. 6. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take
effect 6 months after the date of enactment of this Act.
______
By Mr. ENZI:
S. 1597. A bill to award posthumously a Congressional gold medal to
Constantino Brumidi; to the Committee on Banking, Housing, and Urban
Affairs.
Mr. ENZI. Mr. President, it is a special pleasure for me, as an
Italian American to introduce legislation to the Senate that will mark
the 200th anniversary of the birth of Constantino Brumidi.
As I introduce this legislation, I do so to recognize not only
Constantino Brumidi, but all those who have come to our shores to
pursue a dream and share in the blessings of liberty and freedom that
is our birthright as American citizens.
For Constantino Brumidi, there was no higher honor or greater calling
than to be an American citizen. It was a title he sought and then
signed with pride on some of his best work.
That experience is by no means unique to Constantino Brumidi. The
same call that he heard to come to America continues to be heard every
day as more and more people from all over the world come to the United
States in the pursuit of a dream and the freedom that marks our way of
life.
For my own family, it wasn't all that long after Constantino Brumidi
left for America that my own ancestors heard the call for freedom and
came here as well. Just like Constantino Brumidi they left the beauty
of Italy--its mountains and its sunny shores--to come and be a part of
the great adventure that is the United States.
That is my background, and when I came to Washington to serve in the
Senate, I found a renewed sense of purpose and inspiration every time I
walked through the corridors of the Capitol Building and saw
Constantino Brumidi's artwork so prominently and proudly displayed.
This is a special place and if you walk through these halls late at
night you can almost hear the whispers of the past and the hushed
echoes of the voices of our Founding Fathers and past Senators and
Representatives as they debated and discussed the issues of the day.
Statuary Hall, home to so many of our Nation's heroes particularly
draws you near as the Chamber's historical record calls to mind the
legends of our past--Washington, Jefferson, Lincoln, Adams and
Franklin.
That is when it hits you--that the story of the United States isn't a
random series of events, but the result of the vision and heartfelt
commitment of those who played an active role in our history. As an
Italian American it gives me a great sense of pride to know that one of
those great Americans was Constantino Brumidi.
The history books tell us that Constantino Brumidi was born in Rome
of Italian and Greek heritage. He had a great talent for painting that
revealed itself at an early age, and it was already beginning to earn
him a reputation as one of Europe's great artists when he heard a
different call--a call to make beautiful the home of democracy and
liberty--the United States of America.
One day, after completing a commission, Constantino Brumidi stopped
in Washington, DC, to visit the Capitol on his way home. Looking at its
tall, blank walls and empty corridors, he must have felt the excitement
and inspiration only an artist facing an empty canvas can know. On that
day he began what was more than an assignment for him--it was a labor
of love--as he brought to life the great moments in American history
for all to see on the walls and ceiling of this great building. His
efforts were destined to earn him the title of America's Michelangelo.
There aren't many quotes that are attributed to Constantino Brumidi,
but one that appears on the marker where he is buried is a beautiful
expression of his love for our country:
``My one ambition and my daily prayer is that I may live long enough
to make beautiful the Capitol of the one country on earth in which
there is liberty.''
That is the philosophy that guided Constantino Brumidi's hand as it
fired his imagination and inspired his creations in the Capitol.
Imagine what he would think if he could walk these corridors today. He
would see that his beautiful work has stood the test of time and gained
the appreciation and admiration of countless visitors to our shores and
our Capitol Building. He would see that it continues to thrill the
millions who flock here every year. I believe he would be both proud
and
[[Page S9518]]
humbled to be the center of such attention.
It is only fitting that over the years Constantino Brumidi has become
a symbol of all those who came to the United States in pursuit of a
dream that we all too often take for granted. It was freedom and
liberty that drew Constantino Brumidi to our land and it is what
continues to draw us together, American, Italian, Greek, Irish and
every other nationality you can name to make this world a better place
for us all to live.
Throughout the Capitol, each carefully planned stroke of Brumidi's
brush will continue to remind us that we are blessed and truly
fortunate to live in a land of promise and opportunity where we are all
called to greatness. Constantino Brumidi dared to be great and he will
be forever remembered for the gifts and talents he shared with us.
The legislation I am introducing today will ensure that the legacy he
left us all as Americans is never forgotten. Constantino Brumidi wanted
one thing--to be forever remembered as an Artist Citizen of the United
States--the home of liberty that he loved. We must all ensure his story
continues to be told so that it may continue to serve as a source of
inspiration and encouragement to all those who come to our shores that
any one of them can make a difference in the world by making the most
of the opportunities that are available to them here in America.
______
By Mr. HATCH (for himself, Mr. Craig, Mr. Burns, Mr. Smith, Mrs.
Lincoln, and Mr. Schumer):
S. 1598. A bill to amend the Internal Revenue Code of 1986 to provide
for a nonrefundable tax credit against income tax for individuals who
purchase a residential safe storage device for the safe storage of
firearms; to the Committee on Finance.
Mr. HATCH. Mr. President, if I may, I would like to speak very
briefly on another topic. I am an unqualified supporter of the
``Protection of Lawful Commerce in Arms Act,'' on which we will be
voting later today.
My colleague, Senator Craig, should be commended for his hard work on
this important legislation, which will protect gun manufacturers and
distributors from unwarranted lawsuits.
While we must always be vigilant in protecting our rights--including
our Second Amendment rights--it is also critical that we encourage
responsible exercise of those rights. For that reason, I want to say a
few words in support of the ``Child Protection and Home Safety Act of
2005,'' which I am introducing today. This Act would promote the safe
storage of firearms by providing a 25 percent tax credit toward the
purchase of a gun safe, up to a maximum of $250. I am pleased that my
colleagues, Senators Schumer, Craig, Burns, Lincoln, and Smith, are
cosponsoring this important bipartisan legislation. Our bill will
encourage gun owners to purchase gun safes for the safe storage of
firearms, thereby preventing the mishandling of guns and keeping our
families and communities safer.
This bill has widespread support from numerous national
organizations, including the National Association of Police
Organizations, the American Association of Suicidology, the American
Ethical Union, the National Black Police Officers Association, and
SAVE, the Suicide Awareness Voice of Education. In my home State of
Utah, law enforcement has given this bill unqualified support. In
addition to the Utah Sheriff's Association and the Utah Police Corps,
the Utah Highway Patrol Association has enthusiastically endorsed this
legislation.
Mr. President, I will ask unanimous consent to include a copy of
their letter of support in the Record.
Many of the guns used in violent acts are acquired on the black
market, having been stolen from the homes of law abiding Americans.
Nearly 10 percent of state prison inmates incarcerated on gun crimes
say the weapons they used were stolen. Safely securing a firearm within
a person's home is a fundamental way to help ensure that firearms do
not fall into the wrong hands. One important step that can be taken in
this regard is for families to lock firearms within a theft-resistant
safe. This bill, by encouraging the purchase and use of gun safes, will
significantly reduce the rate of stolen guns, thereby reducing the
incidents of homicides and violent crimes.
Another problem plaguing America today is that of children gaining
access to their parents' firearms and using those firearms to commit
homicide or suicide. The school shootings in Columbine, Santee, Lake
Worth, Florida, Fort Gibson, Oklahoma and Deming, New Mexico, are a sad
legacy we hope to leave far behind us. It is the responsibility of gun
owners to ensure that our children cannot gain access to firearms and
unintentionally or intentionally use those firearms to harm themselves
or someone else. This bill, by encouraging gun owners to lock up their
firearms in gun safes, will make it more difficult for children to
access their parents' guns.
Utah is home to several fine manufacturers of gun safes. The
employees at companies such as Liberty, Fort Knox, and others know that
while there are many ways to attempt to secure a firearm, gun safes are
the best way to reliably secure firearms and keep them out of the hands
of those who should not have access to them. Other methods of securing
firearms may only give the purchaser a false sense of security.
Trigger locks do not prevent loading and can easily be opened by a
child with a screwdriver. Cable locks can easily be cut open with a
simple wire-cutter. Locked case boxes are small and light and can
easily be picked up and carried away by a thief.
Quality gun safes can provide the security our children and our
communities deserve. And through the vehicle of a tax credit, this bill
encourages gun safety while preserving Second Amendment liberties.
I want to thank everyone who has worked with us to craft this bill.
By encouraging gun owners to purchase residential gun safes for the
safe storage of firearms we move a little bit closer to creating a
safer America.
Mr. President, I urge all of my colleagues to support the ``Child
Protection and Home Safety Act of 2005,'' and I ask unanimous consent
that the text of the bill and the letter to which I referred be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 1598
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 ``Child Protection and Home
Safety Act of 2005''.
SEC. 2. CREDIT FOR RESIDENTIAL GUN SAFE PURCHASES.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
nonrefundable personal credits) is amended by inserting after
section 25B the following new section:
``SEC. 25C. PURCHASE OF RESIDENTIAL GUN SAFES.
``(a) Allowance of Credit.--In the case of an individual,
there shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to 25
percent of the amount paid or incurred by the taxpayer during
such taxable year for the purchase of a qualified residential
gun safe.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) with respect to any qualified residential gun safe shall
not exceed $250.
``(2) Carryforward of unused credit.--If the credit
allowable under subsection (a) for any taxable year exceeds
the limitation imposed by section 26(a) for such taxable year
reduced by the sum of the credits allowable under this
subpart (other than this section and section 23), such excess
shall be carried to the succeeding taxable year and added to
the credit allowable under subsection (a) for such taxable
year. No credit may be carried forward under this subsection
to any taxable year following the third taxable year after
the taxable year in which the purchase or purchases are made.
For purposes of the preceding sentence, credits shall be
treated as used on a first-in first-out basis.
``(c) Qualified Residential Gun Safe.--For purposes of this
section, the term `qualified residential gun safe' means a
container not intended for the display of firearms which is
specifically designed to store or safeguard firearms from
unauthorized access and which meets a performance standard
for an adequate security level established by objective
testing.
``(d) Special Rules.--
``(1) Denial of double benefit.--No deduction shall be
allowed under this chapter with respect to any expense which
is taken into account in determining the credit under this
section.
``(2) Married couples must file joint return.--If the
taxpayer is married at the
[[Page S9519]]
close of the taxable year, the credit shall be allowed under
subsection (a) only if the taxpayer and taxpayer's spouse
file a joint return for the taxable year.
``(3) Marital status.--Marital status shall be determined
in accordance with section 7703.
``(e) Election To Have Credit Not Apply.--A taxpayer may
elect to have this section not apply for any taxable year.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to ensure that residential
gun safes qualifying for the credit meet design and
performance standards sufficient to ensure the provisions of
this section are carried out.
``(g) Statutory Construction; Evidence; Use of
Information.--
``(1) Statutory construction.--Nothing in this section
shall be construed--
``(A) as creating a cause of action against any firearms
dealer or any other person for any civil liability, or
``(B) as establishing any standard of care.
``(2) Evidence.--Notwithstanding any other provision of
law, evidence regarding the use or nonuse by a taxpayer of
the tax credit under this section shall not be admissible as
evidence in any proceeding of any court, agency, board, or
other entity for the purposes of establishing liability based
on a civil action brought on any theory for harm caused by a
product or by negligence, or for purposes of drawing an
inference that the taxpayer owns a firearm.
``(3) Use of information.--No database identifying gun
owners may be created using information from tax returns on
which the credit under this section is claimed.''.
(b) Conforming Amendment.--Section 6501(m) of the Internal
Revenue Code of 1986 is amended by inserting ``25C(e),''
before ``30(d)(4),''.
(c) Clerical Amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter I of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 25B the following new item:
``Sec. 25C. Purchase of residential gun safes.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004.
____
Heber City Police Department,
Heber City, UT.
Hon. Orrin G. Hatch,
U.S. Senate,
Washington, DC.
Dear Senator Hatch: The Utah Chiefs of Police Association
enthusiastically endorses legislation which would provide a
25% tax credit toward the purchase of a gun safe, up to a
maximum of $250.
This legislation would encourage gun owners to purchase gun
safes for the safe storage of firearms. An increase in the
use of gun safes will help prevent the theft of firearms,
reducing incidents of suicide, homicide and violent crimes.
Senator Hatch, we urge you to introduce this legislation in
the Senate, support it and use your best efforts to see that
it gets passed. The passage of this vital legislation will
prevent the mishandling of guns and keep our families and
communities safer.
Thank you in advance for all your work and your support of
this matter.
Sincerely,
Chief Ed Rhoades,
President,
Utah Chiefs of Police Association.
______
By Mr. McCAIN (for himself, Mr. Ensign, and Mr. Kyl):
S. 1599. A bill to repeal the perimeter rule for Ronald Reagan
Washington National Airport, and for other purposes; to the Committee
on Commerce, Science, and Transportation.
Mr. McCAIN. Mr. President, I am pleased to be joined by Senators
Ensign and Kyl in introducing the Abolishing Aviation Barriers Act of
2005. This bill would remove the arbitrary restrictions that prevent
Americans from having an array of options for nonstop air travel
between airports in western States and LaGuardia International Airport
``LaGuardia'', and Ronald Reagan Washington National Airport,
``Washington National''.
LaGuardia restricts the departure or arrival of nonstop flights to or
from airports that are farther than 1,500 miles from LaGuardia.
Washington National has a similar restriction for nonstop flights to or
from airports 1,250 miles from Washington National. These restrictions
are commonly referred to as the ``perimeter rule.'' This bill would
abolish these archaic limitations that reduce consumers' options for
convenient flights and competitive fares.
The original purpose of the perimeter rule was to promote LaGuardia
and Washington National as airports for business travelers flying to
and from East Coast and Midwest cities and to promote traffic to other
airports by diverting long haul flights to Newark and Kennedy airports
in the New York area and the Dulles airport in the Washington area.
However, over the years, Congress has rightly granted numerous
exceptions to the perimeter rule because the air traveling public is
eager for travel options. Today, there are nonstop flights between
LaGuardia and Denver and between Washington National and Denver, Las
Vegas, Los Angeles, Phoenix, Salt Lake City and Seattle. Rather than
continuing to take a piecemeal approach to promoting consumer choice, I
urge Congress to take this opportunity once and for all to do away with
this outdated rule.
As many in this body know, I have been fighting against the perimeter
rule for years. I continue to believe that Americans should have access
to air travel at the lowest possible cost and with the most convenience
for their schedule. Therefore, I have always advocated for the removal
of any artificial barrier that prevents free market competition. Last I
co-sponsored legislation to repeal the ``Wright Amendment'' which
prohibits flights from Dallas'' Love Field airport to 43 States. This
week I am proud to come together with colleagues once again to
eliminate another unnecessary restraint through the Abolishing Aviation
Barriers Act of 2005.
Some opponents, mainly those with parochial interests, have
criticized me over the years for my efforts to remove the perimeter
rule for Washington National, particularly because such removal would
allow flights between Phoenix and Tucson and Washington National. Due
to such criticism, I made a pledge in 1998 that I would not take such
flights if they were made available. Shortly thereafter, the Federal
Aviation Administration granted an exemption for two nonstop flights
per day between Washington National and Phoenix. I have never taken
these flights. Instead I have routinely used connecting flights or
flown out of Dulles International Airport. Being a frequent flier and
having flown from both Dulles and Kennedy in the past few months, I can
assure my colleagues, that both airports have enormous business and no
longer need to be ``fed'' long haul traffic to promote airport usage.
In fact, a 1999 study by the Transportation Research Board stated
that perimeter rules ``no longer serve their original purpose and have
produced too many adverse side effects, including barriers to
competition . . . The rules arbitrarily prevent some airlines from
extending their networks to these airports; they discourage competition
among the airports in the region and among the airlines that use these
airports; and they are subject to chronic attempts by special interest
groups to obtain exemptions.''
That same year, the Government Accountability Office, GAO, stated
that the ``practical effect'' of the perimeter rule ``has been to limit
entry'' of other carriers. The GAO found that airfares at LaGuardia and
Washington National are approximately 50 percent higher on average than
fares at similar airports unconstrained by the perimeter rule. Such an
anticompetitive rule should not remain in effect, particularly where
its anticompetitive impact has long been recognized. For this reason, I
will continue the struggle to try to remove the perimeter rule and
other anticompetitive restrictions that increase consumer costs and
decrease convenience for no apparent benefit.
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. 1599
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 ``Abolishing Aviation Barriers
Act of 2005''.
SEC. 2. RONALD REAGAN WASHINGTON NATIONAL AIRPORT.
(a) In General.--Chapter 449 of title 49, United States
Code, is amended by striking section 49109.
(b) Clerical Amendment.--The chapter analysis for chapter
449 of title 49, United States Code, is amended by striking
the item relating to section 49109 and inserting the
following:
``44901. Repealed''.
SEC. 3. TERMINATION OF FEDERAL SUPPORT FOR PERIMETER RULE AT
NEW YORK LAGUARDIA AIRPORT.
Notwithstanding any other provision of law, no Federal
funds may be obligated or expended after the date of
enactment of this Act to enforce the Port Authority of New
York and New Jersey rule banning flights beyond 1,500 miles
(or any other flight distance
[[Page S9520]]
related restriction), from arrival or departure at New York
LaGuardia Airport.
______
By Ms. SNOWE (for herself and Mr. Hatch):
S. 1600. A bill to amend the Communications Act of 1934 to ensure
full access to digital television in areas served by low-power
television, and for other purposes; to the Committee on Commerce,
Science, and Transportation.
Ms. SNOWE. Mr. President, I have the support of many of my colleagues
on the Senate Committee on Commerce, Science and Transportation to
introduce legislation to help rural America transition to an age of
digital television. Television is an important media outlet for local
news, weather and information. Years ago, it was decided that the
United States should transition to a higher standard of television
service. Digital television is much more than simply a sharper picture;
it allows for an increase in the number of channels, more efficient use
of spectrum and many new features for consumers. As the Senate
considers broader digital television transition legislation, it is
important not to leave rural America behind.
The bill I introduce today is aimed to assist translator stations and
low power analog stations. Translator stations are small stations that
repeat a signal from full power stations so that the signal may be
reached in remote areas. Low power analog TV stations are television
stations that typically serve smaller, rural communities. While
translators and low power analog TV stations are located in many parts
of the country, most are concentrated in rural areas, including many
parts of Maine.
There has been a long time understanding that low power stations
would not be a part of the full power digital television transition.
This understanding, however, does not mean that Congress can simply
look away. We must ensure that low power stations have the necessary
time and adequate funds to move into the digital age. The Digital Low
Power Television Transition Act aims to address these needs.
First, the bill I am introducing today puts a deadline for the low
power digital televison transition four years out from whatever the
hard date is that Congress ultimately decides for the full power
digital television transition. Full power stations have had years to
transition to digital. Low power stations have yet to even receive
their digital allocations, and therefore need additional time to
upgrade equipment. This delay will also allow consumers in rural areas
to continue to use analog television sets to receive over-the-air
signals until digital television equipment becomes more prevalent in
small town consumer electronics stores.
Second, the Digital Translator and Low Power Television Transition
bill establishes a grant program within the National Telecommunications
and Information Agency, NTIA, to help defray the cost of upgrading
translators and low power television stations from analog to digital.
This money for the grant program would come from a trust fund set up
with proceeds of the spectrum auctions that will take place because of
the full power digital television transition. The Federal
Communications Commission, FCC, estimates that approximately $100
million will be needed for the 4474 translators and 2071 low power
analog and to upgrade. The trust fund's size reflects the FCC's
estimate.
The goal of this Act is to assist the rural, low power stations
without interrupting the greater digital televison transition. Because
of the secondary status of translators and low power stations, the
auction of full power analog spectrum will remain unaffected. These
stations do play an important role in rural communities, therefore this
bill calls upon the FCC to report to Congress on the status of
translators and low power analog.
This bill is not meant to be a comprehensive approach to the digital
television transition. It is merely a solution to one of the many
questions Congress will face this Congress. Rural America deserves the
same benefits that digital televison will bring that will be available
in urban areas. This Act gives translators, low power analog and Class
A stations the assistance they need to smoothly transition to digital.
______
By Mr. GRASSLEY (for himself, Mr. Bayh, and Mrs. Clinton):
S. 1602. A bill to amend title XIX of the Social Security Act require
States to disregard benefits paid under long-term care insurance for
purposes of determining medicaid eligibility, to expand long-term care
insurance partnerships between States and insurers, to amend the
Internal Revenue Code of 1986 to allow individuals a deduction for
qualified long-term care insurance premiums, the use of such insurance
under cafeteria plans and flexible spending arrangements, and a credit
for individuals with long-term care needs, to establish home and
community based services as an optional medicaid benefit, and for other
purposes; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, I am pleased to join my colleagues
Senator Bayh and Senator Clinton in introducing the Improving Long-term
Care Choices Act. This legislation sets forth a series of proposals
aimed at improving the accessibility of long-term care insurance and
promoting awareness about the protection that long-term care insurance
can offer. It also seeks to broaden the availability of the types of
long-term care services such as home- and community-based care, which
many folks prefer to institutional care.
Before I begin my discussion of the merits of the legislation that I
am introducing today, I want to take this opportunity to once again
emphasize my commitment to enacting the Family Opportunity Act. I have
worked to get the Family Opportunity Act enacted for many years now.
I have been motivated to work so hard because I have been deeply
moved by a number of stories from families, both from my State of Iowa
and elsewhere, who have had to turn down promotions, or even put their
child with a disability up for adoption in order to secure for these
children the medical services they so desperately need.
The Family Opportunity Act would provide a State option to allow
families with disabled children to ``buy in'' to the Medicaid program;
establish mental health parity in Medicaid Home and Community Based
Waiver programs; establish Family to Family Health Information Centers
and restore Medicaid eligibility for certain SSI beneficiaries.
As part of the on-going negotiations relative to the FOA, many
stakeholders have agreed that a modification of a feature of the
President's New Freedom Initiative, a demonstration program known as
``Money Follows the Person'' should be enacted along with the FOA.
Money Follows the Person allows the Secretary to provide grants to
states to increase the use of home and community based care and
provides States a financial incentive for the first year to do so.
I want stakeholders in the disability community as well as the many
organizations who support the Family Opportunity Act to understand that
the legislation I am introducing today compliments rather than
supplants my efforts to enact FOA and Money Follows the Person. I
believe that we should provide a wide array of options to the states to
encourage them to identify and eliminate barriers to community living
including access to consumer direction and respite care.
Long-term care services can be prohibitively expensive. Just one year
in a nursing home can cost well over $50,000. In many cases,
individuals deplete their savings and resources paying for long-term
and ultimately qualify for Medicaid coverage. Right now, Medicaid pays
for the bulk of long-term care services in this country. In 2002 alone,
we spent nearly $93 billion on long-term care services under Medicaid.
With our aging population, one thing is clear: spending will only
increase.
When most people think about purchasing long-term care insurance,
they think, ``that's something I can put off until tomorrow.'' We need
to change the perception because the older you are when you first buy
coverage, the more expensive the premiums are.
Our legislation calls for the Secretary to educate folks about the
protection that long-term care insurance can offer. We envision people
having the opportunity to compare policies available in their States.
Among other means, this could be accomplished
[[Page S9521]]
through an internet website for example.
Making people aware of long-term care insurance won't go very far
though, unless we make some other changes to enhance the value and
protection that long-term care insurance can bring. Our bill takes
several steps in this regard.
First, the legislation would require that States disregard benefits
paid under a long-term care insurance policy when determining
eligibility for Medicaid. Second, it incorporates a series of consumer
protections recommended by the National Association of Insurance
Commissioner, NAIC, into the definition of `qualified long-term care
services.' Individuals who purchase a policy that have these consumer
protections will be eligible for an above the line tax deduction and a
tax credit for out-of-pocket expenses made by caregivers. Third, the
bill would expand the long-term care partnership program, which
currently operates as a demonstration in four states. The long-term
care partnerships combine private long-term care insurance with
Medicaid coverage once individuals exhaust their insurance benefits.
Several States would like to pursue their own long-term care
partnerships and this legislation will enable them to do that.
The Improving Long-term Care Choices Act also builds on the
President's New Freedom Initiative by taking further steps toward
removing the ``institutional bias'' in Medicaid, giving States the
option of providing home- and community-based services as part of their
State Medicaid Plan.
In doing so, the bill gives States the flexibility to design long-
term care benefits that will reduce the reliance on costly
institutional settings and meet the needs of elderly and disabled
individuals who overwhelmingly wish to remain in their homes and
communities.
In his New Freedom Initiative announced shortly after taking office,
President George W. Bush outlined a plan to tear down barriers
preventing people with disabilities from fully participating in
American society.
The President also endorses the idea of shifting Medicaid's delivery
system towards one that promotes cost-effective, community-based care
instead of one weighted so heavily towards institutional settings.
This legislation also challenges us to think beyond funding and
program silos and directs the Secretary to address administrative
barriers that impede the integration of acute and long-term care
services. The Secretary also must develop recommendations for statutory
changes that will make it easier for States to offer better coordinated
acute and long-term care services.
The Improving Long-Term Care Choices Act is consistent with our
ideals about families, individual choices in health care and financial
responsibility. This bill aims high. But it is sorely evident that we
need to think creatively and comprehensively, even boldly, if we hope
to make the type of inroads in promoting the availability of good long-
term care insurance policies and in rebalancing the institutional bias
in long-term care services that no longer reflects the needs and
preferences of many stakeholders.
The Improving Long-Term Care Choices Act is a good bill. The American
Network of Community Options and Resources, the Arc & United Cerebral
Palsy Disability Policy Collaboration, and the National Disability
Rights Network, the United Spinal Association, and the Association of
University Centers on Disabilities support the bill. I urge my
colleagues to do the same.
I ask unanimous consent that a section-by-section summary of the
legislation and letters of support be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Improving Long-Term Care Choices Act--Summary
TITLE I: LONG-TERM CARE INSURANCE CONSUMER PROTECTIONS
Subtitle A
Section 101: State Medicaid Plan requirements regarding
Medicaid eligibility determination, long-term care
insurance reciprocity, and consumer education
Requires each state in its Medicaid plan to exclude
benefits, including assigned benefits, paid under a
qualified-long term care policy in determining income for
purposes of determining eligibility for medical assistance.
Requires that states with a long-term care insurance
partnership program to meet requirements for reciprocity to
with other long-term care insurance partnership states.
Reciprocity rules to be developed as specified in section
103.
Requires the Secretary to educate consumers on the
advisability of obtaining long-term care insurance that meets
federal standards and the potential interaction between
coverage under a policy and federal and state health
insurance programs.
Section 102: Additional consumer protections for long-term
care insurance
Establishes additional consumer protections with respect to
long-term care insurance policies based on the October 2000
National Association of Insurance Commissioners (NAIC) model
regulations including non-cancellability, prohibitions on
limitations and exclusions, extension of benefits,
continuation of conversion coverage, discontinuance and
replacement, prohibitions on post-claim underwriting,
inflation protection, and prohibitions on pre-existing
condition and probationary periods in replacement policies or
certificates.
Issuers of long-term care insurance policies must also
comply with NAIC model provisions related to disclosure of
rating practices, application forms and replacement coverage,
reporting, filing requirements for marketing, suitability,
standard format outline of coverage, and delivery of
shopper's guide.
Issuers must comply with model act policies related to
right to return, outline of coverage, certificates under
group plans, monthly reports on accelerated death benefits,
and incontestability period.
Applies to policies issued more than 1 year after
enactment.
Section 103: Expansion of State Long-term Care Partnerships
Permits the expansion of long-term care partnership
insurance policies to all states.
Requires all new partnership policies to be ``qualified
long-term care insurance policies'' defined as a policy that:
(1) disregards any assets or resources in the amount equal
payments made under the policy; (2) requires the holder, upon
the policy's effective date, to reside in the state or a
state with a qualified long-term care partnership; (3)
includes the consumer protections specified in 7702B of the
tax code as amended by Section 102 (additional consumer
protections); (4) requires compound inflation protection; and
(5) requires that any agent selling such policies receive
training and demonstrate knowledge of such policies,
Medicaid asset protection would apply in an equal amount to
the insurance benefit paid under the policy, referred to as a
dollar-for-dollar model. [The four states (NY, IN, CT, and
CA) that currently offer long-tenn care partnership policies
that are not dollar-for-dollar may continue to offer those
policies.]
Directs the Secretary to set standards for reciprocity in
conjunction with states, insurers, NAIC, and other groups as
deemed necessary by the Secretary not later than 12 months
after enactment to provide for the portability of long-term
care partnership policies from one partnership state to
another partnership state.
Establishes minimum uniform reporting requirements.
Section 104: National Clearinghouse for Long-term Care
Information
Provides for: (1) development of a national clearinghouse
on long-term care information to educate consumers on the
importance of purchasing long-term care insurance, and, where
appropriate, to assist consumers in comparing long-term care
insurance policies offered in their states, including
information on benefits, pricing (including historic
increases in premiums) as well as other options for financing
long-term care and (2) establishment of a website to
facilitate comparison of long-term care policies.
Authorizes such sums a necessary for the clearinghouse in
fiscal year 2006 and each year thereafter.
Subtitle B
Section 121: Treatment of premiums on qualified long-term
care insurance contracts
Provides individuals an above-the-line tax deduction for
the cost of their qualified LTC insurance policy (as defined
by HIPAA, section 7702B(b)). Phases in applicable percentage
of the deduction based on the number of years of continuous
coverage under a qualified LTC policy.
Section 122: Credit for taxpayers with long-term care needs
Provides applicable individuals with LTC needs or their
eligible caregivers a $3000 tax credit to help cover LTC
expenses. An applicable individual is one who has been
certified by a physician as needing help with at least 3
activities of daily living, such as eating, bathing,
dressing. LTC tax credit would be phased-in over 4 years as
follows: $1000 in 2005, $1500 in 2006, $2000 in 2007, $2500
in 2008, and $3000 in 2009 or thereafter. The credit phases
out by $100 for each $1000 (or fraction thereof) by which the
taxpayer's modified adjusted gross income exceeds the
threshold amount set at $150,000 for a joint return and
$75,000 for an individual return.
[[Page S9522]]
Section 123: Treatment of exchanges of long-term care
insurance contracts
Includes a waiver of limitations, allowing individuals to
make claims if there are changes to law.
TITLE II: MEDICAID HOME AND COMMUNITY-BASED SERVICES OPTIONAL BENEFIT
Section 201: Medicaid Home and Community-Based Services
Optional Benefit
Provides states with a new option to offer home and
community-based services to Medicaid-eligible individuals
without obtaining a federal waiver. Under this option states
may include one or more home and community-based services
currently available under existing waiver authority. States
would also be permitted to allow individuals to choose to
self-direct services. Under this option, states must
establish a more stringent eligibility standard for placement
of individuals in institutions, than for placement in a home
and community-based setting. States would be permitted to
offer a limited benefit consisting of home and community-
based services only, to certain populations not otherwise
eligible for Medicaid, but not to exceed individuals whose
income exceeds 300% of SSI income and resource standards. At
states option, provides presumptive eligibility for aged,
blind and disabled for home and community-based services. If
enrollment under the state plan exceeds state projections,
the state would be permitted to change eligibility standards
to limit enrollment for new applicants, while grandfathering
those individuals already receiving services.
TITLE III: INTEGRATED ACUTE AND LONG-TERM CARE SERVICES FOR DUALLY
ELIGIBLE INDIVIDUALS
Section 301: Removal of barriers to integrated acute and
long-term care services for dually eligible individuals
Directs the Secretary, in collaboration with directors of
State Medicaid programs, health care issuers, managed care
plans, and others to issue regulations removing
administrative barriers that impede the offering of
integrated acute, home and community-based, nursing facility,
and mental health services, and to the extent consistent with
the enrollee's coverage for such services under Part D,
prescription drugs. The Secretary also must submit
recommendations to address legislative barriers to offering
integrated services. The Medicare Payment Advisory Commission
(MedPAC) will comment on the Secretary's recommendations.
____
American Network of Community
Options and Resources,
Alexandria, VA, July 29, 2005.
Hon. Charles Grassley,
Hon. Evan Bayh,
U.S. Senate, Washington, DC.
Dear Senators Grassley and Bayh: On behalf of the American
Network of Community Options and Resources (ANCOR)--the
national association representing more than 850 private
providers of supports and services to more than 380,000
people with significant disabilities--we extend our
appreciation and offer our support in the introduction today
of your ``Improving Long-Term Care Choices Act of 2005.''
It is especially noteworthy that you introduced this bill
on the eve of Medicaid's 40th anniversary. Medicaid has
worked for millions of people with disabilities, improving
their lives over the past four decades. However, Medicaid can
and should do better on behalf of the 8 million individuals
with disabilities that depend daily upon this program for
their health services and long-term supports. This is a
propitious moment to send a message to the nation--people
with disabilities can count on Medicaid. It makes clear to
all that Congress intends to maintain its commitment for a
strong federal role in enhancing the lives of people with
disabilities.
People with disabilities, their families, and providers
have for years called for the removal of Medicaid's
institutional bias. ANCOR provided testimony in. September of
2001 in conjunction with the President's New Freedom
Initiative that the Congress must change the structure of
Medicaid to include state plan home and community-based
services. Your bill builds upon the President's initiative,
the Supreme Court's Olmstead decision, and ANCOR's commitment
to community integration.
In addition to helping millions of people of all ages who
depend upon Medicaid for long-term supports, your legislation
will assist millions of moderate-income Americans to address
their future long-term needs. By encouraging reliable long-
term care insurance and tax incentives to defray costs for
long-term needs, your bill begins the important process to
adopt a national comprehensive long-term care policy. This
step is critical as the nation stands on the precipice of the
fast approaching ``sleeping giant''--the retirement of the
baby boom generation and shift in demographics. In this way,
the bill will help reduce the financial pressures on Medicaid
and our nation's reliance on it as the only public long-term
care program.
ANCOR is pleased and proud to offer its support to you on
this momentous day and to pledge our help in making the
``Improving Long-Term Care Choices Act of 2005'' a reality
this session. We are grateful for your leadership and ongoing
commitment to people with disabilities and those who provide
them with daily supports.
Sincerely,
Suellen R. Galbraith,
Director for Government Relations.
____
Disability Policy Collaboration,
Washington, DC, July 29, 2005.
Hon. Charles Grassley,
Hon. Evan Bayh,
U.S. Senate.
Dear Chairman Grassley and Senator Bayh: The Arc of the
United States and United Cerebral Palsy strongly support your
introduction of the Improving Long-Term Care Choices Act. The
Arc is the national organization of and for people with
mental retardation and related developmental disabilities and
their families. United Cerebral Palsy is a nationwide network
of organizations providing advocacy and direct services to
people with disabilities and their families.
The creation of a Medicaid home and community-based
services optional benefit is an important improvement in the
federal/state Medicaid program and one for which we have
advocated for many years. We believe that the addition of
this benefit as an option for states will make it easier for
states to serve people with severe disabilities where they
want to be served--in their own home communities, rather than
in institutions or other facilities. This will increase
opportunities for improved quality of life for many children
and adults with severe disabilities and their families.
We applaud your efforts and are grateful for your
leadership in introducing this important legislation and
pledge to work with you to secure its passage and enactment.
Sincerely,
Paul Marchand,
Staff Director,
Disability Policy Collaboration.
____
National Disability
Rights Network,
Washington, DC, July 29, 2005.
Hon. Charles Grassley,
U.S. Senate,
Washington, DC.
Dear Senator Grassley: The National Disability Rights
Network (NDRN) is the nonprofit membership organization for
the federally mandated Protection and Advocacy (P&A) Systems
and the Client Assistance Programs (CAP) for individuals with
disabilities. Through training and technical assistance,
legal support, and legislative advocacy, NDRN works to create
a society in which children and adults with all types of
disabilities are afforded equality of opportunity and are
able to fully participate by exercising choice and self-
determination.
NDRN strongly supports your introduction of the Improving
Long Term Care Choices Act of 2005. One of the major goals of
the P&A/CAP network is for all individuals with disabilities
to live in their own communities--independently, with their
families, or with other individuals of their choice. Your
determination in bringing forward this bill--with the
critical component of establishing home and community-based
services and supports as a optional Medicaid benefit, instead
of only available through a waiver--is a major step in the
right direction.
NDRN and the entire P&A/CAP network look forward to the day
when community-based supports and services for children and
adults with disabilities are the norm and institutional
services are non-existent or require a waiver.
We believe that this bill also is very important because it
will shine a light on the need for a true long-term care
system in our nation. While long-term care insurance is not
the answer for everyone, it can be useful--if affordable and
if it covers people for a long enough span of time; The
availability of long-term care insurance also could help to
take the pressure off of the Medicaid program.
Thank you again for your continuing recognition of the
needs of children and adults with disabilities and their
families. The disability community looks upon you as one of
its leading advocates in the U.S. Congress. NDRN is pleased
to offer any help it can in moving the Long-Term Care Choices
Act through this session of Congress. Please contact Dr.
Kathleen McGinley, 202-408-9514, K[email protected].
Sincerely,
Lynn Breedlove,
President,
NDRN Board of Directors.
____
United Spinal Association,
Washington, DC, July 29, 2005.
Hon. Charles Grassley,
Hon. Evan Bayh,
U.S. Senate,
Washington, DC.
Dear Senators Grassley and Bayh: United Spinal Association,
a national disability advocacy organization dedicated to
enhancing the quality of life for individuals with spinal
cord injury or spinal cord disease by assuring quality health
care, promoting research, and advocating for civil rights and
independence, thanks you for introducing the Improving Long
Term Care Choices Act of 2005. United Spinal applauds your
leadership in bringing forward such an important measure,
which will assist thousands of Americans with disabilities
become more fully integrated and participating members of
their communities.
The Improving Long Term Care Choices Act would help states
rebalance their long term supports systems away from an
institutional bias by giving states the flexibility to
[[Page S9523]]
offer community services and supports as a state plan option
under Medicaid. The proposal would also encourage individuals
to purchase private long-term care insurance, which could
help elevate some of the financial pressures off of state
Medicaid programs. In addition, this bill will help states in
their efforts to comply with the Supreme Court Olmstead
decision.
People with disabilities should be able to live and work in
their communities, not segregated in large and costly
institutions. This system reform is long overdue. Thank you
again for your vision, courage and ongoing leadership to
create public policy that promotes independence, productivity
and integration of people with disabilities in their
communities. United Spinal would like to offer any assistance
you need in moving the Improving Long Term Care Choices Act
through this session of Congress. Please contact me at (202)
331-1002 for assistance.
Sincerely,
Kimberly Ruff-Wilbert,
Policy Analyst,
United Spinal Association.
____
Association of University
Centers on Disabilities,
Silver Spring, MD, July 29, 2005.
Hon. Charles Grassley,
Hon. Evan Bayh,
U.S. Senate,
Washington, DC.
Dear Senators Grassley and Bayh: On behalf of the
Association of University Centers on Disabilities (AUCD), a
national network that provides education, training and
service in developmental disabilities, we want to thank you
for introducing the Improving Long Term Care Choices Act of
2005. The Association of University Centers on Disabilities
(AUCD) applauds your leadership in bringing forward such an
important measure, which will assist thousands of Americans
with disabilities to be more fully integrated and
participating members of their communities.
The Improving Long Term Care Choices Act would help states
rebalance their long term supports systems away from an
institutional bias by giving states the flexibility to offer
community services and supports as a state plan option under
Medicaid. The proposal would also encourage individuals to
purchase private long-term care insurance which will help
take some of the financial pressure off the Medicaid program.
It will also help states in their efforts to comply with the
Supreme Court Olmstead decision.
People with disabilities should be able to live and work in
the community with or close to family and friends, not
segregated in large and costly institutions. This system
reform is long overdue.
Thank you again for your vision, courage and ongoing
leadership to create public policy that promotes
independence, productivity and integration of people with
disabilities in their communities. AUCD would like to offer
any assistance you need in moving the Improving Long Term
Care Choices Act through this session of Congress. Please
contact Kim Musheno at 301-588-8252 for assistance,
Sincerely,
Robert Bacon,
Co-Chair,
AUCD Governmental Affairs Committee.
Lucille Zeph,
Co-Chair,
AUCD Governmental Affairs Committee.
Mrs. CLINTON: Mr. President, I am proud to rise today to introduce
the Improving Long-Term Care Choices Act with Senator Grassley and
Senator Bayh. This legislation would take several important steps
toward assisting Americans and their caregivers to meet their long-term
care needs.
Issues related to long-term care are of growing concern to many in
New York and around the Nation. Individuals and families are struggling
to afford costly care, obtain appropriate information regarding long-
term care insurance, and maintain dignity and choice regarding these
important services. As I talk with seniors around the State of New York
and throughout the country, what I hear most is that people want to
stay in their homes with their loved ones for as long .as they can.
However, too many individuals and families struggle to be able to
afford quality home and community based care. In addition, families are
unsure where to find the resources they need to purchase long-term care
insurance.
That is why I have joined with my colleagues to introduce this
legislation. The Improving Long-Term Care Choices Act will assist
individuals in meeting their long-term care needs, while reducing
Medicaid costs.
This bill will improve access to home and community based services
through Medicaid that will help seniors remain in their homes and
communities. It will also expand long-term care insurance consumer
protections, provide tax deductions for the cost of long-term care
insurance, and allow tax credits for individuals and their caregivers
to help cover long-term care expenses not covered by insurance.
Finally, this legislation would establish a national clearinghouse on
long-term care information.
This legislation takes some important steps to assist individuals and
families in gathering the resources necessary to prepare for their
long-term care needs and gain access to services in their preferred
choice of setting.
I look forward to continuing to work with Senators Grassley and Bayh
and all of my colleagues to ensure that all Americans have access to
the resources that help them access high quality long-term care.
______
By Ms. SNOWE:
S. 1603. A bill to establish a National Preferred Lender Program,
facilitate the delivery of financial assistance to small businesses,
and for other purposes; to the Committee on Small Business and
Entrepreneurship.
Ms. SNOWE. Mr. President, I rise today to discuss a bill, the Small
Business Lending Improvement Act of 2005, which I have introduced today
to provide small businesses with easier access to loans and to increase
efficiency in the Small Business Administration's largest loan program,
the 7(a) program, which provided $12.7 billion in small business loans
in 2004.
As Chair of the Senate Committee on Small Business and
Entrepreneurship, I am committed to supporting our Nation's Main Street
small business community by increasing its access to capital. This
legislation will reform a cumbersome SBA lender licensing process that
does not provide our small businesses with the most efficient means of
accessing the capital they must have to start and sustain their firms.
The bill would allow the SBA's 7(a) loan program to better capitalize
on the demonstrated potential small business have to create jobs and
economic growth.
As our Nation continues to prosper from economic growth, low
inflation, and low unemployment, we should not forget the critical role
played by our small businesses. Without strong and successful small
businesses, our prosperity would not be what it is today.
Under current law, the most prolific lenders in the SBA's 7(a) loan
program can participate in the ``Preferred Lender Program'' (PLP
Program), which allows them to use their own processing facilities and
therefore both increases lenders' efficiency and reduces costs for the
SBA. However, PLP lenders are required to apply for PLP status in each
of the 71 SBA districts nationwide to obtain PLP status in that
district, and they must re-apply each year in each district. This is
extremely inefficient and wasteful, and creates enormous unnecessary
administrative costs.
Section 2 of this bill would allow qualifying lenders to participate
in the PLP Program on a nationwide basis after just one licensing
process. This provision was in S. 1375, the Small Business
Administration 50th Anniversary Reauthorization Act of 2003, which I
introduced in 2003 and which the Senate approved unanimously in
September 2003.
This provision would drastically reduce administrative costs and
would standardize the operation of the PLP program. A National
Preferred Lenders Program would eliminate the inefficiencies and cost
of applying for PLP status in each district, and would increase the
ease with which loans are made to small businesses, thereby improving
small businesses' access to capital. Competition among lenders for
small business customers would increase, increasing financing
alternatives and lowering costs for small businesses.
In addition to simplifying licensing processes for both lenders and
the SBA, the bill would allow the SBA's lender oversight to be done
more efficiently and effectively, on a national basis. The current
process of having to renew licenses in each district is extremely time-
consuming and administratively burdensome for the lenders and the SBA.
A National Preferred Lenders Program could remedy the inefficiencies
and cost of applying for PLP status in each district and save a
tremendous amount of taxpayer dollars.
Section 3 of the act increases the maximum size of a 7(a) loan to $3
million, from the current $2 million, and increase the maximum size of
a 7(a)
[[Page S9524]]
guarantee to $2.25 million, from the current $1.5 million. This would
maintain the maximum 75 percent guarantee. Small businesses' financing
needs are increasing and, especially with the high cost of real estate
and new equipment, it is appropriate to respond to those needs by
offering larger loans.
In the SBA's 504 Loan Program, loans may now be as large as $10
million, with $4 million guaranteed, for manufacturing projects, $5
million (with $2 million guaranteed) for loans that serve an enumerated
public policy goal (such as rural development), and $3.75 million (with
$1.5 million guaranteed) for all other ``regular'' 504 Program loans.
Thus, this increase in 7(a) Program loans to $3 million would bring
7(a) loans closer in size to 504 Program loans, while still leaving
7(a) loans smaller than 504 Program loans.
Section 4 of the bill increases the program's authorization level to
$18 billion for fiscal year 2006, instead of the $17 billion authorized
for fiscal year 2006 in the Omnibus Appropriations Act, enacted in
December 2004. The program is on pace to achieve loan volume of between
$14 and $15 billion in fiscal year 2005, and this provision would allow
the program adequate ability to grow unimpeded in fiscal year 2006,
especially if the maximum loan size is increased.
Section 5 of the bill requires the SBA to implement an alternative
size standard, in addition to the program's current standard, for the
7(a) program. The SBA would create an alternative size standard for the
7(a) program, as it has already done for the 504 program, that
considers a business's net worth and income. This provision would bring
the 7(a) program into conformity with the 504 Program. This provision
was also in S. 1375 in the 108th Congress, passed unanimously by the
Senate in 2003.
Currently, in the 7(a) program a small business's eligibility to
receive a loan is determined by reference to a multipage chart that has
different size standards for every industry that can be very confusing,
especially for small lenders that do not make many 7(a) loans. In the
504 Program, however, lenders can use either the industry-specific
standards or an ``alternative size standard'' that the SBA created,
which simply says a small business is eligible for a loan if it has
gross income of less than $7 million or net worth of less than $2
million.
This would simplify the 7(a) lending process and provide small
businesses with a streamlined procedure for determining if they are
eligible for 7(a) loans, and it would conform the standards used by the
7(a) and 504 programs. It would make the program far more accessible to
small businesses and small lenders.
All of these improvements to the SBA's largest loan program will
support our national goal of building a vibrant and growing economy.
Small businesses are the heart of our economy, and this bill will help
to improve small businesses' economic prospects.
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. 1603
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 ``Small Business Lending
Improvement Act of 2005''.
SEC. 2. NATIONAL PREFERRED LENDERS PROGRAM.
Section 7(a)(2) of the Small Business Act (15 U.S.C.
636(a)(2)) is amended by adding at the end the following:
``(E) National preferred lenders program.--
``(i) Establishment.--There is established the National
Preferred Lenders Program in the Preferred Lenders Program
operated by the Administration, in which a participant may
operate as a preferred lender in any State if such lender
meets appropriate eligibility criteria established by the
Administration.
``(ii) Terms and conditions.--An applicant shall be
approved under the following terms and conditions:
``(I) Term.--Each participant approved under this
subparagraph shall be eligible to make loans for not more
than 2 years under the program established under this
subparagraph.
``(II) Renewal.--At the expiration of the term described in
subclause (I), the authority of a participant to make loans
for the program established under this subparagraph may be
renewed based on a review of performance during the previous
term.
``(III) Effect of failure.--Failure to meet the criteria
under this subparagraph shall not affect the eligibility of a
participant to continue as a preferred lender in a State or
district in which the participant is in good standing.
``(iii) Implementation.--
``(I) Regulations.--As soon as is practicable, the
Administrator shall promulgate regulations to implement the
program established under this subparagraph.
``(II) Program implementation.--Not later than 120 days
after the date of enactment of this subparagraph, the
Administrator shall implement the program established under
this subparagraph.''.
SEC. 3. MAXIMUM LOAN AMOUNT.
Section 7(a)(3)(A) of the Small Business Act (15 U.S.C.
636(a)(3)(A)) is amended by striking ``$1,500,000 (or if the
gross loan amount would exceed $2,000,000)'' and inserting
``$2,250,000 (or if the gross loan amount would exceed
$3,000,000)''.
SEC. 4. SECTION 7(A) AUTHORIZATION FOR FISCAL YEAR 2006.
Section 20(e)(1)(B)(i) of the Small Business Act (15 U.S.C.
631 note) is amended by striking ``$17,000,000,000'' and
inserting ``$18,000,000,000''.
SEC. 5. ALTERNATIVE SIZE STANDARD.
Section 3(a)(3) of the Small Business Act (15 U.S.C.
632(a)(3)) is amended--
(1) by striking ``When establishing'' and inserting the
following: ``Establishment of Size Standards.--
``(A) In general.--When establishing''; and
(2) by adding at the end the following:
``(B) Alternative size standard.--
``(i) In general.--Not later than 180 days after the date
of enactment of this subparagraph, the Administrator shall
establish an alternative size standard under paragraph (2),
that shall be applicable to loan applicants under section
7(a) or under title V of the Small Business Investment Act of
1958 (15 U.S.C. 695 et seq.).
``(ii) Criteria.--The alternative size standard established
under clause (i) shall utilize the maximum net worth and
maximum net income of the prospective borrower as an
alternative to the use of industry standards.
``(iii) Interim rule.--Until the Administrator establishes
an alternative size standard under clause (i), the
Administrator shall use the alternative size standard in
section 121.301(b) of title 13, Code of Federal Regulations,
for loan applicants under section 7(a) or under title V of
the Small Business Investment Act of 1958 (15 U.S.C. 695 et
seq.).''.
______
By Mr. KYL (for himself, Mr. Pryor, Mr. Cornyn, Mr. Graham, Mr.
Brownback, and Mr. Chambliss):
S. 1605. A bill to amend title 18, United States Code, to protect
public safety officers, judges, witnesses, victims, and their family
members, and for other purposes; to the Committee on the Judiciary.
Mr. KYL. Mr. President, I rise today to introduce the Law Enforcement
Officers' Protection Act of 2005. This act will guarantee tough,
mandatory punishment for criminals who murder or assault police
officers, firefighters, judges, court employees, ambulance-crew
members, and other public-safety officers in the course of their
duties. Attacks on police officers and judges are serious crimes. They
merit the toughest penalties. LEOPA imposes the following terms of
imprisonment for attacks on public-safety officers: (1) second degree
murder, 30 years to life; (2) voluntary manslaughter, 15 to 40 years;
(3) assault resulting in serious bodily injury, 15 to 40 years; (4)
assault with a dangerous weapon, 15 to 40 years; and (5) assault
resulting in bodily injury, 5 to 20 years. The act also imposes
commensurate penalties for retaliatory murders, kidnappings, and
assaults committed against the family members of public-safety
officers.
LEOPA includes additional provisions that will deter attacks upon
police officers. The act expedites Federal-court review of state
convictions for murder of a public-safety officer; it limits the
damages that can be recovered by criminals for any injuries experienced
during their arrest; it removes arbitrary barriers to retired officers'
right to carry concealed weapons under Federal law; it makes it a crime
to publicize a public-safety officer's identity in order to threaten or
intimidate him; and it increases existing penalties for obstruction of
justice and interference with court proceedings.
Aggravated assaults against police officers are a serious national
problem. According to the most recent F.RI. report on the subject, 52
law-enforcement officers were feloniously killed in the United States
in 2003. In the 10 year period from 1994 through 2003, a total of 616
lawenforcement officers were feloniously killed in the line of duty in
the United States.
[[Page S9525]]
These officers' assailants unquestionably are among the worst
criminals. Of those individuals responsible for unlawful killings of
police officers between 1994 and 2003, 521 had a prior criminal arrest,
including 153 who had a prior arrest for assaulting a police officer or
resisting arrest. The individuals who commit these types of offenses
are among the most dangerous members of the criminal class. Tough
sentences for these criminals not only protect those who risk their
lives to protect us; they also directly protect the public at large by
removing a dangerous class of criminals from society.
Ordinary assaults against police officers have become a widespread
problem. More than 57,000 law enforcement officers were assaulted in
the course of their duties in 2003, and more than a quarter of these
assaults resulted in injury to the officer. These numbers represent
more than one of every 10 officers serving in the United States. Our
society apparently has reached a point where criminals feel entitled to
assault a police officer when they are being arrested. LEOPA is
designed to change that understanding, to show criminals that assaults
against police officers are unacceptable.
It bears mention that because of improvements in technology, recent
years' numbers of officers killed in the line of duty even understate
the extent of the violence that officers face. As the Los Angeles Times
noted in 1994, ``the number of officers killed--an average of 60 to 70
a year since the late 1980s--would have broken records, too, if not for
the advent of bulletproof vests, police experts say; about 400 officers
have survived shootings over the last decade because they were wearing
protective armor.'' (Faye Fiore & Miles Corwin, Toll of Violence Haunts
Families of Police Officers, N.Y. Times, Feb. 21, 1994, at 1). As the
executive director of the Fraternal Order of Police noted recently,
``there's less respect for authority in general and police officers
specifically. The predisposition of criminals to use firearms is
probably at the highest point in our history.'' (Jerry Nachtigal, Crime
Down, but Number of Police Officers Killed Holds Steady, Associated
Press Newswires, Apr. 11, 1999).
Violence against police officers also inhibits effective law
enforcement. It breeds caution among officers and hinders robust
investigation. LEOPA is designed to restore balance to the law. It is
designed to ensure that police officers do not fear for their safety
when enforcmg the law, but instead, that criminals fear the
consequences of breaking the law.
Finally, aside from their broader effects on law enforcement and
society, aggravated assaults and murders of police officers simply are
terrible crimes. The victims often are young and in the prime of life,
leaving behind young children, spouses, and grieving parents. A few
recent incidents in the news serve to illustrate the horrific toll that
these homicides take on the surviving victims:
Los Angeles County Deputy Sheriff Shayne York, 26 years old, was
murdered during an invasion robbery while waiting for his fiancee at a
hair salon on August 16, 1997. He was killed solely because of his
status as a police officer. The Los Angeles Times gave the following
account of the crime from the testimony at the killer's trial:
The robbers yelled racial slurs and ordered customers and
employees to the floor, snatching valuables from everyone
inside. When one of the bandits found a law enforcement badge
in York's wallet, he kicked York as he lay on the ground,
according to testimony from [York's fiancee], also a Los
Angeles County sheriff's deputy. The gunman asked York if he
ever mistreated blacks and Crips gang members at Los Angeles
County's Pitchess Detention Center, where York worked. York
responded, ``No, sir.'' [The killer,] an alleged Crips gang
member, then pointed a pistol at the back of York's head and
squeezed the trigger, prosecutors said. [York's fiancee]
testified she saw York's body go limp as she felt his blood
flowing onto her legs. She said she heard the gunman say, ``I
always wanted to kill a pig.'' (Jack Leonard & Monte Morin,
Man Guilty of Killing Off-Duty Deputy, L.A. Times, Aug. 23,
2000, at B1.)
Deputy York's killer never expressed any remorse over this senseless
crime. When jurors read their verdict at his trial, he shouted at them,
``May Allah kill you all, pagans, infidels.'' (Stuart Pfeifer & Richard
Marosi, Jury Recommends Death for Robber Who Killed Deputy, L.A. Times,
Sept. 8, 2000, at B7.)
California Highway Patrol Officer Don Burt, 25 years old, was shot
seven times by a member of a street gang during a traffic stop on July
13, 1996. As Officer Burt lay wounded on the ground, the killer shot
him in the head. The Los Angeles Times, covering the killer's trial,
gave the following account of the testimony describing the devastating
impact of Officer Burt's death on his family:
[Don Burt's father] relived some of his happiest memories
with his son--the wedding of his son and [daughter-in-law]
Kristin, and the day he was told he was going to be a
grandfather. But the proudest moment for both father and son
was when the younger Burt joined the Highway Patrol. ``I
pinned on his badge and 1 hugged him,'' the father said,
tearfully. ``The proudest I'd ever seen him. The gleam he had
in his eye--he was so proud.''
It was a quiet summer night the night his son died, [Burt's
father] told the 12-member jury. He and his wife had just
finished dinner. The telephone rang. It was their daughter-
in-law's father, also a CHP officer, saying there had been a
shooting in the area that the younger Burt patrolled. The
elder Burt, a 30-year veteran trooper, called the CHP
dispatch center to learn more. A patrol car arrived to take
the parents to the hospital. ``We drove [to the hospital] in
dead silence,'' Burt said. ``I knew my son was dead and 1
couldn't tell my wife. She was sitting there with hope and 1
couldn't tell her.''
Jeannie Burt said she didn't realize how serious her son's
injuries were until a few minutes after they arrived at the
hospital. ``I thought he wasn't hurt too bad, that everything
was going to be all right,'' Jeannie Burt told jurors. But
then, ``I saw Kristin's brother and he just shook his head.
And 1 knew my son was dead.'' Tears streamed down Jeannie
Burt's cheeks through most of her testimony. ``He wasn't
perfect, but pretty close to it,'' the mother said through
her tears. ``I'm grateful 1 had my son for the 25 years 1 had
him. 1 wouldn't trade that with anything. I'm just so sad
that my daughter-in-law has lost the love of her life. That
his son does not have a father.''
Kristin Burt, widow of the slain officer, said she was
seven months pregnant with their first child when her husband
of nearly three years was killed. She took the stand Monday,
faltering and fighting back tears as she described how the
coroner told her that her husband was dead. The coroner
``held my hand and slipped Don's wedding ring into my hand,''
Kristin Burt said. (Louis Roug & Meg James, Rage in the
Courtroom, L.A. Times, Apr. 18, 2000, at B1.)
Officer Burt's son, Cameron, was born two months after he was killed.
Compton Police Officers Kevin Burrell and James MacDonald were shot
and killed by a wanted criminal during a traffic stop on February 22,
1993. Newspapers gave the following account of the crime: ``The
officers were wearing bulletproof vests when they stopped a red pickup
truck about 11 p.m., but were knocked to the ground by bullet wounds to
their limbs. With the officers lying in the rain-soaked street, [the
killer] pumped bullets into their heads, execution-style.'' (Jodi
Wi1goren, Killer of 2 Compton Police Officers Sentenced to Death, L.A.
Times, Aug. 16, 1995, at 1.)
Officers Burrell and MacDonald were both young men, with all of their
parents still living, at the time of their deaths. At the killer's
trial, their families described the deep trauma that the crime created.
The Los Angeles Times gave the following account:
One after another, the mothers and fathers of Officers
James Wayne MacDonald and Kevin Michael Burrell took the
stand to cry out their losses. Three could not complete their
testimony without breaking down so badly that court recessed.
Burrell's mother told how she had heard the shots that killed
her son a few blocks from her home. MacDonald's father,
sobbing uncontrollably, blurted, ``Come home, Jimmy, let me
trade places with you,'' when he was asked what he would tell
his son if he could bring him back.
James and Tonia MacDonald told how they visit their son's
grave twice each day in their hometown of Santa Rosa, just to
chat. Clark and Edna Burrell told how neither of them can
bear to visit the cemetery where their son now lies.
``I heard the shots,'' Edna Burrell said. Then she told how
she reasoned that her son had been hit. ``I was listening to
my police scanner,'' she said, ``and I knew it was Kevin
because I didn't hear them call his name'' on other dispatch
calls. ``So when she (a police officer) knocked on my door,
all I could do is scream, 'Oh God, they shot my baby. ``,
With that, Edna Burrell broke down. Overwhelmed, she was led
from the courtroom, past where [ the killer] sat staring
straight ahead. Sobbing softly, she repeated what she had
said on the stand: ``How could he do that? How could he do
that?''
Both sets of parents said the deaths of their sons left
them feeling empty, lost and angry. ``The whole time I was
praying, just to let Jimmy live until I could see him
again,'' Tonia MacDonald sobbed, remembering the hours after
she was told about the
[[Page S9526]]
shooting. ``And then I was so mad at God. All I wanted was to
see him one more time.''
All four parents said old friends have fallen away as grief
consumed their lives. Mother's Day, James MacDonald
testified, has become unbearable. ``This year, when I got up,
I didn't tell her (his wife) 'Happy Mother's Day' because
it's a tough day,'' he said. ``I could see the tears in her
eyes.'' (Emily Adams, Slain Officers'' Parents Tell of Pain,
L.A. Times, June 1, 1995, at 1.)
It bears mention that all of the criminals responsible for the
murders described here were convicted of capital offenses, and will be
subject to the expedited federal review provisions in section 6 of
LEOPA once they complete their State appeals.
Section 6 of the bill is named for Dr. John B. Jamison, a Coconino
County, AZ, Reserve Sheriffs Deputy who was murdered while responding
to a fellow deputy's call for assistance on September 6, 1982. The
killer fired 30 rounds from an assault rifle into Dr. Jamison's car,
killing the deputy before he could reach his gun or even unbuckle his
seatbelt. Dr. Jamison was survived by his 13-year-old son and 10-year-
old daughter. State courts completed their review of the killer's
conviction and sentence in 1985. Federal courts then delayed the case
for an additional 15 years. One judge on the U.S. Court of Appeals for
the Ninth Circuit even tried to postpone the killer's final execution
date on the alleged basis that the killer was wrongfully denied state
funds to investigate a rare neurological condition that his lawyer had
learned of while watching television. Dr. Jamison's killer ultimately
was executed in 2000--18 years after the crime occurred, and 15 years
after federal habeas-corpus proceedings began.
Section 6 is designed to prevent these kinds of delays in Federal
review of cases involving state convictions for the murder of a public-
safety officer. In the district court, parties will be required to move
for an evidentiary hearing within 90 days of the completion of
briefing, the court must act on the motion within 30 days, and the
hearing must begin 60 days later and last no longer than 3 months. All
district-court review must be completed within 15 months of the
completion of briefing. In the court of appeals, the court must
complete review within 120 days of the completion of briefing. In most
cases, these limits will ensure that federal review of a defendant's
appeal is completed within less than 2 years. This section also makes
these deadlines practical and enforceable by limiting federal review to
those claims presenting meaningful evidence that the defendant did not
commit the crime--defendants would be barred from re-litigating claims
unrelated to guilt or innocence. (Defendants still will be permitted to
litigate all their legal claims in state court on direct review and
state-habeas review, and in petitions for certiorari in the U.S.
Supreme Court.)
The need for this provision is particularly stark in the judicial
circuit that includes my home state of Arizona. The U.S. Court of
Appeals for the Ninth Circuit's pattern of blocking capital punishment
for all murderers--including those who kill police officers--is well
documented. A recent committee report of the U.S. Senate, for example,
notes that: ``Data for the last ten years show that outside of the
Ninth Circuit, usually 70 to 80 percent of death sentences are affirmed
by a [federal] Court of Appeals on collateral review. In almost every
year, however, the Ninth Circuit has reversed the majority of death
sentences that it reviews. Moreover, this percentage has climbed
sharply in recent years . . . In the last three years, the Ninth
Circuit has reversed 88 percent, 80 percent, and 86 percent of the
death sentences that it has reviewed.'' (S. Rep. No. 107-315 (2002), at
72-73) The Senate report also notes that a core group of Ninth Circuit
judges vote to reverse virtually every death sentence that they review.
Judge Stephen Reinhardt, for example, had reviewed 31 death sentences
by 2002, and voted to reverse every single one. Other Ninth Circuit
judges have similar records.
As Ninth Circuit Judge Alex Kozinski has noted, ``there are those of
my colleagues who have never voted to uphold a death sentence and
doubtless never wil1.'' He continued: ``Refusing to enforce a valid law
is a violation of the judges' oath--something that most judges consider
a shameful breach of duty. . . . [But] to slow down the pace of
executions by finding fault with every death sentence is considered by
some to be highly honorable.'' (Alex Kozinski, Tinkering with Death,
The New Yorker, Feb. 10, 1997, at 48-53)
This pattern of behavior extends to the Ninth Circuit's review of
death sentences imposed for the murder of police officers. In the nine
States under the Ninth Circuit's jurisdiction, 34 criminals have been
sentenced to death for murdering police officers since the late 1970's.
Only one--the man who killed Dr. Jamison--has ever been executed. The
Ninth Circuit consistently has obstructed all other death sentences for
criminals convicted of murdering police officers in the western States.
As one Orange County newspaper columnist notes, these numbers reflect
poorly on our society's commitment to ensuring justice for slain police
officers and their families:
When California voters reinstated the death penalty in
1978, they made killing an on-duty peace officer one of the
``special circumstances'' that could subject the killer to
execution. The idea behind that was simple enough. If you
made killing a cop a death-penalty offense, maybe it would
make criminals think twice before doing it. . . . But it's
doubtful that the special circumstance concerning peace
officers strikes any fear into the heart of a would-be cop-
killer. Because in the 24 years since the new death-penalty
law was passed, not one cop-killer has been executed in
California. During that time, more than 200 California peace
officers have been murdered in the line of duty, including
eight in Orange County, and dozens of cop-killers have been
sent to death row. But not one has died for his crime. True,
California hasn't been in any hurry to execute other
murderers, either. Since 1978, more than 700 killers have
been sent to death row, but only 10 have been executed. But
the justice system seems particularly reluctant to actually
enforce the death penalty against cop-killers. ``That sends a
terrible message,'' says Marianne Wrede of Anaheim Hills,
whose son, West Covina Police Officer Kenneth Wrede, was
murdered in 1983. ``It says the justice system doesn't
respect the sacrifices of police officers and their
families.'' (Gordon Dillow, State Balks at Executing Cop-
Killers, The Orange County Reg., Dec. 5, 2002)
These unconscionable delays have greatly increased the suffering
experienced by the surviving families of murdered police officers.
Again, a few examples from recent news stories illustrate the nature of
the problems created by the current system of decades-long post-
conviction review:
On August 31, 1983, West Covina Police Officer Kenneth Wrede, 26
years old, responded to a call about a man behaving strangely in a
residential neighborhood. Wrede confronted the man, who became abusive
and tried to hit Wrede with an 8-foot tree spike. Wrede could have shot
the man, but instead attempted to defuse the situation. The man then
reached into Wrede's car and ripped the shotgun and rack from the
dashboard. Wrede drew his gun and persuaded the man to lay down the
shotgun, but the man picked it up again when Wrede lowered his revolver
and shot Wrede in the head, killing him instantly.
Years later, Wrede's parents described the terrible impact of this
crime on their family. Marianne Wrede told of how ``a half hour before
local television newscasts would broadcast the story, her doorbell
rang. On the steps stood her son's commander and a police lieutenant.
Between them stood Kenneth Wrede's distraught wife. `I knew it was bad
news,' Marianne Wrede said. `I shut the door in their faces and I said,
`It can't be my boy.' '' (Laura-Lynne Powell, Grief Unites Kin of
Fallen Officers, The Orange County Reg., June 20,1991, at EO1) Many
years after the crime, she reflected that ``every day I miss my son and
it never goes away.'' (Anne C. Mulkern & Tiffany Montgomery, Caring
Counts in Line of Duty, The Orange County Reg., Sept. 25, 1996, at BO1)
Ken Wrede's father also described the impact of the loss of his son.
``My life will never be the same. I deal with it every day; when I hear
a police siren and immediately think of my son, when I pull up next to
a police car and think that that could have been him. I still stop as
often as I can and tell the officers to have a good day and be
careful.'' (David Haldane & Michael Wagner, For Some, a Reminder of
Past Tragedy, L.A. Times, July 15, 1996, at A3)
Officer Wrede's killer was sentenced to death in 1984, and that
conviction was affirmed by the California Supreme Court in 1989. Then
in 2000--17 years after Ken Wrede's murder--a divided panel of the
Ninth Circuit reversed the killer's death sentence. The
[[Page S9527]]
Ninth Circuit found that the killer's lawyer provided ineffective
assistance of counsel at the penalty phase because he did not present
additional evidence of the killer's abusive childhood and drug use.
At the time, Marianne Wrede noted, ``We thought we finally were close
to getting this behind us. And now this.'' (Gordon Dillow, Long Wait
for Justice Gets Worse, The Orange County Reg., May 11, 2000, at BO1) A
California Deputy Attorney General denounced the decision, stating that
``it can always be suggested a jury should have heard something else in
the penalty phase of a death penalty case.'' (Richard Winston, Reversal
of Death Penalty in Officer's Killing Decried Courts, L.A. Times, May
10, 2000, at B3) West Covina Corporal Robert Tibbets, the original
investigator at the scene of Wrede's murder, described the Ninth
Circuit's decision as a ``miscarriage of justice.'' (Id.) He had
promised Wrede's parents that he would accompany them to every court
hearing for their son's killer. He made good on his promise, even 19
years later, when the killer was retried and again sentenced to death
in 2002. But the Wredes now face another round of state and then
federal appeals. At the retrial, Ken's father noted that ``my family
and 1 had endured 19 years of trial, appeals, delays, causing us to
relive the trauma of Kenny's death over and over again.'' The trial
judge agreed. He stated, ``It is an obscenity to put anyone through
this needlessly for 19 years. It is inexcusable for us in the system
that we need to look at this case for 19 years to get it resolved. The
system at some point in the line has become clogged and broken.''
(Larry Welborn, 19 Years and no Resolution for Parents, The Orange
County Reg., Sept. 21, 2002)
Riverside Police Officers Dennis Doty and Philip Trust were killed by
a man whom they attempted to arrest at his home on May 13, 1982. The
man was in bed when the officers arrived and they permitted him to
dress. The man then pulled out a gun that he had been sitting on and
shot and killed both officers. He apparently sought revenge for
injuries that he sustained when he was shot while committing a bank
robbery. Officer Doty had served a tour of duty in Vietnam, where he
had received a purple heart and bronze star. The State supreme court
affirmed the killer's conviction and death sentence in 1991.
In 2002, 20 years after the murders, Federal district court reversed
the killer's death sentence, finding that he had received ineffective
assistance of counsel because he did not trust his lawyers. Local
Superior Court judge Edward Webster denounced the decision, declaring
that he was ``outraged by the entire federal process.'' He declared
that ``this [ decision] is just a product of judges'' personal opinions
and philosophies opposing the death penalty.'' (Marlowe Churchill,
Riverside Judge Takes Federal Court to Task, The Press-Enterprise, July
22, 1995, at BO1) The Riverside assistant police chief noted that the
decision was particularly unfortunate for the officers' families:
``They lived this 20 years ago, and not to have closure on the trial
process is particularly difficult'' (Mike Kataoka, Court Annuls Death
Decree, The Press Enterprise, May 31, 2002, at BO1)
Los Angeles Police Detective Tom Williams was shot and killed by a
man against whom he had testified several hours earlier in a robbery
trial on October 31, 1985. Detective Williams was killed while picking
up his son at a day-care center. A local newspaper gave the following
account of the crime: ``With [his son] Ryan sitting beside him in the
front seat of his truck, Williams, 42, saw the man in the ski mask, saw
the automatic weapon pointing out of the driver's side window of the
passing car. But he was helpless to do anything to protect himself. All
he had time to do was scream for Ryan to get down, then cover the boy
with his own body.'' (Dennis McCarthy, Youth Feels Need to Serve, L.A.
Daily News, Aug. 24, 1993, at Nl) The Los Angeles Times gave the
following account of testimony from the killer's trial:
A seventh-grade pupil at a Canoga Park church school
testified Wednesday that he saw 6-year-old Ryan Williams
sitting on the ground crying moments after the boy's father,
a Los Angeles police detective, had been gunned down in the
street on Oct. 31,1985. Thomas C. Williams, 42, was picking
up Ryan from school at 5:40 p.m. when he was struck by eight
bullets from an automatic weapon. The detective died, slumped
against the driver's side of his orange pickup truck. . . .
[The pupil] said he looked toward Williams' truck, parked in
front of the Faith Baptist Church school, and saw the
windshield shatter. ``It split into pieces,'' [he] said.
``Then I ducked. I couldn't see anything. I got up because I
heard some little boy cry. I walked over. He was sitting on
the ground and he was crying and he had a bloody lip.'' (Lynn
Steinberg, Boy Tells of Fatal Attack on Detective, L.A.
Times, Feb. 11, 1998, at 12)
Detective Williams's killer remains on death row today, 20 years
after committing this crime.
Garden Grove police officer Donald Reed was shot and killed while
arresting a man at a bar on June 7, 1980. The killer appeared at first
to cooperate with police, but then pulled a pistol from his jacket and
began firing. One officer who comforted Reed as he lay on the ground
describe the scene: ``I could see a sense of panic in Don's eyes. He
said, `I am not gonna make it' '' (Daniel Yi, Slain Officer's Family
Testifies, L.A. Times, Feb. 9, 2000, at B1)
When Reed died, he had two toddler sons, ages 3 and 1\1/2\. Reed's
killer was sentenced to death, but the sentence was reversed on appeal,
and he was retried and sentenced to death again in 2000. Reed's sons
were 22 and 21 by the time of the retrial. Still coping with the loss
of their father, they chose not to attend the second trial. ``I was a
mother, a father, I had to teach them everything,'' Reed's widow
stated. (Id.) Of her husband, she simply noted, ``He was taken
unnecessarily.'' (John McDonald, Officer's Widow Details Trauma, The
Orange County Reg., Feb. 9, 2000, at B01) She also described the impact
on her family of holding a second trial 20 years after the crime. ``We
had all moved on, and then this came back and smacked us in the face.
It really just tears you apart.'' (Daniel Yi, Slain Officer's Family
Testifies, L.A. Times, Feb. 9, 2000, at B1)
Los Angeles Police Officer Paul Verna was gunned down during a
traffic stop on June 2, 1983, by two men who earlier had committed a
series of violent robberies. The first man shot Verna from inside the
car, and the second then exited the vehicle and shot Verna five more
times as he lay on the ground. Verna was survived by his wife and two
young sons. Years later, the state supreme court reversed the death
sentence of one of the killers. A new trial was held in 2000. At the
first trial, Verna's widow described the devastating impact of the
crime on her family. She spoke of how ``no one who has not done it can
know how difficult it is to tell two young boys that the daddy they
loved so much is gone.'' (Janet Rae-Dupree, 2 Sentenced to Die for
Killing Policeman, L.A. Times, Sept. 21, 1985, at 6) A local newspaper
gave the following accounts of the sentencing retrial:
Vema's sons were young boys, 4 and 9, when he was murdered.
This past week, they testified as young men. They told the
jury that they did not have a lot of first-hand recollection
of their dad. They did have the memories of stories from
their mom and many others as to what their dad was like. Ryan
[the younger son] spoke of sometimes feeling uneasy at being
told how much he looked like and even acted like his dad,
whom he does not remember. Sandy, Verna's widow, spoke of the
challenge of properly raising two very young boys alone. (Jim
Tatreau, Who Was Paul Verna? Murdered Officer Deeply Missed
Hero, L.A. Daily News, Oct. 22, 2000, at V3)
``At age 33, to be a widow--my roles in life completely
changed. The very hardest part was when they were very young
kids--when Ryan, who was 4 years old when his father died,
would get hurt and would cry to his mother at bedtime,
`Mommy, I just want my daddy.' I couldn't give that to him,
no matter how hard I tried. I could do everything else, but I
couldn't give him his daddy.'' (Jason Kandel, Retrial Brings
Victim's Family to Tears, L.A. Daily News, Sept. 27, 2000, at
N4)
[Ryan] has only vague memories of his father's death, and
then he could know his father only through various police
memorials, plaques and family pictures. He has learned most
of the details of the death from three weeks of testimony
during the penalty retrial, and his killer's image won't
disappear. ``My father didn't deserve to die in that manner,
especially what was said to him and the gun being thrown on
him when he's lying on the ground,'' he said in tears. ``My
father wasn't around for a lot of things, a lot of special
things in my life.'' (Id.)
Our society must do everything that it can to deter these types of
crimes to ensure that punishment for those who commit them is swift and
certain. For
[[Page S9528]]
all of these reasons, I urge my colleagues to support the Law-
Enforcement Officers' Protection Act.
Mr. KYL. Mr. President, I rise today with my colleague, Senator
Cornyn of Texas, to introduce the ``DNA Fingerprint Act of 2005.'' This
act will allow State and Federal law enforcement to catch rapists,
murderers, and other violent criminals whom it otherwise would be
impossible to identify and arrest.
The principal provisions of the DNA Fingerprint Act make it easier to
include and keep the DNA profiles of criminal arrestees in the National
DNA Index System, where that profile can be compared to crime-scene
evidence. By removing current barriers to maintaining data from
criminal arrestees, the act will allow the creation of a comprehensive,
robust database that will make it possible to catch serial rapists and
murderers before they commit more crimes.
The impact this act will have on preventing rape and other violent
crimes is not merely speculative. We know from real life examples that
an all-arrestee database can prevent many future offenses. In March of
this year, the city of Chicago produced a case study of eight serial
killers in that city who would have been caught after their first
offense--rather than after their fourth or tenth--if an all-arrestee
database had been in place. This study is included in the record at the
conclusion of my remarks.
The first example that the Chicago study cites involves serial rapist
and murderer Andre Crawford. In March 1993, Crawford was arrested for
felony theft. Under the DNA Fingerprint Act, the state of Illinois
would have been able to take a DNA sample from Crawford at that time
and upload and keep that sample in NDIS, the national DNA database. But
at that time--and still today--Federal law makes it difficult to upload
an arrestee's profiles to NDIS, and bars States from keeping that
profile in NDIS if the arrestee is not later convicted of a criminal
offense. As a result, Crawford's DNA profile was not collected and it
was not added to NDIS. And as a result, when Crawford murdered a 37-
year-old woman on September 21, 1993, although DNA evidence was
recovered from the crime scene, Crawford could not be identified as the
perpetrator. And as a result, Crawford went on to commit many more
rapes and murders.
On December 21, 1994, a 24-year-old woman was found murdered in an
abandoned building on the 800 block of West 50th place in Chicago. DNA
evidence was recovered. That DNA evidence identifies Crawford as the
perpetrator. If the DNA Fingerprint Act had been law, and Crawford's
profile had been collected after his March 1993 arrest, he would have
been identified as the perpetrator of the September 1993 murder, and
this December 1994 murder could have been prevented.
On April 3, 1995, a 36-year-old woman was found murdered in an
abandoned house on the 5000 block of South Carpenter Street in Chicago.
DNA evidence was recovered. That DNA evidence identifies Crawford as
the perpetrator. If the DNA Fingerprint Act had been law, and
Crawford's profile had been collected after his March 1993 arrest, he
would have been identified as the perpetrator of the two earlier
murders that he had committed, and this April 1995 muurder could have
been prevented.
On July 23, 1997, a 27-year-old woman was found murdered in a closet
of an abandoned house on the 900 block of West 51st Street in Chicago.
DNA evidence was recovered. That DNA evidence identifies Crawford as
the perpetrator. If the DNA Fingerprint Act had been law, and
Crawford's profile had been collected after his March 1993 arrest, he
would have been identified as the perpetrator of the three earlier
murders that he had committed, and this July 1997 murder could have
been prevented.
On December 27, 1997, a 42-year-old woman was raped in Chicago. As
she walked down the street, a man approached her from behind, put a
knife to her head, dragged her into an abandoned building on the 5100
block of South Peoria Street, and beat and raped her. DNA evidence was
recovered. That DNA evidence identifies Crawford as the perpetrator. If
the DNA Fingerprint Act had been law, and Crawford's profile had been
collected after his March 1993 arrest, he would have been identified as
the perpetrator of the four earlier murders that he had committed, and
this December 1997 rape could have been prevented.
In June 1998, a 31-year-old woman was found murdered in an abandoned
building on the 5000 block of South May Street in Chicago. DNA evidence
was recovered. That DNA evidence identifies Crawford as the
perpetrator. If the DNA Fingerprint Act had been law, and Crawford's
profile had been collected after his March 1993 arrest, he would have
been identified as the perpetrator of the four earlier murders and one
rape that he had committed, and this June 1998 murder could have been
prevented.
On August 13, 1998, a 44-year-old woman was found murdered in an
abandoned house on the 900 block of West 52nd Street. Her clothes were
found in the alley. DNA evidence was recovered. That DNA evidence
identifies Crawford as the perpetrator. If the DNA Fingerprint Act had
been law, and Crawford's profile had been collected after his March
1993 arrest, he would have been identified as the perpetrator of the
five earlier murders and one rape that he had committed, and this
August 1998 murder could have been prevented.
Also on August 13, 1998, a 32-year-old woman was found murdered in
the attic of a house on the 5200 block of South Marshfield. Her body
was decomposed, but DNA evidence was recovered. That DNA evidence
identifies Crawford as the perpetrator. If the DNA Fingerprint Act had
been law, and Crawford's profile had been collected after his March
1993 arrest, he would have been identified as the perpetrator of the
six earlier murders and one rape that he had committed, and this
additional murder could have been prevented.
On December 8, 1998, a 35-year-old woman was found murdered in a
building on the 1200 block of West 52nd Street. She had rope marks
around her neck and injuries to her face. DNA evidence was recovered.
That DNA evidence identifies Crawford as the perpetrator. If the DNA
Fingerprint Act had been law, and Crawford's profile had been collected
after his March 1993 arrest, he would have been identified as the
perpetrator of the seven earlier murders and one rape that he had
committed, and this December 1998 murder could have been prevented.
On February 2, 1999, a 35-year-old woman was found murdered on the
1300 block of West 51st Street. DNA evidence was recovered. That DNA
evidence identifies Crawford as the perpetrator. If the DNA Fingerprint
Act had been law, and Crawford's profile had been collected after his
March 1993 arrest, he would have been identified as the perpetrator of
the eight earlier murders and one rape that he had committed, and this
February 1999 murder could have been prevented.
On April 21, 1999, a 44-year-old woman was found murdered in the
upstairs of an abandoned house on the 5000 block of South Justine
Street. DNA evidence was recovered. That DNA evidence identifies
Crawford as the perpetrator. If the DNA Fingerprint Act had been law,
and Crawford's profile had been collected after his March 1993 arrest,
he would have been identified as the perpetrator of the nine earlier
murders and one rape that he had committed, and this April 1999 murder
could have been prevented.
And on June 20, 1999, a 41-year-old woman was found murdered in the
attic of an abandoned building on the 1500 block of West 51st Street.
DNA evidence was recovered from blood on a nearby wall, indicating a
struggle. That DNA evidence identifies Crawford as the perpetrator. If
the DNA Fingerprint Act had been law, and Crawford's profile had been
collected after his March 1993 arrest, he would have been identified as
the perpetrator of the ten earlier murders and one rape that he had
committed, and this additional murder could have been prevented.
As the city of Chicago case study concludes:
In January 2000, Andre Crawford was charged with 11 murders
and 1 Aggravated Criminal Sexual Assault. If his DNA sample
had been taken on March 6, 1993, the subsequent 10 murders
and 1 rape would not have happened.
The city of Chicago study goes on to discuss the cases of 7 other
serial rapists and murders from that city. Collectively, together with
Andre Crawford, these 8 serial rapists and
[[Page S9529]]
killers represent 22 murders and 30 rapes that could have been
prevented had an all-arrestee database been in place.
The DNA Fingerprint Act eliminates current federal statutory
restrictions that prevent states from adding and keeping arresttee
profiles in NDIS. In effect, the Act would make it possible to build a
comprehensive, robust national all-arrestee DNA database.
Here is how the DNA Fingerprint Act works: First, under current
Federal law, a DNA profile from an arrestee cannot be uploaded to NDIS
until the arrestee is charged in an indictment or information. Thus
today, even an arrestee charged in a pleading cannot have his DNA
uploaded to the national index. The act eliminates this restriction,
allowing arrestees to be included as soon as they are arrested. It also
eliminates a statutory restriction that bars inclusion of profiles from
suspects who provide so-called ``exoneration'' samples. The act
recognizes that criminal suspects have no legitimate interest in
evading identification for crimes that they have committed.
Second, the act requires an arrestee to take the initiative to opt
out of NDIS if charges against him have been dismissed or he has been
acquitted, and he does not want his DNA profile compared to future
crime scene evidence. Current law places the burden of determining who
may be removed from the index on the administrator of the DNA database,
thus requiring the administrator to track the progress of individual
criminal cases. This bureaucratic burden discourages states from
creating and maintaining comprehensive, all-arrestee DNA databases. It
also effectively precludes the creation of a genuine national all-
arrestee database. In effect, only convicts' DNA profiles can be kept
in the database over the long term. The act would allow arrestee
profiles to be kept in the database as well.
Third, the DNA Fingerprint Act would allow expanded use of CODIS
grants. Congress currently appropriates funds for use by states to
expand their DNA databases. Current law restricts the use of these
grants, however, to only building databases of convicted felons. This
bill expands this authorization to allow use of these funds to build a
database of all DNA samples collected under lawful authority--including
samples taken from arrestees.
Fourth, the DNA Fingerprint Act allows the Federal Government to take
and keep DNA samples from arrestees. The act gives the Attorney-General
the authority to develop regulations allowing collection of DNA
profiles from federal arrestees or detainees. The authority to issue
such regulations would give the Attorney General the flexibility needed
to respond to new legal developments and changes in technology.
And finally, the act tolls the statute of limitations for Federal sex
offenses. Current law generally tolls the statute of limitations for
felony cases in which the perpetrator is implicated in the offense
through DNA testing. The one exception to this tolling is the sexual-
abuse offenses in chapter 109A of title 18. When Congress adopted
general tolling, it left out chapter 109A, apparently because those
crimes already are subject to the use of ``John Doe'' indictments to
charge unidentified perpetrators. The Justice Department has made
clear, however, that John Doe indictments are ``not an adequate
substitute for the applicability of [tolling].'' The Department has
criticized the exception in current law as ``work[ing] against the
effective prosecution of rapes and other serious sexual assaults under
chapter 109A,'' noting that it makes ``the statute of limitation rules
for such offenses more restrictive than those for all other Federal
offenses in cases involving DNA identification.'' The DNA Fingerprint
Act corrects this anomaly by allowing tolling for chapter 109A
offenses.
Further evidence of the potential effectiveness of a comprehensive,
robust DNA database is available from the recent experience of Great
Britain. The British have taken the lead in using DNA to solve crimes,
creating a database that now includes 2,000,000 profiles. Their
database has now reached the critical mass where it is big enough to
serve as a highly effective tool for solving crimes. In the U.K., DNA
from crime scenes produces a match to the DNA database in 40 percent of
all cases. This amounted to 58,176 cold hits in the United Kingdom
2001. (See generally ``The Application of DNA Technology in England and
Wales,'' a study commissioned by the National Institute of Justice.) A
broad DNA database works. The same tool should be made available in the
United States.
Some critics of DNA databasing argue that a comprehensive database
would violate criminal suspects' privacy rights. This is simply untrue.
The sample of DNA that is kept in NDIS is what is called ``junk DNA''--
it is impossible to determine anything medically sensitive from this
DNA. For example, this DNA does not allow the tester to determine if
the donor is susceptible to particular diseases. The Justice Department
addressed this issue in its statement of views on S. 1700, a DNA bill
that was introduced in the 108th Congress:
[T]here [are no] legitimate privacy concerns that require
the retention or expansion of these [burdensome expungement
provisions]. The DNA identification system is already subject
to strict privacy rules, which generally limit the use of DNA
samples and DNA profiles in the system to law enforcement
identification purposes. See 42 U.S.C. 14132(b)-(c).
Moreover, the DNA profiles that are maintained in the
national index relate to 13 DNA sites that do not control any
traits or characteristics of individuals. Hence, the
databased information cannot be used to discern, for example,
anything about an individual's genetic illnesses, disorders,
or dispositions. Rather, by design, the information the
system retains in the databased DNA profiles is the
equivalent of a ``genetic fingerprint'' that uniquely
identifies an individual, but does not disclose other facts
about him.
Elsewhere in its Views Letter, the Justice Department also explained
why the restrictive expungement provisions in current law are
unnecessary and contrary to sound public policy. The letter noted that
the FBI maintains a database of fingerprints of arrestees--without
regard to whether the arrestee later was acquitted or convicted. The
letter states, ``With respect to the . . . exclusion of DNA profiles of
unindicted arrestees, it should be noted by way of comparison that
there is no Federal policy that bars States from including fingerprints
of arrestees in State and Federal law enforcement databases prior to
indictment.'' The Justice Department also pointed out that ``[t]here is
no reason to have a . . . Federal policy mandating expungement for DNA
information. If the person whose DNA it is does not commit other
crimes, then the information simply remains in a secure database and
there is no adverse effect on his life. But if he commits a murder,
rape, or other serious crime, and DNA matching can identify him as the
perpetrator, then it is good that the information was retained.''
From the Chicago study--which examines the experience of just one
American city over recent years--we know that an all-arrestee database
can and inevitably will make the critical difference in solving and
preventing violent sex offenses. From the British experience, we know
that a comprehensive database can be a highly effective tool in solving
crimes. And we know that DNA databasing does not violate the right to
privacy. I urge the Congress to enact the DNA Fingerprint Act--before
another preventable sex crime occurs.
I ask unanimous consent that the text of the Chicago study be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Case Study of 8 Serial Killers and Rapists: 60 Violent Crimes Could
Have Been Prevented, Including 22 Murders and 30 Rapes, City of
Chicago, March 2005
If Illinois collected DNA from 8 serial killers and rapists
during any of their felony arrests, over 60 serious violent
crimes would never have occurred. These include: 22 murders--
all female victims ranging from 24 to 44 years old; 30
rapes--all victims ranging from 15 to 65 years old; attempted
rapes; and aggravated kidnapping.
Offender Andre Crawford, 37 years old: 10 preventable murders
and 1 preventable rape
Andre Crawford has been charged with eleven murders and one
attempted murder/aggravated criminal sexual assault.
In March 1993, Andre Crawford was arrested for Felony
Theft. If Illinois required him to give a DNA sample during
that felony arrest, a DNA match could have been obtained with
the DNA evidence recovered from his first murder, thereby
identifying him as the offender and the subsequent 10 murders
and one attempted murder/criminal sexual assault would have
been prevented.
[[Page S9530]]
Timeline of Events: On March 6, 1993, Andre Crawford was
arrested for Felony Theft.
On September 21, 1993, a 37-year-old woman was found
murdered. Her body was discovered in a vacant factory lot on
the 700 block of West 50th Street. She had blunt trauma to
her head. DNA evidence was recovered.
The following are 10 preventable murders & 1 preventable
attempted murder/rape which would not have occurred had
Crawford's DNA sample been taken on March 6, 1993:
On December 21, 1994, a 24-year-old woman was found
murdered. Her body was found in an abandoned building on the
800 block of West 50th Place. DNA evidence was recovered.
On April 3, 1995, a 36-year-old woman was found murdered.
Her body was discovered in an abandoned house on the 5000
block of South Carpenter. DNA evidence was recovered.
On May 3, 1995, Andre Crawford was arrested for Attempted
Criminal Sexual Abuse (Felony). Another missed opportunity to
have his DNA sample entered into the system and to prevent
further violence.
On July 23, 1997, a 27-year-old woman was found murdered.
Her body was discovered in a closet of an abandoned house on
the 900 block of West 51st Street. DNA evidence was
recovered.
On December 27, 1997, a 42-year-old woman was raped. As she
walked, an offender approached her from behind, placed a
knife to her head, dragged her into an abandoned building on
the 5100 block of South Peoria, then beat and raped her. DNA
evidence was recovered.
In January 1998, Andre Crawford was arrested for Possession
of a Controlled Substance (Felony). Another missed
opportunity to have his DNA sample entered into the system
and to prevent further violence.
In June 1998, a 31-year-old woman was found murdered. Her
body was discovered in an abandoned building on the 5000
block of South May Street.
On August 13, 1998, a 44-year-old woman was found murdered.
A rehabber discovered her body in the kitchen of an abandoned
house on the 900 block of West 52nd Street. Her clothes were
found in the alley. DNA evidence was recovered.
On August 13, 1998, a 32-year-old woman was found murdered.
A real estate agent discovered her decomposed body lying on
the floor in the attic on the 5200 block of South Marshfield.
DNA evidence was recovered.
On December 8, 1998, a 35-year-old woman was found
murdered. A rehabber discovered her body with her pants one
around her ankle and the other completely off in a building
on the 1200 block of West 52nd Street. She had rope marks
around her neck and injuries to her face. DNA evidence was
recovered.
On February 2, 1999, a 35-year-old woman was found
murdered. Her body was discovered on the 1300 block of West
51st Street. DNA evidence was recovered.
On April 21, 1999, a 44-year-old woman was found murdered.
Her body was discovered in the upstairs of an abandoned house
on the 5000 block of South Justine. DNA evidence was
recovered.
On June 20, 1999, a 41-year old woman was found murdered.
Her body was found in the attic of an abandoned building on
the 1500 block of West 51st Street. DNA evidence was
recovered from blood on the wall which indicated a struggle.
In November 1999, Andre Crawford was arrested for
possession of a controlled substance (felony). Another missed
opportunity to have his DNA sample entered into the system
and to prevent further violence.
In January 2000, Andre Crawford was charged with 11 murders
and 1 aggravated criminal sexual assault. If his DNA sample
had been taken on March 6, 1993, the subsequent 10 murders
and 1 rape would not have happened.
Offender Brandon Harris, 18 years old: 4 preventable rapes
and 1 preventable kidnapping
Brandon Harris was convicted of five aggravated criminal
sexual assaults and one aggravated kidnapping/attempted rape.
In August 2000, Brandon Harris was arrested with a felony
charge. If Illinois required him to give a DNA sample after
that arrest, a DNA match could have been obtained with the
DNA evidence recovered from his first rape, thereby
identifying him as the offender and the subsequent four rapes
and one attempt rape/armed robbery/aggravated kidnapping
would have been prevented.
Timeline of events: On December 2, 1999, a 17-year old girl
was raped. As she was waiting for a bus, an offender
displayed a knife, forced her to an abandoned garage on the
100 block of South 83rd Street and raped her.
On August 25, 2000, Brandon Harris was arrested for
aggravated criminal sexual assault.
On October 29, 2000, Brandon Harris was arrested for
aggravated criminal sexual assault.
The following are 4 preventable rapes and 1 attempted rape/
armed robbery/aggravated kidnapping which would not have
occurred had Harris's DNA sample been taken on August 25,
2000.
On November 26, 2000, a 25-year old woman was raped. As she
walked to work, an offender approached her, displayed a
handgun, forced her into an abandoned house on the 7900 block
of South Yale and raped her. DNA evidence was recovered.
On November 29, 2000, a 19-year old girl was robbed and
kidnapped. As she attempted to exit an L-Train, an offender
displayed a handgun and demanded her to stay on the train.
The offender ordered the victim to exit the train at a later
stop, took her to an abandoned basement on the 200 block of
West 80th Street where he made her take her clothes off and
took her money.
On December 7, 2000, Brandon Harris was arrested for
robbery--armed with a firearm & UUW (felony). However,
Brandon was not convicted until February 5, 2001 and
sentenced to home confinement. Six days later, he rapes
again.
On February 11, 2001, a 22-year old woman was raped. As she
was waiting for a bus, an offender pulled up in a vehicle,
ordered her into the car at gunpoint and raped her on the
8200 block of South Harvard. DNA evidence was recovered.
On February 28, 2001, a 15-year old girl was raped. She
exited an L-station and began to walk home when an offender
walked up behind her, stuck a piece of glass to her neck,
forced her to a basement stairwell on the 8000 block of South
Princeton and raped her. DNA evidence was recovered.
On May 19, 2001, a 17-year old girl was raped. As she
waited for a bus, an offender approached her, led her at
gunpoint to a backyard on the 8100 South Harvard and raped
her.
Brandon Harris was convicted of 5 aggravated criminal
sexual assaults and 1 attempt aggravated criminal sexual
assault. If his DNA sample had been taken on August 25, 2000,
the subsequent 4 rapes and 1 attempt rape would not have
happened.
Offender Geoffrey T. Griffin, 31 years old: 8 preventable
murders and 1 preventable rape
Geoffrey Griffin has been charged with eight murders and
one aggravated criminal sexual assault.
In December 1993, Geoffrey Griffin was arrested for
possession of a controlled substance (felony). If Illinois
required him to give a DNA sample after that felony arrest, a
DNA match could have been obtained with the DNA evidence
recovered from his first rape, thereby identifying him as the
offender and the subsequent eight murders, one rape and one
attempted rape would have been prevented.
Timeline of Events: On August 26, 1995, Geoffrey Griffin
was arrested for possession of a controlled substance.
On July 10, 1998, a 37-year-old woman was raped. She was
forced into an abandoned building on the 6700 block of South
Halsted. After being raped, she was beat into unconsciousness
and left to die. DNA evidence was recovered from the sexual
assault kit.
The following are 8 preventable murders, 1 rape and 1
attempted rape which would not have occurred had Griffin's
DNA sample been taken on August 26, 1995.
On July 11, 1998, a 36-year-old woman was found murdered.
She was found in the rear yard on the 7400 block of South
Halsted, naked from the waist down. She suffered blunt trauma
to the face and head. DNA evidence was recovered from the
sexual assault kit.
On February 7, 1999, a 22-year-old woman was raped. She was
attacked in an abandoned building on the 10900 block of South
Edbrooke. The offender raped her, then beat her in the head
with a brick and burned her eyes. DNA evidence was recovered
from the sexual assault kit.
On May 2, 2000, a 33-year-old woman was found murdered. She
was raped, and then strangled to death on the 15800 block of
South Park. She was found naked. DNA evidence was recovered
from the victim's fingernail clippings.
On May 12, 2000, a 32-year-old woman was found murdered.
She was found naked in an abandoned building on the 11800
block of South Yale. She was strangled to death. DNA evidence
of the assailant was recovered from the sexual assault kit.
On May 17, 2000, a 32-year-old woman was found murdered.
Her body was discovered in an abandoned building on the 11900
block of South LaSalle. The murderer's jacket had the
victim's blood stains on it. DNA evidence was recovered.
On June 13, 2000, a 21-year-old woman was attacked. As she
was in an abandoned building on the 11900 block of South
Wallace, an offender attempted to rape her. She was struck
with a knife, but escaped.
On June 16, 2000, a 29-year-old woman was found murdered.
Her body was discovered in an abandoned building on the 10700
block of South Michigan. DNA of the assailant was recovered
from the victim's fingernails. Later matched.
On June 19, 2000, a 47-year-old woman was found murdered.
Her body was found naked from her waist down and the cause of
death was strangulation on the 20 block of East 113th Place
(occurrence May 25, 2000). DNA of the assailant was recovered
from the victim's fingernails.
On June 22, 2000, a 39-year-old woman was found murdered.
Her body was found in an abandoned house on the 200 block of
West 112th Place (occurrence June 13, 2000). She was naked
from the waist down and the cause of death was strangulation.
DNA evidence was recovered. The murderer's jacket had the
victim's blood on it.
On June 27, 2000, a 44-year-old woman was found murdered.
She was strangled to death. Her body was found naked from the
waist down on the 11000 block of South Edbrooke (occurrence
June 13, 2000). The murderer's jacket had the victim's blood
on it.
Geoffrey Griffin was arrested on June 17, 2000. He has
subsequently been charged with eight murders and 1 aggravated
criminal sexual assault. If his DNA sample had been
[[Page S9531]]
taken on August 26, 1995, the 8 murders, 1 rape and 1
attempted rape would not have happened.
Offender Mario Villa, 37 years old: 8 preventable rapes or
attempted rapes
Mario Villa has been charged with four rapes, linked by DNA
to two other rapes, and a main suspect in an additional rape
and two attempted rapes.
In February 1999, Mario Villa was arrested for felony
burglary. If Illinois required him to give a DNA sample after
that arrest, a DNA match could have been obtained with the
DNA evidence recovered from his first rape, thereby
identifying him as the offender and the subsequent six rapes
and two attempted rapes would have been prevented.
Timeline of Events: On February 6, 1999, Mario Villa was
arrested for burglary (felony).
On July 5, 1999, a 16-year-old girl was raped. As she slept
in her apartment on the 1300 block of North Dean Street, an
offender entered her apartment and raped her. He ordered her
to take a shower after raping her. DNA evidence was recovered
from the criminal sexual assault kit.
The following are 8 preventable rapes or attempted rapes
which would not have occurred had Villa's DNA sample been
taken on February 6, 1999.
On May 26, 2002, a 32-year-old woman was raped. As she
slept in her apartment on the 1300 block of South Greenview,
an offender entered her residence, raped her and then ordered
her to take a shower. DNA evidence of the assailant was
recovered from the criminal sexual assault kit.
On March 17, 2003, a 47-year-old woman was raped. As she
sat in her car at a forest preserve in Lisle, Illinois, the
offender ordered her into the woods and raped her. DNA
evidence of the assailant was recovered from the criminal
sexual assault kit. Linked by DNA.
On June 8, 2003, a 19-year-old woman was attacked in her
apartment. As she slept in her apartment on the 1800 block of
North Halsted, an offender entered her residence and
attempted to rape her. The victim yelled, ``Fire, fire'' and
the offender fled.
On August 22, 2003, a woman was raped in Kenosha,
Wisconsin. DNA evidence of the assailant was recovered from
the criminal sexual assault kit. Linked by DNA.
On October 4, 2003, a 29-year-old woman was attacked at
home on the 1200 block of West Byron at 3 a.m. in the
morning, an offender entered her apartment and attempted to
rape her.
On October 15, 2003, a 24-year-old woman was raped. As she
slept in her apartment on the 3500 block of West Greenview,
the offender entered her residence, placed a pillow over her
face and raped her. Offender ordered her to take a shower
after raping her.
On December 20, 2003, a 40-year-old woman was raped. As she
slept in her apartment at 1300 of West Ohio, an offender
entered her residence, told her not to say anything, placed a
pillow over her mouth and raped her. Offender ordered her to
take shower after raping her.
On February 7, 2004, a 23-year-old woman was raped. As she
slept in her apartment, an offender entered her residence on
the 2000 block of North Cleveland and raped her. The offender
ordered her to take a shower after raping her.
On March 19, 2004, police officers obtained a search
warrant and swabbed a DNA sample from Mario Villa as he
appeared in court on an unrelated criminal trespassing
charge. Subsequently, Mario Villa was charged with 4
aggravated criminal sexual assaults, linked by DNA or
similarities in the other crimes. If his DNA sample had been
taken on February 6, 1999, the subsequent 6 rapes and 2
attempted rapes would not have happened.
Offender Bernard Middleton, 55 years old: 1 preventable
murder and 2 preventable rapes
Bernard Middleton has been charged with one murder and
three aggravated criminal sexual assaults.
Bernard Middleton was arrested for felonies in 1987 and
1993, if Illinois required him to give a DNA sample after
either arrest, a DNA match could have been obtained with the
DNA evidence recovered from his first rape, thereby
identifying him as the offender and the subsequent murder and
two rapes would have been prevented.
Timeline of Events: On January 17, 1987, Bernard Middleton
was arrested for aggravated battery.
On May 6, 1993, Bernard Middleton was arrested for felony
theft.
On September 25, 1995, a 22-year-old woman was raped. As
she waited for a bus, an offender placed a knife to her head,
led her to an isolated area, beat and raped her on the 600
block of West Garfield. DNA evidence was recovered.
The following is 1 preventable murder and 2 preventable
rapes which would not have occurred had Middleton's DNA
sample been taken on May 6, 1993.
On October 16, 1995, a 32-year-old woman was found
murdered. She was lured into a stairwell at Hope Academy on
the 5500 block of South Lowe, raped, and then murdered. Her
body was found in the stairwell. DNA evidence was recovered
from the criminal sexual assault kit.
On May 28, 1997, Bernard Middleton was arrested for felony
theft. Another missed opportunity to have his DNA sample
entered into the system and to prevent further violence.
On July 25, 1997, a 34-year-old woman was raped. The
offender placed a knife against her head, told that she would
be killed and then raped her on the 5500 block of South
Calumet. DNA evidence was recovered.
On September 14, 1998, Bernard Middleton was arrested for
felony theft. Convicted on October 9, 1998 and sentenced to
probation for 1 year. Another missed opportunity to have his
DNA sample entered into the system and to prevent further
violence.
On October 31, 1998, a 48-year-old woman was raped. As she
walked down the street, an offender grabbed her from behind,
placed a knife against her, forced her to the alley and raped
her on the 1500 Block of North Claremont Avenue. DNA evidence
was recovered.
On November 12, 2001, Bernard Middleton was arrested for
possession of a controlled substance. Another missed
opportunity to have his DNA sample entered into the system
and to prevent further violence.
On August 8, 2002, Bernard Middleton was arrested for
felony retail theft. Convicted and sentence to 20 months.
Another missed opportunity to have his DNA sample entered
into the system and to prevent further violence.
On May 1, 2003, Bernard Middleton was charged with the
aforementioned murder and three rapes. While Bernard
Middleton was in prison for a retail theft conviction in
2002, his DNA sample was entered into the DNA database and
his sample matched the evidence recovered from the previous
unresolved cases. If his DNA sample had been taken on May 6,
1993, the murder and 2 rapes would not have happened.
Offender Ronald Macon, 35 years old: 2 preventable murders
and 1 preventable criminal sexual assault
In 2003, Ronald Macon was convicted of three murders and
one criminal sexual assault.
Ronald Macon was arrested for a felony charge on three
separate occasions in 1998. If Illinois required him to give
a DNA sample after his first felony arrest in 1998, a DNA
match could have been obtained with the DNA evidence
recovered from his first murder, thereby identifying him as
the offender and the subsequent two murders and one criminal
sexual assault would have been prevented.
Timeline of Events: On January 13, 1998, Ronald Macon was
arrested for retail theft (felony).
On July 20, 1998, Ronald Macon was arrested for defacing
property (felony).
On September 8, 1998, Ronald Macon was arrested for retail
theft (felony).
On February 18, 1999, a 43-year-old woman was found
murdered. Her body was discovered on the 100 block of East
45th Street. DNA evidence was recovered.
The following are 2 preventable murders and 1 preventable
criminal sexual assault which would not have occurred had
Macon's DNA sample been taken on January 13, 1998.
On April 4, 1999, a 35-year-old woman was found murdered.
She was choked and beaten to death with an electrical box on
the 5900 block of South Damen Ave. DNA was evidence
recovered.
On June 21, 1999, a woman was found murdered. She was
choked, raped; her hands and feet were bound with shoelaces,
and then strangled to death with a strap from a bag. Her body
was discovered on the 400 block of East 69th Street. DNA
evidence was recovered.
On August 9, 1999, Ronald Macon was arrested for criminal
sexual assault of a 65-year-old woman. Ronald Macon placed a
knife to the victim's neck and demanded her jewelry and
money. Ronald Macon then wrapped a cord around her hands, led
her into the bedroom and raped her.
On September 11, 2003, Ronald Macon was sentenced for life
in prison for killing the three women and sentenced to 30
years for raping a 65-year-old woman. If his DNA sample had
been taken on January 13, 1998, 2 murders and 1 rape would
not have happened.
[The remainder of the study describes 11 preventable rapes
committed by offenders Ronald Harris and Arto Jones, and 5
preventable rapes committed by offender Nolan Watson, all of
which could have been prevented if Chicago had collected DNA
from all felony arrestees.]
______
By Mr. LAUTENBERG (for himself and Mr. Corzine):
S. 1607. A bill to amend section 10501 of title 49, United States
Code, to exclude solid waste disposal from the jurisdiction of the
Surface Transportation Board; to the Committee on Commerce, Science,
and Transportation.
Mr LAUTENBERG. Mr. President, I rise to introduce legislation to
address a serious problem in New Jersey and across the nation--the
unregulated sorting and processing of garbage at rail facilities in our
communities.
A conflict in Federal laws and policy has resulted in certain solid
waste-handling facilities located on railroad property being
unregulated. Environmental laws such as the Solid Waste Disposal Act
should apply to the operation of these facilities. However, a broad-
reaching Federal railroad law forbids environmental regulatory agencies
from overseeing the safe handling of trash or solid waste at these
sites.
These unintended consequences require our attention, and are the
reason
[[Page S9532]]
for the Solid Waste Environmental Regulation Clarification Affecting
Railroads Act of 2005.
The Federal railroad law in question was enacted most recently in the
Interstate Commerce Commission Termination Act of 1995 to protect the
operation of interstate rail service. The law gives `exclusive'
jurisdiction over rail transportation--and activities incident to such
transportation--to the Federal Surface Transportation Board.
I realize this law is necessary for the efficient operation of
commerce in our modern economy. I serve on the Committee on Commerce,
Science and Transportation, as well as the Subcommittee on Merchant
Marine and Surface Transportation, which oversees the Surface
Transportation Board and considers nominations of its members. The
board's reputation and expertise in rail regulation is second to none.
However, the Board is limited to only a passive role in ensuring that
rail facilities are operated with minimal detriment to the public
health and safety. These sites require active environmental regulation,
just like other solid waste handling facilities.
The recent proliferation of solid waste rail transfer facilities has
affected the ability of State and local governments to engage in long-
term waste management planning. These agencies also are responsible for
responding to accidents and incidents occurring at these facilities.
Although transporting solid waste by rail can reduce the number of
trucks hauling solid waste on public roads, handling this waste without
careful planning and management presents a danger to human health and
the environment.
These transfer operations create thick dust, which is potentially
hazardous and is breathed in by local residents and business owners.
Some transfer facilities don't have proper drainage on site, leading
to the potential contamination of surface and groundwater and nearby
wetlands.
In addition, these facilities raise serious concerns about the safety
of their workers and the exemptions they claim from strong State worker
protection laws.
As a result of these chilling reports, I asked state agencies in New
Jersey, railroads, and other interested groups to provide input into
possible legislation to address this problem.
Many experts in New Jersey, including the Department of Environmental
Protection, the Meadowlands Commission, the Pinelands Commission, and
the Rutgers Environmental Law Clinic, provided excellent suggestions. I
look forward to working with them throughout the process to find a
solution to this problem.
I have also met with railroad interests, who are concerned about
their ability to continue hauling solid waste. Some operators of these
rail facilities have voluntarily complied with State environmental
laws, even though they could claim that Federal railroad law preempts
any enforcement action States could take. I would like to thank members
of the solid waste handling industry for their concern and input as
well.
One reason this legislation is needed is that the Surface
Transportation Board has never clarified whether it even has
jurisdiction over the processing and sorting of solid waste at a rail
facility.
This bill would make it clear that Congress' intent was not to
subvert the policies of the Solid Waste Disposal Act and other
environmental laws covering the handling of garbage.
The bill will clarify the intent of Congress in passing these two
important laws, and ensure that they work together to provide for a
robust, environmentally responsible rail system.
Some have suggested that perhaps this clarification should not be
limited to the processing and sorting of solid waste. But these are the
activities that require the greatest environmental oversight, because
they pose the greatest environmental risk.
Many towns across the country are beginning to understand the problem
of having an unregulated polluting neighbor, and having nowhere to turn
for help. Many influential organizations support this effort,
including: United States Conference of Mayors, National Governors
Association, Solid Waste Association of North America, Mass Municipal
Association, National Solid Wastes Management Association, Integrated
Waste Services Association, and Construction Material Recyclers
Association.
These garbage transfer facilities should not be able to circumvent
and ignore our environmental and. safety laws. I realize that the
Surface Transportation Board must have broad jurisdiction over rail
transportation, but that jurisdiction should not be interpreted in a
way that puts our environment at risk.
Railroading has a bright future in New Jersey and throughout our
country, as freight loads have increased to levels we have not seen in
some time. I have fought for many years to ensure that our freight
transportation system, the backbone of our national economy, continues
to flourish. But we need this legislation to ensure that these solid
waste rail transfer facilities are run in the same environmentally
responsible manner as other solid waste sites.
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. 1607
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 ``Solid Waste Environmental
Regulation Clarification Affecting Railroads Act of 2005''.
SEC. 2. AMENDMENTS TO EXCLUDE SOLID WASTE DISPOSAL FROM THE
JURISDICTION OF THE BOARD.
Section 10501 of title 49, United States Code, is amended--
(1) in subsection (b)(2), by inserting ``except solid waste
management facilities (as defined in section 1004 of the
Solid Waste Disposal Act (42 U.S.C. 6903)),'' after
``facilities,''; and
(2) in subsection (c)(2)--
(A) by striking ``over mass'' and inserting the following:
``over--
``(A) mass''; and
(B) by striking the period at the end and inserting the
following: ``; or
``(B) the processing or sorting of solid waste.''.
Mr. CORZINE. Mr. President, I rise in support of legislation being
introduced today by my colleague from New Jersey, Senator Lautenberg.
This legislation, the Solid Waste Environmental Regulation
Clarification Affecting Railroads Act of 2005, would deal with a
growing problem in my state: the problem of railroads avoiding strict
environmental standards by constructing waste transfer facilities next
to rail lines. I am proud to cosponsor this important legislation.
I first became aware of this problem when constituents contacted me
about a waste transfer facility proposed to be built by a railroad in
Mullica Township, New Jersey. There could not be a worse place for such
a facility. Mullica Township is located in the Pinelands National
Reserve, which encompasses more than 1.1 million acres of ecologically
sensitive land. The Pinelands was designated as our nation's first
national reserve in order to protect its streams, bogs,and cedar and
hardwood swamps, as well as the many species that live there. Yet many
of these protections could be circumvented if this proposed facility is
built. The railroad argues that federal statute provides a shield from
all environmental standards for any trash facility built adjacent to a
rail line. This same argument has been used by railroads in the case of
5 similar facilities that are already in operation in North Bergen.
These facilities lie near New Jersey's Meadowlands, another
environmental treasure.
The statute being used by the railroads establishes the Surface
Transportation Board, STB, as the reulatory agency for the nation's
railroads, title 49 of the United States Code. Under section 10501, the
STB has exclusive jurisdiction over the ``construction, acquisition, or
operation'' of ``facilities'' located adjacent to a rail line. The
railroads argue that facility means any facility, including a trash
transfer station. They argue that because of this statute, federal law
preempts all other state and local protections.
I cannot believe that Congress intended these types of facilities to
be exempt from State and local environmental standards. The risk to the
surrounding communities from the air pollution and groundwater
contamination that could occur when open rail cars carrying solid waste
are allowed
[[Page S9533]]
to load and off-load is too great. However, I believe that we must take
steps to clarify the law's intent. The ``Solid Waste Environmental
Regulation Clarification Affecting Railroads Act of 2005 will do this.
The Act makes it clear that all state and local environmental laws and
restrictions apply to these facilities.
This is a commonsense measure that insures that the public remains
fully involved in decisions relating to these facilities, regardless of
where they are built. I urge its enactment.
______
By Mr. SMITH (for himself, Mr. McCain, Mr. Inouye, and Mr. Nelson
of Florida):
S. 1608. A bill to enhance Federal Trade Commission enforcement
against illegal spam, spyware. and cross-border fraud and deception,
and for other purposes; to the Committee on Commerce, Science, and
Transportation.
Mr. SMITH. Mr. President, I rise today with Senators McCain, Inouye,
and Nelson of Florida to introduce the ``Undertaking Spam, Spyware, and
Fraud Enforcement With Enforcers Beyond Borders Act of 2005'' or the
``U.S. SAFE WEB Act of 2005''.
The Federal Trade Commission has a constitutionally mandated
responsibility to protect the American consumer from all types of fraud
and deception. Today, the American consumer is increasingly falling
prey to a new type of fraud unknown just a few years ago. The US SAFE
WEB Act of 2005 will take the important steps necessary to help combat
this disturbing and growing trend.
The rise in the use of the internet has provided the American
consumer with innumerable benefits. The global market place in which we
live knows no borders, and the FTC must be provided with all the tools
necessary to fulfill its duty in this type of environment.
Using internet and long-distance telephone technology, unscrupulous
businesses are increasingly able to victimize consumers in ways not
previously imagined. Deceptive spammers can easily hide their
identities, forge the electronic path of their email messages, and send
messages from anywhere in the world to anyone in the world. These
businesses can strike quickly on a global scale, victimize thousands of
consumers, and disappear nearly without a trace--along with their ill-
gotten gains.
There are dangers that come into U.S. homes through some of the
harmful online networks, including some peer-to-peer networks, who
purposefully locate outside the United States to avoid our Federal laws
and put American families at risk.
Cross-Border fraud, as it is known, is becoming an increasingly
common problem facing the American consumer and the FTC. In 1995, fewer
than 1 percent of all consumer fraud complaints received by the FTC
were directed at foreign entities. In less than a decade, the
percentage had grown to 16 percent. In 2004 alone, the FTC received
more than 47,000 complaints by U.S. consumers against foreign companies
complaining about transactions involving more that $92 million. In the
past three years, over 100,000 consumers logged cross-border fraud
complaints with the FTC.
Remarkably, these high numbers likely understate the problem.
Consumers who reported instances of cross-border fraud only did so when
they knew that they were complaining about foreign entities. In many
more instances, consumers do not know that their complaints are against
foreign entities. Fully one-third of all complaints to the FTC do not
reveal the location of the entity being complained about.
The Federal Trade Commission also testified at a recent Aging
Committee hearing on elder fraud that many sweepstakes and lottery
scams originate in Canada, and consumer fraud has become increasingly
cross-border in nature.
The US SAFE WEB Act helps to address the challenges posed by
globalization of fraudulent, deceptive, and unfair practices.
Our bill draws on established models for international cooperation
pioneered by agencies such as the Securities and Exchange Commission
and the Commodities Futures Trading Commission. The FTC faces
significant challenges in battling sophisticated cross-border schemes.
Just as improved authority to act in cross-border cases gave the SEC
and CFTC important new tools to fulfill their missions, enactment of
the US SAFE WEB Act would help the FTC fulfill its mission of
protecting and assisting U.S. consumers. The Act will substantially
improve the FTC's ability to meet the challenges posed by international
investigations and litigation.
The US SAFE WEB Act will provide the FTC with important new tools in
many important areas. The provisions contained within the Act are
needed to help the FTC to protect consumers from cross-border fraud and
deception, and particularly to fight spam, spyware, and Internet fraud
and deception.
Among key provisions within the bill are those that broaden
reciprocal information sharing, expand investigative cooperation
between U.S. and foreign law enforcement agencies, increase information
from foreign sources, and enhance the confidentiality of FTC
investigations.
These provisions are needed to allow the FTC to share important
information with foreign agencies so that they can halt fraud,
deception, spam, and spyware targeting U.S. citizens, and for the FTC
to obtain, reciprocally, foreign information needed to halt these
cnmes.
Furthermore, this legislation enhances the FTC's ability to obtain
consumer redress in cross-border cases. The US SAFE WEB Act would allow
the FTC to target more resources toward foreign litigation to
facilitate recovery of offshore assets to redress U.S. consumers.
In the 108th Congress, Senator McCain and I introduced this
legislation and it quickly passed the Senate by unanimous consent.
Unfortunately, the bill was not signed into law before Congress
adjourned. I urge my colleagues to support quick passage of this very
important legislation this year.
The American consumer is far too vulnerable to this growing type of
fraud and deception. Enactment of the US SAFE WEB Act would help the
FTC fulfill its mission of protecting and assisting U.S. consumers.
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. 1608
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.
(a) Short Title.--This Act may be cited as the
``Undertaking Spam, Spyware, And Fraud Enforcement With
Enforcers beyond Borders Act of 2005'' or the ``U.S. SAFE WEB
Act of 2005''.
(b) Findings.--The Congress finds the following:
(1) The Federal Trade Commission protects consumers from
fraud and deception. Cross-border fraud and deception are
growing international problems that affect American consumers
and businesses.
(2) The development of the Internet and improvements in
telecommunications technologies have brought significant
benefits to consumers. At the same time, they have also
provided unprecedented opportunities for those engaged in
fraud and deception to establish operations in one country
and victimize a large number of consumers in other countries.
(3) An increasing number of consumer complaints collected
in the Consumer Sentinel database maintained by the
Commission, and an increasing number of cases brought by the
Commission, involve foreign consumers, foreign businesses or
individuals, or assets or evidence located outside the United
States.
(4) The Commission has legal authority to remedy law
violations involving domestic and foreign wrongdoers,
pursuant to the Federal Trade Commission Act. The
Commission's ability to obtain effective relief using this
authority, however, may face practical impediments when
wrongdoers, victims, other witnesses, documents, money and
third parties involved in the transaction are widely
dispersed in many different jurisdictions. Such circumstances
make it difficult for the Commission to gather all the
information necessary to detect injurious practices, to
recover offshore assets for consumer redress, and to reach
conduct occurring outside the United States that affects
United States consumers.
(5) Improving the ability of the Commission and its foreign
counterparts to share information about cross-border fraud
and deception, to conduct joint and parallel investigations,
and to assist each other is critical to achieve more timely
and effective enforcement in cross-border cases.
[[Page S9534]]
(c) Purpose.--The purpose of this Act is to enhance the
ability of the Federal Trade Commission to protect consumers
from illegal spam, spyware, and cross-border fraud and
deception and other consumer protection law violations.
SEC. 2. FOREIGN LAW ENFORCEMENT AGENCY DEFINED.
Section 4 of the Federal Trade Commission Act (15 U.S.C.
44) is amended by adding at the end the following:
`` `Foreign law enforcement agency' means--
``(1) any agency or judicial authority of a foreign
government, including a foreign state, a political
subdivision of a foreign state, or a multinational
organization constituted by and comprised of foreign states,
that is vested with law enforcement or investigative
authority in civil, criminal, or administrative matters; and
``(2) any multinational organization, to the extent that it
is acting on behalf of an entity described in paragraph
(1).''.
SEC. 3. AVAILABILITY OF REMEDIES.
Section 5(a) of the Federal Trade Commission Act (15 U.S.C.
45(a)) is amended by adding at the end the following:
``(4)(A) For purposes of subsection (a), the term `unfair
or deceptive acts or practices' includes such acts or
practices involving foreign commerce that--
``(i) cause or are likely to cause reasonably foreseeable
injury within the United States; or
``(ii) involve material conduct occurring within the United
States.
``(B) All remedies available to the Commission with respect
to unfair and deceptive acts or practices shall be available
for acts and practices described in this paragraph, including
restitution to domestic or foreign victims.''.
SEC. 4. POWERS OF THE COMMISSION.
(a) Publication of Information; Reports.--Section 6(f) of
the Federal Trade Commission Act (15 U.S.C. 46(f)) is
amended--
(1) by inserting ``(1)'' after ``such information'' the
first place it appears; and
(2) by striking ``purposes.'' and inserting ``purposes, and
(2) to any officer or employee of any foreign law enforcement
agency under the same circumstances that making material
available to foreign law enforcement agencies is permitted
under section 21(b).''.
(b) Other Powers of the Commission.--Section 6 of the
Federal Trade Commission Act (15 U.S.C. 46) is further
amended by inserting after subsection (i) and before the
proviso the following:
``(j) Investigative Assistance for Foreign Law Enforcement
Agencies.--
``(1) In general.--Upon a written request from a foreign
law enforcement agency to provide assistance in accordance
with this subsection, if the requesting agency states that it
is investigating, or engaging in enforcement proceedings
against, possible violations of laws prohibiting fraudulent
or deceptive commercial practices, or other practices
substantially similar to practices prohibited by any
provision of the laws administered by the Commission, other
than Federal antitrust laws (as defined in section 12(5) of
the International Antitrust Enforcement Assistance Act of
1994 (15 U.S.C. 6211(5))), to provide the assistance
described in paragraph (2) without requiring that the conduct
identified in the request constitute a violation of the laws
of the United States.
``(2) Type of assistance.--In providing assistance to a
foreign law enforcement agency under this subsection, the
Commission may--
``(A) conduct such investigation as the Commission deems
necessary to collect information and evidence pertinent to
the request for assistance, using all investigative powers
authorized by this Act; and
``(B) when the request is from an agency acting to
investigate or pursue the enforcement of civil laws, or when
the Attorney General refers a request to the Commission from
an agency acting to investigate or pursue the enforcement of
criminal laws, seek and accept appointment by a United States
district court of Commission attorneys to provide assistance
to foreign and international tribunals and to litigants
before such tribunals on behalf of a foreign law enforcement
agency pursuant to section 1782 of title 28, United States
Code.
``(3) Criteria for determination.--In deciding whether to
provide such assistance, the Commission shall consider all
relevant factors, including--
``(A) whether the requesting agency has agreed to provide
or will provide reciprocal assistance to the Commission;
``(B) whether compliance with the request would prejudice
the public interest of the United States; and
``(C) whether the requesting agency's investigation or
enforcement proceeding concerns acts or practices that cause
or are likely to cause injury to a significant number of
persons.
``(4) International agreements.--If a foreign law
enforcement agency has set forth a legal basis for requiring
execution of an international agreement as a condition for
reciprocal assistance, or as a condition for provision of
materials or information to the Commission, the Commission,
with prior approval and ongoing oversight of the Secretary of
State, and with final approval of the agreement by the
Secretary of State, may negotiate and conclude an
international agreement, in the name of either the United
States or the Commission, for the purpose of obtaining such
assistance, materials, or information. The Commission may
undertake in such an international agreement to--
``(A) provide assistance using the powers set forth in this
subsection;
``(B) disclose materials and information in accordance with
subsection (f) and section 21(b); and
``(C) engage in further cooperation, and protect materials
and information received from disclosure, as authorized by
this Act.
``(5) Additional authority.--The authority provided by this
subsection is in addition to, and not in lieu of, any other
authority vested in the Commission or any other officer of
the United States.
``(6) Limitation.--The authority granted by this subsection
shall not authorize the Commission to take any action or
exercise any power with respect to a bank, a savings and loan
institution described in section 18(f)(3) (15 U.S.C.
57a(f)(3)), a Federal credit union described in section
18(f)(4) (15 U.S.C. 57a(f)(4)), or a common carrier subject
to the Act to regulate commerce, except in accordance with
the undesignated proviso following the last designated
subsection of section 6 (15 U.S.C. 46).
``(7) Assistance to certain countries.--The Commission may
not provide investigative assistance under this subsection to
a foreign law enforcement agency from a foreign state that
the Secretary of State has determined, in accordance with
section 6(j) of the Export Administration Act of 1979 (50
U.S.C. App. 2405(j)), has repeatedly provided support for
acts of international terrorism, unless and until such
determination is rescinded pursuant to section 6(j)(4) of
that Act (50 U.S.C. App.2405(j)(4)).
``(k) Referral of Evidence for Criminal Proceedings.--
``(1) In general.--Whenever the Commission obtains evidence
that any person, partnership, or corporation, either domestic
or foreign, has engaged in conduct that may constitute a
violation of Federal criminal law, to transmit such evidence
to the Attorney General, who may institute criminal
proceedings under appropriate statutes. Nothing in this
paragraph affects any other authority of the Commission to
disclose information.
``(2) International information.--The Commission shall
endeavor to ensure, with respect to memoranda of
understanding and international agreements it may conclude,
that material it has obtained from foreign law enforcement
agencies acting to investigate or pursue the enforcement of
foreign criminal laws may be used for the purpose of
investigation, prosecution, or prevention of violations of
United States criminal laws.
``(l) Expenditures for Cooperative Arrangements.--To expend
appropriated funds for--
``(1) operating expenses and other costs of bilateral and
multilateral cooperative law enforcement groups conducting
activities of interest to the Commission and in which the
Commission participates; and
``(2) expenses for consultations and meetings hosted by the
Commission with foreign government agency officials, members
of their delegations, appropriate representatives and staff
to exchange views concerning developments relating to the
Commission's mission, development and implementation of
cooperation agreements, and provision of technical assistance
for the development of foreign consumer protection or
competition regimes, such expenses to include necessary
administrative and logistic expenses and the expenses of
Commission staff and foreign invitees in attendance at such
consultations and meetings including--
``(A) such incidental expenses as meals taken in the course
of such attendance;
``(B) any travel and transportation to or from such
meetings; and
``(C) any other related lodging or subsistence.''.
(c) Authorization of Appropriations.--The Federal Trade
Commission is authorized to expend appropriated funds not to
exceed $100,000 per fiscal year for purposes of section 6(l)
of the Federal Trade Commission Act (15 U.S.C. 46(l)) (as
added by subsection (b) of this section), including operating
expenses and other costs of the following bilateral and
multilateral cooperative law enforcement agencies and
organizations:
(1) The International Consumer Protection and Enforcement
Network.
(2) The International Competition Network.
(3) The Mexico-U.S.-Canada Health Fraud Task Force.
(4) Project Emptor.
(5) The Toronto Strategic Partnership and other regional
partnerships with a nexus in a Canadian province.
(d) Conforming Amendment.--Section 6 of the Federal Trade
Commission Act (15 U.S.C. 46) is amended by striking
``clauses (a) and (b)'' in the proviso following subsection
(l) (as added by subsection (b) of this section) and
inserting ``subsections (a), (b), and (j)''.
SEC. 5. REPRESENTATION IN FOREIGN LITIGATION.
Section 16 of the Federal Trade Commission Act (15 U.S.C.
56) is amended by adding at the end the following:
``(c) Foreign Litigation.--
``(1) Commission attorneys.--With the concurrence of the
Attorney General, the Commission may designate Commission
attorneys to assist the Attorney General in connection with
litigation in foreign courts on particular matters in which
the Commission has an interest.
[[Page S9535]]
``(2) Reimbursement for foreign counsel.--The Commission is
authorized to expend appropriated funds, upon agreement with
the Attorney General, to reimburse the Attorney General for
the retention of foreign counsel for litigation in foreign
courts and for expenses related to litigation in foreign
courts in which the Commission has an interest.
``(3) Limitation on use of funds.--Nothing in this
subsection authorizes the payment of claims or judgments from
any source other than the permanent and indefinite
appropriation authorized by section 1304 of title 31, United
States Code.
``(4) Other authority.--The authority provided by this
subsection is in addition to any other authority of the
Commission or the Attorney General.''.
SEC. 6. SHARING INFORMATION WITH FOREIGN LAW ENFORCEMENT
AGENCIES.
(a) Material Obtained Pursuant to Compulsory Process.--
Section 21(b)(6) of the Federal Trade Commission Act (15
U.S.C. 57b-2(b)(6)) is amended by adding at the end ``The
custodian may make such material available to any foreign law
enforcement agency upon the prior certification of an
appropriate official of any such foreign law enforcement
agency, either by a prior agreement or memorandum of
understanding with the Commission or by other written
certification, that such material will be maintained in
confidence and will be used only for official law enforcement
purposes, if--
``(A) the foreign law enforcement agency has set forth a
bona fide legal basis for its authority to maintain the
material in confidence;
``(B) the materials are to be used for purposes of
investigating, or engaging in enforcement proceedings related
to, possible violations of--
``(i) foreign laws prohibiting fraudulent or deceptive
commercial practices, or other practices substantially
similar to practices prohibited by any law administered by
the Commission;
``(ii) a law administered by the Commission, if disclosure
of the material would further a Commission investigation or
enforcement proceeding; or
``(iii) with the approval of the Attorney General, other
foreign criminal laws, if such foreign criminal laws are
offenses defined in or covered by a criminal mutual legal
assistance treaty in force between the government of the
United States and the foreign law enforcement agency's
government;
``(C) the appropriate Federal banking agency (as defined in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)) or, in the case of a Federal credit union, the
National Credit Union Administration, has given its prior
approval if the materials to be provided under subparagraph
(B) are requested by the foreign law enforcement agency for
the purpose of investigating, or engaging in enforcement
proceedings based on, possible violations of law by a bank, a
savings and loan institution described in section 18(f)(3) of
the Federal Trade Commission Act (15 U.S.C. 57a(f)(3)), or a
Federal credit union described in section 18(f)(4) of the
Federal Trade Commission Act (15 U.S.C. 57a(f)(4)); and
``(D) the foreign law enforcement agency is not from a
foreign state that the Secretary of State has determined, in
accordance with section 6(j) of the Export Administration Act
of 1979 (50 U.S.C. App. 2405(j)), has repeatedly provided
support for acts of international terrorism, unless and until
such determination is rescinded pursuant to section 6(j)(4)
of that Act (50 U.S.C. App. 2405(j)(4)).
Nothing in the preceding sentence authorizes the disclosure
of material obtained in connection with the administration of
the Federal antitrust laws or foreign antitrust laws (as
defined in paragraphs (5) and (7), respectively, of section
12 of the International Antitrust Enforcement Assistance Act
of 1994 (15 U.S.C. 6211)) to any officer or employee of a
foreign law enforcement agency.''.
(b) Information Supplied by and About Foreign Sources.--
Section 21(f) of the Federal Trade Commission Act (15 U.S.C.
57b-2(f)) is amended to read asfollows:
``(f) Exemption From Public Disclosure.--
``(1) In General.--Any material which is received by the
Commission in any investigation, a purpose of which is to
determine whether any person may have violated any provision
of the laws administered by the Commission, and which is
provided pursuant to any compulsory process under this Act or
which is provided voluntarily in place of such compulsory
process shall not be required to be disclosed under section
552 of title 5, United States Code, or any other provision of
law, except as provided in paragraph (2)(B) of this section.
``(2) Material obtained from a foreign source.--
``(A) In general.--Except as provided in subparagraph (B)
of this paragraph, the Commission shall not be required to
disclose under section 552 of title 5, United States Code, or
any other provision of law--
``(i) any material obtained from a foreign law enforcement
agency or other foreign government agency, if the foreign law
enforcement agency or other foreign government agency has
requested confidential treatment, or has precluded such
disclosure under other use limitations, as a condition of
providing the material;
``(ii) any material reflecting a consumer complaint
obtained from any other foreign source, if that foreign
source supplying the material has requested confidential
treatment as a condition of providing the material; or
``(iii) any material reflecting a consumer complaint
submitted to a Commission reporting mechanism sponsored in
part by foreign law enforcement agencies or other foreign
government agencies.
``(B) Savings provision.--Nothing in this subsection shall
authorize the Commission to withhold information from the
Congress or prevent the Commission from complying with an
order of a court of the United States in an action commenced
by the United States or the Commission.''.
SEC. 7. CONFIDENTIALITY; DELAYED NOTICE OF PROCESS.
(a) In General.--The Federal Trade Commission Act (15
U.S.C. 41 et seq.) is amended by inserting after section 21
the following:
``SEC. 21A. CONFIDENTIALITY AND DELAYED NOTICE OF COMPULSORY
PROCESS FOR CERTAIN THIRD PARTIES.
``(a) Application With Other Laws.--The Right to Financial
Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title
18, United States Code, shall apply with respect to the
Commission, except as otherwise provided in this section.
``(b) Procedures for Delay of Notification or Prohibition
of Disclosure.--The procedures for delay of notification or
prohibition of disclosure under the Right to Financial
Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title
18, United States Code, including procedures for extensions
of such delays or prohibitions, shall be available to the
Commission, provided that, notwithstanding any provision
therein--
``(1) a court may issue an order delaying notification or
prohibiting disclosure (including extending such an order) in
accordance with the procedures of section 1109 of the Right
to Financial Privacy Act (12 U.S.C. 3409) (if notification
would otherwise be required under that Act), or section 2705
of title 18, United States Code, (if notification would
otherwise be required under chapter 121 of that title), if
the presiding judge or magistrate judge finds that there is
reason to believe that such notification or disclosure may
cause an adverse result as defined in subsection (g) of this
section; and
``(2) if notification would otherwise be required under
chapter 121 of title 18, United States Code, the Commission
may delay notification (including extending such a delay)
upon the execution of a written certification in accordance
with the procedures of section 2705 of that title if the
Commission finds that there is reason to believe that
notification may cause an adverse result as defined in
subsection (g) of this section.
``(c) Ex Parte Application by Commission.--
``(1) In general.--If neither notification nor delayed
notification by the Commission is required under the Right to
Financial Privacy Act (12 U.S.C. 3401 et seq.) or chapter 121
of title 18, United States Code, the Commission may apply ex
parte to a presiding judge or magistrate judge for an order
prohibiting the recipient of compulsory process issued by the
Commission from disclosing to any other person the existence
of the process, notwithstanding any law or regulation of the
United States, or under the constitution, or any law or
regulation, of any State, political subdivision of a State,
territory of the United States, or the District of Columbia.
The presiding judge or magistrate judge may enter such an
order granting the requested prohibition of disclosure for a
period not to exceed 60 days if there is reason to believe
that disclosure may cause an adverse result as defined in
subsection (g). The presiding judge or magistrate judge may
grant extensions of this order of up to 30 days each in
accordance with this subsection, except that in no event
shall the prohibition continue in force for more than a total
of 9 months.
``(2) Application.--This subsection shall apply only in
connection with compulsory process issued by the Commission
where the recipient of such process is not a subject of the
investigation or proceeding at the time such process is
issued.
``(3) Limitation.--No order issued under this subsection
shall prohibit any recipient from disclosing to a Federal
agency that the recipient has received compulsory process
from the Commission.
``(d) No Liability for Failure To Notify.--If neither
notification nor delayed notification by the Commission is
required under the Right to Financial Privacy Act (12 U.S.C.
3401 et seq.) or chapter 121 of title 18, United States Code,
the recipient of compulsory process issued by the Commission
under this Act shall not be liable under any law or
regulation of the United States, or under the constitution,
or any law or regulation, of any State, political subdivision
of a State, territory of the United States, or the District
of Columbia, or under any contract or other legally
enforceable agreement, for failure to provide notice to any
person that such process has been issued or that the
recipient has provided information in response to such
process. The preceding sentence does not exempt any recipient
from liability for--
``(1) the underlying conduct reported;
``(2) a failure to comply with the record retention
requirements under section 1104(c) of the Right to Financial
Privacy Act (12 U.S.C. 3404), where applicable; or
``(3) any failure to comply with any obligation the
recipient may have to disclose to a
[[Page S9536]]
Federal agency that the recipient has received compulsory
process from the Commission or intends to provide or has
provided information to the Commission in response to such
process.
``(e) Venue and Procedure.--
``(1) In general.--All judicial proceedings initiated by
the Commission under the Right to Financial Privacy Act (12
U.S.C. 3401 et seq.), chapter 121 of title 18, United States
Code, or this section may be brought in the United States
District Court for the District of Columbia or any other
appropriate United States District Court. All ex parte
applications by the Commission under this section related to
a single investigation may be brought in a single proceeding.
``(2) In camera proceedings.--Upon application by the
Commission, all judicial proceedings pursuant to this section
shall be held in camera and the records thereof sealed until
expiration of the period of delay or such other date as the
presiding judge or magistrate judge may permit.
``(f) Section Not to Apply to Antitrust Investigations or
Proceedings.--This section shall not apply to an
investigation or proceeding related to the administration of
Federal antitrust laws or foreign antitrust laws (as defined
in paragraphs (5) and (7), respectively, of section 12 of the
International Antitrust Enforcement Assistance Act of 1994
(15 U.S.C. 6211).
``(g) Adverse Result Defined.--For purposes of this section
the term `adverse result' means--
``(1) endangering the life or physical safety of an
individual;
``(2) flight from prosecution;
``(3) the destruction of, or tampering with, evidence;
``(4) the intimidation of potential witnesses; or
``(5) otherwise seriously jeopardizing an investigation or
proceeding related to fraudulent or deceptive commercial
practices or persons involved in such practices, or unduly
delaying a trial related to such practices or persons
involved in such practices, including, but not limited to,
by--
``(A) the transfer outside the territorial limits of the
United States of assets or records related to fraudulent or
deceptive commercial practices or related to persons involved
in such practices;
``(B) impeding the ability of the Commission to identify
persons involved in fraudulent or deceptive commercial
practices, or to trace the source or disposition of funds
related to such practices; or
``(C) the dissipation, fraudulent transfer, or concealment
of assets subject to recovery by the Commission.''.
(b) Conforming Amendment.--Section 16(a)(2) of the Federal
Trade Commission Act (15 U.S.C. 56(a)(2)) is amended--
(1) in subparagraph (C) by striking ``or'' after the
semicolon;
(2) in subparagraph (D) by inserting ``or'' after the
semicolon; and
(3) by inserting after subparagraph (D) the following:
``(E) under section 21A of this Act;''.
SEC. 8. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION.
The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is
further amended by adding after section 21A (as added by
section 7 of this Act) the following:
``SEC. 21B. PROTECTION FOR VOLUNTARY PROVISION OF
INFORMATION.
``(a) In General.--
``(1) No liability for providing certain material.--An
entity described in paragraphs (2) or (3) of subsection (d)
that voluntarily provides material to the Commission that
such entity reasonably believes is relevant to--
``(A) a possible unfair or deceptive act or practice, as
defined in section 5(a) of this Act; or
``(B) assets subject to recovery by the Commission,
including assets located in foreign jurisdictions;
shall not be liable to any person under any law or regulation
of the United States, or under the constitution, or any law
or regulation, of any State, political subdivision of a
State, territory of the United States, or the District of
Columbia, for such provision of material or for any failure
to provide notice of such provision of material or of
intention to so provide material.
``(2) Limitations.--Nothing in this subsection shall be
construed to exempt any such entity from liability--
``(A) for the underlying conduct reported; or
``(B) to any Federal agency for providing such material or
for any failure to comply with any obligation the entity may
have to notify a Federal agency prior to providing such
material to the Commission.
``(b) Certain Financial Institutions.--An entity described
in paragraph (1) of subsection (d) shall, in accordance with
section 5318(g)(3) of title 31, United States Code, be exempt
from liability for making a voluntary disclosure to the
Commission of any possible violation of law or regulation,
including--
``(1) a disclosure regarding assets, including assets
located in foreign jurisdictions--
``(A) related to possibly fraudulent or deceptive
commercial practices;
``(B) related to persons involved in such practices; or
``(C) otherwise subject to recovery by the Commission; or
``(2) a disclosure regarding suspicious chargeback rates
related to possibly fraudulent or deceptive commercial
practices.
``(c) Consumer Complaints.--Any entity described in
subsection (d) that voluntarily provides consumer complaints
sent to it, or information contained therein, to the
Commission shall not be liable to any person under any law or
regulation of the United States, or under the constitution,
or any law or regulation, of any State, political subdivision
of a State, territory of the United States, or the District
of Columbia, for such provision of material or for any
failure to provide notice of such provision of material or of
intention to so provide material. This subsection shall not
provide any exemption from liability for the underlying
conduct.
``(d) Application.--This section applies to the following
entities, whether foreign or domestic:
``(1) A financial institution as defined in section 5312 of
title 31, United States Code.
``(2) To the extent not included in paragraph (1), a bank
or thrift institution, a commercial bank or trust company, an
investment company, a credit card issuer, an operator of a
credit card system, and an issuer, redeemer, or cashier of
travelers' checks, money orders, or similar instruments.
``(3) A courier service, a commercial mail receiving
agency, an industry membership organization, a payment system
provider, a consumer reporting agency, a domain name
registrar or registry acting as such, and a provider of
alternative dispute resolution services.
``(4) An Internet service provider or provider of telephone
services.''.
SEC. 9. STAFF EXCHANGES.
The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is
amended by adding after section 25 the following new section:
``SEC. 25A. STAFF EXCHANGES.
``(a) In General.--The Commission may--
``(1) retain or employ officers or employees of foreign
government agencies on a temporary basis as employees of the
Commission pursuant to section 2 of this Act or section 3101
or section 3109 of title 5, United States Code; and
``(2) detail officers or employees of the Commission to
work on a temporary basis for appropriate foreign government
agencies.
``(b) Reciprocity and Reimbursement.--The staff
arrangements described in subsection (a) need not be
reciprocal. The Commission may accept payment or
reimbursement, in cash or in kind, from a foreign government
agency to which this section is applicable, or payment or
reimbursement made on behalf of such agency, for expenses
incurred by the Commission, its members, and employees in
carrying out such arrangements.
``(c) Standards of Conduct.--A person appointed under
subsection (a)(1) shall be subject to the provisions of law
relating to ethics, conflicts of interest, corruption, and
any other criminal or civil statute or regulation governing
the standards of conduct for Federal employees that are
applicable to the type of appointment.''.
SEC. 10. INFORMATION SHARING WITH FINANCIAL REGULATORS.
Section 1112(e) of the Right to Financial Privacy Act of
1978 (12 U.S.C. 3412(e)) is amended by inserting ``the
Federal Trade Commission,'' after ``the Securities and
Exchange Commission,''.
SEC. 11. AUTHORITY TO ACCEPT REIMBURSEMENTS, GIFTS, AND
VOLUNTARY AND UNCOMPENSA TED SERVICES.
The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is
amended--
(1) by redesignating section 26 as section 28; and
(2) by inserting after section 25A, as added by section 9
of this Act, the following:
``SEC. 26. REIMBURSEMENT OF EXPENSES.
``The Commission may accept payment or reimbursement, in
cash or in kind, from a domestic or foreign law enforcement
agency, or payment or reimbursement made on behalf of such
agency, for expenses incurred by the Commission, its members,
or employees in carrying out any activity pursuant to a
statute administered by the Commission without regard to any
other provision of law. Any such payments or reimbursements
shall be considered a reimbursement to the appropriated funds
of the Commission.
``SEC. 27. GIFTS AND VOLUNTARY AND UNCOMPENSATED SERVICES.
``(a) In General.--In furtherance of its functions the
Commission may accept, hold, administer, and use
unconditional gifts, donations, and bequests of real,
personal, and other property and, notwithstanding section
1342 of 10 title 31, United States Code, accept voluntary and
uncompensated services.
``(b) Limitations.--
``(1) Conflicts of interest.--The Commission shall
establish written guidelines setting forth criteria to be
used in determining whether the acceptance, holding,
administration, or use of a gift, donation, or bequest
pursuant to subsection (a) would reflect unfavorably upon the
ability of the Commission or any employee to carry out its
responsibilities or official duties in a fair and objective
manner, or would compromise the integrity or the appearance
of the integrity of its programs or any official involved in
those programs.
``(2) Voluntary services.--A person who provides voluntary
and uncompensated service under subsection (a) shall be
considered a Federal employee for purposes of--
``(A) chapter 81 of title 5, United States Code, (relating
to compensation for injury); and
``(B) the provisions of law relating to ethics, conflicts
of interest, corruption, and any
[[Page S9537]]
other criminal or civil statute or regulation governing the
standards of conduct for Federal employees.
``(3) Tort liability of volunteers.--A person who provides
voluntary and uncompensated service under subsection (a),
while assigned to duty, shall be deemed a volunteer of a
nonprofit organization or governmental entity for purposes of
the Volunteer Protection Act of 1997 (42 U.S.C. 14501 et
seq.). Subsection (d) of section 4 of such Act (42 U.S.C.
14503(d)) shall not apply for purposes of any claim against
such volunteer.''.
SEC. 12. PRESERVATION OF EXISTING AUTHORITY.
The authority provided by this Act, and by the Federal
Trade Commission Act (15 U.S.C. 41 et seq.) and the Right to
Financial Privacy Act (12 U.S.C. 3401 et seq.), as such Acts
are amended by this Act, is in addition to, and not in lieu
of, any other authority vested in the Federal Trade
Commission or any other officer of the United States.
SEC. 13. REPORT.
Not later than 3 years after the date of enactment of this
Act, the Federal Trade Commission shall transmit to Congress
a report describing its use of and experience with the
authority granted by this Act, along with any recommendations
for additional legislation. The report shall include--
(1) the number of cross-border complaints received by the
Commission;
(2) identification of the foreign agencies to which the
Commission has provided nonpublic investigative information
under this Act;
(3) the number of times the Commission has used compulsory
process on behalf of foreign law enforcement agencies
pursuant to section 6 of the Federal Trade Commission Act (15
U.S.C. 46), as amended by section 4 of this Act;
(4) a list of international agreements and memoranda of
understanding executed by the Commission that relate to this
Act;
(5) the number of times the Commission has sought delay of
notice pursuant to section 21A of the Federal Trade
Commission Act, as added by section 7 of this Act, and the
number of times a court has granted a delay;
(6) a description of the types of information private
entities have provided voluntarily pursuant to section 21B of
the Federal Trade Commission Act, as added by section 8 of
this Act;
(7) a description of the results of cooperation with
foreign law enforcement agencies under section 21 of the
Federal Trade Commission Act (15 U.S.C. 57-2) as amended by
section 6 of this Act;
(8) an analysis of whether the lack of an exemption from
the disclosure requirements of section 552 of title 5, United
States Code, with regard to information or material
voluntarily provided relevant to possible unfair or deceptive
acts or practices, has hindered the Commission in
investigating or engaging in enforcement proceedings against
such practices; and
(9) a description of Commission litigation brought in
foreign courts.
____________________