[Congressional Record Volume 152, Number 63 (Friday, May 19, 2006)]
[Senate]
[Pages S4837-S4842]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. BUNNING:
S. 2884. A bill to facilitate and expedit direct refunds to coal
producers and exporters of the excise tax unconstitutionally imposed on
coal exported from the United States; to the Committee on Finance.
Mr. BUNNING. Mr. President, today I rise to introduce legislation
that will ensure fair tax treatment for domestic coal producers and
coal exporters to help them receive the coal excise tax refunds due to
them from an unconstitutional tax they paid.
For years the Federal Government collected the coal excise tax on
coal exports from coal producers and coal exporters. In 1998, the
Federal Courts declared the coal excise tax unconstitutional when
applied to exported coal.
Although those that export coal are entitled to the refunds of the
unconstitutional coal excise tax on exported coal, they face serious
and significant obstacles to obtaining refunds of the tax with the
Internal Revenue Service and the courts.
This legislation will end unnecessary litigation on this issue and
simplify the IRS process that U.S. coal producers and exporters use to
obtain refunds of the coal excise tax they paid. It also will ensure
that the producer or exporter that actually exported the coal, and thus
is entitled to the refund, receives that refund.
I urge my colleagues to join me in support of this legislation.
______
Mr. GRASSLEY (for himself and Mr. Baucus):
S. 2913. A bill to amend the Internal Revenue Code of 1986 to clarify
the employment tax treatment and reporting of wages paid by
professional employer organizations; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, today, Senator Baucus and I are
introducing legislation that will update and clarify the tax rules for
business clients and that use professional employer organizations,
PEOs. This legislation will improve the efficiency of small businesses
by eliminating any uncertainty about the ability of qualifying PEOs to
assume liability for paying wages and collecting and remitting Federal
employment taxes.
Business owners are overwhelmed with the challenges of meeting
Federal and State employment and tax responsibilities. Many businesses,
particularly small to mid-sized businesses are turning to professional
employer organizations for assistance with these employment
obligations. A PEO works with its business clients to provide
comprehensive employment services. The PEO assumes responsibility for
the management of human resources, employee benefits, payroll, and
workers' compensation, allowing their business clients to focus on
their core competencies to maintain and grow their bottom line. In
short, this legislation is about improving the efficiency of America's
small businesses.
Businesses today need help with the increasingly complex employment
related matters. The most important of these matters is the payment of
wages and the collection and remitting of employment taxes.
Increasingly, businesses are turning to PEOs to assume these
responsibilities. Our legislation will eliminate any ambiguity about a
PEO's ability to assume employment tax responsibility while providing
important safeguards for the PEO's small business clients.
Tbe Small Business Efficiency Act will permit PEOs that are certified
by the IRS, CPEO, to collect and remit Federal employment taxes of
their business clients' employees. The certification process is
voluntary and was designed with significant input from all
stakeholders, including the Department of the Treasury and the IRS. To
be certified by the IRS, the CPEO would have to meet financial and
other standards and maintain ongoing certification by the IRS. The CPEO
would be required to assume full and sole responsibility for the
collection of Federal employment taxes.
In addition to the many benefits for business clients, the government
benefits from improved employment regulatory compliance and tax
administration The IRS has stated that CPEOs would facilitate tax
administration by reducing the number of returns it processes and by
reducing errors in calculating and paying employment taxes. This is a
win-win situation. The PEO arrangement not only reduces the
governmental burden of collecting employment tax and unemployment
compensation obligations, it also assures consistent compliance with
complex tax laws and timely and expedited payment of taxes. This is
clearly an improvement for PEOs, the business clients of PEOs, and the
Federal Government.
The Small Business Efficiency Act will substantially simplify
employment tax obligations for businesses that use PEOs. The
legislation will provide clarity for PEOs, their business clients, and
the IRS regarding the rights of a PEO to assist business client with
employment tax responsibilities while significantly improving tax
administration. I ask unanimous consent that the text of the bill and a
section-by-section description of the bill be printed in the
Congressional Record and I look forward to working with my colleagues
to address this issue in a timely manner.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2913
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 Efficiency
Act of 2006''.
[[Page S4838]]
SEC. 2. NO INFERENCE.
Nothing contained in this Act or the amendments made by
this Act shall be construed to create any inference with
respect to the determination of who is an employee or
employer--
(1) for Federal tax purposes (other than the purposes set
forth in the amendments made by section 3), or
(2) for purposes of any other provision of law.
SEC. 3. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.
(a) Employment Taxes.--Chapter 25 of the Internal Revenue
Code of 1986 (relating to general provisions relating to
employment taxes) is amended by adding at the end the
following new section:
``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.
``(a) General Rules.--For purposes of the taxes, and other
obligations, imposed by this subtitle--
``(1) a certified professional employer organization shall
be treated as the employer (and no other person shall be
treated as the employer) of any work site employee performing
services for any customer of such organization, but only with
respect to remuneration remitted by such organization to such
work site employee, and
``(2) the exemptions and exclusions which would (but for
paragraph (1)) apply shall apply with respect to such taxes
imposed on such remuneration.
``(b) Successor Employer Status.--For purposes of sections
3121(a) and 3306(b)(1)--
``(1) a certified professional employer organization
entering into a service contract with a customer with respect
to a work site employee shall be treated as a successor
employer and the customer shall be treated as a predecessor
employer during the term of such service contract, and
``(2) a customer whose service contract with a certified
professional employer organization is terminated with respect
to a work site employee shall be treated as a successor
employer and the certified professional employer organization
shall be treated as a predecessor employer.
``(c) Liability With Respect to Work Site Employees.--
``(1) General rules.--Solely for purposes of its liability
for the taxes, and other obligations, imposed by this
subtitle--
``(A) the certified professional employer organization
shall be treated as the employer of any individual (other
than a work site employee or a person described in subsection
(e)) who is performing services covered by a contract meeting
the requirements of section 7705(e)(2), but only with respect
to remuneration remitted by such organization to such
individual, and
``(B) the exemptions and exclusions which would (but for
subparagraph (A)) apply shall apply with respect to such
taxes imposed on such remuneration.
``(d) Special Rule for Related Party.--Subsection (a) shall
not apply in the case of a customer which bears a
relationship to a certified professional employer
organization described in section 267(b) or 707(b). For
purposes of the preceding sentence, such sections shall be
applied by substituting `10 percent' for `50 percent'.
``(e) Special Rule for Certain Individuals.--For purposes
of the taxes imposed under this subtitle, an individual with
net earnings from self-employment derived from the customer's
trade or business (including a partner in a partnership that
is a customer) is not a work site employee with respect to
remuneration paid by a certified professional employer
organization.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Certified Professional Employer Organization Defined.--
Chapter 79 of such Code (relating to definitions) is amended
by adding at the end the following new section:
``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.
``(a) In General.--For purposes of this title, the term
`certified professional employer organization' means a person
who applies to be treated as a certified professional
employer organization for purposes of section 3511 and who
has been certified by the Secretary as meeting the
requirements of subsection (b).
``(b) Certification.--A person meets the requirements of
this subsection if such person--
``(1) demonstrates that such person (and any owner,
officer, and such other persons as may be specified in
regulations) meets such requirements as the Secretary shall
establish with respect to tax status, background, experience,
business location, and annual financial audits,
``(2) represents that it will satisfy the bond and
independent financial review requirements of subsections (c)
on an ongoing basis,
``(3) represents that it will satisfy such reporting
obligations as may be imposed by the Secretary,
``(4) computes its taxable income using an accrual method
of accounting unless the Secretary approves another method,
``(5) agrees to verify the continuing accuracy of
representations and information which was previously provided
on such periodic basis as the Secretary may prescribe, and
``(6) agrees to notify the Secretary in writing of any
change that materially affects the continuing accuracy of any
representation or information which was previously made or
provided.
``(c) Requirements.--
``(1) In general.--An organization meets the requirements
of this paragraph if such organization--
``(A) meets the bond requirements of paragraph (2), and
``(B) meets the independent financial review requirements
of paragraph (3).
``(2) Bond.--
``(A) In general.--A certified professional employer
organization meets the requirements of this paragraph if the
organization has posted a bond for the payment of taxes under
subtitle C (in a form acceptable to the Secretary) in an
amount at least equal to the amount specified in subparagraph
(B).
``(B) Amount of bond.--For the period April 1 of any
calendar year through March 31 of the following calendar
year, the amount of the bond required is equal to the greater
of--
``(i) 5 percent of the organization's liability under
section 3511 for taxes imposed by subtitle C during the
preceding calendar year (but not to exceed $1,000,000), or
``(ii) $50,000.
``(3) Independent financial review requirements.--A
certified professional employer organization meets the
requirements of this paragraph if such organization--
``(A) has, as of the most recent audit date, caused to be
prepared and provided to the Secretary (in such manner as the
Secretary may prescribe) an opinion of an independent
certified public accountant as to whether the certified
professional employer organization's financial statements are
presented fairly in accordance with generally accepted
accounting principles, and
``(B) provides, not later than the last day of the second
month beginning after the end of each calendar quarter, to
the Secretary from an independent certified public accountant
an assertion regarding Federal employment tax payments and an
examination level attestation on such assertion.
Such assertion shall state that the organization has withheld
and made deposits of all taxes imposed by chapters 21, 22,
and 24 of the Internal Revenue Code in accordance with
regulations imposed by the Secretary for such calendar
quarter and such examination level attestation shall state
that such assertion is fairly stated, in all material
respects.
``(4) Controlled group rules.--For purposes of the
requirements of paragraphs (2) and (3), all professional
employer organizations that are members of a controlled group
within the meaning of sections 414(b) and (c) shall be
treated as a single organization.
``(5) Failure to file assertion and attestation.--If the
certified professional employer organization fails to file
the assertion and attestation required by paragraph (3) with
respect to any calendar quarter, then the requirements of
paragraph (3) with respect to such failure shall be treated
as not satisfied for the period beginning on the due date for
such attestation.
``(6) Audit date.--For purposes of paragraph (3)(A), the
audit date shall be six months after the completion of the
organization's fiscal year.
``(d) Suspension and Revocation Authority.--The Secretary
may suspend or revoke a certification of any person under
subsection (b) for purposes of section 3511 if the Secretary
determines that such person is not satisfying the
representations or requirements of subsections (b) or (c), or
fails to satisfy applicable accounting, reporting, payment,
or deposit requirements.
``(e) Work Site Employee.--For purposes of this title--
``(1) In general.--The term `work site employee' means,
with respect to a certified professional employer
organization, an individual who--
``(A) performs services for a customer pursuant to a
contract which is between such customer and the certified
professional employer organization and which meets the
requirements of paragraph (2), and
``(B) performs services at a work site meeting the
requirements of paragraph (3).
``(2) Service contract requirements.--A contract meets the
requirements of this paragraph with respect to an individual
performing services for a customer if such contract is in
writing and provides that the certified professional employer
organization shall--
``(A) assume responsibility for payment of wages to the
individual, without regard to the receipt or adequacy of
payment from the customer for such services,
``(B) assume responsibility for reporting, withholding, and
paying any applicable taxes under subtitle C, with respect to
the individual's wages, without regard to the receipt or
adequacy of payment from the customer for such services,
``(C) assume responsibility for any employee benefits which
the service contract may require the certified professional
employer organization to provide, without regard to the
receipt or adequacy of payment from the customer for such
services,
``(D) assume responsibility for hiring, firing, and
recruiting workers in addition to the customer's
responsibility for hiring, firing and recruiting workers,
``(E) maintain employee records relating to the individual,
and
``(F) agree to be treated as a certified professional
employer organization for purposes of section 3511 with
respect to such individual.
``(3) Work site coverage requirement.--The requirements of
this paragraph are met
[[Page S4839]]
with respect to an individual if at least 85 percent of the
individuals performing services for the customer at the work
site where such individual performs services are subject to 1
or more contracts with the certified professional employer
organization which meet the requirements of paragraph (2)
(but not taking into account those individuals who are
excluded employees within the meaning of section 414(q)(5)).
``(f) Determination of Employment Status.--Except to the
extent necessary for purposes of section 3511, nothing in
this section shall be construed to affect the determination
of who is an employee or employer for purposes of this title.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(c) Conforming Amendments.--
(1) Section 45B of such Code (relating to credit for
portion of employer social security taxes paid with respect
to employees with cash tips) is amended by adding at the end
the following new subsection:
``(e) Certified Professional Employer Organizations.--For
purposes of this section, in the case of a certified
professional employer organization which is treated under
section 3511 as the employer of a work site employee who is a
tipped employee--
``(1) the credit determined under this section shall not
apply to such organization but to the customer of such
organization with respect to which the work site employee
performs services, and
``(2) the customer shall take into account any remuneration
and taxes remitted by the certified professional employer
organization.''.
(2) Section 3302 of such Code is amended by adding at the
end the following new subsection:
``(h) Treatment of Certified Professional Employer
Organizations.--If a certified professional employer
organization (as defined in section 7705), or a client of
such organization, makes a payment to the State's
unemployment fund with respect to a work site employee, such
organization shall be eligible for the credits available
under this section with respect to such payment.''.
(3) Section 3303(a) of such Code is amended--
(A) by striking the period at the end of paragraph (3) and
inserting ``; and'' and by inserting after paragraph (3) the
following new paragraph:
``(4) a certified professional employer organization (as
defined in section 7705) is permitted to collect and remit,
in accordance with paragraphs (1), (2), and (3),
contributions during the taxable year to the State
unemployment fund with respect to a work site employee.'',
and
(B) in the last sentence--
(i) by striking ``paragraphs (1), (2), and (3)'' and
inserting ``paragraphs (1), (2), (3), and (4)'', and
(ii) by striking ``paragraph (1), (2), or (3)'' and
inserting ``paragraph (1), (2), (3), or (4)''.
(4) Section 6053(c) of such Code (relating to reporting of
tips) is amended by adding at the end the following new
paragraph:
``(8) Certified professional employer organizations.--For
purposes of any report required by this section, in the case
of a certified professional employer organization that is
treated under section 3511 as the employer of a work site
employee, the customer with respect to whom a work site
employee performs services shall be the employer for purposes
of reporting under this section and the certified
professional employer organization shall furnish to the
customer any information necessary to complete such reporting
no later than such time as the Secretary shall prescribe.''.
(d) Clerical Amendments.--
(1) The table of sections for chapter 25 of such Code is
amended by adding at the end the following new item:
``Sec. 3511. Certified professional employer organizations.''.
(2) The table of sections for chapter 79 of such Code is
amended by inserting after the item relating to section 7704
the following new item:
``Sec. 7705. Certified professional employer organizations.''.
(e) Reporting Requirements and Obligations.--The Secretary
of the Treasury shall develop such reporting and
recordkeeping rules, regulations, and procedures as the
Secretary determines necessary or appropriate to ensure
compliance with the amendments made by this Act with respect
to entities applying for certification as certified
professional employer organizations or entities that have
been so certified. Such rules shall be designed in a manner
which streamlines, to the extent possible, the application of
requirements of such amendments, the exchange of information
between a certified professional employer organization and
its customers, and the reporting and recordkeeping
obligations of the certified professional employer
organization.
(f) User Fees.--Subsection (b) of section 7528 of such Code
(relating to Internal Revenue Service user fees) is amended
by adding at the end the following new paragraph:
``(4) Certified professional employer organizations.--The
fee charged under the program in connection with the
certification by the Secretary of a professional employer
organization under section 7705 shall not exceed $500.''.
(g) Effective Dates.--
(1) In general.--The amendments made by this Act shall take
effect on the January 1st of the first calendar year
beginning more than 12 months after the date of the enactment
of this Act.
(2) Certification program.--The Secretary of the Treasury
shall establish the certification program described in
section 7705(b) of the Internal Revenue Code of 1986 not
later than 6 months before the effective date determined
under paragraph (1).
____
The Small Business Efficiency Act
Section-By-Section Description
Section 1. Short Title: The Small Business Efficiency Act.
Section 2. No Inference Language: The legislation is
narrowly drafted to provide expressly that except for the
payment of employment taxes as provided in the bill, there is
no inference regarding the determination of who is a common
law employer under Federal tax laws or who is an employer
under other provisions of the law.
Section 3. Certified Organizations: Creates a voluntary
certification program for Professional Employer Organizations
(CPEOs) by establishing basic requirements which must be met
in order to be certified by the Internal Revenue Service
(IRS).
Section 3(a) describes the responsibility of the CPEO with
respect to the covered workers performing services at its
business client's worksite, with the CPEO being treated as
the employer of those covered workers for employment tax
purposes. This section provides that after certification, a
CPEO assume the responsibility and liability for payment of
wages and collection of Federal employment taxes for covered
workers. This section also provides that a CPEO and its
clients will be treated as ``successor'' employers for
employment tax purposes with no additional taxes owed simply
because a client engages or disengages a CPEO. Finally, the
section imposes rules that prevent abuse.
Section 3(b) describes certification requirements which a
PEO must demonstrate to the IRS by written application. As
established by the Secretary of the Treasury, these could
include requirements with respect to tax status, background,
experience, business location, and annual financial audits,
as well as verification of the continuing accuracy of
representations and information on a periodic basis. In
addition, this section requires CPEOs to obtain financial
reviews from independent CPAs and to post a bond for the
payment of employment taxes. A worksite employee is a worker
who performs services at the CPEO's business client worksite
if the worker and at least 85% of the individuals working at
the worksite are covered by a written service contract that
provides the CPEO will (1) assume responsibility for payment,
reporting and withholding of wages, employment taxes and
employee benefits, without regard to the adequacy of payment
by the client business. The service contract would also be
required to expressly provide that the CPEO assumes shared
responsibility with the business client for firing the worker
or hiring or recruiting any new worker and for maintaining
employee records.
Section 3(c) provides conforming amendments with respect to
certain credits and reporting rules.
Section 3(d) makes certain clerical amendments.
Section 3(e) creates regulatory authority to develop
appropriate reporting and recordkeeping rules.
Section 3(f) authorizes the creation of a CPEO
certification user fee not to exceed $500.
Section 3(g) provides that the provisions of the Act will
take effect on January 1 of the first calendar year beginning
more than 12 months after the date of enactment. This section
further requires the Secretary of the Treasury to establish
the certification program not later than 6 months following
the effective date.
______
By Mr. BIDEN:
S. 2915. A bill to amend title 10, United States Code, to improve
screening for colorectal cancer for TRICARE beneficiaries over the age
of 50; to the Committee on Armed Services.
Mr. BIDEN. Mr. President, today I am pleased to introduce a simple
bill that would give military dependents and retirees the same choices
for colon cancer screening that every Medicare beneficiary and every
Federal employee enjoys. This legislation requires Tricare to abandon
its overly restrictive and outdated policy of limiting coverage of
screening colonoscopy to a small group of high-risk individuals. By
contrast, for several years both Medicare and the Federal Employees
Health Benefits Program have paid for screening colonoscopy to detect
cancer in average-risk people, and my bill simply applies this same
standard to the Tricare program.
Why is this bill so important? Colon cancer is highly curable when
detected and treated early but extremely lethal when it reaches an
advanced stage. Early detection and prompt treatment are the keys to
surviving colon cancer. Among those whose colon cancer has been cured
by modern diagnostic and treatment methods are President Reagan,
Supreme Court Justice Ginsburg, and our colleague Senator Burns, to
name just a few.
[[Page S4840]]
Why is access to colonoscopy so critical? At present,
gastroenterologists overwhelmingly recommend colonoscopy as the
preferred method to use for screening of colon cancer in average risk
individuals over 50. Colonoscopy is more sensitive than other methods
of screening in detecting colonic neoplasia, pre-cancerous changes or
full-blown cancers, at an early stage; colonoscopy is more reliable in
finding colonic neoplasia in the upper \2/3\ of the colon; and
colonoscopy permits biopsy and removal of abnormal tissue as soon as it
is discovered, in a single procedure. In fact, medical specialists
refer to colonoscopy as the ``gold standard'' for colon cancer
screening.
Since, 2001, the Medicare Program has permitted the use of
colonoscopy to screen for colon cancer in ``average risk'' individuals,
and the Federal Employees Health Benefits Program has used the same
criteria since 2003. But the Tricare medical program for military
beneficiaries clings to an outmoded policy that authorizes screening
colonoscopy to detect colon cancer only for only a very narrowly
defined group of ``high risk'' people, not the much broader group of
``average risk'' individuals covered by the Medicare and FEHBP
programs. By failing to keep up with modern medical practice, as well
as with other federal health programs, Tricare seems to be
inappropriately restricting access to a potentially lifesaving tool for
early cancer detection. The resulting unnecessary delay in detection of
colon cancer puts our military community at needless risk.
To remedy this situation, my bill requires the Tricare program to use
the same criteria as the Medicare program in paying for screening
colonoscopy. My bill does not mandate that screening colonoscopy be
used for colon cancer detection in Tricare beneficiaries; that decision
is left to Tricare patients and their doctors. Rather, this legislation
simply affords Tricare participants the same options that Federal
employees and Medicare beneficiaries have enjoyed for some time.
Frankly, I see no logical reason why those who have served our
country in uniform for over 20 years, and the family members of those
currently on active duty, should not have access to the same high-
quality medical choices offered to our senior citizens and to our
Federal workers. The policy on colon cancer screening that has worked
well for 42 million Medicare beneficiaries and 9 million FEHBP
participants, a policy that is endorsed by most medical specialists,
seems totally appropriate for the Tricare population. It is time to
bring the Tricare program's colon cancer screening criteria into the
21st century.
Mr. President, I encourage my colleagues to join me in supporting
this commonsense legislation
______
By Ms. SNOWE (for herself, Mr. Dorgan, Mr. Inouye, Mr. Wyden, Mr.
Leahy, Mrs. Boxer, Mr. Obama, and Mrs. Clinton):
S. 2917. A bill to amend the Communications Act of 1934 to ensure net
neutrality; to the Committee on Commerce, Science, and Transportation.
Ms. SNOWE. Mr. President, I rise today to introduce legislation that
will preserve the open, unrestricted nature of the Internet. I want to
thank my colleagues, Senator Dorgan and Senator Inouye, with whom I
have worked closely to draft this bill. I also want to acknowledge
Senator Wyden, who has introduced similar net neutrality legislation,
for his leadership on this issue.
Having risen from its humble beginnings as an obscure tool for a few
tech-savvy enthusiasts, the Internet now stands as the epicenter of
commerce today. An April 2006 Pew Internet study cites that 73 percent
of adults in the U.S. now use the Internet, 45 percent of whom use it
for making major financial decisions. Last year alone, over $1.7
trillion in transactions took place on the Internet, and today 725,000
small businesses use e-commerce giant eBay as a way to reach customers.
Because anyone, anywhere, can communicate and transact business with
virtually any corner of the globe with an Internet connection, the
benefits of the Internet on small businesses--and on rural places like
my home State of Maine--cannot be overstated.
The Internet became a robust engine of economic development by
enabling anyone with a good idea to connect to consumers and compete on
a level playing field for consumers' business. Anyone can send an e-
mail or set up a Web site at little or no cost, and the marketplace has
picked winners and losers, rather than an arbitrary gatekeeper.
When users log onto the Internet, they take a lot of things for
granted. They assume that they will be able to access whatever Web site
they want, when they want to--and if they have a broadband connection,
they expect this to happen at a high speed, regardless of what Web site
they choose. They also assume that they can use any feature they like,
anytime they choose--watching online videos, searching for information,
making purchases, and sending e-mails and instant messages. They assume
that they can attach devices to make their online experience better--
things such as Web cameras, game controllers, or extra hard drives.
What they are assuming is called ``net neutrality,'' the principle at
the core of the Internet's DNA. The idea is that the Internet should be
open and free, restricted by no one.
Unfortunately, all this may change very soon if Congress does not
take action. In August 2005, the Federal Communications Commission
issued an order removing virtually all regulation of Internet
facilities that connect homes and businesses to the World Wide Web.
Among the regulations lifted were the long-standing non-discrimination
rules that required the owners of Internet facilities networks--in most
cases cable and telephone companies--to allow delivery of all Internet
content to the end user at the same speed, refraining from blocking any
Web sites. These long-standing rules have enabled small businesses in
Maine and across the country to have the same access to customers as
giant corporations. Yet without the protections of the legislation we
introduce today, those small businesses may be reduced to second-class
citizen status on the Web.
Telephone and cable companies supply broadband Internet service to 98
percent of Internet subscribers in this country. Recently, executives
from several of the largest of these firms publicly indicated their
intention to charge fees to Web site operators before giving them
access to their highspeed lines, and relegate those who do not pay up
to the slower transmission lines. A Web site owned by a company who is
a competitor could even be blocked entirely.
Anyone who has sat frustrated at a computer screen waiting for a file
to download knows what this means for the those Web site owners not
willing to pay up: their sites and applications will run at a slower
pace, thus turning away consumers. These Internet companies, e-mail
services, and Web site owners will be relegated to the Information
``Dirt Road''--the Information Superhighway will be reserved for those
companies who are willing to pay the toll. Worst of all, consumers and
businesses who rely on these Internet services will be completely
powerless, since it is beyond their control as to which Web site owners
are willing to pay the fees.
The legislation we introduce today keeps the rules where they always
have been, until last year. First, the bill bars network operators from
blocking, degrading or impairing Internet traffic. Second, the bill
ensures that network operators are not allowed to create a two-tiered
Internet--an Internet that treats those who can afford to do business
with large nationwide broadband providers more favorably than those who
do not. Virtually everyone has called for more widespread deployment of
broadband facilities: this bill ensures that those high-speed networks
are available for all users of the Internet.
This legislation already enjoys support from a broad spectrum of
groups who care about Internet freedom, such as the Consumer's Union,
the Parent's Television Council, the Gun Owners of America, the
American Library Association, and the Christian Coalition. Altogether
over 140 organizations have backed our efforts to prevent
discrimination the Internet.
If we allow companies to set up tollbooths along the Information
Superhighway, we will fundamentally alter every Internet user's
experience and stifle the entrepreneurship that flourishes on the
world's last remaining
[[Page S4841]]
frontier. Network operators should not have the power to decide which
Web pages load faster, which content their customers can access, and
whose data has the highest priority. Network operators already enjoy
near-monopolistic privileges in many markets across the country. Should
this market power now be extended to messaging services, streaming
video, or online shopping, just to name a few?
Consumers should decide which businesses succeed and which fail, not
network providers. What has made the Internet such a remarkable success
is the ability of consumers everywhere to use the connection they pay
for to experience a world of their own choosing on their own terms.
Earlier this month, the New York Times endorsed the legislation in an
editorial when it called for ``a strong net neutrality bill that would
prohibit broadband providers from creating a two-tiered Internet.
Senators who care about the Internet and Internet users should get
behind it.'' I hope my colleagues join me in supporting the Internet
Freedom Preservation Act.
Mr. DORGAN. Mr. President, today my colleague Senator Snowe and I are
introducing the Internet Freedom Preservation Act.
Internet freedom, known as net neutrality, is one of the most
important issues facing us as the telecommunications landscape
continues to change, and frankly, how this issue is resolved could
determine whether our Nation continues to be a world leader in the area
of innovation and technology.
Consumers, businesses, and the very marketplace of ideas have
benefited from the historically open nature of the Internet.
From the largest of corporations to the person working alone in a
garage, all have had the ability to offer their content, services, and
applications over the Internet and to reach consumers, because of this
open structure of the Internet and the existence of net neutrality
nondiscrimination rules.
I think it is important to point the wide variety of groups that have
called for the preservation of strong net neutrality protections:
groups as diverse as Consumers Union, AARP, Microsoft, Amazon, Gun
Owners of America, and the National Religious Broadcasters, and over
150 organizations or companies so far have weighed in on this important
issue.
The Internet, and the broadband network operators that bring the
Internet to businesses and consumers, have enabled even the most rural
town in my State of North Dakota to be connected to the rest of the
world, and this connection has brought economic opportunities, and
advances in health and education that could otherwise not have been
possible.
Now, however, the open nature of the Internet is at risk. It is at
risk because of actions by the Federal Communications Commission, and
because of the lack of competition in the broadband market.
Non-discrimination rules that existed for years on broadband
providers have been removed, leaving only the marketplace to act as a
check. The problem is, however, that the broadband marketplace is
highly concentrated--98 percent of consumers get their broadband from
either cable modem or DSL, and up to 50 percent of consumers can only
get their broadband from one broadband provider.
Thus, the situation is not a marketplace of players on an equal
footing. Broadband network operators have substantial market power and
the incentive to use it. There have been public statements by some of
their CEOs that have made clear that they intend to use that leverage
to exact payments from content providers and to operate as gatekeepers.
These broadband network operators have become more than just the pipe
that carries content, services, and applications to a consumer; they
now are in the business of these content, services and applications as
well. Thus, they have the leverage, and the incentive to favor their
own services over competition.
Until now the Internet has been driven by consumers and innovators,
which have in turn, encouraged broadband deployment.
Consumers pay for their Internet connection, and expect that they can
go anywhere they lawfully want to on the Internet.
But without maintaining the longstanding nondiscrimination rules that
have been in place for decades, the Internet could go from being driven
by consumers and innovators to bring dictated by network operators.
What will be the impact on the next great application or service over
the Internet if the very first thing the next start-up has to do is
work out an agreement with the broadband provider?
What will be the impact on consumers if their choices are
artificially limited by their broadband providers as to what VOIP or
video service they can get?
I agree that broadband network operators are investing millions of
dollars in building the next generation of infrastructure, and I
commend them for that. Under our bill they will still be able to be
compensated for their investments, as they are now, by charging for
their broadband connections.
But they should not be able to put up additional tolls on the
Internet, or erect barricades to competition that will change the
nature of the Internet as we know it.
Our bill will preserve the freedom and the openness of the Internet
that we have come to take for granted, but that is now at risk.
I ask my colleagues to support this legislation that I introduce
today with Senator Snowe.
Mr. INOUYE. Mr. President, I rise to today in support of the
legislation introduced by my colleagues Senators Snowe and Dorgan to
preserve a founding principle of communications law that is critical to
the promotion of innovation and opportunity for all Americans. The
preservation of the open, non-discriminatory architecture of the
Internet is vital to the American economy and society. Over a
relatively short timeframe, the Internet has become a robust engine for
market innovation, economic growth, social discourse, and the free flow
of ideas precisely because it has allowed consumer choice and control
over the use of lawful content, applications and services. In turn,
anyone with a good idea has been able to connect to consumers and
compete on a level playing field for consumers' business. The
marketplace has picked winners and losers, and not a central
gatekeeper. This bedrock concept of connecting innovators and consumers
without interference, known as ``net neutrality,'' has been a hallmark
feature of the Internet and is a principle reason why America leads the
world in online innovation.
Regrettably, without this legislation that heritage may be at risk as
traditional rules that have required communications operators to follow
principles of non-discrimination no longer apply. In August 2005, the
FCC refused to adopt meaningful and enforceable consumer safeguards at
the time it classified DSL and cable modem as an information service.
As a result, the bill that I have cosponsored with Senators Snowe and
Dorgan is necessary to ensure that consumers and content companies have
the ability to use the Internet without interference or gate-keeping by
the network operators.
This bill responds to recent FCC decisions by preserving the openness
of the Internet and thereby encourages the continued development of
innovative Internet technologies, services, and content that has fueled
the American economy. Specifically, under the bill, consumers will have
the ability to access the content of their choosing, and Internet
businesses will have the ability to compete head-to-head with network
providers on the basis of the merits of their offerings.
As the father of the Internet, Vint Cerf, said to our Committee, the
Internet is ``innovation without permission.'' The proposed legislation
will ensure that the Internet indeed remains a platform that spawns
innovation and economic development for the benefit of all Americans.
______
By Mr. DODD (for himself and Mr. Lott):
S. 2918. A bill to provide access to newspapers for blind or other
persons with disabilities; to the Committee on rules and
Administration.
Mr. DODD. Mr. President, today I am introducing, along with the
distinguished Chairman of the Rules Committee, legislation to ensure
that the blind and those with disabilities continue to have free access
to electronic editions of periodicals and newspapers. This service is
an extension of the existing authorization for the Library of
[[Page S4842]]
Congress to provide Braille books, recordings, sound reproduction
equipment, musical scores, and other materials to the blind and
physically disabled individuals.
Currently, the National Federation of the Blind provides these
services through its NFB-NEWSLINE program which has been funded by the
Library of Congress through its Books for the Blind program. The NFB-
NEWSLINE program is a telephone-based electronic audio newspaper
service serving our Nation's 1.3 million blind Americans by providing
23 million minutes of on-demand service in response to 2,600 calls per
day at an average cost of 2.7 cents per minute.
Congress established the Books for the Blind program within the
Library of Congress in 1931. The program is administered by the
National Library Service for the Blind and Physically Handicapped, NLS,
which continues to be the primary source of Braille and audio books and
magazines for blind adults today. However, until development of the
NFB-NEWSLINE program, it was not economically feasible for NLS to
provide timely access to newspapers for the blind. Under current
production methods, it would require several weeks for NLS to prepare
and deliver a single copy of a daily newspaper.
The NFB-NEWSLINE program, however, is designed for real time rapid
distribution of the electronic text of newspapers. Under this program,
the blind can access daily newspapers on the day of publication through
telephone access to the digital text. The funding for this program has
been provided by a public-private partnership between NFB-NEWSLINE,
state sponsors, including public libraries, rehabilitation agencies,
and several affiliates of NFB, and the Library of Congress. Newspaper
and magazine content is contributed by many participating news
organization and publishers.
The bill Senator Lott and I are introducing today will ensure the
continued Federal share of this partnership so that NFB-NEWSLINE can
continue to serve as the multi-state provider of this service.
Currently, NFB-NEWSLINE provides some level of service to all 50
states, the District of Columbia and Puerto Rico by providing local
dialing numbers for the blind and disabled to use to access newspapers
and periodicals. The annual telecommunications costs for this service
is approximately $750,000 which serves approximately 40 percent of the
eligible readers.
This bill will enable NFB-NEWSLINE to continue to serve existing
readers with improved services while at the same time expanding
services to more readers. The bill authorizes $750,000 for this service
in fiscal year 2007 and such sums as are necessary in fiscal years
2008-2011. This is a very efficient program that for a very small
Federal investment will allow the blind and disabled to more fully
participate in their communities through access to the daily news. With
the current state of technology, it is simply unacceptable that the
blind and disabled do not have real time access to daily newspapers and
periodicals.
I commend NFB-NEWSLINE for developing this public-private partnership
to serve the needs of the blind and disabled individuals and I pleased
to introduce this legislation to ensure the continuation of this
program.
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