[Congressional Record Volume 152, Number 67 (Thursday, May 25, 2006)]
[Senate]
[Pages S5233-S5257]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
______
By Mr. TALENT:
S. 3061. A bill to extend the patent term for the badge of the
American Legion Women's Auxiliary, and for other purposes; to the
Committee on the Judiciary.
Mr. TALENT. Mr. President, I ask unanimous consent that the text of
S. 3061, 3062, and 3063 be printed in the Record.
There being no objection, the text of the bills were ordered to be
printed in the Record, as follows:
S. 3061
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. PATENT TERM EXTENSION FOR THE BADGE OF THE
AMERICAN LEGION WOMEN'S AUXILIARY.
The term of a certain design patent numbered 55,398 (for
the badge of the American Legion Women's Auxiliary) is
renewed and extended for a period of 14 years beginning on
the date of enactment of this Act, with all the rights and
privileges pertaining to such patent.
______
By Mr. TALENT:
S. 3062. A bill to extend the patent term for the badge of the
American Legion, and for other purposes; to the Committee on the
Judiciary.
S. 3062
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. PATENT TERM EXTENSION FOR THE BADGE OF THE
AMERICAN LEGION.
The term of a certain design patent numbered 54,296 (for
the badge of the American Legion) is renewed and extended for
a period of 14 years beginning on the date of enactment of
this Act, with all the rights and privileges pertaining to
such patent.
______
By Mr. TALENT:
S. 3063. A bill to extend the patent term for the badge of the Sons
of the American Legion, and for other purposes; to the Committee on the
Judiciary.
S. 3063
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. PATENT TERM EXTENSION FOR THE BADGE OF THE SONS OF
THE AMERICAN LEGION.
The term of a certain design patent numbered 92,187 (for
the badge of the Sons of the American Legion) is renewed and
extended for a period of 14 years beginning on the date of
enactment of this Act, with all the rights and privileges
pertaining to such patent.
______
By Mr. NELSON of Florida:
S. 3114. A bill to establish a bipartisan commission on insurance
reform; to the Committee on Banking, Housing, and Urban Affairs.
Mr. NELSON of Florida. Mr. President, I ask unanimous consent that
the text of these four bills, the Commission on Catastrophic Disaster
Risk and Insurance Act of 2006, the Catastrophe Savings Accounts Act of
2006, the Policyholder Disaster Protection Act of 2006, and the
Homeowners Protection Act of 2006, be printed in the Record.
There being no objection, the text of the bills was ordered to be
printed in the Record, as follows:
S. 3114
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 ``Commission on Catastrophic
Disaster Risk and Insurance Act of 2006''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Hurricanes Katrina, Rita, and Wilma, which struck the
United States in 2005, caused over $200 billion in total
economic losses, including insured and uninsured losses.
(2) Although private sector insurance is currently
available to spread some catastrophe-related losses
throughout the Nation and internationally, most experts
believe there will be significant insurance and reinsurance
shortages, resulting in dramatic rate increases for consumers
and businesses, and the unavailability of catastrophe
insurance.
(3) The Federal Government has provided and will continue
to provide billions of dollars and resources to pay for
losses from catastrophes, including hurricanes, volcanic
eruptions, tsunamis, tornados, and other disasters, at huge
costs to American taxpayers.
(4) The Federal Government has a critical interest in
ensuring appropriate and fiscally responsible risk management
of catastrophes. Mortgages require reliable property
insurance, and the unavailability of reliable property
insurance would make most real estate transactions
impossible. In addition, the public health, safety, and
welfare demand that structures damaged or destroyed in a
catastrophe be reconstructed as soon as possible. Therefore,
the inability of the private sector insurance and reinsurance
markets to maintain sufficient capacity to enable Americans
to obtain property insurance coverage in the private sector
endangers the national economy and the public health, safety,
and welfare.
(5) Multiple proposals have been introduced in the United
States Congress over the past decade to address catastrophic
risk insurance, including the creation of a national
catastrophic reinsurance fund and the revision of the Federal
tax code to allow insurers to use tax-deferred catastrophe
funds, yet Congress has failed to act on any of these
proposals.
(6) To the extent the United States faces high risks from
catastrophe exposure, essential technical information on
financial structures and innovations in the catastrophe
insurance market is needed.
(7) The most efficient and effective approach to assessing
the catastrophe insurance problem in the public policy
context is to establish a bipartisan commission of experts to
study the management of catastrophic disaster risk, and to
require such commission to timely report its recommendations
to Congress so that Congress can quickly craft a solution to
protect the American people.
SEC. 3. ESTABLISHMENT.
There is established a bipartisan Commission on
Catastrophic Disaster Risk and Insurance (in this Act
referred to as the ``Commission'').
SEC. 4. MEMBERSHIP.
(a) Members.--The Commission shall be composed of the
following:
(1) The Director of the Federal Emergency Management Agency
or a designee of the Director.
(2) The Administrator of the National Oceanic and
Atmospheric Administration or a designee of the
Administrator.
(3) 12 additional members or their designees of whom one
shall be--
(A) a representative of a consumer group;
(B) a representative of a primary insurance company;
(C) a representative of a reinsurance company;
(D) an independent insurance agent with experience in
writing property and casualty insurance policies;
(E) a State insurance regulator;
(F) a State emergency operations official;
(G) a scientist;
(H) a faculty member of an accredited university with
experience in risk management;
(I) a member of nationally recognized think tank with
experience in risk management;
(J) a homebuilder with experience in structural
engineering;
(K) a mortgage lender; and
(L) a nationally recognized expert in antitrust law.
(b) Manner of Appointment.--
(1) In general.--Any member of the Commission described
under subsection (a)(3) shall be appointed only upon
unanimous agreement of--
(A) the majority leader of the Senate;
(B) the minority leader of the Senate;
(C) the Speaker of the House of Representatives; and
(D) the minority leader of the House of Representatives.
(2) Consultation.--In making any appointment under
paragraph (1), each individual described in paragraph (1)
shall consult with the President.
(c) Eligibility Limitation.--Except as provided in
subsection (a), no member or officer of the Congress, or
other member or officer of the Executive Branch of the United
States Government or any State government may be appointed to
be a member of the Commission.
(d) Period of Appointment.--
(1) In general.--Each member of the Commission shall be
appointed for the life of the Commission.
(2) Vacancies.--A vacancy on the Commission shall not
affect its powers, but shall be filled in the same manner as
the original appointment was made.
(e) Quorum.--
(1) Majority.--A majority of the members of the Commission
shall constitute a quorum, but a lesser number may hold
hearings.
(2) Approval actions.--All recommendations and reports of
the Commission required by this Act shall be approved only by
a majority vote of a quorum of the Commission.
(f) Chairperson.--The majority leader of the Senate, the
minority leader of the Senate, the Speaker of the House of
Representatives, and the minority leader of the House of
Representatives shall jointly select 1 member appointed
pursuant to subsection (a) to serve as the Chairperson of the
Commission.
(g) Meetings.--The Council shall meet at the call of its
Chairperson or a majority of its members at any time.
[[Page S5234]]
SEC. 5. DUTIES OF THE COMMISSION.
The Commission shall--
(1) assess--
(A) the condition of the property and casualty insurance
and reinsurance markets in the aftermath of Hurricanes
Katrina, Rita, and Wilma in 2005, and the 4 major hurricanes
that struck the United States in 2004; and
(B) the ongoing exposure of the United States to
earthquakes, volcanic eruptions, tsunamis, and floods; and
(2) recommend and report, as required under section 6, any
necessary legislative and regulatory changes that will--
(A) improve the domestic and international financial health
and competitiveness of such markets; and
(B) assure consumers of the--
(i) availability of adequate insurance coverage when an
insured event occurs; and
(ii) best possible range of insurance products at
competitive prices.
SEC. 6. REPORT.
(a) In General.--Not later than 90 days after the
appointment of Commission members under section 4, the
Commission shall submit to the President and the Congress a
final report containing a detailed statement of its findings,
together with any recommendations for legislation or
administrative action that the Commission considers
appropriate, in accordance with the requirements of section
5.
(b) Considerations.--In developing any recommendations
under subsection (a), the Commission shall consider--
(1) the catastrophic insurance and reinsurance market
structures and the relevant commercial practices in such
insurance industries in providing insurance protection to
different sectors of the American population;
(2) the constraints and opportunities in implementing a
catastrophic insurance system that can resolve key obstacles
currently impeding broader implementation of catastrophe risk
management and financing with insurance;
(3) methods to improve risk underwriting practices,
including--
(A) analysis of modalities of risk transfer for potential
financial losses;
(B) assessment of private securitization of insurances
risks;
(C) private-public partnerships to increase insurance
capacity in constrained markets; and
(D) the financial feasibility and sustainability of a
national catastrophe pool or regional catastrophe pools
designed to provide adequate insurance coverage and increased
underwriting capacity to insurers and reinsurers;
(4) approaches for implementing a public insurance scheme
for low-income communities, in order to promote risk
reduction and explicit insurance coverage in such
communities;
(5) methods to strengthen insurance regulatory requirements
and supervision of such requirements, including solvency for
catastrophic risk reserves;
(6) methods to promote public insurance policies linked to
programs for loss reduction in the uninsured sectors of the
American population;
(7) methods to strengthen the risk assessment and
enforcement of structural mitigation and vulnerability
reduction measures, such as zoning and building code
compliance;
(8) the appropriate role for the Federal Government in
stabilizing the property and casualty insurance and
reinsurance markets, with an analysis--
(A) of options such as--
(i) a reinsurance mechanism;
(ii) the modernization of Federal taxation policies; and
(iii) an ``insurance of last resort'' mechanism; and
(B) how to fund such options; and
(9) the merits of the 3 principle legislative proposals
currently pending in the 109th Congress, namely:
(A) The creation of a Federal catastrophe fund to act as a
backup to State catastrophe funds;
(B) Tax-deferred catastrophe accounts for insurers; and
(C) Tax-free catastrophe accounts for policyholders.
SEC. 7. POWERS OF THE COMMISSION.
(a) Hearings.--The Commission or, at the direction of the
Commission, any subcommittee or member of the Commission,
may, for the purpose of carrying out this Act--
(1) hold such public hearings in such cities and countries,
sit and act at such times and places, take such testimony,
receive such evidence, and administer such oaths or
affirmations as the Commission or such subcommittee or member
considers advisable; and
(2) require, by subpoena or otherwise, the attendance and
testimony of such witnesses and the production of such books,
records, correspondence, memoranda, papers, documents, tapes,
and materials as the Commission or such subcommittee or
member considers advisable.
(b) Issuance and Enforcement of Subpoenas.--
(1) Issuance.--Subpoenas issued under subsection (a) shall
bear the signature of the Chairperson of the Commission and
shall be served by any person or class of persons designated
by the Chairperson for that purpose.
(2) Enforcement.--In the case of contumacy or failure to
obey a subpoena issued under subsection (a), the United
States district court for the judicial district in which the
subpoenaed person resides, is served, or may be found may
issue an order requiring such person to appear at any
designated place to testify or to produce documentary or
other evidence. Any failure to obey the order of the court
may be punished by the court as a contempt of that court.
(3) Confidentiality.--
(A) In general.--Information obtained under a subpoena
issued under subsection (a) which is deemed confidential, or
with reference to which a request for confidential treatment
is made by the person furnishing such information--
(i) shall be exempt from disclosure under section 552 of
title 5, United States Code; and
(ii) shall not be published or disclosed unless the
Commission determines that the withholding of such
information is contrary to the interest of the United States.
(B) Exception.--The requirements of subparagraph (A) shall
not apply to the publication or disclosure of any data
aggregated in a manner that ensures protection of the
identity of the person furnishing such data.
(c) Authority of Members or Agents of the Commission.--Any
member or agent of the Commission may, if authorized by the
Commission, take any action which the Commission is
authorized to take by this Act.
(d) Obtaining Official Data.--
(1) Authority.--Notwithstanding any provision of section
552a of title 5, United States Code, the Commission may
secure directly from any department or agency of the United
States any information necessary to enable the Commission to
carry out the purposes of this Act.
(2) Procedure.--Upon request of the Chairperson of the
Commission, the head of that department or agency shall
furnish the information requested to the Commission.
(e) Postal Services.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(f) Administrative Support Services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission, on a reimbursable basis, any
administrative support services necessary for the Commission
to carry out its responsibilities under this Act.
(g) Gifts.--
(1) In general.--The Commission may accept, use, and
dispose of gifts or donations of services or property.
(2) Regulations.--The Commission shall adopt internal
regulations governing the receipt of gifts or donations of
services or property similar to those described in part 2601
of title 5, Code of Federal Regulations.
SEC. 8. COMMISSION PERSONNEL MATTERS.
(a) Compensation of Members.--Each member of the Commission
who is not an officer or employee of the Federal Government
shall be compensated at a rate equal to the daily equivalent
of the annual rate of basic pay prescribed for GS-18 of the
General Schedule under section 5332 of title 5, United States
Code, for each day (including travel time) during which such
member is engaged in the performance of the duties of the
Commission. All members of the Commission who are officers or
employees of the United States shall serve without
compensation in addition to that received for their services
as officers or employees of the United States.
(b) Travel Expenses.--The members of the Commission shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Commission.
(c) Subcommittees.--The Commission may establish
subcommittees and appoint persons to such subcommittees as
the Commission considers appropriate.
(d) Staff.--Subject to such policies as the Commission may
prescribe, the Chairperson of the Commission may appoint and
fix the pay of such additional personnel as the Chairperson
considers appropriate to carry out the duties of the
Commission.
(e) Applicability of Certain Civil Service Laws.--
Subcommittee members and staff of the Commission may be--
(1) appointed without regard to the provisions of title 5,
United States Code, governing appointments in the competitive
service; and
(2) paid without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of that title relating to
classification and General Schedule pay rates, except that an
individual so appointed may not receive pay in excess of the
annual rate of basic pay prescribed for GS-18 of the General
Schedule under section 5332 of that title.
(f) Experts and Consultants.--In carrying out its
objectives, the Commission may procure temporary and
intermittent services of consultants and experts under
section 3109(b) of title 5, United States Code, at rates for
individuals which do not exceed the daily equivalent of the
annual rate of basic pay prescribed for GS-18 of the General
Schedule under section 5332 of that title.
(g) Detail of Government Employees.--Upon request of the
Chairperson of the Commission, any Federal Government
employee may be detailed to the Commission to assist in
carrying out the duties of the Commission--
(1) on a reimbursable basis; and
[[Page S5235]]
(2) such detail shall be without interruption or loss of
civil service status or privilege.
SEC. 9. TERMINATION.
The Commission shall terminate 60 days after the date on
which the Commission submits its report under section 6.
SEC. 10. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $5,000,000 to carry
out the purposes of this Act.
Ms. LANDRIEU. Mr. President, one of the most frequent complaints I
have been hearing from people in Louisiana whose homes sustained damage
in Katrina and Rita has been about their property insurance. First, it
took insurance companies a long time to get adjusters into the area
after the storm and many people are still waiting for claim payments.
This was followed by the shock for many of our homeowners that their
property insurance policies covered wind damage, but not flood damage.
They could get the roof replaced, but the rest of the house was lost.
Many of them were not required to have flood insurance because they
either did not live in a flood plain or did not have a mortgage. And
now we are beginning to discover that many insurance companies are no
longer writing policies in Louisiana.
Our homeowners weathered one, and in some cases two, hurricanes
already. However, now it's as if our homeowners have been hit by
another hurricane--one causing a flood of red ink, lost homes, ruined
lives, and broken communities.
I hope we never see another storm like Katrina. I would not want any
of my colleagues' states to face the one-two punch of two hurricanes
the way Louisiana was. But hurricane season is coming again, starting
next week on June 1. These insurance issues and problems are going to
come again. We can rebuild levees and use the lessons of Katrina to
better prepare for these storms, but finding a solution to this
insurance issue is much harder.
First of all, insurance is regulated at the State level. We do not
control it up here. In all fairness, property casualty insurance
companies do not cover flood damage because that is covered by the
National Flood Insurance Program at FEMA. But the potential for
flooding from hurricanes still remains and our insurance system is not
ready to handle the amount of uninsured damage a massive storm like
Katrina.
I am pleased to join my colleague from Florida, Senator Nelson, as a
cosponsor of the Commission on Catastrophic Disaster Risk and Insurance
Act of 2006. This bill will not produce major changes in the insurance
industry overnight, but it will begin to take a look at this issue to
identify the best solution to ensuring that home and business owners
will have insurance coverage to help them rebuild after catastrophic
natural disasters.
The commission established by this legislation will take the first
steps for assessing the casualty insurance market and recommend any
necessary legislative changes to ensure that consumers will have
readily available and affordable insurance coverage to protect them
from natural disasters. Experts from a wide variety of fields in
disaster preparedness, construction engineering, the insurance
industry, and government will serve on the commission. While the
members will be chosen on a bipartisan basis, they will be taking a
nonpartisan approach to this subject.
I urge my colleagues to support this legislation. It is a first
step--a modest step--toward ensuring the financial security of
Americans in the face of catastrophic disasters.
______
By Mr. NELSON of Florida:
S. 3115. A bill to amend the Internal Revenue Code of 1986 to create
Catastrophe Savings Accounts; to the Committee on Finance.
S. 3115
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 ``Catastrophe Savings Accounts
Act of 2006''.
SEC. 2. CATASTROPHE SAVINGS ACCOUNTS.
(a) In General.--Subchapter F of Chapter 1 of the Internal
Revenue Code of 1986 (relating to exempt organizations) is
amended by adding at the end the following new part:
``PART IX--CATASTROPHE SAVINGS ACCOUNTS
``SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS.
``(a) General Rule.--A Catastrophe Savings Account shall be
exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, such account shall be subject to the
taxes imposed by section 511 (relating to imposition of tax
on unrelated business income of charitable organizations).
``(b) Catastrophe Savings Account.--For purposes of this
section, the term `Catastrophe Savings Account' means a trust
created or organized in the United States for the exclusive
benefit of an individual or his beneficiaries and which is
designated (in such manner as the Secretary shall prescribe)
at the time of the establishment of the trust as a
Catastrophe Savings Account, but only if the written
governing instrument creating the trust meets the following
requirements:
``(1) Except in the case of a qualified rollover
contribution--
``(A) no contribution will be accepted unless it is in
cash, and
``(B) contributions will not be accepted in excess of the
account balance limit specified in subsection (c).
``(2) The trustee is a bank (as defined in section 408(n))
or another person who demonstrates to the satisfaction of the
Secretary that the manner in which that person will
administer the trust will be consistent with the requirements
of this section.
``(3) The interest of an individual in the balance of his
account is nonforfeitable.
``(4) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
``(c) Account Balance Limit.--The aggregate account balance
for all Catastrophe Savings Accounts maintained for the
benefit of an individual (including qualified rollover
contributions) shall not exceed--
``(1) in the case of an individual whose qualified
deductible is not more than $1,000, $2,000, and
``(2) in the case of an individual whose qualified
deductible is more than $1,000, the amount equal to the
lesser of--
``(A) $15,000, or
``(B) twice the amount of the individual's qualified
deductible.
``(d) Definitions.--For purposes of this section--
``(1) Qualified catastrophe expenses.--The term `qualified
catastrophe expenses' means expenses paid or incurred by
reason of a major disaster that has been declared by the
President under section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act.
``(2) Qualified deductible.--With respect to an individual,
the term `qualified deductible' means the annual deductible
for the individual's homeowners' insurance policy.
``(3) Qualified rollover contribution.--The term `qualified
rollover contribution' means a contribution to a Catastrophe
Savings Account--
``(A) from another such account of the same beneficiary,
but only if such amount is contributed not later than the
60th day after the distribution from such other account, and
``(B) from a Catastrophe Savings Account of a spouse of the
beneficiary of the account to which the contribution is made,
but only if such amount is contributed not later than the
60th day after the distribution from such other account.
``(e) Tax Treatment of Distributions.--
``(1) In general.--Any distribution from a Catastrophe
Savings Account shall be includible in the gross income of
the distributee in the manner as provided in section 72.
``(2) Distributions for qualified catastrophe expenses.--
``(A) In general.--No amount shall be includible in gross
income under paragraph (1) if the qualified catastrophe
expenses of the distributee during the taxable year are not
less than the aggregate distributions during the taxable
year.
``(B) Distributions in excess of expenses.--If such
aggregate distributions exceed such expenses during the
taxable year, the amount otherwise includible in gross income
under paragraph (1) shall be reduced by the amount which
bears the same ratio to the amount which would be includible
in gross income under paragraph (1) (without regard to this
subparagraph) as the qualified catastrophe expenses bear to
such aggregate distributions.
``(3) Additional tax for distributions not used for
qualified catastrophe expenses.--The tax imposed by this
chapter for any taxable year on any taxpayer who receives a
payment or distribution from a Catastrophe Savings Account
which is includible in gross income shall be increased by 10
percent of the amount which is so includible.
``(4) Retirement distributions.--No amount shall be
includible in gross income under paragraph (1) (or subject to
an additional tax under paragraph (3)) if the payment or
distribution is made on or after the date on which the
distributee attains age 62.
``(f) Tax Treatment of Accounts.--Rules similar to the
rules of paragraphs (2) and (4) of section 408(e) shall apply
to any Catastrophe Savings Account.''.
(b) Tax on Excess Contributions.--
(1) In general.--Subsection (a) of section 4973 of the
Internal Revenue Code of 1986 (relating to tax on excess
contributions to certain tax-favored accounts and annuities)
is amended by striking ``or'' at the end of paragraph (4), by
inserting ``or'' at the end of paragraph (5), and by
inserting after paragraph (5) the following new paragraph:
``(6) a Catastrophe Savings Account (as defined in section
530A),''.
[[Page S5236]]
(2) Excess contribution.--Section 4973 of such Code is
amended by adding at the end the following new subsection:
``(h) Excess Contributions to Catastrophe Savings
Accounts.--For purposes of this section, in the case of
Catastrophe Savings Accounts (within the meaning of section
530A), the term `excess contributions' means the amount by
which the aggregate account balance for all Catastrophe
Savings Accounts maintained for the benefit of an individual
exceeds the account balance limit defined in section
530A(c)(1).''.
(c) Conforming Amendment.--The table of parts for
subchapter F of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Part IX. Catastrophe Savings Accounts''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
______
By Mr. NELSON of Florida:
S. 3116. A bill to amend the Internal Revenue Code of 1986 to provide
for the creation of disaster protection funds by property and casualty
insurance companies for the payment of policyholders' claims arising
from future catastrophic events; to the Committee on Finance.
S. 3116
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 ``Policyholder Disaster
Protection Act of 2006''.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) Rising costs resulting from natural disasters are
placing an increasing strain on the ability of property and
casualty insurance companies to assure payment of homeowners'
claims and other insurance claims arising from major natural
disasters now and in the future.
(2) Present tax laws do not provide adequate incentives to
assure that natural disaster insurance is provided or, where
such insurance is provided, that funds are available for
payment of insurance claims in the event of future
catastrophic losses from major natural disasters, as present
law requires an insurer wishing to accumulate surplus assets
for this purpose to do so entirely from its after-tax
retained earnings.
(3) Revising the tax laws applicable to the property and
casualty insurance industry to permit carefully controlled
accumulation of pretax dollars in separate reserve funds
devoted solely to the payment of claims arising from future
major natural disasters will provide incentives for property
and casualty insurers to make natural disaster insurance
available, will give greater protection to the Nation's
homeowners, small businesses, and other insurance consumers,
and will help assure the future financial health of the
Nation's insurance system as a whole.
(4) Implementing these changes will reduce the possibility
that a significant portion of the private insurance system
would fail in the wake of a major natural disaster and that
governmental entities would be required to step in to provide
relief at taxpayer expense.
SEC. 3. CREATION OF POLICYHOLDER DISASTER PROTECTION FUNDS;
CONTRIBUTIONS TO AND DISTRIBUTIONS FROM FUNDS;
OTHER RULES.
(a) Contributions to Policyholder Disaster Protection
Funds.--Subsection (c) of section 832 of the Internal Revenue
Code of 1986 (relating to the taxable income of insurance
companies other than life insurance companies) is amended by
striking ``and'' at the end of paragraph (12), by striking
the period at the end of paragraph (13) and inserting ``;
and'', and by adding at the end the following new paragraph:
``(14) the qualified contributions to a policyholder
disaster protection fund during the taxable year.''.
(b) Distributions From Policyholder Disaster Protection
Funds.--Paragraph (1) of section 832(b) of such Code is
amended by striking ``and'' at the end of subparagraph (D),
by striking the period at the end of subparagraph (E) and
inserting ``, and'', and by adding at the end the following
new subparagraph:
``(F) the amount of any distributions from a policyholder
disaster protection fund during the taxable year, except that
a distribution made to return to the qualified insurance
company any contribution which is not a qualified
contribution (as defined in subsection (h)) for a taxable
year shall not be included in gross income if such
distribution is made prior to the filing of the tax return
for such taxable year.''.
(c) Definitions and Other Rules Relating to Policyholder
Disaster Protection Funds.--Section 832 of such Code
(relating to insurance company taxable income) is amended by
adding at the end the following new subsection:
``(h) Definitions and Other Rules Relating to Policyholder
Disaster Protection Funds.--For purposes of this section--
``(1) Policyholder disaster protection fund.--The term
`policyholder disaster protection fund' (hereafter in this
subsection referred to as the `fund') means any custodial
account, trust, or any other arrangement or account--
``(A) which is established to hold assets that are set
aside solely for the payment of qualified losses, and
``(B) under the terms of which--
``(i) the assets in the fund are required to be invested in
a manner consistent with the investment requirements
applicable to the qualified insurance company under the laws
of its jurisdiction of domicile,
``(ii) the net income for the taxable year derived from the
assets in the fund is required to be distributed no less
frequently than annually,
``(iii) an excess balance drawdown amount is required to be
distributed to the qualified insurance company no later than
the close of the taxable year following the taxable year for
which such amount is determined,
``(iv) a catastrophe drawdown amount may be distributed to
the qualified insurance company if distributed prior to the
close of the taxable year following the year for which such
amount is determined,
``(v) a State required drawdown amount may be distributed,
and
``(vi) no distributions from the fund are required or
permitted other than the distributions described in clauses
(ii) through (v) and the return to the qualified insurance
company of contributions that are not qualified
contributions.
``(2) Qualified insurance company.--The term `qualified
insurance company' means any insurance company subject to tax
under section 831(a).
``(3) Qualified contribution.--The term `qualified
contribution' means a contribution to a fund for a taxable
year to the extent that the amount of such contribution, when
added to the previous contributions to the fund for such
taxable year, does not exceed the excess of--
``(A) the fund cap for the taxable year, over
``(B) the fund balance determined as of the close of the
preceding taxable year.
``(4) Excess balance drawdown amounts.--The term `excess
balance drawdown amount' means the excess (if any) of--
``(A) the fund balance as of the close of the taxable year,
over
``(B) the fund cap for the following taxable year.
``(5) Catastrophe drawdown amount.--
``(A) In general.--The term `catastrophe drawdown amount'
means an amount that does not exceed the lesser of the amount
determined under subparagraph (B) or (C).
``(B) Net losses from qualifying events.--The amount
determined under this subparagraph shall be equal to the
qualified losses for the taxable year determined without
regard to clause (ii) of paragraph (8)(A).
``(C) Gross losses in excess of threshold.--The amount
determined under this subparagraph shall be equal to the
excess (if any) of--
``(i) the qualified losses for the taxable year, over
``(ii) the lesser of--
``(I) the fund cap for the taxable year (determined without
regard to paragraph (9)(E)), or
``(II) 30 percent of the qualified insurance company's
surplus as regards policyholders as shown on the company's
annual statement for the calendar year preceding the taxable
year.
``(D) Special drawdown amount following a recent
catastrophe loss year.--If for any taxable year included in
the reference period the qualified losses exceed the amount
determined under subparagraph (C)(ii), the `catastrophe
drawdown amount' shall be an amount that does not exceed the
lesser of the amount determined under subparagraph (B) or the
amount determined under this subparagraph. The amount
determined under this subparagraph shall be an amount equal
to the excess (if any) of--
``(i) the qualified losses for the taxable year, over
``(ii) the lesser of--
``(I) \1/3\ of the fund cap for the taxable year
(determined without regard to paragraph (9)(E)), or
``(II) 10 percent of the qualified insurance company's
surplus as regards policyholders as shown on the company's
annual statement for the calendar year preceding the taxable
year.
``(E) Reference period.--For purposes of subparagraph (D),
the reference period shall be determined under the following
table:
The reference period
shall be--in--
The 3 preceding taxable years. ........................................
The 2 preceding taxable years. ........................................
The preceding taxable year. ...........................................
No reference period applies............................................
``(6) State required drawdown amount.--The term `State
required drawdown amount' means any amount that the
department of insurance for the qualified insurance company's
jurisdiction of domicile requires to be distributed from the
fund, to the extent such amount is not otherwise described in
paragraph (4) or (5).
``(7) Fund balance.--The term `fund balance' means--
``(A) the sum of all qualified contributions to the fund,
``(B) less any net investment loss of the fund for any
taxable year or years, and
``(C) less the sum of all distributions under clauses (iii)
through (v) of paragraph (1)(B).
``(8) Qualified losses.--
``(A) In general.--The term `qualified losses' means, with
respect to a taxable year--
[[Page S5237]]
``(i) the amount of losses and loss adjustment expenses
incurred in the qualified lines of business specified in
paragraph (9), net of reinsurance, as reported in the
qualified insurance company's annual statement for the
taxable year, that are attributable to one or more qualifying
events (regardless of when such qualifying events occurred),
``(ii) the amount by which such losses and loss adjustment
expenses attributable to such qualifying events have been
reduced for reinsurance received and recoverable, plus
``(iii) any nonrecoverable assessments, surcharges, or
other liabilities that are borne by the qualified insurance
company and are attributable to such qualifying events.
``(B) Qualifying event.--For purposes of subparagraph (A),
the term `qualifying event' means any event that satisfies
clauses (i) and (ii).
``(i) Event.--An event satisfies this clause if the event
is 1 or more of the following:
``(I) Windstorm (hurricane, cyclone, or tornado).
``(II) Earthquake (including any fire following).
``(III) Winter catastrophe (snow, ice, or freezing).
``(IV) Fire.
``(V) Tsunami.
``(VI) Flood.
``(VII) Volcanic eruption.
``(VIII) Hail.
``(ii) Catastrophe designation.--An event satisfies this
clause if the event--
``(I) is designated a catastrophe by Property Claim
Services or its successor organization,
``(II) is declared by the President to be an emergency or
disaster, or
``(III) is declared to be an emergency or disaster in a
similar declaration by the chief executive official of a
State, possession, or territory of the United States, or the
District of Columbia.
``(9) Fund cap.--
``(A) In general.--The term `fund cap' for a taxable year
is the sum of the separate lines of business caps for each of
the qualified lines of business specified in the table
contained in subparagraph (C) (as modified under
subparagraphs (D) and (E)).
``(B) Separate lines of business cap.--For purposes of
subparagraph (A), the separate lines of business cap, with
respect to a qualified line of business specified in the
table contained in subparagraph (C), is the product of--
``(i) net written premiums reported in the annual statement
for the calendar year preceding the taxable year in such line
of business, multiplied by
``(ii) the fund cap multiplier applicable to such qualified
line of business.
``(C) Qualified lines of business and their respective fund
cap multipliers.--For purposes of this paragraph, the
qualified lines of business and fund cap multipliers
specified in this subparagraph are those specified in the
following table:
``Line of Business on Annual Fund Cap
Statement Blank: Multiplier:
Fire...................................................... 0.25
Allied.................................................... 1.25
Farmowners Multiple Peril................................. 0.25
Homeowners Multiple Peril................................. 0.75
Commercial Multi Peril (non-liability portion)............ 0.50
Earthquake................................................13.00
Inland Marine............................................ 0.25.
``(D) Subsequent modifications of the annual statement
blank.--If, with respect to any taxable year beginning after
the effective date of this subsection, the annual statement
blank required to be filed is amended to replace, combine, or
otherwise modify any of the qualified lines of business
specified in subparagraph (C), then for such taxable year
subparagraph (C) shall be applied in a manner such that the
fund cap shall be the same amount as if such reporting
modification had not been made.
``(E) 20-year phase-in.--Notwithstanding subparagraph (C),
the fund cap for a taxable year shall be the amount
determined under subparagraph (C), as adjusted pursuant to
subparagraph (D) (if applicable), multiplied by the phase-in
percentage indicated in the following table:
------------------------------------------------------------------------
Phase-in
percentage to
be applied to
fund cap
``Taxable year beginning in: computed
under
subparagraphs
(A) and (B):
------------------------------------------------------------------------
2006..................................................... 5 percent
2007..................................................... 10 percent
2008..................................................... 15 percent
2009..................................................... 20 percent
2010..................................................... 25 percent
2011..................................................... 30 percent
2012..................................................... 35 percent
2013..................................................... 40 percent
2014..................................................... 45 percent
2015..................................................... 50 percent
2016..................................................... 55 percent
2017..................................................... 60 percent
2018..................................................... 65 percent
2019..................................................... 70 percent
2020..................................................... 75 percent
2021..................................................... 80 percent
2022..................................................... 85 percent
2023..................................................... 90 percent
2024..................................................... 95 percent
2025 and later........................................... 100 percent
------------------------------------------------------------------------
``(10) Treatment of investment income and gain or loss.--
``(A) Contributions in kind.--A transfer of property other
than money to a fund shall be treated as a sale or exchange
of such property for an amount equal to its fair market value
as of the date of transfer, and appropriate adjustment shall
be made to the basis of such property. Section 267 shall
apply to any loss realized upon such a transfer.
``(B) Distributions in kind.--A transfer of property other
than money by a fund to the qualified insurance company shall
not be treated as a sale or exchange or other disposition of
such property. The basis of such property immediately after
such transfer shall be the greater of the basis of such
property immediately before such transfer or the fair market
value of such property on the date of such transfer.
``(C) Income with respect to fund assets.--Items of income
of the type described in paragraphs (1)(B), (1)(C), and (2)
of subsection (b) that are derived from the assets held in a
fund, as well as losses from the sale or other disposition of
such assets, shall be considered items of income, gain, or
loss of the qualified insurance company. Notwithstanding
paragraph (1)(F) of subsection (b), distributions of net
income to the qualified insurance company pursuant to
paragraph (1)(B)(ii) of this subsection shall not cause such
income to be taken into account a second time.
``(11) Net income; net investment loss.--For purposes of
paragraph (1)(B)(ii), the net income derived from the assets
in the fund for the taxable year shall be the items of income
and gain for the taxable year, less the items of loss for the
taxable year, derived from such assets, as described in
paragraph (10)(C). For purposes of paragraph (7), there is a
net investment loss for the taxable year to the extent that
the items of loss described in the preceding sentence exceed
the items of income and gain described in the preceding
sentence.
``(12) Annual statement.--For purposes of this subsection,
the term `annual statement' shall have the meaning set forth
in section 846(f)(3).
``(13) Exclusion of premiums and losses on certain puerto
rican risks.--Notwithstanding any other provision of this
subsection, premiums and losses with respect to risks covered
by a catastrophe reserve established under the laws or
regulations of the Commonwealth of Puerto Rico shall not be
taken into account under this subsection in determining the
amount of the fund cap or the amount of qualified losses.
``(14) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection, including regulations--
``(A) which govern the application of this subsection to a
qualified insurance company having a taxable year other than
the calendar year or a taxable year less than 12 months,
``(B) which govern a fund maintained by a qualified
insurance company that ceases to be subject to this part, and
``(C) which govern the application of paragraph (9)(D).''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2005.
______
By Mr. NELSON of Florida:
S. 3117. A bill to establish a program to provide more protection at
lower cost through a national backstop for State natural catastrophe
insurance programs to help the United States better prepare for and
protect its citizens against the ravages of natural catastrophes, to
encourage and promote mitigation and prevention for, and recovery and
rebuilding from such catastrophes, to better assist in the financial
recovery and rebuilding from such catastrophes, and to develop a
rigorous process of continuous improvement; to the Commitment on
Banking, Housing, and Urban Affairs.
S. 3117
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Homeowners
Protection Act of 2006''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.
Sec. 3. National Commission on Catastrophe Preparation and Protection.
Sec. 4. Program authority.
Sec. 5. Qualified lines of coverage.
Sec. 6. Covered perils.
Sec. 7. Contracts for reinsurance coverage for eligible State programs.
Sec. 8. Minimum level of retained losses and maximum Federal liability.
Sec. 9. Consumer Hurricane, Earthquake, Loss Protection (HELP) Fund.
Sec. 10. Regulations.
Sec. 11. Termination.
Sec. 12. Annual study concerning benefits of the Act.
Sec. 13. GAO study of the National Flood Insurance Program and
hurricane-related flooding.
Sec. 14. Definitions.
SEC. 2. FINDINGS.
Congress finds that--
[[Page S5238]]
(1) America needs to take steps to be better prepared for
and better protected from catastrophes;
(2) the hurricane seasons of 2004 and 2005 are startling
reminders of both the human and economic devastation that
hurricanes, flooding, and other natural disasters can cause;
(3) if a repeat of the deadly 1900 Galveston hurricane
occurred again it could cause thousands of deaths and over
$36,000,000,000 in loss;
(4) if the 1906 San Francisco earthquake occurred again it
could cause thousands of deaths, displace millions of
residents, destroy thousands of businesses, and cause over
$400,000,000,000 in loss;
(5) if a Category 5 hurricane were to hit Miami it could
cause thousands of deaths and over $50,000,000,000 in loss
and devastate the local and national economy;
(6) if a repeat of the 1938 ``Long Island Express'' were to
occur again it could cause thousands of deaths and over
$30,000,000,000 in damage, and if a hurricane that strong
were to directly hit Manhattan it could cause over
$150,000,000,000 in damage and cause irreparable harm to our
Nation's economy;
(7) a more comprehensive and integrated approach to dealing
with catastrophes is needed;
(8) using history as a guide, natural catastrophes will
inevitably place a tremendous strain on homeowners' insurance
markets in many areas, will raise costs for consumers, and
will jeopardize the ability of many consumers to adequately
insure their homes and possessions;
(9) the lack of sufficient insurance capacity and the
inability of private insurers to build enough capital, in a
short amount of time, threatens to increase the number of
uninsured homeowners, which, in turn, increases the risk of
mortgage defaults and the strain on the Nation's banking
system;
(10) some States have exercised leadership through
reasonable action to ensure the continued availability and
affordability of homeowners' insurance for all residents;
(11) it is appropriate that efforts to improve insurance
availability be designed and implemented at the State level;
(12) while State insurance programs may be adequate to
cover losses from most natural disasters, a small percentage
of events is likely to exceed the financial capacity of these
programs and the local insurance markets;
(13) a limited national insurance backstop will improve the
effectiveness of State insurance programs and private
insurance markets and will increase the likelihood that
homeowners' insurance claims will be fully paid in the event
of a large natural catastrophe and that routine claims that
occur after a mega-catastrophe will also continue to be paid;
(14) it is necessary to provide a national insurance
backstop program that will provide more protection at an
overall lower cost and that will promote stability in the
homeowners' insurance market;
(15) it is the proper role of the Federal Government to
prepare for and protect its citizens from catastrophes and to
facilitate consumer protection, victim assistance, and
recovery, including financial recovery; and
(16) any Federal reinsurance program must be founded upon
sound actuarial principles and priced in a manner that
encourages the creation of State funds and maximizes the
buying potential of these State funds and encourages and
promotes prevention and mitigation, recovery and rebuilding,
and consumer education, and emphasizes continuous analysis
and improvement.
SEC. 3. NATIONAL COMMISSION ON CATASTROPHE PREPARATION AND
PROTECTION.
(a) Establishment.--The Secretary of the Treasury shall
establish a commission to be known as the National Commission
on Catastrophe Preparation and Protection.
(b) Duties.--The Commission shall meet for the purpose of
advising the Secretary regarding the estimated loss costs
associated with the contracts for reinsurance coverage
available under this Act and carrying out the functions
specified in this Act, including--
(1) the development and implementation of public education
concerning the risks posed by natural catastrophes;
(2) the development and implementation of prevention,
mitigation, recovery, and rebuilding standards that better
prepare and protect the United States from catastrophes; and
(3) conducting continuous analysis of the effectiveness of
this Act and recommending improvements to the Congress so
that--
(A) the costs of providing catastrophe protection are
decreased; and
(B) the United States is better prepared.
(c) Members.--
(1) Appointment and qualification.--The Commission shall
consist of 9 members, as follows:
(A) Homeland security member.--The Secretary of Homeland
Security or the Secretary's designee.
(B) Appointed members.--8 members appointed by the
Secretary, who shall consist of--
(i) 1 individual who is an actuary;
(ii) 1 individual who is employed in engineering;
(iii) 1 individual representing the scientific community;
(iv) 1 individual representing property and casualty
insurers;
(v) 1 individual representing reinsurers;
(vi) 1 individual who is a member or former member of the
National Association of Insurance Commissioners; and
(vii) 2 individuals who are consumers.
(2) Prevention of conflicts of interest.--Members shall
have no personal or financial interest at stake in the
deliberations of the Commission.
(d) Treatment of Non-Federal Members.--Each member of the
Commission who is not otherwise employed by the Federal
Government shall be considered a special Government employee
for purposes of sections 202 and 208 of title 18, United
States Code.
(e) Experts and Consultants.--
(1) In general.--The Commission may procure temporary and
intermittent services from individuals or groups recognized
as experts in the fields of meteorology, seismology,
vulcanlogy, geology, structural engineering, wind
engineering, and hydrology, and other fields, under section
3109(b) of title 5, United States Code, but at a rate not in
excess of the daily equivalent of the annual rate of basic
pay payable for level V of the Executive Schedule, for each
day during which the individual procured is performing such
services for the Commission.
(2) Other experts.--The Commission may also procure, and
the Congress encourages the Commission to procure, experts
from universities, research centers, foundations, and other
appropriate organizations who could study, research, and
develop methods and mechanisms that could be utilized to
strengthen structures to better withstand the perils covered
by this Act.
(f) Compensation.--
(1) In general.--Each member of the Commission who is not
an officer or employee of the Federal Government shall be
compensated at a rate of basic pay payable for level V of the
Executive Schedule, for each day (including travel time)
during which such member is engaged in the performance of the
duties of the Commission.
(2) Federal employees.--All members of the Commission who
are officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
(g) Obtaining Data.--
(1) In general.--The Commission and the Secretary may
solicit loss exposure data and such other information as
either the Commission or the Secretary deems necessary to
carry out its responsibilities from governmental agencies and
bodies and organizations that act as statistical agents for
the insurance industry.
(2) Obligation to keep confidential.--The Commission and
the Secretary shall take such actions as are necessary to
ensure that information that either deems confidential or
proprietary is disclosed only to authorized individuals
working for the Commission or the Secretary.
(3) Failure to comply.--No State insurance or reinsurance
program may participate if any governmental agency within
that State has refused to provide information requested by
the Commission or the Secretary.
(h) Funding.--
(1) Authorization of appropriations.--There is authorized
to be appropriated--
(A) $10,000,000 for fiscal year 2007 for the--
(i) initial expenses in establishing the Commission; and
(ii) initial activities of the Commission that cannot
timely be covered by amounts obtained pursuant to section
7(b)(6)(B)(iii), as determined by the Secretary;
(B) such additional sums as may be necessary to carry out
subsequent activities of the Commission;
(C) $10,000,000 for fiscal year 2007 for the initial
expenses of the Secretary in carrying out the program
authorized under section 4; and
(D) such additional sums as may be necessary to carry out
subsequent activities of the Secretary under this Act.
(2) Offset.--
(A) Obtained from purchasers.--The Secretary shall provide,
to the maximum extent practicable, that an amount equal to
any amount appropriated under paragraph (1) is obtained from
purchasers of reinsurance coverage under this Act and
deposited in the Fund established under section 9.
(B) Inclusion in pricing contracts.--Any offset obtained
under subparagraph (A) shall be obtained by inclusion of a
provision for the Secretary's and the Commission's expenses
incorporated into the pricing of the contracts for such
reinsurance coverage, pursuant to section 7(b)(6)(B)(iii).
(i) Termination.--The Commission shall terminate upon the
effective date of the repeal under section 11(c).
SEC. 4. PROGRAM AUTHORITY.
(a) In General.--The Secretary, in consultation with the
Secretary of Homeland Security, shall carry out a program
under this Act to make homeowners protection coverage
available through contracts for reinsurance coverage under
section 7, which shall be made available for purchase only by
eligible State programs.
(b) Purpose.--The program shall be designed to make
reinsurance coverage under this Act available--
(1) to improve the availability and affordability of
homeowners' insurance for the purpose of facilitating the
pooling, and spreading the risk, of catastrophic financial
losses from natural catastrophes;
[[Page S5239]]
(2) to improve the solvency and capacity of homeowners'
insurance markets;
(3) to encourage the development and implementation of
mitigation, prevention, recovery, and rebuilding standards;
and
(4) to recommend methods to continuously improve the way
the United States reacts and responds to catastrophes,
including improvements to the HELP Fund established under
section 9.
(c) Contract Principles.--Under the program established
under this Act, the Secretary shall offer reinsurance
coverage through contracts with covered purchasers, which
contracts shall--
(1) minimize the administrative costs of the Federal
Government; and
(2) provide coverage based solely on insured losses within
a State for the eligible State program purchasing the
contract.
SEC. 5. QUALIFIED LINES OF COVERAGE.
Each contract for reinsurance coverage made available under
this Act shall provide insurance coverage against residential
property losses to--
(1) homes (including dwellings owned under condominium and
cooperative ownership arrangements); and
(2) the contents of apartment buildings.
SEC. 6. COVERED PERILS.
(a) In General.--Each contract for reinsurance coverage
made available under this Act shall cover losses insured or
reinsured by an eligible State program purchasing the
contract that are proximately caused by--
(1) earthquakes;
(2) perils ensuing from earthquakes, including fire and
tsunamis;
(3) tropical cyclones having maximum sustained winds of at
least 74 miles per hour, including hurricanes and typhoons;
(4) tornadoes;
(5) volcanic eruptions;
(6) catastrophic winter storms; and
(7) any other natural catastrophe peril (not including any
flood) insured or reinsured under the eligible State program
for which reinsurance coverage under section 7 is provided.
(b) Rulemaking.--The Secretary shall, by regulation, define
the natural catastrophe perils described in subsection
(a)(7).
SEC. 7. CONTRACTS FOR REINSURANCE COVERAGE FOR ELIGIBLE STATE
PROGRAMS.
(a) Eligible State Programs.--A program shall be eligible
to purchase a contract under this section for reinsurance
coverage under this Act only if the State entity authorized
to make such determinations certifies to the Secretary that
the program complies with the following requirements:
(1) Program design.--The program shall be a State-
operated--
(A) insurance program that--
(i) offers coverage for--
(I) homes (which may include dwellings owned under
condominium and cooperative ownership arrangements); and
(II) the contents of apartments to State residents; and
(ii) is authorized by State law; or
(B) reinsurance program that is designed to improve private
insurance markets that offer coverage for--
(i) homes (which may include dwellings owned under
condominium and cooperative ownership arrangements); and
(ii) the contents of apartments.
(2) Operation.--
(A) In general.--The program shall meet the following
requirements:
(i) A majority of the members of the governing body of the
program shall be public officials.
(ii) The State shall have a financial interest in the
program, which shall not include a program authorized by
State law or regulation that requires insurers to pool
resources to provide property insurance coverage for covered
perils.
(iii) The State shall not be eligible for Consumer HELP
Fund assistance under section 9 if a State has appropriated
money from the State fund and not paid it back to the State
fund, with interest.
(iv) Upon receipt of assistance from the Consumer HELP
Fund, each reimbursement contract sold by a State shall
provide for reimbursements at 100 percent of eligible losses.
(v) A State shall be required to utilize either--
(I) an open rating system that permits insurers to set
homeowners' insurance rates without prior approval of the
State; or
(II) a rate approval process that requires actuarially
sound, risk-based, self-sufficient homeowners' insurance
rates.
(B) Certification.--A State shall not be eligible for
Consumer HELP Fund assistance unless the Secretary can
certify that such State is in compliance with the requirement
described in clause (v).
(3) Tax status.--The program shall be structured and
carried out in a manner so that the program is exempt from
all Federal taxation.
(4) Coverage.--The program shall cover perils enumerated in
section 6.
(5) Earnings.--The program may not provide for, nor shall
have ever made, any redistribution of any part of any net
profits of the program to any insurer that participates in
the program.
(6) Prevention and mitigation.--
(A) In general.--The program shall include prevention and
mitigation provisions that require that not less $10,000,000
and not more than 35 percent of the net investment income of
the State insurance or reinsurance program be used for
programs to mitigate losses from natural catastrophes for
which the State insurance or reinsurance program was
established.
(B) Rule of construction.--For purposes of this paragraph,
prevention and mitigation shall include methods to reduce
losses of life and property, including appropriate measures
to adequately reflect--
(i) encouragement of awareness about the risk factors and
what can be done to eliminate or reduce them;
(ii) location of the risk, by giving careful consideration
of the natural risks for the location of the property before
allowing building and considerations if structures are
allowed; and
(iii) construction relative to the risk and hazards, which
act upon--
(I) State mandated building codes appropriate for the risk;
(II) adequate enforcement of the risk-appropriate building
codes;
(III) building materials that prevent or significantly
lessen potential damage from the natural catastrophes;
(IV) building methods that prevent or significantly lessen
potential damage from the natural catastrophes; and
(V) a focus on prevention and mitigation for any
substantially damaged structure, with an emphasis on how
structures can be retrofitted so as to make them building
code compliant.
(7) Requirements regarding coverage.--
(A) In general.--The program--
(i) may not, except for charges or assessments related to
post-event financing or bonding, involve cross-subsidization
between any separate property and casualty lines covered
under the program unless the elimination of such activity in
an existing program would negatively impact the eligibility
of the program to purchase a contract for reinsurance
coverage under this Act pursuant to paragraph (3);
(ii) shall include provisions that authorize the State
insurance commissioner or other State entity authorized to
make such a determination to terminate the program if the
insurance commissioner or other such entity determines that
the program is no longer necessary to ensure the availability
of homeowners' insurance for all residents of the State; and
(iii) shall provide that, for any insurance coverage for
homes (which may include dwellings owned under condominium
and cooperative ownership arrangements) and the contents of
apartments that is made available under the State insurance
program and for any reinsurance coverage for such insurance
coverage made available under the State reinsurance program,
the premium rates charged shall be amounts that, at a
minimum, are sufficient to cover the full actuarial costs of
such coverage, based on consideration of the risks involved
and accepted actuarial and rate making principles,
anticipated administrative expenses, and loss and loss-
adjustment expenses.
(B) Applicability.--This paragraph shall apply--
(i) before the expiration of the 2-year period beginning on
the date of the enactment of this Act, only to State programs
which, after January 1, 2007, commence offering insurance or
reinsurance coverage described in subparagraph (A) or (B),
respectively, of paragraph (1); and
(ii) after the expiration of such period, to all State
programs.
(8) Other qualifications.--
(A) Regulations.--
(i) Compliance.--The State program shall (for the year for
which the coverage is in effect) comply with regulations that
shall be issued under this paragraph by the Secretary, in
consultation with the National Commission on Catastrophe
Preparation and Protection established under section 3.
(ii) Criteria.--The regulations issued under clause (i)
shall establish criteria for State programs to qualify to
purchase reinsurance under this section, which are in
addition to the requirements under the other paragraphs of
this subsection.
(B) Contents.--The regulations issued under subparagraph
(A)(i) shall include requirements that--
(i) the State program shall have public members on its
board of directors or have an advisory board with public
members;
(ii) the State program provide adequate insurance or
reinsurance protection, as applicable, for the peril covered,
which shall include a range of deductibles and premium costs
that reflect the applicable risk to eligible properties;
(iii) insurance or reinsurance coverage, as applicable,
provided by the State program is made available on a
nondiscriminatory basis to all qualifying residents;
(iv) any new construction, substantial rehabilitation, and
renovation insured or reinsured by the program complies with
applicable State or local government building, fire, and
safety codes;
(v) the State, or appropriate local governments within the
State, have in effect and enforce nationally recognized model
building, fire, and safety codes and consensus-based
standards that offer risk responsive resistance that is
substantially equivalent or greater than the resistance to
earthquakes or high winds;
(vi) the State has taken actions to establish an insurance
rate structure that takes into account measures to mitigate
insurance losses;
(vii) there are in effect, in such State, laws or
regulations sufficient to prohibit price
[[Page S5240]]
gouging, during the term of reinsurance coverage under this
Act for the State program in any disaster area located within
the State; and
(viii) the State program complies with such other
requirements that the Secretary considers necessary to carry
out the purposes of this Act.
(b) Terms of Contracts.--Each contract under this section
for reinsurance coverage under this Act shall be subject to
the following terms and conditions:
(1) Maturity.--The term of the contract shall not exceed 1
year or such longer term as the Secretary may determine.
(2) Payment condition.--The contract shall authorize claims
payments for eligible losses only to the eligible State
program purchasing the coverage.
(3) Retained losses requirement.--For each event of a
covered peril, the contract shall make a payment for the
event only if the total amount of insurance claims for
losses, which are covered by qualified lines, occur to
properties located within the State covered by the contract,
and that result from events, exceeds the amount of retained
losses provided under the contract (pursuant to section 8(a))
purchased by the eligible State program.
(4) Multiple events.--The contract shall--
(A) cover any eligible losses from 1 or more covered events
that may occur during the term of the contract; and
(B) provide that if multiple events occur, the retained
losses requirement under paragraph (3) shall apply on a
calendar year basis, in the aggregate and not separately to
each individual event.
(5) Timing of eligible losses.--Eligible losses under the
contract shall include only insurance claims for property
covered by qualified lines that are reported to the eligible
State program within the 3-year period beginning upon the
event or events for which payment under the contract is
provided.
(6) Pricing.--
(A) Determination.--The price of reinsurance coverage under
the contract shall be an amount established by the Secretary
as follows:
(i) Recommendations.--The Secretary shall take into
consideration the recommendations of the Commission in
establishing the price, but the price may not be less than
the amount recommended by the Commission.
(ii) Fairness to taxpayers.--The price shall be established
at a level that--
(I) is designed to reflect the risks and costs being borne
under each reinsurance contract issued under this Act; and
(II) takes into consideration empirical models of natural
disasters and the capacity of private markets to absorb
insured losses from natural disasters.
(iii) Self-sufficiency.--The rates for reinsurance coverage
shall be established at a level that annually produces
expected premiums that shall be sufficient to pay the
expected annualized cost of all claims, loss adjustment
expenses, and all administrative costs of reinsurance
coverage offered under this section.
(B) Components.--The price shall consist of the following
components:
(i) Risk-based price.--A risk-based price, which shall
reflect the anticipated annualized payout of the contract
according to the actuarial analysis and recommendations of
the Commission.
(ii) Administrative costs.--A sum sufficient to provide for
the operation of the Commission and the administrative
expenses incurred by the Secretary in carrying out this Act.
(7) Information.--The contract shall contain a condition
providing that the Commission may require a State program
that is covered under the contract to submit to the
Commission all information on the State program relevant to
the duties of the Commission, as determined by the Secretary.
(8) Additional contract option.--
(A) In general.--The contract shall provide that the
purchaser of the contract may, during a term of such original
contract, purchase additional contracts from among those
offered by the Secretary at the beginning of the term,
subject to the limitations under section 8, at the prices at
which such contracts were offered at the beginning of the
term, prorated based upon the remaining term as determined by
the Secretary.
(B) Timing.--An additional contract purchased under
subparagraph (A) shall provide coverage beginning on a date
15 days after the date of purchase but shall not provide
coverage for losses for an event that has already occurred.
(9) Others.--The contract shall contain such other terms as
the Secretary considers necessary--
(A) to carry out this Act; and
(B) to ensure the long-term financial integrity of the
program under this Act.
(c) Participation by Multi-State Catastrophe Fund
Programs.--
(1) In general.--Nothing in this Act shall prohibit, and
this Act shall be construed to facilitate and encourage, the
creation of multi-State catastrophe insurance or reinsurance
programs, or the participation by such programs in the
program established pursuant to section 4.
(2) Regulations.--The Secretary shall, by regulation, apply
the provisions of this Act to multi-State catastrophe
insurance and reinsurance programs.
SEC. 8. MINIMUM LEVEL OF RETAINED LOSSES AND MAXIMUM FEDERAL
LIABILITY.
(a) Available Levels of Retained Losses.--In making
reinsurance coverage available under this Act, the Secretary
shall make available for purchase contracts for such coverage
that require the sustainment of retained losses from covered
perils (as required under section 7(b)(3) for payment of
eligible losses) in various amounts, as the Secretary, in
consultation with the Commission, determines appropriate and
subject to the requirements under subsection (b).
(b) Minimum Level of Retained Losses.--
(1) Contracts for state programs.--Subject to paragraphs
(3) and (4) and notwithstanding any other provision of this
Act, a contract for reinsurance coverage under section 7 for
an eligible State program that offers insurance or
reinsurance coverage described in subparagraph (A) or (B),
respectively, of section 7(a)(1), may not be made available
or sold unless the contract requires retained losses from
covered perils in the following amount:
(A) In general.--The State program shall sustain an amount
of retained losses of not less than--
(i) the claims-paying capacity of the eligible State
program, as determined by the Secretary; and
(ii) an amount, determined by the Secretary in consultation
with the Commission, that is the amount equal to the eligible
losses projected to be incurred at least once every 50 years
on an annual basis from covered perils.
(B) Transition rule for existing programs.--
(i) Claims-paying capacity.--Subject to clause (ii), in the
case of any eligible State program that was offering
insurance or reinsurance coverage on the date of the
enactment of this Act and the claims-paying capacity of which
is greater than the amount determined under subparagraph
(A)(i) but less than an amount determined for the program
under subparagraph (A)(ii), the minimum level of retained
losses applicable under this paragraph shall be the claims-
paying capacity of such State program.
(ii) Agreement.--
(I) In general.--Clause (i) shall apply to a State program
only if the program enters into a written agreement with the
Secretary providing a schedule for increasing the claims-
paying capacity of the program to the amount determined for
the program under subparagraph (A)(ii) over a period not to
exceed 5 years.
(II) Extension.--The Secretary may extend the 5-year period
under subclause (I) for not more than 5 additional 1-year
periods if the Secretary determines that losses incurred by
the State program as a result of covered perils create
excessive hardship on the State program.
(III) Consultation.--The Secretary shall consult with the
appropriate officials of the State program regarding the
required schedule and any potential 1-year extensions.
(C) Transition rule for new programs.--
(i) 50-year event.--The Secretary may provide that, in the
case of an eligible State program that, after January 1,
2007, commences offering insurance or reinsurance coverage,
during the 7-year period beginning on the date that
reinsurance coverage under section 7 is first made available,
the minimum level of retained losses applicable under this
paragraph shall be the amount determined for the State under
subparagraph (A)(i), except that such minimum level shall be
adjusted annually as provided in clause (ii) of this
subparagraph.
(ii) Annual adjustment.--Each annual adjustment under this
clause shall increase the minimum level of retained losses
applicable under this subparagraph to an eligible State
program described in clause (i) in a manner such that--
(I) during the course of such 7-year period, the applicable
minimum level of retained losses approaches the minimum level
that, under subparagraph (A)(ii), will apply to the eligible
State program upon the expiration of such period; and
(II) each such annual increase is a substantially similar
amount, to the extent practicable.
(D) Reduction because of reduced claims-paying capacity.--
(i) Authority.--Notwithstanding subparagraphs (A), (B), and
(C) or the terms contained in a contract for reinsurance
pursuant to such subparagraphs, if the Secretary determines
that the claims-paying capacity of an eligible State program
has been reduced because of payment for losses due to an
event, the Secretary may reduce the minimum level of retained
losses.
(ii) Term of reduction.--
(I) Extension.--The Secretary may extend the 5-year period
for not more than 5 additional 1-year periods if the
Secretary determines that losses incurred by the State
program as a result of covered perils create excessive
hardship on the State program.
(II) Consultation.--The Secretary shall consult with the
appropriate officials of the State program regarding the
required schedule and any potential 1-year extensions.
(E) Claims-paying capacity.--For purposes of this
paragraph, the claims-paying capacity of a State-operated
insurance or reinsurance program under section 7(a)(1) shall
be determined by the Secretary, in consultation with the
Commission, taking into consideration the claims-paying
capacity as determined by the State program, retained losses
to private insurers in the State in an amount assigned by the
State insurance commissioner, the cash surplus of the
program, and
[[Page S5241]]
the lines of credit, reinsurance, and other financing
mechanisms of the program established by law.
(c) Maximum Federal Liability.--
(1) In general.--Notwithstanding any other provision of
law, the Secretary may sell only contracts for reinsurance
coverage under this Act in various amounts that comply with
the following requirements:
(A) Estimate of aggregate liability.--The aggregate
liability for payment of claims under all such contracts in
any single year is unlikely to exceed $200,000,000,000 (as
such amount is adjusted under paragraph (2)).
(B) Eligible loss coverage sold.--Eligible losses covered
by all contracts sold within a State during a 12-month period
do not exceed the difference between the following amounts
(each of which shall be determined by the Secretary in
consultation with the Commission):
(i) The amount equal to the eligible loss projected to be
incurred once every 500 years from a single event in the
State.
(ii) The amount equal to the eligible loss projected to be
incurred once every 50 years from a single event in the
State.
(2) Annual adjustments.--The Secretary shall annually
adjust the amount under paragraph (1)(A) (as it may have been
previously adjusted) to provide for inflation in accordance
with an inflation index that the Secretary determines to be
appropriate.
(d) Limitation on Percentage of Risk in Excess of Retained
Losses.--
(1) In general.--The Secretary may not make available for
purchase contracts for reinsurance coverage under this Act
that would pay out more than 100 percent of eligible losses
in excess of retained losses in the case of a contract under
section 7 for an eligible State program, for such State.
(2) Payout.--For purposes of this subsection, the amount of
payout from a reinsurance contract shall be the amount of
eligible losses in excess of retained losses multiplied by
the percentage under paragraph (1).
SEC. 9. CONSUMER HURRICANE, EARTHQUAKE, LOSS PROTECTION
(HELP) FUND.
(a) Establishment.--There is established within the
Treasury of the United States a fund to be known as the
Consumer HELP Fund (in this section referred to as the
``Fund'').
(b) Credits.--The Fund shall be credited with--
(1) amounts received annually from the sale of contracts
for reinsurance coverage under this Act;
(2) any amounts borrowed under subsection (d);
(3) any amounts earned on investments of the Fund pursuant
to subsection (e); and
(4) such other amounts as may be credited to the Fund.
(c) Uses.--Amounts in the Fund shall be available to the
Secretary only for the following purposes:
(1) Contract payments.--For payments to covered purchasers
under contracts for reinsurance coverage for eligible losses
under such contracts.
(2) Commission costs.--To pay for the operating costs of
the Commission.
(3) Administrative expenses.--To pay for the administrative
expenses incurred by the Secretary in carrying out the
reinsurance program under this Act.
(4) Termination.--Upon termination under section 11, as
provided in such section.
(d) Borrowing.--
(1) Authority.--To the extent that the amounts in the Fund
are insufficient to pay claims and expenses under subsection
(c), the Secretary--
(A) may issue such obligations of the Fund as may be
necessary to cover the insufficiency; and
(B) shall purchase any such obligations issued.
(2) Public debt transaction.--For the purpose of purchasing
any such obligations under paragraph (1)--
(A) the Secretary may use as a public debt transaction the
proceeds from the sale of any securities issued under chapter
31 of title 31, United States Code; and
(B) the purposes for which such securities are issued under
such chapter are hereby extended to include any purchase by
the Secretary of such obligations under this subsection.
(3) Characteristics of obligations.--Obligations issued
under this subsection shall be in such forms and
denominations, bear such maturities, bear interest at such
rate, and be subject to such other terms and conditions, as
the Secretary shall determine.
(4) Treatment.--All redemptions, purchases, and sales by
the Secretary of obligations under this subsection shall be
treated as public debt transactions of the United States.
(5) Repayment.--Any obligations issued under this
subsection shall be--
(A) repaid including interest, from the Fund; and
(B) recouped from premiums charged for reinsurance coverage
provided under this Act.
(e) Investment.--If the Secretary determines that the
amounts in the Fund are in excess of current needs, the
Secretary may invest such amounts as the Secretary considers
advisable in obligations issued or guaranteed by the United
States.
(f) Prohibition of Federal Funds.--Except for amounts made
available pursuant to subsection (d) and section 3(h), no
further Federal funds shall be authorized or appropriated for
the Fund or for carrying out the reinsurance program under
this Act.
SEC. 10. REGULATIONS.
The Secretary, in consultation with the Secretary of the
Department of Homeland Security, shall issue any regulations
necessary to carry out the program for reinsurance coverage
under this Act.
SEC. 11. TERMINATION.
(a) In General.--Except as provided in subsection (b), the
Secretary may not provide any reinsurance coverage under this
Act covering any period after the expiration of the 20-year
period beginning on the date of the enactment of this Act.
(b) Extension.--If upon the expiration of the period under
subsection (a) the Secretary, in consultation with the
Commission, determines that continuation of the program for
reinsurance coverage under this Act is necessary or
appropriate to carry out the purpose of this Act under
section 4(b) because of insufficient growth of capacity in
the private homeowners' insurance market, the Secretary shall
continue to provide reinsurance coverage under this Act until
the expiration of the 5-year period beginning upon the
expiration of the period under subsection (a).
(c) Repeal.--Effective upon the date that reinsurance
coverage under this Act is no longer available or in force
pursuant to subsection (a) or (b), this Act (except for this
section) is repealed.
(d) Deficit Reduction.--The Secretary shall cover into the
General Fund of the Treasury any amounts remaining in the
Fund under section 9 upon the repeal of this Act.
SEC. 12. ANNUAL STUDY CONCERNING BENEFITS OF THE ACT.
(a) In General.--The Secretary shall, on an annual basis,
conduct a study and submit to the Congress a report that--
(1) analyzes the cost and availability of homeowners'
insurance for losses resulting from catastrophic natural
disasters covered by the reinsurance program under this Act;
(2) describes the efforts of the participating States in--
(A) enacting preparedness, prevention, mitigation,
recovery, and rebuilding standards; and
(B) educating the public on the risks associated with
natural catastrophe; and
(3) makes recommendations regarding ways to improve the
program under this Act and its administration.
(b) Contents.--Each annual study under this section shall
also determine and identify, on an aggregate basis--
(1) for each State or region, the capacity of the private
homeowners' insurance market with respect to coverage for
losses from catastrophic natural disasters;
(2) for each State or region, the percentage of homeowners
who have such coverage, the catastrophes covered, and the
average cost of such coverage; and
(3) for each State or region, the effects this Act is
having on the availability and affordability of such
insurance.
(c) Timing.--Each annual report under this section shall be
submitted not later than March 30 of the year after the year
for which the study was conducted.
(d) Commencement of Reporting Requirement.--The Secretary
shall first submit an annual report under this section not
later than 2 years after the date of the enactment of this
Act.
SEC. 13. GAO STUDY OF THE NATIONAL FLOOD INSURANCE PROGRAM
AND HURRICANE-RELATED FLOODING.
(a) In General.--In light of the flooding associated with
Hurricane Katrina, the Comptroller General of the United
States shall conduct a study of the availability and adequacy
of flood insurance coverage for losses to residences and
other properties caused by hurricane-related flooding.
(b) Contents.--The study under this section shall determine
and analyze--
(1) the frequency and severity of hurricane-related
flooding during the last 20 years in comparison with flooding
that is not hurricane-related;
(2) the differences between the risks of flood-related
losses to properties located within the 100-year floodplain
and those located outside of such floodplain;
(3) the extent to which insurance coverage referred to in
subsection (a) is available for properties not located within
the 100-year floodplain;
(4) the advantages and disadvantages of making such
coverage for such properties available under the national
flood insurance program;
(5) appropriate methods for establishing premiums for
insurance coverage under such program for such properties
that, based on accepted actuarial and rate making principles,
cover the full costs of providing such coverage;
(6) appropriate eligibility criteria for making flood
insurance coverage under such program available for
properties that are not located within the 100-year
floodplain or within a community participating in the
national flood insurance program;
(7) the appropriateness of the existing deductibles for all
properties eligible for insurance coverage under the national
flood insurance program, including the standard and variable
deductibles for pre-FIRM and post-FIRM properties, and
whether a broader range of deductibles should be established;
(8) income levels of policyholders of insurance made
available under the national flood insurance program whose
properties are pre-FIRM subsidized properties;
[[Page S5242]]
(9) how the national flood program is marketed, if changes
can be made so that more people are aware of flood coverage,
and how take-up rates may be improved;
(10) the number of homes that are not primary residences
that are insured under the national flood insurance program
and are pre-FIRM subsidized properties; and
(11) suggestions and means on how the program under this
Act can better meet its stated goals as well as the
feasibility of expanding the national flood insurance program
to cover the perils covered by this Act.
(c) Consultation With FEMA.--In conducting the study under
this section, the Comptroller General shall consult with the
Director of the Federal Emergency Management Agency.
(d) Report.--The Comptroller General shall complete the
study under this section and submit a report to the Congress
regarding the findings of the study not later than 5 months
after the date of the enactment of this Act.
SEC. 14. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Commission.--The term ``Commission'' means the National
Commission on Catastrophe Preparation and Protection
established under section 3.
(2) Covered perils.--The term ``covered perils'' means the
natural disaster perils under section 6.
(3) Covered purchaser.--The term ``covered purchaser''
means an eligible State-operated insurance or reinsurance
program that purchases reinsurance coverage made available
under a contract under section 7.
(4) Disaster area.--The term ``disaster area'' means a
geographical area, with respect to which--
(A) a covered peril specified in section 6 has occurred;
and
(B) a declaration that a major disaster exists, as a result
of the occurrence of such peril--
(i) has been made by the President of the United States;
and
(ii) is in effect.
(5) Eligible losses.--The term ``eligible losses'' means
losses in excess of the sustained and retained losses, as
defined by the Secretary after consultation with the
Commission.
(6) Eligible state program.--The term ``eligible State
program'' means--
(A) a State program that, pursuant to section 7(a), is
eligible to purchase reinsurance coverage made available
through contracts under section 7; or
(B) a multi-State program that is eligible to purchase such
coverage pursuant to section 7(c).
(7) Price gouging.--The term ``price gouging'' means the
providing of any consumer good or service by a supplier
related to repair or restoration of property damaged from a
catastrophe for a price that the supplier knows or has reason
to know is greater, by at least the percentage set forth in a
State law or regulation prohibiting such act (notwithstanding
any real cost increase due to any attendant business risk and
other reasonable expenses that result from the major
catastrophe involved), than the price charged by the supplier
for such consumer good or service immediately before the
disaster.
(8) Qualified lines.--The term ``qualified lines'' means
lines of insurance coverage for which losses are covered
under section 5 by reinsurance coverage under this Act.
(9) Reinsurance coverage.--The term ``reinsurance coverage
under this Act'' means coverage under contracts made
available under section 7.
(10) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(11) State.--The term ``State'' means the States of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands, American Samoa, and any
other territory or possession of the United States.
______
By Ms. SNOWE (for herself and Mr. Craig):
S. 3122. A bill to amend the Small Business Act to improve loans for
members of the Guard and Reserve, and for other purposes; to the
Committee on Small Business and Entrepreneurship.
Ms. SNOWE. Mr. President, our country has forever prided itself on
providing individuals the opportunity to pursue a fair and prosperous
existence. Our Nation's free markets enable small business owners to
grow their enterprise and realize their dreams. Yet, small business
owners and entrepreneurs are not blind to the costs of maintaining a
free and open society. These same small business owners and
entrepreneurs play a vital role in protecting freedom, at home and
abroad, as members of the U.S. National Guard and Reserve Forces.
In recent years, however, the Department of Defense, DOD, has placed
greater reliance on our nation's Guard and Reserve forces. In fact,
since Septeber 2001, over 550,000 Guard and Reserve members have been
called up in support of current operations, at the same time, making up
nearly one-third of deployed service members in Iraq and Afghanistan.
In addition, Guard and Reserve members have been charged in assisting
with recovery efforts in the Gulf Coast, following some of the most
devastating natural disasters in our country's history.
As these brave men and women are called to serve our Nation, the
small businesses they temporarily leave behind often suffer. Many
affected small buinesses experience slowing production and lost sales
or incur additional expenses to compensate for an employee's absence.
As a result, self-employed Guard and Reserve members and small
businesses that employ Guard and Reserve members are ``paying'' a
disproportionate and unfair share of the burden of increased call-ups.
This is particularly troubling, because according to the majority of
non-government-employed Guard and Reserve members are either self-
employed or work for small businesses.
To help stem the ill affects of Guard and Reserve call-ups on small
businesses, Senator Craig and I are introducing the Patriot Loan Act of
2006. This legislation improves the U.S. Small Business
Administration's Military Reservist Economic Injury Disaster Loan,
MREIDL, program. The MREIDL program was created to provide funds to
eligible small businesses to meet ordinary and necessary operating
expenses that the business cannot meet, because an essential employee
was ``called-up'' to active duty in their role as a military reservist.
Specifically, our legislation would raise the maximum military
reservist loan amount from $1,500,000 to $2,000,000. A maximum military
reservist loan amount of $2,000,000 is the same level as many ofthe
SBA's other loan programs, including: the 7(a) loans, international
trade loans, and 504 Certified Development Corporation loans that serve
a public policy goal.
This bill would allow the SBA Administrator, either directly or
through banks to offer loans up to $25,000 without requiring collateral
fr a loan applicant. Currently, the BA offers military reservist loans
up to $5,000 without requiring collateral. This provision would
increase that level to eligible small businesses.
The bill would also require the Administrator to give military
reservist loan applications priority for processing and ensure that
Guard and Reserve members are adequately assisted with their loan
application by incorporating the support and expertise of SBA
entrepreneurial development partners, such as Small Business
Development Centers.
Finally, the legislation requires the SBA and DOD to develop a joint
website and printed materials providing information regarding the
MREIDL program for Guard and Reserve members, and that the SBA and DOD
jointly conduct a feasibility study on introducing business
mobilization and interruption insurance for members of the Guard and
Reserve forces, and increased utilization of credit unions affiliated
with the DOD.
I thank Senator Craig for working with me to help address this
critical issue and I urge my colleagues to support this bill.
______
By Mr. LEAHY:
S. 3123. A bill to suspend temporarily the duty on ski and snowboard
pants; to the Committee on Finance.
Mr. LEAHY. Mr. President, I ask unanimous consent that the text of
the five bills on suspending duties be printed in the Record.
There being no objection, the text of the bills was ordered to be
printed in the Record, as follows:
S. 3123
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SKI AND SNOWBOARD PANTS
(a) In General.--Subchapter II of chapter 99 of the
Harmonized Tariff Schedule of the United States is amended by
inserting in numerical sequence the following new heading:
9902.62.03. Ski/snowboard pants (provided for in subheading
6210.40.50). Free. No change. No change. On or before 12/31/
2009.
(b) Effective Date.--The amendment made by subsection (a)
applies to goods entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
______
By Mr. LEAHY:
S. 3124. A bill to suspend temporarily the duty on ski boots, cross
country
[[Page S5243]]
ski footwear and snowboard boots; to the Committee on Finance.
S. 3124
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND
REDUCTIONS
(a) Other Modifications.--
(1) Snowboard boots.--Heading 9902.64.04 of the Harmonized
Tariff Schedule of the United States is amended--
(A) by striking ``Snowboard'' and inserting ``Ski boots,
cross country ski footwear and snowboard'';
(B) by striking ``4%'' and inserting ``Free''; and
(C) by striking ``12/31/2006'' and inserting ``12/31/
2009'',
(b) Effective Date.--The amendments made by subsection (a)
apply to goods entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
______
By Mr. LEAHY:
S. 3125. A bill to suspend temporarily the duty on ski and snowboard
pants; to the Committee on Finance.
S. 3125
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SKI AND SNOWBOARD PANTS
(a) In General.--Subchapter II of chapter 99 of the
Harmonized Tariff Schedule of the United States is amended by
inserting in numerical sequence the following new heading:
9902.62.01. Ski/snowboard pants (provided for in subheading
6203.43.35). Free. No change. No change. On or before 12/31/
2009.
(b) Effective Date.--The amendment made by subsection (a)
applies to goods entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
______
By Mr. LEAHY:
S. 3126. A bill to suspend temporarily the duty on ski and snowboard
pants; to the Committee on Finance.
S. 3126
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SKI AND SNOWBOARD PANTS
(a) In General.--Subchapter II of chapter 99 of the
Harmonized Tariff Schedule of the United States is amended by
inserting in numerical sequence the following new heading:
9902.62.02. Ski/snowboard pants (provided for in subheading
6204.63.30). Free. No change. No change. On or before 12/31/
2009.
(b) Effective Date.--The amendment made by subsection (a)
applies to goods entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
______
By Mr. LEAHY:
S. 3127. A bill to suspend temporarily the duty on ski and snowboard
pants; to the Committee on Finance.
S. 3127
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SKI AND SNOWBOARD PANTS.
(a) In General.--Subchapter II of chapter 99 of the
Harmonized Tariff Schedule of the United States is amended by
inserting in numerical sequence the following new heading:
9902.62.04. Ski/snowboard pants (provided for in subheading
6210.50.50). Free. No change. No change. On or before 12/31/
2009.
(b) Effective Date.--The amendment made by subsection (a)
applies to goods entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
______
By Mr. BINGAMAN (for himself and Mr. Lugar):
=========================== NOTE ===========================
On page S5243, May 25, 2006, under S. 3171, the following
sponsor appeared: Mr. BINGAMAN:
The online version has been corrected to read: Mr. BINGAMAN (for
himself and Mr. Lugar):
========================= END NOTE =========================
S. 3171. A bill to establish the Department of Commerce an Under
Secretary for United States Direct Investment, and for other purposes.
Mr. BINGAMAN. Mr. President, I rise today to introduce ``The United
States Direct Investment Act of 2006'' with my colleague from Indiana,
Senator Lugar. This legislation is a necessary step towards making our
country more competitive in encouraging multinational businesses to
expand or open new offices, facilities or plants in the United States
instead of in another country. While the United States continues to be
the premier place in the world to locate a business, we can no longer
rely on our inherent advantages alone. This legislation will refocus
the Administrations efforts so that we do a better job of reaching out
to businesses around the world and convince them that they should
expand their current operations or open new facility in the United
States instead of somewhere else overseas.
Our legislation creates the United States Direct Investment
Administration, USDIA, the Commerce Department to be lead by an Under
Secretary. This new administration shall be responsible for collecting
and analyzing data related to foreign direct investment flows. They
shall create an annual Investment Report and an annual Direct
Investment Agenda to be reported and sent to Congress. They will then
assume responsibility as the lead agency for advocating and
implementing strategic policies to encourage more investment in the
United States from abroad. This new administration will manage an
investment zone program for communities that have been negatively
impacted by trade but want to attract international companies to locate
in their area. Finally, this new administration will be empowered to
create ten new ``renewal communities'' as currently defined under the
Internal Revenue Code.
Many countries, particularly those in Europe, have committed
significant resources and energy to recruiting foreign direct
investment. In many cases, they have offices in the United States where
they meet with U.S. companies to encourage them to consider their
country for their next expansion. Right now our country does not have
any comparable operation. We leave these efforts to our states, region
and cities through economic development agencies and offices. Unlike
other countries, we don't provide a Federal umbrella organization to
help these people recruit more effectively. Because of their limited
resources, this means that many of these economic development agencies
are unable to effectively target potential businesses that might be an
ideal fit for their city or State. In some cases, these areas may be
going through an economic downturn due to the closing of a plant or
factory making their limited resources even more scarce. This
legislation would give these agencies the assistance and guidance they
need to be more successful and effective in their recruiting efforts.
It is important that we focus not only on how to get businesses to
stay in this country, but also on how we encourage overseas businesses
to come here. In both cases, the end result is the same--more jobs for
U.S. workers. Our first responsibility needs to be encouraging
companies to stay in the United States, but we need to be cognizant of
the fact that we will not always be successful. If we have a robust
effort to encourage overseas companies to move facilities to our
country we will be able to neutralize any unavoidable losses. Many of
the pieces are already in place. We already collect much of the data
and have an effective matrix of State, regional and local economic
development entities. What this legislation does is put these pieces
together in a way that accomplishes the primary job at hand--creating
jobs in the United States.
I ask for unanimous consent the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3171
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 ``United States Direct
Investment Act of 2006''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Administration.--The term ``Administration'' means the
United States Direct Investment Administration established
under section 4.
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means the Committee
on Finance and the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Energy and
Commerce and Committee on Ways and Means of the House of
Representatives.
(3) Critical high-technology industries.--The term
``critical high-technology industries'' means industries
involved in technology--
(A) the development of which will--
(i) provide a wide array of economic, environmental,
energy, and defense-related returns for the United States;
and
(ii) ensure United States economic, environmental, energy,
and defense-related welfare; and
(B) in which the United States has an abiding interest in
creating or maintaining secure domestic sources.
(4) Department.--The term ``Department'' means the
Department of Commerce.
(5) Under secretary.--The term ``Under Secretary'' means
the Under Secretary of Commerce for United States Direct
Investment described in section 4(a).
(6) United states direct investment promotion committee.--
The term ``United
[[Page S5244]]
States Direct Investment Promotion Committee'' means the
Interagency United States Direct Investment Promotion
Committee established under section 7.
(7) WTO agreement.--The term ``WTO Agreement'' means the
Agreement establishing the World Trade Organization entered
into on April 15, 1994.
SEC. 3. RELATION TO CFIUS.
The provisions of this Act shall not affect the
implementation or application of section 721 of the Defense
Production Act of 1950 (50 U.S.C. App. 2170) and the
activities of the Committee on Foreign Investment in the
United States (or any successor committee).
SEC. 4. ESTABLISHMENT OF UNITED STATES DIRECT INVESTMENT
ADMINISTRATION.
(a) In General.--There is established in the Department of
Commerce a United States Direct Investment Administration
which shall be headed by an Under Secretary of Commerce for
United States Direct Investment. The Under Secretary shall be
appointed by the President, by and with the advice and
consent of the Senate, and shall be compensated at the rate
provided for level III of the Executive Schedule in section
5314 of title 5, United States Code.
(b) Deputy Under Secretary.--There shall be in the
Administration a Deputy Under Secretary for United States
Direct Investment who shall be appointed by the President, by
and with the advice of the Senate, and shall be compensated
at the rate provided for level IV of the Executive Schedule
in section 5315 of title 5, United States Code.
(c) Staff.--The Under Secretary may appoint such additional
personnel to serve in the Administration as the Under
Secretary determines necessary.
(d) Duties.--The Under Secretary, in cooperation with the
Economics and Statistics Administration and other offices at
the Department, shall--
(1) collect and analyze data related to the flow of direct
investment in the United States and throughout the world, as
described in section 5;
(2) submit to the appropriate congressional committees an
annual United States Direct Investment Report, as described
in section 6;
(3) develop and publish an annual United States Direct
Investment Agenda;
(4) assume responsibility as the lead agency for advocating
and implementing strategic policies that will increase direct
investment in the United States;
(5) coordinate with the President regarding implementation
of section 721 of the Defense Production Act of 1950 (50
U.S.C. App. 2170) and the activities of the Committee on
Foreign Investment in the United States (or any successor
committee); and
(6) in cooperation with the Economic Development
Administration, administer an investment zone program for
communities that have been negatively impacted by either
trade or economic cycles.
(e) Conforming Amendments.--
(1) Section 5314 of title 5, United States Code, is amended
by adding at the end the following: ``Under Secretary of
Commerce for United States Direct Investment.''.
(2) Section 5315 of title 5, United States Code, is amended
by adding at the end the following: ``Deputy Under Secretary
of Commerce for United States Direct Investment.''.
SEC. 5. ANNUAL DIRECT INVESTMENT REPORT.
(a) Annual Direct Investment Report.--Not later than April
30, 2007, and on or before March 31 of each succeeding
calendar year, the Under Secretary shall submit a report on
the data identified and the analysis described in subsection
(b) for the preceding calendar year (which shall be known as
the ``Annual Direct Investment Report''). The Report shall be
submitted to the President and the appropriate congressional
committees.
(b) Data Identification.--
(1) In general.--The data identified and analysis for the
Report described in subsection (a) means the data identified
and analyzed by the Under Secretary of Commerce, in
cooperation with the Economic and Statistics Administration
and other offices at the Department and with the assistance
of other departments and agencies, including the Office of
the United States Trade Representative, for the preceding
calendar year regarding the following:
(A) Policies, programs, and practices at the State and
regional level designed to attract direct investment.
(B) The amount of direct investment attracted in each such
State and region.
(C) Policies, programs, and practices in foreign countries
designed to attract direct investment, and the amount of
direct investment attracted in each such foreign country.
(D) A comparison of the levels of direct investment
attracted in the United States and in foreign countries,
including a matrix of inputs affecting the level of direct
investment.
(E) Specific sectors in the United States and in foreign
countries in which direct investments are being made,
including the specific amounts invested in each sector, with
particular emphasis on critical high-technology industries.
(F) Trends in direct investment, with particular emphasis
on critical high-technology industries.
(G) The best policy and practices at the Federal, State,
and regional levels regarding direct investment policy, with
specific reference to programs and policies that have the
greatest potential to increase direct investment in the
United States and enhance United States competitive advantage
relative to foreign countries. Particular emphasis should be
given to attracting direct investment in critical high-
technology industries.
(H) Policies, programs, and practices in foreign countries
designed to attract direct investment that are not in
compliance with the WTO Agreement and the agreements annexed
to that Agreement.
(2) Certain factors taken into account in making
analysis.--In making any analysis under paragraph (1), the
Under Secretary shall take into account--
(A) the relative impact of policies, programs, and
practices of foreign governments on United States commerce;
(B) the availability of information to document the effect
of policies, programs, and practices;
(C) the extent to which such act, policy, or practice is
subject to international agreements to which the United
States is a party; and
(D) the impact trends in direct investment have had on--
(i) the competitiveness of United States industries in the
international economy, with particular emphasis on critical
high-technology industries;
(ii) the value of goods and services exported from and
imported to the United States;
(iii) employment in the United States, in particular high-
wage employment; and
(iv) the provision of health care, pensions, and other
benefits provided by companies based in the United States.
(c) Assistance of Other Agencies.--
(1) Furnishing of information.--The head of each department
or agency of the executive branch of the Government,
including any independent agency, is authorized and directed
to furnish to the Under Secretary, upon request, such data,
reports, and other information as is necessary for the Under
Secretary to carry out the functions under this Act.
(2) Restrictions on release or use of information.--Nothing
in this subsection shall authorize the release of information
to, or the use of information by, the Under Secretary in a
manner inconsistent with law or any procedure established
pursuant thereto.
(3) Personnel and services.--The head of any department,
agency, or instrumentality of the United States may detail
such personnel and may furnish such services, with or without
reimbursement, as the Under Secretary may request to assist
in carrying out the functions of the Under Secretary.
(d) Annual Revisions and Updates.--The Under Secretary
shall annually revise and update the Report described in
subsection (a).
SEC. 6. ANNUAL DIRECT INVESTMENT AGENDA.
(a) In General.--Not later than April 30, 2007, and on or
before March 31 of each succeeding calendar, the Under
Secretary shall submit an agenda based on the data and
analysis described in section 5 for the preceding calendar
year, to the President and the appropriate congressional
committees. The agenda shall be known as the ``Annual Direct
Investment Agenda'' and shall include--
(1) an evaluation of the research and development program
expenditures being made in the United States with particular
emphasis to critical high-technology industries considered
essential to United States economic security and necessary
for long-term United States economic competitiveness in world
markets; and
(2) proposals that identify the policies, programs, and
practices in foreign countries and that the United States
should pursue that--
(A) encourage direct investment in the United States that
will enhance the country's competitive advantage relative to
foreign countries, with particular emphasis on critical high-
technology industries;
(B) enhance the viability of the manufacturing sector in
the United States;
(C) increase opportunities for high-wage jobs and promotes
high levels of employment;
(D) encourage economic growth; and
(E) increase opportunities for the provision of health
care, pensions, and other benefits provided by companies
based in the United States.
(b) Consultation With Congress on Annual Direct Investment
Agenda.--The Under Secretary shall keep the appropriate
congressional committees currently informed with respect to
the Annual Direct Investment Agenda and implementation of the
Agenda. After the submission of the Agenda, the Under
Secretary shall also consult periodically with, and take into
account the views of, the appropriate congressional
committees regarding implementation of the Agenda.
SEC. 7. UNITED STATES DIRECT INVESTMENT PROMOTION COMMITTEE.
(a) Establishment.--The President shall establish and the
Under Secretary shall assume lead responsibility for an
Interagency United States Direct Investment Promotion
Committee. The functions of the Committee shall be to--
(1) coordinate all United States Government activities
related to the promotion of direct investment in the United
States;
(2) advocate and implement strategic policies, programs,
and practices that will increase direct investment in the
United States;
[[Page S5245]]
(3) train United States Government officials to pursue
strategic policies, programs, and practices that will
increase direct investment in the United States;
(4) consult with business, labor, State, regional, and
local government officials on strategic policies, programs,
and practices that will increase direct investment in the
United States;
(5) develop and publish materials that can be used by
Federal, State, regional, and local government officials to
increase direct investment in the United States;
(6) create and maintain a database of direct investment
opportunities in the United States;
(7) create and maintain an interactive website that can be
used to access direct investment opportunities in different
sectors and geographical areas of the United States, with
particular emphasis on critical high-technology industries;
(8) coordinate direct investment marketing activities with
State Economic Development Agencies; and
(9) host regular meetings and discussions with State,
regional, and local economic development officials to
consider best policy practices to increase direct investment
in the United States.
(b) Members.--The Committee shall be composed of the
following:
(1) The Secretary of Commerce.
(2) The United States Trade Representative.
(3) Members of the United States International Trade
Commission.
(4) The Secretary of the Treasury.
(5) Members of the National Economic Council.
(6) The Secretary of Agriculture.
(7) Such other officials as the President determines to be
necessary.
SEC. 8. DESIGNATION OF ADDITIONAL RENEWAL COMMUNITIES.
Section 1400E of the Internal Revenue Code of 1986
(relating to designation of renewal communities) is amended
by adding at the end the following new subsection:
``(h) Additional Designations Permitted.--
``(1) In general.--In addition to the areas designated
under subsection (a), the Under Secretary of Commerce for
United States Direct Investment, after consultation with the
Secretary of the Treasury, may designate in the aggregate an
additional 10 nominated areas as renewal communities under
this section, subject to the availability of eligible
nominated areas.
``(2) Period designations may be made and take effect.--A
designation may be made under this subsection after the date
of the enactment of this subsection and before the date which
is 5 years after such date of enactment. Subject to
subparagraphs (B) and (C) of subsection (b)(1), a designation
made under this subsection shall remain in effect during the
period beginning with such designation and ending on the date
which is 8 years after such designation.
``(3) Application of rules.--Except as otherwise provided
in paragraph (1), the rules of this section shall apply to
designations under this subsection.''.
Mr. LUGAR. Mr. President, I rise today in support of S. 3171, the
United States Direct Investment Act of 2006, introduced by Senator
Bingaman and myself. At a time when commerce routinely crosses national
borders, the U.S. should be positioned to compete in all arenas. That
means not only strengthening the ability of American business to invest
and sell their products in foreign markets, but equally important,
attracting foreign companies to the American market. Other nations
actively recruit and provide incentives for global companies to set up
operations and create new jobs within their borders. We must do the
same.
To this end, we propose to establish a framework within the
Department of Commerce to specifically study how we can better
encourage global companies to invest and set up businesses on our
shores. It is essential as well, that we determine where this
investment is needed. There are certain communities in the U.S. that
are in extreme need of an infusion of economic growth and the
opportunity to take part in the global economy. The U.S. has a talented
and skilled workforce. We need to lead foreign companies and
entrepreneurs to the cities and towns where they can find the resources
they require. If this information is readily available, and if we
provide incentives for companies to come, we will significantly
increase the amount of foreign investment coming into our country.
In 2005, foreign companies accounted for $129 billion worth of
investments in the United States. This money translates into jobs and
prosperity for Americans. The best way to ensure that this valuable
investment is spread more widely throughout the 50 States is by
conducting the sort of analysis proposed in this bill. We should keep
track of both the quantity of investment attracted to each particular
state and region, and as well as the types of investment foreigners
make, particularly in the high technology industry. We should conduct
an analysis of the industries that are investing in the U.S. compared
to the industries that are going to other countries. We also need to
assess which policies and programs have had the most success in
attracting foreign investment.
It is particularly important to attract research and development and
high technology industries. These have a multiplier effect that helps
increase the overall competitiveness of the American economy. We should
create incentives for high technology companies to develop and invest
in a U.S. presence and workforce.
Another key feature of the bill is consultations with local and
regional authorities, as well as Congress. The administration should
determine the needs of particular localities and what the federal
government can do to assist local efforts in attracting foreign
investment. Congress should also be consulted so that information can
be relayed regarding regions of the country that are suffering from a
lack of high wage jobs.
Global business ties are vital tools in shaping our international
business and foreign policy. Cooperation on the commercial front
enhances our ability to work with nations on other matters, including
security and intelligence. This bill offers a positive solution to the
concerns over domestic job growth by seeking to ensure that
globalization is a two-way street with more investment traffic flowing
in our direction.
______
By Mr. LEAHY:
S. 3175. A bill to amend title 35, United States Code, with respect
to establishing procedures for granting authority to the Under
Secretary for Commerce for Intellectual Property and Director of the
Patent and Trademark Office to grant compulsory patent licenses for
exporting patented pharmaceutical products to certain countries
consistent with international commitments made by the United States,
and for other purposes; to the Committee on the Judiciary.
Mr. LEAHY. Mr. President, I am today introducing a bill which can be
the catalyst for saving the lives or improving the health of millions
of families in impoverished nations.
In far too many nations, thousands of children die needlessly each
month.
The concept of my bill--called the Life-Saving Medicines Export Act
of 2006--is easy to summarize.
It allows U.S. companies to make low-cost generic versions of
patented medicines for export to impoverished nations that face public
health crises but cannot produce those life-saving medicines for
themselves.
This bill is based on World Trade Organization agreements permitting
nations with pharmaceutical industries to help nations in need.
That WTO agreement was labeled by U.S. Ambassador Portman as ``a
landmark achievement that we hope will help developing countries
devastated by HIV and AIDS and other public health crises.''
Apart from the pressing need for this step in humanitarian terms,
passage of this bill could go a long way in improving U.S. relations
with large segments of the world's population.
On December 6, 2005, the Office of the U.S. Trade Representative
announced that it ``welcomes'' efforts to ``allow countries to override
patent rights when necessary to export life-saving drugs to developing
countries that face public health crises but cannot produce drugs for
themselves.''
I am concerned, however, that the administration has taken no steps
whatsoever to begin to implement that agreement. No implementing
legislation has been provided to the Hill. I was informed just today
that the administration has ``no present plans'' to propose legislation
to implement that international agreement. I am disappointed with that
answer but am pleased that the administration expressed a willingness
to work with me on this important effort. I will forward my bill to
them later today.
Indeed, the World Health Assembly and the World Health Organization
have adopted resolutions urging all WTO member nations with a generic
capability to adopt laws that implement that agreement.
The World Bank recently issued a guide and model documents on how
[[Page S5246]]
best to implement that international agreement. My bill follows their
model.
Like a generation ago, infectious and parasitic diseases remain the
major killers of children in the developing world. Many of these
diseases--measles, malaria, river blindness--we can prevent or cure.
But those countries still lack the public health systems and the vital
medicines.
Every hour, more than 500 African mothers lose a child, mostly from
diseases caused by contaminated water.
In some sub-Saharan countries, HIV infection rates range as high as a
third of the adult population, and for this reason 35 percent of
African children are at higher risk of death than they were a decade
ago.
Despite these grim statistics, there is a brighter side.
We are far more aware today of how much our own health depends on
what takes place half a world away. Whether it is AIDS, SARS, West Nile
Virus, the Avian Flu, or some as yet unknown infectious disease, we are
all at risk, and only an airplane flight away, from wherever the
outbreak may occur.
Because of this new awareness, global health is finally recognized as
an issue of national security. It may seem obvious today, but even ten
years ago it was not.
Health threats that once concerned only medical personnel, now
receive the attention of the highest levels of governments. We are
supporting policies and programs to help the poorest countries conduct
better surveillance and respond more quickly to protect their own
people, and to prevent the spread of disease.
There is a great deal more we need to do. Today, 15 percent of the
world's people consume 91 percent of the world's pharmaceuticals. The
high price of many life-saving medicines--medicines that we take for
granted in this country--is beyond reach for billions of the world's
most vulnerable populations.
President Franklin Roosevelt said: ``The test of our progress is not
whether we add more to the abundance of those who have much, it is
whether we provide enough for those who have little.''
Imagine if you, or a loved one, were dying and you knew the medicine
to cure the disease exists and costs only a few dollars, but you have
no way to get it or to pay for it. That is a reality for millions of
people today.
Reports by UNICEF, UNAIDS, and Doctors without Borders clearly show
that the high price of many life-saving medicines is a significant
barrier to their availability in many very low income areas of the
world. Indeed, the 4th Global Report of UNAIDS notes the extremely low
rate of treatment for HIV/AIDS in those areas by pointing out that of
the 5 to 6 million urgently in need of antiretroviral medicines, only
some 400,000 were receiving them.
With respect to AIDS, a recent book by Philip Hilts called
``Prescription for Survival'' notes the importance of offering
affordable medicines to populations of impoverished nations:
``It was said that the price of the drugs was killing tens of
thousands . . .''
Under my bill, U.S. generic manufacturers would be allowed to make
generic versions of patented drugs without the consent of the patent
holders.
Those patent holders would receive compensation in the form of a
royalty payment under a so-called ``compulsory license'' and the
generic companies would then be required to sell those less-expensive
generic drugs only to least-developed or developing nations.
Use of a compulsory license occurs when Congress determines that
there is an important need which should be addressed.
For example, most Americans do not realize that their network
television programs received by satellite or by cable are provided
under a compulsory license. The program owners receive a royalty for
their programs under a formula.
This way American families can watch network TV programming over
satellite or cable just like it is made available over-the-air. This
same compulsory license approach, except with respect to patented
medicines, is employed in this bill.
The WTO agreement contains language designed to protect the interests
of the patent holders by focusing its benefits on areas of the world
where these important medicines would not otherwise be available except
for some of the wealthiest residents.
Thus, implementation of the agreement would not take business away
from the companies owning the patents, sometimes referred to as the
``brand-name'' companies, since their medicines are not purchased by
low-income families in those impoverished nations.
In addition, the patent holders will receive royalties from the
generic companies under the bill. Third, generic versions of products
sold under the agreement have to be clearly marked as not for resale to
developed nations. This will mean that the bill should not result in
undercutting the high-priced sales of those medicines by the brand-name
companies in developed nations.
Thus, the bill addresses both the urgent needs of millions of low-
income families in impoverished nations while protecting the interests
of the patent owners of these life-saving medicines.
There have been significant voluntary efforts made by brand-name
pharmaceutical companies, foundations, and non-profits who have donated
life-saving medicines and have donated time, personnel and money to
help in the fight against deadly diseases in other nations. I commend
and greatly appreciate those efforts.
Some funding mechanisms have been started including the Global Fund
to Fight AIDS, Tuberculosis and Malaria and President Bush's Millennium
Challenge Account. Nonetheless, much remains to be done.
If this bill is enacted it would complement the above efforts and
implement the WTO agreements and make low-cost life-saving
pharmaceutical products, and other medicines, available to hundreds of
thousands of persons without other access to those products.
To provide a little history, I am very pleased that all the member
nations of the World Trade Organization, WTO, agreed to this approach
to assist people suffering from life-threatening diseases in least-
developed or developing nations. Under this international agreement,
nations such as the United States with pharmaceutical industries would
be allowed to make and sell generic medicines to nations in need even
if the patent owners of those medicines refused to authorize such
manufacture and sale.
As I said earlier, on December 6, 2005, the United States announced
that it ``welcomes'' the WTO amendment to ``allow countries to override
patent rights when necessary to export life-saving drugs to developing
countries that face public health crises but cannot produce drugs for
themselves.'' The amendment will go in effect, for those nations which
adopt it, once \2/3\ of the member nations adopt it. The current waiver
approach, allowing nations to implement it now, will remain in place
until the permanent amendment is adopted. This permits the U.S. to move
forward with this effort this year. Indeed, Canada has already passed
implementing legislation.
Participation by any nation which wants to export such generic
products is voluntary. In order to participate, each country must pass
legislation to implement the WTO agreement. The United States needs to
act as soon as possible.
This is a moral issue. I am working with a number of religious
groups, humanitarian organizations, international assistance groups,
and generic drug companies on this effort. I have also received input
from some pharmaceutical brand-name companies and hope a few will step
forward and be leaders in this effort. I will also reach out across the
aisle to try to form a bipartisan coalition.
Two recent World Health Organization annual reports, the World Health
Reports for 2003 and 2004, demonstrate the enormous scope of the need
for supplying these medicines to needy countries. The ``Life-Saving
Medicines Export Act of 2006'' that I am introducing today would allow
the U.S. generic industry to respond to these urgent international
needs and could save millions of lives in impoverished nations.
Canada, Norway and the Netherlands have already enacted such
legislation or rule changes. However, aspects of the Canadian law have
been an impediment to the willingness of generic companies to
participate. For example,
[[Page S5247]]
that law allows Canadian generic companies to provide such medicines
for at most only 4 years. The Canadian version permits dilatory and
needless litigation, omits important medicines from a complex list of
covered drugs, and creates unnecessary bureaucratic hoops.
I have received input from generic companies and my bill addresses
all of those concerns. For example, it would provide that a
participating generic manufacturer could provide such medicines for up
to 14 years which makes it much more likely that U.S. generic companies
would make the investments needed to make low-cost medicines for export
to impoverished areas.
Under my bill, U.S. generic manufacturers would be allowed to make
generic versions of patented drugs without the consent of the patent
holders. Those patent holders would receive compensation, a royalty
payment, under a so-called ``compulsory license'' and the generic
companies would then be required to sell those less-expensive generic
drugs only to least-developed or developing nations.
The WTO agreement contains language designed to protect the interests
of the patent holders by focusing its provisions on areas of the world
where these important medicines would not otherwise be available except
for some of the wealthiest residents. Thus, implementation of the
agreement would not take business away from the companies owning the
patents, sometimes referred to as the ``brand-name patent holders since
their medicines are not purchased by low-income families in those
impoverished nations. There may be de minimis losses of profits for
brand-name patent holders but certainly the humanitarian and self-
interest benefits provided by the bill would massively outweigh those
concerns.
In addition, the patent holders will receive royalties from the
generic companies under the bill. Third, generic versions of products
sold under the agreement have to be clearly marked as not for resale to
developed nations. This should mean that the bill will not result in
undercutting the high-priced sales of the patented medicines in
developed nations. Re-exporting of these generic products is prohibited
unless it is part of a regional trade alliance among impoverished
nations as permitted under the WTO agreements.
Thus, the bill addresses both the urgent needs of millions of low-
income families in impoverished nations while protecting the interests
of the patent owners of these life-saving medicines and will hopefully
help enhance America's image in the world.
For those only interested in self-interest rather than humanitarian
aid, note that because of the globalization of travel our Nation is at
risk from failure to contain diseases in other nations. America has a
strong self-interest in combating diseases in foreign nations. A
surprising number of new diseases have emerged in recent years. Some of
these new diseases are variations of existing diseases. The volume of
people and cargo going to and from distant nations is astounding.
According to ``Rx for Survival'' by Philip Hilts, if you count only
travel between nations with a heavy burden of disease and those with
less disease, more than a million people a week are making the trip.
The more viruses and bacteria mutant inside animals and people, and
the more people and goods travel throughout the world, the more
residents living in the United States are at risk of being harmed by
dangerous diseases.
The National Intelligence Estimate of January 2000, published by the
CIA and the National Intelligence Council noted that: ``New and
emerging infectious diseases will pose a rising global health threat,
and will complicate U.S. and global security over the next 20 years.
These diseases will endanger U.S. citizens at home and abroad, threaten
United States armed forces deployed overseas and exacerbate social and
political instability in key countries and regions.''
I hope all my colleagues will join me in supporting this effort. Here
is my section-by-section summary of the bill.
Section 1: Sets forth the name of the Act as the ``Life-Saving
Medicines Export Act of 2006.''
Section 2: States that the purpose of the Act is to promote public
health under World Trade Organization agreements by permitting the
export of generic versions of life-saving patented pharmaceutical
products and other medicines including diagnostic tools and vaccines
needed to prevent or treat potentially life threatening diseases to
residents of impoverished countries with insufficient or no
manufacturing capacity to make the medicines. The findings set forth
determinations by the World Health Organization concerning the millions
of low-income persons without regular access to medicines in lesser-
developed or developing nations.
Section 3: This section requires the Director of the United States
Patent and Trademark Office to issue a compulsory license (permission
to make and sell a patented product under this new Act) to permit
generic companies to make and export medicines under the terms of WTO
international agreements under several conditions.
The recipient country must be a least-developed nation, as defined by
the United Nations, or a developing nation without the ability to
manufacture the medicine in question.
The recipient country, called an ``eligible country'' in the bill,
must notify the WTO of its interest in participating in this program.
Efforts must have been made by the generic company to buy the right
to make and sell the medicine under normal business arrangements with
the patent holders.
The medical product exported under this Act must be for life-
threatening public health problems and can only be used in least-
developed or developing nations, and is not for re-export except in
identified circumstances relating to regional trade alliances.
Special labeling and packaging must be used to make clear that the
product is sold under the authority of the WTO agreement only for use
as allowed under agreement and this bill.
The permission to make and sell the product, the license, can not
exceed 7 years, except that the license may be extended once.
The holder of the compulsory license shall pay a royalty to the
patent holder, as determined by the Director of the PTO within a
limited range of possible rates set forth in the bill, taking into
account such factors as humanitarian needs, the economic value to the
importing nation, and the need for low-cost pharmaceutical products by
persons in the importing nation.
The maximum royalty for any shipment shall not exceed 4 percent times
the commercial value of the pharmaceutical products to be exported
under this Act under that supply agreement.
An alternative royalty payment approach, modeled after the approach
enacted into law by Canada, would also be permitted with the same 4
percent maximum. In addition, the Director may accept combined
applications from multiple eligible countries. Note that in emergency
situations the Director may waive provisions of the bill in a manner
consistent with the WTO agreements.
Section 4: This section makes clear that compulsory licenses issued
under this Act shall not be considered an infringement of a patent.
Section 5: This section creates a diverse advisory board of academic,
patent, trade, medical, international aid, and industry experts to
advise the Director, and to report to the Congress, on ways to improve
implementation of the bill to achieve its purposes. Mandatory funding
for the board is provided out of the general fund of the U.S. at $1.5
million in fiscal years 2007 and 2008, with modestly declining amounts
provided in subsequent years through 2011.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3175
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 ``Life-Saving Medicines Export
Act of 2006''.
SEC. 2. PURPOSES AND FINDINGS.
(a) Purpose.--The purpose of this Act is to promote public
health by permitting the export of life-saving pharmaceutical
products and other medicines manufactured in the United
States by compulsory license to residents of participating
countries with insufficient or no manufacturing capability in
the pharmaceutical sector for the product in
[[Page S5248]]
question consistent with the General Council Decision of the
World Trade Organization.
(b) Findings.--Congress finds the following:
(1) The United States Trade Representative recently
announced that it ``welcomes'' the World Trade Organization
amendment to ``allow countries to override patent rights when
necessary to export life-saving drugs to developing countries
that face public health crises but cannot produce drugs for
themselves.''. United States Ambassador Portman called this
``a landmark achievement that we hope will help developing
countries.''.
(2) Compulsory licensing of patents is a ``fixture in
almost all patent systems'' in the world as noted in the
Berkeley Technology Law Journal in 2003. By the end of the
1950s, for example, an estimated 40,000 to 50,000 compulsory
licenses were issued regarding patents in the United States.
(Access to Patented Medicine in Developing Countries, F.M.
Scherer, www.cmhealth.org/docswg4; World Health
Organization). Indeed, the WHO paper notes that the ``United
States has led the world in issuing compulsory licenses to
restore competition when violations of the antitrust laws
have been found, or in the negotiated settlement of antitrust
cases before full adjudication has occurred.''
(3) The vast majority of people living in developing
countries or least developed nations have limited or no
access to many medicines that are saving and extending lives
of those in other, more developed nations. Since sales of the
patented, brand-name versions of such medicines are minimal
or non-existent in many impoverished regions of the world
providing generic versions of those medicines under the WTO
General Council Decision will have minimal impact on the
sales of brand-name, patented versions in such regions.
(4) The World Health Organization has estimated that \1/3\
of the world's population lacks regular access to essential
medicines, including antiretroviral drugs, and that a number
of essential medicines are under patent.
(5) Medicines and vaccines are needed throughout the world
to combat newly arising public health threats such as the
avian flu. A United States National Intelligence Estimate in
January 2000 notes that ``New and emerging infectious
diseases will pose a rising global health threat. . .''.
(6) Millions of people with HIV/AIDS in developing
countries need antiretroviral drugs. More than 40,000,000
people worldwide have HIV and 95 percent of them live in
developing countries. Malaria, tuberculosis, and other
infectious diseases kill millions of people a year in
developing nations.
(7) Comprehensive reports of the World Health Organization
of the United Nations, in 2004 and 2005 detail the urgent
need for pharmaceutical products in developing countries and
in least developed nations.
(8) The World Trade Organization decisions of August 30,
2003, on access to generic medicines is now being considered
by member nations of the World Trade Organization for
ratification as a permanent amendment to the WTO Agreement on
Trade Related Aspects of Intellectual Property Rights.
SEC. 3. EXPORTATION OF PHARMACEUTICAL PRODUCTS FOR PUBLIC
HEALTH PURPOSES.
(a) In General.--Chapter 29 of title 35, United States
Code, is amended by inserting after section 297 the
following:
``Sec. 298. Exportation of pharmaceutical products for public
health purposes
``(a) Definitions.--In this section:
``(1) Eligible country.--The term `eligible country' means
a country that--
``(A)(i) is designated by the United Nations as a least
developed country; or
``(ii) if not so designated--
``(I) has certified to the General Council that the country
seeks to participate in the compulsory licensing system under
this section as authorized by the General Council Decision;
or
``(II) has certified through an official government finding
if not a member of the World Trade Organization, that the
country does not possess sufficient manufacturing capacities
to produce the pharmaceutical product that such country seeks
to import under this section;
``(B) has provided notice to the Director describing such
lack of sufficient manufacturing capacities; and
``(C) has not terminated that country's participation in
such compulsory licensing system by certifying to the General
Council or to the Director that it no longer desires to
participate in such a system.
``(2) General council.--The term `General Council' means
the General Council of the WTO established by paragraph (2)
of Article IV of the Agreement Establishing the World Trade
Organization entered into on April 15, 1994.
``(3) General council decision.--The term `General Council
Decision' means the decision of the General Council of 30
August 2003 on the Implementation of Paragraph 6 of the Doha
Declaration on the TRIPS Agreement and Public Health and the
WTO General Council Chairman's statement accompanying the
Decision (JOB(03)/177, WT/GC/M/82) (collectively known as the
`TRIPS/health solution').
``(4) Generic manufacturer.--The term `generic
manufacturer' means, with respect to a pharmaceutical
product, a manufacturer that does not hold the patent to such
pharmaceutical product or is not otherwise authorized by the
patent holder to make use of the invention.
``(5) Pharmaceutical product.--The term `pharmaceutical
product' means any patented product, or pharmaceutical
product, including components of that product, manufactured
through a patented process, of the pharmaceutical sector
including any drug, active ingredient of a drug, diagnostic,
or vaccine needed to prevent or treat potentially life
threatening public health problems, including those listed in
Paragraph 6 of the Doha Declaration on the TRIPS Agreement
and Public Health.
``(6) TRIPS agreement.--The term `TRIPS Agreement' means
the Agreement on Trade-Related Aspects of Intellectual
Property Rights (described in section 101(d)(15) of the
Uruguay Round Agreements Act (19 U.S.C. 3501 note)).
``(7) World trade organization.--The term `World Trade
Organization' means the organization established pursuant to
the WTO Agreement.
``(8) WTO agreement.--The term `WTO Agreement' means the
Agreement Establishing The World Trade Organization entered
into on April 15, 1994.
``(9) WTO.--The term `WTO' has the meaning given that term
in section 2 of the Uruguay Round Agreements Act (19 U.S.C.
3501).
``(10) Uruguay round agreements.--The term `Uruguay Round
Agreements' has the meaning given such term in section 2(7)
of the Uruguay Round Agreements Act (19 U.S.C. 3501(7)).
``(b) Issuance of Compulsory License.--Notwithstanding any
other provision of part II or this part, and subject to
subsections (c) and (d), the Director shall issue a
compulsory license to a generic manufacturer of a
pharmaceutical product or a patented product under this
section consistent with the Life-Saving Medicines Export Act
of 2006 for the purposes of--
``(1) manufacturing and exporting to an eligible country,
(including using nongovernmental agencies to assist in
handling and distribution to eligible countries) such
pharmaceutical products, including exporting for the purpose
of foreign testing and certification and other activities
reasonable related to such manufacturing and exporting; and
``(2) such other purposes under that Act.
``(c) Application for Compulsory License.--
``(1) In general.--
``(A) Submission.--Except as provided under subsection (g),
a generic manufacturer that seeks to manufacture and export a
pharmaceutical product to an eligible country (including
through the use of a nongovernmental organization) shall
submit to the Director an application as developed by the
Director for a compulsory license as described in this
section.
``(B) Assistance.--The Director shall establish an office
within the Patent and Trademark Office to assist--
``(i) applicants under this section, including aiding
persons in identifying what patents cover which
pharmaceutical products and in providing other advice and
guidance to facilitate the filing of complete applications;
and
``(ii) eligible countries, nongovernmental organizations,
or nations likely to become eligible countries, identify
companies in the United States which could provide
pharmaceutical products under this section to such countries.
``(2) Content of application.--The Director shall approve
an application submitted under paragraph (1) if such
application contains--
``(A) the name of the pharmaceutical product to be
manufactured and exported under the license;
``(B) an estimate of the quantities of the pharmaceutical
product to be manufactured and exported under the license and
a stipulation that the amount manufactured and exported shall
not exceed the amount necessary to meet the needs of the
eligible country;
``(C) for each patented invention to which the application
relates--
``(i) the name of the patent holder and the applicable
patent number; or
``(ii) a statement by the applicant on information and
belief of the name of the patent holder and applicable patent
number;
``(D) the name of the eligible country to which the
pharmaceutical product will be exported and the name of any
nongovernmental organization which will assist in the effort;
``(E)(i) copies of the notifications of the eligible
countries that are member countries of the WTO, as defined in
the General Council Decision, made to the Council for TRIPS
regarding notifications set forth under 2(a) of such
Decision; and
``(ii) for eligible countries that are not member countries
of the WTO, a copy of the information required by the
notification as set forth under 2(a) of such Decision
published on a public website and the address of such
website;
``(F) a copy of a written request for a voluntary license
sent by registered mail to each patent holder, which shall
have occurred during a period of at least 60 days before the
submission of the application to the Director, and a brief
description of any subsequent negotiations;
``(G) copies of--
``(i) notifications required under the General Counsel
Decision;
``(ii) the name of the authorized designated official of
the eligible country, or a nongovernmental organization duly
authorized to assist in the distribution of pharmaceutical
products--
[[Page S5249]]
``(I) from whom the generic manufacturer has received a
specific request for a pharmaceutical product and is taking
steps to prepare such product or related products; or
``(II) with whom the generic manufacturer has reached an
agreement to manufacture and export the pharmaceutical
product; or
``(iii) a copy of a valid license, other authorization, or
communication issued by a potential eligible country
permitting import of the pharmaceutical product from the
United States; and
``(H) an agreement or understanding entered into by the
applicant to comply with the conditions described under
subsection (d) and with the provisions of the General Council
Decisions; and
``(I) any additional information reasonably required by the
Director, including information necessary to ensure the
identification of the product that is the subject of the
application.
``(3) Combined license applications.--The Director may--
``(A) establish procedures to permit a combined license
application from more than 1 eligible country;
``(B) issue a multi-country license if appropriate;
``(C) issue rules based on the requirements of this section
relating to separate country applicants, in consultation with
the National Advisory Board on Implementation of the General
Council Decision established under section 5 of the Life-
Saving Medicines Export Act of 2006, except for modifications
made to accommodate applying the rules for 1 country to
applications filed by more than 1 eligible country in the
same filing; and
``(D) waive any record keeping, application, or related
provision of this subsection to the extent necessary to
implement this paragraph for any combined application from
multiple countries.
``(4) Action by director.--
``(A) In general.--Not later than 60 days after the
submission of an application, the Director shall approve or
deny that application.
``(B) Conditional denial.--The Director may deny an
application and request additional information or evidence to
be submitted within 30 days after making the request. If
additional information or evidence is submitted within the
30-day period, the Director shall make a final approval or
denial of the application within 60 days after the date of
submission of the additional information or evidence.
``(5) Appeal of denial.--An applicant may seek review of a
final adverse decision of the Director, including any adverse
decision based on failure to comply with any provision of
paragraph (2) in the United States Court of Appeals for the
Federal Circuit. The judgement of such court shall be subject
to final review by the Supreme Court upon certiorari in the
manner prescribed in section 1254 of title 28. The United
States Court of Appeals for the Federal Circuit shall decide
all relevant questions of law, provide appropriate orders,
relief, or judgments, and shall hold unlawful and set aside
any determination of the Director that the court finds to
be--
``(A) arbitrary, capricious, an abuse of discretion,
inconsistent with this section, or otherwise not in
accordance with law;
``(B) contrary to constitutional right, power, privilege,
or immunity;
``(C) in excess of statutory jurisdiction, authority, or
limitations, or in violation of a statutory right; or
``(D) without observance of procedure required by law.
``(d) Conditions of License.--Under rules issued by the
Director, the following conditions shall apply to a
compulsory license issued under this section:
``(1) The pharmaceutical product--
``(A) shall be a generic version of a patented product
approved as safe and efficacious by the World Health
Organization of the United Nations or the United States Food
and Drug Administration; and
``(B) shall be manufactured solely for export to the
eligible country listed in the application under subsection
(c); and
``(C) shall not be exported to any other country except for
nation parties to a regional trade agreement as set forth in
paragraph 6(i) of the General Council Decision.
``(2) The pharmaceutical product, or the label or packaging
of the pharmaceutical product, for export shall be--
``(A) clearly identified as being produced under the system
set out in the General Council Decision; and
``(B) distinguished from the pharmaceutical product or its
label or packaging manufactured by the patent holder through
labeling, shaping, sizing, marking, special packaging, or
other means or combinations of means, which shall be
consistent with paragraph 2(b)(ii) of the General Council
Decision and include--
``(i) a statement that such pharmaceutical product has been
manufactured solely for export to the specific eligible
country or to nation parties to a regional trade agreement as
provided for in paragraphs 6(i) and 6(ii) of the General
Council Decision and is not approved for marketing in the
United States;
``(ii) a statement indicating that the pharmaceutical
product is subject to a compulsory license issued to the
generic manufacturer; and
``(iii) any other markings determined appropriate by the
Director to distinguish such pharmaceutical product from the
patented pharmaceutical product, which may include a
different trademark name or distinctive color or shaping, so
long as--
``(I) such distinction is feasible and does not have a
significant impact on price and will not undermine the
humanitarian purposes of the Life-Saving Medicines Export Act
of 2006; and
``(II) the Director may temporarily waive the requirements
of the distinguishing marks under urgent circumstances for
limited quantities of such pharmaceutical products.
``(3) The term of such compulsory license shall expire on
the date that is the earliest of--
``(A) 7 years after the date of issuance of the license;
``(B) the date the importing country is no longer an
eligible country; or
``(C) on a petition from the original patent holder, on the
date that the Director, in consultation with the National
Advisory Board on Implementation of the General Council
Decision established under section 5 of the Life-Saving
Medicines Export Act of 2006, determines that the
circumstances that have led to the granting of the license
cease to exist and it appears probable that such
circumstances will not reoccur.
``(4) The licensee shall keep accurate records of all
quantities of products manufactured and distributed under its
license and shall make such records available upon request to
an independent person agreed to by the parties, or otherwise
approved by the Director, for the sole purpose of ensuring
whether the terms of the license have been met.
``(5) A generic manufacturer issued a license under this
section may notify the Director if the estimated quantity of
the pharmaceutical product set forth in the application and
subsection (c)(2)(B) will be insufficient to meet the
projected need during the remainder of the license period.
The Director shall adjust the estimated quantity to the
quantity proposed by the licensee unless compelling evidence
demonstrates that the proposed quantity is excessive.
``(e) Compensation to Patent Holder.--
``(1) In general.--The holder of a compulsory license under
this section shall pay to the patent holder a royalty in an
amount and by a date determined by the Director that shall
not be --
``(A) earlier than the date of each shipment for export of
the pharmaceutical product under the compulsory license; or
``(B) later than 45 days after the date of each shipment.
``(2) Amount of royalty.--In consultation with the
Secretary of Health and Human Services, the Director of the
National Institutes of Health, the Director of the United
States Agency for International Development, and the Director
of the Centers of Disease Control, the Director, when
determining a royalty amount under paragraph (1), shall
consider the following:
``(A) The provisions of paragraph 3 of the General Council
Decision and the need for the licensee under this section to
make a reasonable return sufficient to sustain a continued
participation in humanitarian objectives.
``(B) The humanitarian and noncommercial reasons for
issuing a compulsory license under this section.
``(C) The economic value to the importing country of the
use that has been authorized by the Director.
``(D) The need for low-cost pharmaceutical products by
persons in eligible countries.
``(E) Whether the importing country has a patent applicable
to the pharmaceutical product sought to be imported under
this section.
``(F) The ordinary levels of profitability in the United
States, of commercial agreements involving pharmaceutical
products, and any relevant international trends in relevant
prices as reported by the United Nations or other appropriate
humanitarian organizations or agencies for the supply of such
products for humanitarian purposes.
``(3) Royalty rate formulas.--
``(A) In general.--
``(i) Factors.--Except as provided in subparagraph (B), the
amount of the royalty payable to any patentee under this
subsection--
``(I) shall be based on considerations under paragraph (2);
and
``(II) shall not exceed the amount determined by
multiplying the commercial value of the pharmaceutical
product to be exported under the supply agreement by 4
percent.
``(ii) Multiple patentees.--If more than 1 patentee is due
a royalty for a pharmaceutical product under this section,
the amount of the royalty payable for the pharmaceutical
product shall be divided by the number of patentees.
``(B) Alternative royalty rate formula.--
``(i) In general.--
``(I) Establishment and use.--Subject to subclause (II),
the Director may establish and use an alternative royalty
rate formula under this subparagraph instead of the royalty
rate formula under subparagraph (A), if--
``(aa) the Director makes a determination that the
alternative royalty rate formula is more appropriate or
efficient to employ; and
``(bb) the alternative royalty rate formula is based on the
methodology described under clauses (ii) through (v).
``(II) Limitation.--If the royalty amount determined under
the alternative royalty rate formula under subclause (I)
exceeds the dollar amount determined by multiplying
[[Page S5250]]
the commercial value of the pharmaceutical product to be
exported under the supply agreement by 4 percent the royalty
amount shall be set at such dollar amount.
``(ii) Human development index countries.--If the name of
the country to which a pharmaceutical product is to be
delivered under this section is on the Human Development
Index maintained by the United Nations Development Program,
the rate for calculation of the royalty to be paid to any
patentee shall be determined by--
``(I) adding 1 to the total number of countries listed on
such Index;
``(II) subtracting from the sum determined under subclause
(I) the numerical rank on the Index of the country to which
the pharmaceutical product is to be exported;
``(III) dividing the difference determined under subclause
(II) by the total number of countries listed on the Index;
and
``(IV) multiplying the quotient determined under subclause
(III) by 0.04.
``(iii) Single and multiple patentees.--For a country
described under clause (ii), the amount of the royalty
payable to any patentee shall be determined--
``(I) if there is only 1 patentee, by multiplying the total
monetary value of the agreement pertaining to the
pharmaceutical product to be exported under this section by
the royalty rate determined in accordance with clause (ii);
and
``(II) if there is more than 1 patentee, by dividing the
amount determined under subclause (I) by the number of
patentees.
``(iv) Countries not on human development index.--If the
name of the country to which a pharmaceutical product is to
be delivered under this section is not on the Human
Development Index maintained by the United Nations
Development Program, the Director shall--
``(I) determine if relevant circumstances in that country
are reasonably similar to another country on that Human
Development Index;
``(II) if determining a similar country under subclause
(I), use the procedures under clause (ii) to determine a
royalty payment using the numerical rank of that other
country; and
``(III) if determining a royalty rate under subclause (II),
state the reasons for making the determination that the
country to which the product is to be exported was reasonably
similar to the country on such Index used in the calculation.
``(v) Regional trade agreements.--If the Director knows
during review of an application that the pharmaceutical
products are to be delivered under this section to parties to
a regional trade agreement where re-exportation is allowed
under paragraph 6(i) and (ii) of the General Council
Decision, the Director shall--
``(I) determine if relevant circumstances in those
countries are reasonably similar to a country on the Human
Development Index;
``(II) if determining a similar country under subclause
(I), use the procedures under clause (ii) to determine a
royalty payment based on the numerical rank of that other
country; and
``(III) if determining a royalty rate under subclause
(III), shall state the reasons for making the determination
that the countries to which the products are to be re-
exported under paragraph 6(i) and (ii) of such Decision were
reasonably similar to the country selected on such Index.
``(4) Notice of shipments.--Before each shipment of any
product manufactured under this section, the manufacturer
shall, within 15 days before such product is exported,
provide notice through registered mail specifying the
approximate quantity to be exported to--
``(A) the patentee;
``(B) the purchaser of the product; and
``(C) the Director.
``(f) Renewal of Compulsory License.--
``(1) In general.--A generic manufacturer that is the
holder of a compulsory license under this section may submit
to the Director an application to renew the compulsory
license.
``(2) Content of renewal application.--An application under
paragraph (1) shall contain--
``(A) an assurance that the quantities of the
pharmaceutical product authorized to be exported under the
renewal compulsory license will not be exported before such
original compulsory license ceases to be valid;
``(B) an assurance that the applicant has complied with the
terms, conditions, and royalty payment required under this
section; and
``(C) any other information that the Director may
reasonably require.
``(3) Timing of renewal.--An application for renewal shall
be submitted to the Director not later than 45 days before
the expiration date of the compulsory license.
``(4) Term of renewal.--The term of a renewed compulsory
license shall not exceed the term of the original compulsory
license.
``(5) Limitation.--A compulsory license may not be renewed
more than once.
``(g) Effect of Section.--To the extent authorized in
Article 31(b) of the TRIPS Agreement, nothing in this section
shall be construed as requiring an effort to obtain a
voluntary license in the event of--
``(1) a national emergency or other circumstances of
extreme urgency in the eligible country; or
``(2) a public noncommercial governmental use.
``(h) Emergencies and Circumstances of Extreme Urgency.--
``(1) Expedited approval.--
``(A) In general.--The Director may provide approval on an
expedited basis for a limited period of time to grant a
compulsory license regarding a pharmaceutical product to a
generic manufacturer to address a national emergency or other
circumstances of extreme urgency under such expedited
procedures as the Director determines appropriate.
``(B) Procedures.--Procedures under this paragraph may
include--
``(i) waiving any requirement to seek a voluntary license
from the patent holder; and
``(ii) delaying the determination of compensation until
after an approval is made.
``(2) Waiver.--In carrying out expedited approvals under
this subsection, the Director may temporarily waive any
provision of this section.
``(i) Notification to WTO.--The Director shall notify the
WTO of the issuance, termination, or renewal of a compulsory
license under this section and of the name and address of the
licensee, the product for which the license has been granted,
the quantities for which it has been granted, and the
countries to which the product is to be supplied.''.
(b) Establishment of Procedures.--
(1) In general.--The Under Secretary of Commerce for
Intellectual Property and Director of the United States
Patent and Trademark Office (referred to in this section as
the ``Director'') shall establish procedures for implementing
this Act and the amendments made by this Act.
(2) Report.--The Director shall annually submit to the
Committee on the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives a report that
describes the activities related to the implementation of
this Act and the amendments made by this Act.
(3) Regulations.--The Director may issue such regulations
as are necessary and appropriate to carry out this Act and
the amendments made by this Act.
(c) Technical and Conforming Amendment.--The table of
sections for chapter 29 of title 35, United States Code, is
amended by adding after the item relating to section 297 the
following:
``298. Exportation of pharmaceutical products for public health
purposes.''.
SEC. 4. NONINFRINGEMENT OF PATENT.
Section 271 of title 35, United States Code, is amended--
(1) by redesignating subsections (h) and (i) as subsections
(i) and (j), respectively; and
(2) by inserting after subsection (g) the following:
``(h)(1) It shall not be an act of infringement to
manufacture within the United States or for export outside
the United States any patented invention relating to a
pharmaceutical product (as defined under section 298) by any
person that--
``(A) is issued a compulsory license to manufacture and
sell that drug under section 298; and
``(B) manufactures and exports that drug in compliance with
all conditions of that license.
``(2) Subsection (d) (4) or (5) shall not apply to any
patent affected by a license described under paragraph (1) of
this subsection.''.
SEC. 5. NATIONAL ADVISORY BOARD ON IMPLEMENTATION OF THE
GENERAL COUNCIL DECISION.
(a) Definitions.--In this section:
(1) Board.--The term ``Board'' means the National Advisory
Board on Implementation of the General Council Decision
established under this section.
(2) Director.--The term ``Director'' means the Under
Secretary of Commerce for Intellectual Property and Director
of the United States Patent and Trademark Office.
(3) Eligible country.--The term ``eligible country'' means
a country that--
(A)(i) is designated by the United Nations as a least
developed country; or
(ii) if not so designated, does not possess sufficient
manufacturing capacities to produce the pharmaceutical
product that such country seeks to import under section 298
of title 35, United States Code (as added by this Act); and
(B) has provided notice to the Director describing such
lack of sufficient manufacturing capacities.
(4) General council.--The term ``General Council'' means
the General Council of the WTO established by paragraph (2)
of Article IV of the Agreement Establishing the World Trade
Organization entered into on April 15, 1994.
(5) General council decision.--The term ``General Council
Decision'' means the decision of the General Council of 30
August 2003 on the Implementation of Paragraph 6 of the Doha
Declaration on the TRIPS Agreement and Public Health and the
WTO General Council Chairman's statement accompanying the
Decision (JOB(03)/177, WT/GC/M/82) (collectively known as the
``TRIPS/health solution'').
(6) Generic manufacturer.--The term ``generic
manufacturer'' means, with respect to a pharmaceutical
product, a manufacturer that does not hold the patent to such
pharmaceutical product or is not otherwise authorized by the
patent holder to make use of the invention.
(7) Pharmaceutical product.--The term ``pharmaceutical
product'' means any patented pharmaceutical product, or
pharmaceutical product manufactured through a patented
process, including any drug, active
[[Page S5251]]
ingredient of a drug, diagnostic, or vaccine needed to
prevent or treat public health problems.
(8) TRIPS agreement.--The term ``TRIPS Agreement'' means
the Agreement on Trade-Related Aspects of Intellectual
Property Rights (described in section 101(d)(15) of the
Uruguay Round Agreements Act (19 U.S.C. 3501 note)).
(9) World trade organization.--The term ``World Trade
Organization'' means the organization established pursuant to
the WTO Agreement.
(10) WTO agreement.--The term ``WTO Agreement'' means the
Agreement Establishing The World Trade Organization entered
into on April 15, 1994.
(11) WTO.--The term ``WTO'' has the meaning given that term
in section 2 of the Uruguay Round Agreements Act (19 U.S.C.
3501).
(12) Uruguay round agreements.--The term ``Uruguay Round
Agreements'' has the meaning given such term in section 2(7)
of the Uruguay Round Agreements Act (19 U.S.C. 3501(7)).
(b) Establishment.--The Director shall establish the
National Advisory Board on Implementation of the General
Council Decision in accordance with the Federal Advisory
Committee Act (5 U.S.C. App.) to provide advice and guidance
regarding the implementation and administration of the
compulsory licensing program established under section 298 of
title 35, United States Code (as added by this Act),
including royalty amounts to be determined under that
section.
(c) Composition of the Board.--The Board shall be composed
of 10 members, of which--
(1) 1 shall be an individual who is an academic expert on
the subject of pharmaceutical matters and patent law;
(2) 2 shall be an individual with expertise relating to the
WTO, the TRIPS/health solution, and the General Council
Decision;
(3) 2 shall be an individual with expertise relating to the
needs of persons living in least-developed and developing
nations with respect to access to low-cost patented
pharmaceutical products;
(4) 2 shall be individuals who represent international
organizations, such as the United Nations, the World Bank,
international nongovernmental organizations, and religious
faiths, and who have expert knowledge regarding the General
Council Decision and the issues raised by that decision;
(5) 1 shall be a physician with experience in treating
persons with HIV/AIDS, malaria, tuberculosis, or other
infectious diseases;
(6) 1 shall be an individual representing major
pharmaceutical manufacturers in the United States; and
(7) 1 shall be an individual representing major generic
manufacturers of pharmaceutical products in the United
States.
(d) Appointments.--Not later than 120 days after the date
of enactment of this Act, the Director, in consultation with
the Director of the National Institutes of Health (or a
designee), the Director of the United States Agency for
International Development (or a designee), and the Director
of the Centers for Disease Control (or a designee) shall
appoint--
(1) the members of the Board described under subsection
(c)(1), (5), (6), and (7)--
(A) from nominations received from a request for
applications published in the Federal Register; and
(B) after engaging in other efforts to make institutions of
higher education within the United States, international
organizations, and groups representing the medical profession
aware of the solicitation for nominations;
(2) 1 member of the Board described under subsection
(c)(2), from recommendations of the Majority Leader of the
Senate;
(3) 1 member of the Board described under subsection
(c)(2), from recommendations of the Minority Leader of the
Senate;
(4) 1 member of the Board described under subsection (c)(3)
from recommendations of the Speaker of the House of
Representatives;
(5) 1 member of the Board described under subsection (c)(3)
from recommendations of the Minority Leader of the House of
Representatives; and
(6) 2 members of the Board described under subsection
(c)(4) from recommendations of the Secretary of State in
consultation with the United States Ambassador to the United
Nations.
(e) Term.--A member of the Board shall serve for a term of
4 years, except that the Director shall appoint the original
members of the Board for staggered terms of not more than 4
years. A member may not serve a consecutive term unless such
member served an original term that was less than 4 years.
(f) Meetings.--The Director shall convene--
(1) a meeting of the Board not later than 60 days after the
appointment of its members;
(2) subsequent meetings on a periodic basis; and
(3) at least 2 meetings a year during the first 4 years
after the date of enactment of this Act.
(g) Compensation and Expenses.--A member of the Board shall
serve without compensation. While away from their homes or
regular places of business on the business of the Board,
members of the Board may be allowed travel expenses,
including per diem in lieu of subsistence, as is authorized
under section 5703 of title 5, United States Code, for
persons employed intermittently in the Government service.
(h) Chairperson.--The Board shall select a chairperson for
the Board.
(i) Quorum.--A majority of the members of the Board shall
constitute a quorum for the purpose of conducting business.
(j) Decisive Votes.--Two-thirds of the votes cast at a
meeting of the Board at which a quorum is present shall be
decisive of any motion.
(k) Other Terms and Conditions.--The Director shall
authorize the Board to hire a staff director and shall detail
staff of the Patent and Trademark Office or allow for the
hiring of other staff and may pay necessary expenses incurred
by the Board in carrying out this section. The Director shall
provide technical assistance, work space, facilities, and
other amenities to facilitate the meetings and operations of
the Board. The Director, or designated staff, may attend any
such meetings and provide advice and guidance.
(l) Responsibilities of Board.--
(1) In general.--The Board shall provide recommendations to
the Director on the implementation of section 298 of title
35, United States Code (as added by this Act), including the
appropriate royalty rates for compensating patent holders
under that section.
(2) Technical advisory panels.--The Board may convene
technical advisory panels to provide scientific, legal,
international, economic, and other information to the Board.
(m) Evaluation and Reports.--
(1) In general.--The Board shall evaluate the
implementation and administration of section 298 of title 35,
United States Code (as added by this Act), and shall provide
periodic and special reports to the Director, the Secretary
of Health and Human Services, the National Institutes of
Health, the Director of the Centers for Disease Control, and
to the Committee on the Judiciary of the Senate and the
Committee on the Judiciary of the House of Representatives.
(2) Duties.--If the Director uses the compensation method
under section 298(e)(3)(A) of title 35, United States Code
(as added by this Act), the Board shall--
(A) not later than 160 days after the date of enactment of
this Act, begin to gather information regarding proposals for
the compensation of patent holders and shall carefully
examine various compensation options;
(B) not later than 240 days after the date of enactment of
this Act, submit preliminary recommendations to the entities
and officers described under paragraph (1);
(C) advise the Director on various matters raised by the
Director;
(D) submit a report to the Director, the Committee on the
Judiciary of the Senate and the Committee on the Judiciary of
the House of Representatives at least once each year on--
(i) recommendations for improving procedures or the
administration of the program established under that section;
and
(ii) other factual or policy matters which may provide
guidance or assistance to those Committees; and
(E) submit a report to the Director and the Committee on
the Judiciary of the Senate and the Committee on the
Judiciary of the House of Representatives on--
(i) the advantages and disadvantages which might result
from allowing nongovernmental organizations to be able to
apply to obtain a compulsory license under procedures similar
to those set forth in that section for such countries where
the national government declines to apply for such a license,
including an analysis of whether World Trade Organization
understandings would permit such an approach and how such an
approach might be implemented; and
(ii) whether this Act provides sufficient economic
incentives to generic companies for the research and
development of new generic products.
(n) Petitions.--The Board shall establish procedures under
which persons may petition the Board for the purpose of
evaluating various issues related to the implementation and
administration of section 298 of title 35, United States Code
(as added by this Act).
(o) Confidentiality.--Any confidential business information
obtained by the Board in carrying out this section shall not
be released to the public.
(p) Appropriations.--
(1) Amounts of appropriations.--There are appropriated out
of any money in the Treasury not otherwise appropriated to
the United States Patent and Trademark Office for purposes of
carrying out paragraph (2)--
(A) $1,500,000 for the fiscal year ending September 30,
2007;
(B) $1,500,000 for the fiscal year ending September 30,
2008;
(C) $1,300,000 for the fiscal year ending September 30,
2009;
(D) $1,100,000 for the fiscal year ending September 30,
2010; and
(E) $900,000 for the fiscal year ending September 30, 2011.
(2) Use of appropriations.--Amounts appropriated under
paragraph (1) shall be used for the expenses and activities
of the Board under this section, except no more than $200,000
of such amounts in each fiscal year may be used for the
expenses and activities of the Office established under
section 298(c)(B) of title 35, United States Code (as added
by this Act). Such amounts not obligated in any fiscal year
may be carried over into subsequent fiscal years, except that
any amounts not obligated by September 30, 2011, shall be
provided to the Secretary of the Treasury to be returned to
the United States Treasury.
[[Page S5252]]
(q) Termination.--The Board shall terminate on September
30, 2011.
______
By Mr. REID (for Mr. Rockefeller):
S. 3176. A bill to protect the privacy of veterans and spouses of
veterans affected by the security breach at the Department of Veterans
Affairs on May 3, 2006, and for other purposes; to the Committee on
Banking, Housing, and Urban Affairs.
(At the request of Mr. Reid, the following statement was ordered to
be printed in the Record.)
Mr. ROCKEFELLER. Mr. President, every American has the
justifiable expectation that the Federal Government will protect their
private personal information--information that they are required to
provide to a Federal agencies. It is a basic and fundamental
responsibility of government to make sure that this sensitive data is
handled appropriately, accessed only by authorized personal, and used
only for intended purposes.
Earlier this week, the Veterans Administration, VA, announced that
computer disks containing as many as 26.5 million veterans' personal
information were stolen from an employee who had taken the information
home. I, along with many of my colleagues, am outraged at this enormous
lapse in security. The Veterans Administration must make sure that
veterans are not harmed because of the agency's failure to protect
sensitive personal data.
This information includes veterans' social security numbers and dates
of birth, the underpinnings of almost all of our financial information.
In the wrong hands, this information can be used to steal a person's
identity causing substantial harm. All of us have constituents who have
been victims of identity theft. When a person's identity is stolen, it
can have devastating financial consequences for that person and that
family. Even if the financial harm is minimal, it often takes years to
clear your name. For our nation's veterans, many of whom are older and
disabled, identity theft poses even greater problems.
I understand that the Veterans Administration has launched an
internal investigation, but Congress must also conduct a thorough
investigation into how this security breach occurred. I want to know
why the Veterans Administration waited almost 3 weeks to inform our
nation's veterans and Congress of this breach. In my opinion, it is
inexcusable that veterans were not notified immediately that their
personal information had been stolen and were not given any guidance as
to the steps they should take to protect themselves from identity
theft. I understand the Veterans Administration Inspector General has
cited the agency for poor security policies and procedures. Congress
must also begin a comprehensive review of the agency's security
protocols and policies and force the agency to adopt stricter security
measures to make sure that the personal data our veterans are required
to provide the agency is not ever again at risk.
It is for this reason that I am introducing the Veterans' Privacy
Protection Act today. Although all Federal agencies need comprehensive
data privacy policies, this is a targeted bill to address the security
breach at the Veterans Administration on an urgent basis.
Congress has required the Federal Trade Commission to address
identity theft and its consequences. The agency has taken an aggressive
approach in combating this devastating crime. My bill would require the
Federal Trade Commission to develop a hotline explicitly for veterans
to provide the information, counseling, and help necessary to allow a
veteran to protect himself from the loss of personal data.
At this point, our legislative response must cover all 26.5 million
veterans that the Veterans Administration believes may have had their
personal information compromised. If further investigations
conclusively prove that fewer veterans are at-risk, my bill would
target services and support to the affected individuals. To help
veterans, my bill would make it easier for them to request a long-term
credit alert for their records so credit agencies are aware that their
personal information could be being used by others. It is my
understanding that a security freeze on an individual's record can have
a modest cost, and my bill would have the Veterans Administration cover
that cost.
Finally, my bill requires the General Accountability Office to
evaluate the Veterans Administration response to this incident and to
analyze the agency's security protocols. I believe that an independent
investigation could generate a number of recommendations to improve the
security of personal information not just in the Veterans
Administration but in all Federal agencies.
It is my great hope that a thorough investigation will find the
criminals responsible for the theft and determine that they were only
after the computer and not the millions of valuable private records of
our veterans. If in fact these thieves were after our veterans' data,
we will have a major catastrophe on our hands, inexcusably adding more
hardship to the lives of those who have so ably served their country.
Mr. President, today the Veterans Administration has failed our
Nation's veterans. It is inconceivable to me how any Federal agency
could have let this happen. We all have heard the stories during the
past year regarding massive breaches of private and confidential data
by private entities. The Federal Government acted quickly to respond to
these breaches and now it must act just as quickly if not more so to
address its own failings. My bill is a critical step in providing the
necessary assistance that millions of veterans may require, and I urge
my colleagues to act on it with the urgency this situation demands.
I ask unanimous constent that text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3176
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans Privacy Protection
Act of 2006''.
SEC. 2. FEDERAL TRADE COMMISSION PROGRAM FOR VETERANS AN
SPOUSES OF VETERANS AT RISK OF IDENTITY THEFT.
(a) Program Required.--The Federal Trade Commission shall,
in consultation with the Secretary of Veterans Affairs,
develop and implement a program to provide financial
counseling and support to any veteran or spouse described in
subsection (e).
(b) Access.--The program required by subsection (a) shall
be accessible through a toll-free telephone number (commonly
referred to as an ``800 number'') established and operated by
the Federal Trade Commission for purposes of the program.
(c) Elements.--Under the program required by subsection
(a), the Federal Trade Commission shall--
(1) provide to veterans and spouses described in subsection
(e) such financial and other counseling as the Commission
considers appropriate relating to identity theft and the
theft of data as described in that subsection; and
(2) upon request of any veteran or spouse described in
subsection (e), assist such veteran or spouse in securing the
placement of an extended fraud alert or credit security
freeze under sections 605A(b)(3) and 605C of the Fair Credit
Reporting Act, as added by this Act, respectively.
(d) Veterans Not Subject to Identity Theft.--
(1) Notice to ftc of identification of veterans not subject
to identity theft.--Upon conclusively identifying any veteran
otherwise described in subsection (e) as not being at risk of
identity theft as described in that subsection, the Secretary
shall immediately notify the Federal Trade Commission of such
identification.
(2) Notice to veterans.--The program required by subsection
(a) shall include mechanisms to ensure that any veteran who
seeks counseling and support under the program after receipt
by the Commission of notice under paragraph (1) covering such
veteran is informed that such veteran is no longer subject to
identity theft as described in subsection (e).
(e) Applicability.--This section shall apply with respect
to--
(1) any veteran, as defined in section 101 of title 38,
United States Code, who may be a victim of identity theft as
a result of the security breach at the Department of Veterans
Affairs on May 3, 2006; and
(2) any spouse (or former spouse) of such veteran who the
Secretary of Veterans Affairs has conclusively identified as
being at risk of identity theft as a result of that security
breach.
SEC. 3. EXTENDED CONSUMER CREDIT FRAUD ALERTS AND SECURITY
FREEZES FOR VETERANS AND SPOUSES OF VETERANS
AFFECTED BY SECURITY BREACH.
(a) Automatic Fraud Alerts.--Section 605A(b) of the Fair
Credit Reporting Act (15 U.S.C. 1681c-1(b)) is amended by
adding at the end the following:
[[Page S5253]]
``(3) Automatic extended fraud alerts for certain
veterans.--
``(A) In general.--Upon the direct request of a veteran or
spouse described in subparagraph (D), each consumer reporting
agency described in section 603(p)(1) that maintains a file
on the veteran shall take the actions specified in
subparagraphs (A) through (C) of paragraph (1) with respect
to the veteran or spouse.
``(B) Automatic alerts.--Notwithstanding the requirements
of paragraph (1), a veteran or spouse described in
subparagraph (D) is not required to submit any identity theft
report, proof of identity, or other documentation with
respect to an extended fraud alert required by subparagraph
(A).
``(C) Veterans not subject to identity theft.--Upon
conclusively identifying any veteran as not being at risk of
identity theft as a result of the security breach described
in subparagraph (A)--
``(i) the Secretary of Veterans Affairs shall immediately
notify each consumer reporting agency and the veteran
involved that such veteran is no longer subject to identity
theft as a result of the security breach described in
subparagraph (A); and
``(ii) the requirements of subparagraph (A) shall no longer
apply with respect to any such veteran as of the date of such
notification.
``(D) Applicability.--This paragraph shall apply to--
``(i) each veteran, as defined in section 101 of title 38,
United States Code, who may be a victim of identity theft as
a result of the security breach at the Department of Veterans
Affairs on May 3, 2006; and
``(ii) each spouse (or former spouse) of such veteran who
the Secretary of Veterans Affairs has conclusively identified
as being at risk of identity theft as a result of that
security breach.''.
(b) Security Freezes for Veterans.--The Fair Credit
Reporting Act (15 U.S.C. 1681 et seq.) is amended by
inserting after section 605B the following:
``SEC. 605C. SECURITY FREEZES FOR CERTAIN VETERANS.
``(a) Applicability.--This section shall apply with respect
to--
``(1) any veteran, as defined in section 101 of title 38,
United States Code, who may be a victim of identity theft as
a result of the security breach at the Department of Veterans
Affairs on May 3, 2006; and
``(2) any spouse (or former spouse) of such veteran who the
Secretary of Veterans Affairs has conclusively identified as
being at risk of identity theft as a result of that security
breach.
``(b) Security Freezes.--
``(1) Emplacement.--A veteran or spouse described in
subsection (a) may include a security freeze in the file of
that veteran or spouse maintained by a consumer reporting
agency described in section 603(p)(1), by making a request to
the consumer reporting agency in writing, by telephone, or
through a secure electronic connection made available by the
consumer reporting agency.
``(2) Consumer disclosure.--If a veteran or spouse
described in subsection (a) requests a security freeze under
this section, the consumer reporting agency shall disclose to
that person the process of placing and removing the security
freeze and explain to that veteran or spouse the potential
consequences of the security freeze. A consumer reporting
agency may not imply or inform a veteran or spouse that the
placement or presence of a security freeze on the file of
that veteran or spouse may negatively affect their credit
score.
``(c) Effect of Security Freeze.--
``(1) Release of information blocked.--If a security freeze
is in place in the file of a veteran or spouse described in
subsection (a), a consumer reporting agency may not release
information from the file of that veteran or spouse for
consumer credit purposes to a third party without prior
express written authorization from that veteran or spouse.
``(2) Information provided to third parties.--Paragraph (2)
does not prevent a consumer reporting agency from advising a
third party that a security freeze is in effect with respect
to the file of a veteran or spouse described in subsection
(a). If a third party, in connection with an application for
credit, requests access to a consumer file on which a
security freeze is in place under this section, the third
party may treat the application as incomplete.
``(3) Credit score not affected.--The placement of a
security freeze under this section may not be taken into
account for any purpose in determining the credit score of
the veteran or spouse to whom the security freeze relates.
``(d) Removal; Temporary Suspension.--
``(1) In general.--Except as provided in paragraph (4), a
security freeze under this section shall remain in place
until the veteran or spouse to whom it relates requests that
the security freeze be removed. A veteran or spouse may
remove a security freeze on his or her credit report by
making a request to the consumer reporting agency in writing,
by telephone, or through a secure electronic connection made
available by the consumer reporting agency.
``(2) Conditions.--A consumer reporting agency may remove a
security freeze placed in the file of a veteran or spouse
under this section only--
``(A) upon request of that veteran or spouse, pursuant to
paragraph (1); or
``(B) if the agency determines that the file of that
veteran or spouse was frozen due to a material
misrepresentation of fact by that veteran or spouse.
``(3) Notification to consumer.--If a consumer reporting
agency intends to remove a security freeze pursuant to
paragraph (2)(B), the consumer reporting agency shall notify
the veteran or spouse to whom the security freeze relates in
writing prior to removing the freeze.
``(4) Temporary suspension.--A veteran or spouse described
in subsection (a) may have a security freeze under this
section temporarily suspended by making a request to the
consumer reporting agency in writing or by telephone and
specifying beginning and ending dates for the period during
which the security freeze is not to apply.
``(e) Response Times; Notification of Other Entities.--
``(1) In general.--A consumer reporting agency shall--
``(A) place a security freeze in the file of a veteran or
spouse under subsection (b) not later than 5 business days
after receiving a request from the veteran or spouse under
subsection (b)(1); and
``(B) remove or temporarily suspend a security freeze not
later than 3 business days after receiving a request for
removal or temporary suspension from the veteran or spouse
under subsection (d).
``(2) Notification of other agencies.--A consumer reporting
agency shall notify all other consumer reporting agencies
described in section 603(p)(1) of a request under this
section not later than 3 days after placing, removing, or
temporarily suspending a security freeze in the file of the
veteran or spouse under subsection (b), (d)(2)(A), or (d)(4).
``(3) Implementation by other agencies.--A consumer
reporting agency that is notified of a request under
paragraph (2) to place, remove, or temporarily suspend a
security freeze in the file of a veteran or spouse shall--
``(A) request proper identification from the veteran or
spouse, in accordance with subsection (g), not later than 3
business days after receiving the notification; and
``(B) place, remove, or temporarily suspend the security
freeze on that credit report not later than 3 business days
after receiving proper identification.
``(f) Confirmation.--Except as provided in subsection
(c)(3), whenever a consumer reporting agency places, removes,
or temporarily suspends a security freeze at the request of a
veteran or spouse under subsection (b) or (d), respectively,
it shall send a written confirmation thereof to the veteran
or spouse not later than 10 business days after placing,
removing, or temporarily suspending the security freeze. This
subsection does not apply to the placement, removal, or
temporary suspension of a security freeze by a consumer
reporting agency because of a notification received under
subsection (e)(2).
``(g) ID Required.--A consumer reporting agency may not
place, remove, or temporarily suspend a security freeze in
the file of a veteran or spouse described in subsection (a)
at the request of the veteran or spouse, unless the veteran
or spouse provides proper identification (within the meaning
of section 610(a)(1)) and the regulations thereunder.
``(h) Exceptions.--This section does not apply to the use
of the file of a veteran or spouse described in subsection
(a) maintained by a consumer reporting agency by any of the
following:
``(1) A person or entity, or a subsidiary, affiliate, or
agent of that person or entity, or an assignee of a financial
obligation owing by the veteran or spouse to that person or
entity, or a prospective assignee of a financial obligation
owing by the veteran or spouse to that person or entity in
conjunction with the proposed purchase of the financial
obligation, with which the veteran or spouse has or had prior
to assignment an account or contract, including a demand
deposit account, or to whom the veteran or spouse issued a
negotiable instrument, for the purposes of reviewing the
account or collecting the financial obligation owing for the
account, contract, or negotiable instrument.
``(2) Any Federal, State, or local agency, law enforcement
agency, trial court, or private collection agency acting
pursuant to a court order, warrant, subpoena, or other
compulsory process.
``(3) A child support agency or its agents or assigns
acting pursuant to subtitle D of title IV of the Social
Security Act (42 U.S.C. et seq.) or similar State law.
``(4) The Department of Health and Human Services, a
similar State agency, or the agents or assigns of the Federal
or State agency acting to investigate medicare or medicaid
fraud.
``(5) The Internal Revenue Service or a State or municipal
taxing authority, or a State department of motor vehicles, or
any of the agents or assigns of these Federal, State, or
municipal agencies acting to investigate or collect
delinquent taxes or unpaid court orders or to fulfill any of
their other statutory responsibilities.
``(6) The use of consumer credit information for the
purposes of prescreening, as provided for under this title.
``(7) Any person or entity administering a credit file
monitoring subscription to which the veteran or spouse has
subscribed.
``(8) Any person or entity for the purpose of providing a
veteran or spouse with a copy of his or her credit report or
credit score upon request of the veteran or spouse.
``(i) Fees.--
``(1) In general.--Except as provided in paragraph (2), a
consumer reporting agency
[[Page S5254]]
may charge a reasonable fee, for placing, removing, or
temporarily suspending a security freeze in the file of the
veteran or spouse described in subsection (a), which cost
shall be submitted to and paid by the Department of Veterans
Affairs, pursuant to procedures established by the Secretary
of Veterans Affairs.
``(2) ID theft victims.--A consumer reporting agency may
not charge a fee for placing, removing, or temporarily
suspending a security freeze in the file of a veteran or
spouse described in subsection (a), if--
``(A) the veteran or spouse is a victim of identity theft;
``(B) the veteran or spouse requests the security freeze in
writing;
``(C) the veteran or spouse has filed a police report with
respect to the theft, or an identity theft report (as defined
in section 603(q)(4), within 90 days after the date on which
the theft occurred or was discovered by the veteran or
spouse; and
``(D) the veteran or spouse provides a copy of the report
to the reporting agency.
``(j) Limitation on Information Changes in Frozen
Reports.--
``(1) In general.--If a security freeze is in place in the
file of a veteran or spouse described in subsection (a), the
consumer reporting agency may not change any of the following
official information in that file without sending a written
confirmation of the change to the veteran or spouse within 30
days after the date on which the change is made:
``(A) Name.
``(B) Date of birth.
``(C) Social Security number.
``(D) Address.
``(2) Confirmation.--Paragraph (1) does not require written
confirmation for technical modifications of the official
information of a veteran or spouse, including name and street
abbreviations, complete spellings, or transposition of
numbers or letters. In the case of an address change, the
written confirmation shall be sent to both the new address
and to the former address of the veteran or spouse.
``(k) Certain Entity Exemptions.--
``(1) Aggregators and other agencies.--The provisions of
this section do not apply to a consumer reporting agency that
acts only as a reseller of credit information by assembling
and merging information contained in the data base of another
consumer reporting agency or multiple consumer reporting
agencies, and does not maintain a permanent data base of
credit information from which new consumer credit reports are
produced.
``(2) Other exempted entities.--The following entities are
not required to place a security freeze in the file of a
veteran or spouse described in subsection (a) in accordance
with this section:
``(A) A check services or fraud prevention services
company, which issues reports on incidents of fraud or
authorizations for the purpose of approving or processing
negotiable instruments, electronic fund transfers, or similar
methods of payments.
``(B) A deposit account information service company, which
issues reports regarding account closures due to fraud,
substantial overdrafts, ATM abuse, or similar negative
information regarding such veteran or spouse, to inquiring
banks or other financial institutions for use only in
reviewing the request of such veteran or spouse for a deposit
account at the inquiring bank or financial institution.''.
(c) Fees.--Any fee associated with an extended fraud alert
or security freeze required by the amendments made by this
section that would otherwise be required to be paid by the
consumer shall be paid by the Department of Veterans Affairs.
SEC. 4. PENALTIES FOR IDENTITY THEFT OF VETERANS.
Section 1028 of title 18, United States Code, is amended--
(1) in subsection (b), by striking ``The punishment for''
and inserting the following ``Except as provided in
subsection (j), the punishment for''; and
(2) by adding at the end the following:
``(j) Identity Theft of Veterans.--
``(1) In general.--In determining the punishment applicable
under subsection (b), if the offense is an offense described
in paragraph (2), the fine and term of imprisonment otherwise
applicable under subsection (b) shall be doubled.
``(2) Type of offense.--An offense described in this
paragraph is an offense under subsection (a) that--
``(A) involves any document or other information--
``(i) relating to a veteran (as defined in section 101 of
title 38) or a spouse of a veteran; and
``(ii) obtained as a direct or indirect result of the
security breach at the Department of Veterans Affairs on May
3, 2006; and
``(B) was committed after the date of enactment of this
subsection.''.
SEC. 5. FUNDING.
(a) Reimbursement.--The Secretary of Veterans Affairs shall
reimburse the Federal Trade Commission for any costs incurred
by the Commission in carrying out this Act and the amendments
made by this Act.
(b) Availability of Funds.--Amounts appropriated to the
Secretary and available for obligation may be utilized for
purposes of reimbursement of the Federal Trade Commission
under subsection (a).
SEC. 6. COMPTROLLER GENERAL STUDIES ON DATA PROTECTION AND
OTHER MATTERS.
(a) Study on Data Protection by Department of Veterans
Affairs.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of the data protection
procedures of the Department of Veterans Affairs.
(2) Elements.--The study required by paragraph (1) shall
include the following:
(A) A review and assessment of the data protection
procedures of the Department of Veterans Affairs in effect
before May 3, 2006.
(B) A review and assessment of any modifications of the
data protection procedures of the Department of Veterans
Affairs adopted as a result of the loss of data resulting
from the security breach at the Department on May 3, 2006.
(b) Study on Security Breach Investigation by Department of
Veterans Affairs.--
(1) In general.--The Comptroller General of the United
States shall conduct a review and assessment of the
investigation carried out by the Department of Veterans
Affairs with respect to the security breach at the Department
on May 3, 2006.
(2) Cooperation.--The Secretary of Veterans Affairs shall
ensure that the personnel of the Department of Veterans
Affairs cooperate fully with the Comptroller General in the
conduct of the review and assessment required by paragraph
(1).
(c) Study on FTC Program for Veterans and Spouses at Risk
of Identity Theft.--The Comptroller General of the United
States shall conduct a study of the program of the Federal
Trade Commission for veterans and spouses of veterans at risk
of identity theft required by section 2. The study shall
include an assessment of the effectiveness of the program in
meeting the financial counseling and similar needs of
individuals seeking counseling and support through the
program.
(d) Study on Compliance of Federal Agencies With
Requirements on Personal Data.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of the compliance of the
departments and agencies of the Federal Government with
applicable requirements relating to the preservation of the
confidentiality of personal data.
(2) Elements.--The study required by paragraph (1) shall
include the following:
(A) A review and assessment of the current procedures and
practices of the departments and agencies of the Federal
Government regarding the preservation of the confidentiality
of personal data.
(B) A comparative analysis of the procedures practices
referred to in subparagraph (A) with current standards of the
Federal Trade Commission for the preservation of the
confidentiality of personal data by commercial and non-
commercial private entities.
(C) A review and assessment of the modifications of the
data protection procedures adopted by the Department of
Veterans Affairs as a result of the loss of data resulting
from the security breach on May 3, 2006, including an
assessment of the feasibility and advisability of the
adoption of any such modifications by other departments and
agencies of the Federal Government.
(D) An identification of recommendations for improvements
to the procedures and practices of the departments and
agencies of the Federal Government regarding the preservation
of the confidentiality of personal data.
(e) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report setting forth the
results of each study conducted under this section. The
report shall set forth the results of each study separately,
and shall include such recommendations for legislative and
administrative action as the Comptroller General considers
appropriate in light of the studies.
SEC. 7. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Secretary of
Veterans Affairs, such sums as may be necessary to carry out
this Act and the amendments made by this Act.
______
By Mr. BUNNING:
S 3177. A bill to suspend temporarily the duty on certain compounds
of lanthanum phosphates; to the Committee on Finance.
Mr. BUNNING. Mr. President, I rise today to introduce a number of
bills to provide for relief from duties. It is my intention that some
or all of these duty suspension bills will eventually be included in
the Miscellaneous Tariff Bill, MTB, that the Senate Finance Committee
is expected to consider this year.
As the members of the Senate are aware, Congress on occasion passes a
bill, known as the Miscellaneous Tariff Bill or MTB, as a vehicle for
enacting pending non-controversial duty suspensions. The rules for the
inclusion of a duty suspension in the MTB are straight forward. First
and foremost, in order to be included in the MTB, a bill must be non-
controversial. A bill will be controversial if it is objected to by a
domestic producer of the product for which the duty reduction is being
sought. Secondly, the cost for each bill must amount to less than
$500,000 of lost revenue per year.
[[Page S5255]]
As my colleagues are aware, the MTB provides an opportunity to
temporarily eliminate or reduce duties on narrowly defined products
that are imported into the United States because there is not available
domestic source for the products. These duty suspensions reduce input
costs for U.S. businesses and thus ultimately increase the
competitiveness of their products.
I have been approached by a number of manufacturers in Kentucky that
use imported inputs while making their products. These manufacturers
have represented to me that, to their knowledge, there currently exists
no American-made source for these inputs.
In an effort to assist these Kentucky manufacturers, I am introducing
these duty suspension bills so that the items they address will be able
to be considered for inclusion in the MTB prepared by the Senate
Finance Committee.
My intention in introducing these bills is to begin the process of
public comment and technical analysis by the International Trade
Commission (ITC) on the items addressed by the bills. During this
review, the ITC will determine which of these bills are necessary and
meet the selection criteria. My support for a duty suspension for the
items is contingent on a determination by the ITC analysts that the
items in question are proper candidates for inclusion in the non-
controversial MTB.
I look forward to working with Chairman Grassley, Ranking Member
Baucus and my colleagues on the Senate Finance Committee as the process
for assembling a final MTB package continues.
______
By Mr. REED (for himself and Mr. Chafee):
S. 3187. A bill to designate the Post Office located at 5755 Post
Road, East Greenwich, Rhode Island, as the ``Richard L. Cevoli Post
Office.''; to the Committee on Homeland Security and Governmental
Affairs.
Mr. REED. Mr. President, today I pay tribute to one of Rhode Island's
most highly decorated soldiers, Commander Richard L. Cevoli of East
Greenwich.
Commander Cevoli served our nation bravely in both World War II and
the Korean War. In honor of his sacrifices and service to his nation, I
am introducing a bill, along with Senator Chafee, to name the post
office located at 5775 Post Road in East Greenwich, RI, the ``Richard
L. Cevoli Post Office.''
Commander Cevoli was born in East Greenwich, Rhode Island, on October
24, 1919, and died in a tragic plane crash in Florida on January 18,
1955. He went to Rhode Island State College, which is now the
University of Rhode Island, and earned a degree in civil engineering.
In 1941, after graduation, he moved to New York and began working for
the engineering firm of Merritt, Chapman & Scott.
The month after the bombing of Pearl Harbor, Richard Cevoli returned
to Rhode Island and entered the Navy. He was sent to flight training in
Dallas, Sanford, and Pensacola before being assigned to Squadron VF-18,
based on the USS Intrepid in the Pacific.
It was during his service with the VF-18 that Commander Cevoli was
awarded the second-highest medal awarded in the Navy--the Navy Cross.
This honor was given to Commander Cevoli during the Battle of Leyte
Gulf off the Philippines coast in October of 1944. Along with other
fighters, Commander Cevoli strafed the largest Japanese ship, silencing
many of its guns. The following day, he severely damaged a Japanese
aircraft carrier with a 500-pound bomb. On a subsequent attack on the
Japanese forces, as is recorded in his medal citation, ``Cevoli
disregarded the terrific antiaircraft opposition and scored a near miss
on a Kongo class battleship with a 500-pound bomb. Then, pulling out he
made a second run to strafe a destroyer, silencing its antiaircraft
weapons and thereby contributing to our successful bombing and torpedo
attacks which followed. His outstanding courage and determination were
in keeping with the highest traditions of the United States Naval
Service.''
Following his service during the war, he returned to Rhode Island and
continued his Navy career at Naval Air Station, Quonset Point. However,
the peace was short-lived. North Korea invaded South Korea, and another
major conflict quickly began.
From 1949 until 1951, Commander Cevoli served as the Executive
Officer in Squadron VF-18 on board the USS Leyte, seeing action in
Korea. In addition to the Navy Cross, Commander Cevoli earned two
Distinguished Flying Crosses and eight Air Medals during his active
flying career.
Once the conflict in Korea had ended, Commander Cevoli was able to
spend more time at home. He took classes at the Naval War College in
Newport and in July, 1954 he was placed in command of Squadron VF-73.
Tragically, he died serving his country when his plane crashed during a
training mission.
Commander Cevoli left behind a wife, Grace, and three children,
Steven, Carol, and Elizabeth. A life-long resident of East Greenwich,
Commander Cevoli's legacy is memorialized in the Rhode Island Aviation
Hall of Fame.
This legislation will pay tribute to this hero of Rhode Island and
the United States, and I ask my colleagues to join me in honoring
Commander Cevoli by supporting this bill.
Mr. President, I ask unanimous consent that the text of this
legislation be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3187
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. RICHARD L. CEVOLI POST OFFICE.
(a) Designation.--The post office located at 5755 Post
Road, East Greenwich, Rhode Island, shall be known and
designated as the ``Richard L. Cevoli Post Office''.
(b) References.--Any reference in a law, map, regulation,
document, paper, or other record of the United States to the
post office referred to in subsection (a) shall be deemed to
be a reference to the Richard L. Cevoli Post Office.
______
By Mrs. FEINSTEIN:
S. 3188. A bill to amend the Forest Service use and occupancy permit
program to restore the authority of the Secretary of Agriculture to
utilize the special use permit fees collected by the Secretary in
connection with the establishment and operation of marinas in units of
the National Forest System derived from the public domain, and for
other purposes; to the Committee on Energy and Natural Resources.
Mrs. FEINSTEIN. Mr. President, I rise to introduce legislation that
will restore authority to the Forest Service to retain marina permit
revenue for local expenditure.
Within some National Forests, the Forest Service has partnered with
local small business owners, allowing them to operate houseboat
marinas. In exchange, the Forest Service collects occupancy fees from
these marina operators. A portion of these fees had, until recently,
been kept in the Forest for local recreation and safety enhancement
projects. My legislation allows the Forest Service to once again use
these fees in the Forest where they were generated, and where their
impact will be most direct.
Several units of the National Forest system will benefit from this
legislation, but the unit most affected is the Shasta-Trinity National
Forest in California. Under the 1996 Recreation Fee Demonstration
Program, the Shasta-Trinity Forest developed a recreation enhancement
program at Shasta and Trinity Lakes. Forest Service officials used a
portion of the revenue from this program for projects like dock repair,
improved handicapped access, safety markers for boaters, law
enforcement, and campground construction. Over $4 million was invested
in the Forest through this program.
However, the program was inadvertently repealed when the Federal
Lands Recreation Enhancement Act was passed. My legislation will
correct this oversight by amending the Forest Service's Special Use
Permit program, returning this recreation and safety project authority
to the agency.
Recreation on Federal lands is important to quality of life in my
state and throughout the nation. In many rural areas, it also provides
a boost to the economy. I urge my colleagues to support this
legislation. It is a simple bill correcting an oversight in the Federal
Lands Recreation Enhancement Act. Nonetheless, it has important
implications both for recreation enhancement and for the local
economies around the affected National Forests.
I ask unanimous consent that the text of the bill be printed in the
Record.
[[Page S5256]]
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3188
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. RETENTION AND USE OF FOREST SERVICE MARINA PERMIT
FEES FROM NATIONAL FOREST SYSTEM UNITS DERIVED
FROM THE PUBLIC DOMAIN.
The last paragraph under the heading ``forest service'' in
the Act of March 4, 1915 (16 U.S.C. 497), is amended--
(1) by striking ``The Secretary of Agriculture'' and
inserting the following:
``(A) Permits for use and occupancy of national forest
system lands.--The Secretary of Agriculture'';
(2) by striking ``The authority'' and inserting the
following:
``(B) Limitation on use of permits.--The authority''; and
(3) by adding at the end the following:
``(C) Special rules regarding marina permits.--Amounts
collected in connection with the issuance of a special use
permit under this paragraph for a marina at a unit of the
National Forest System derived from the public domain shall
be deposited in an existing special account in the Treasury
established for the Secretary of Agriculture for recreation
management purposes. Amounts so deposited shall be available
to the Secretary of Agriculture, until expended and without
further appropriation, for repair, maintenance, and facility
enhancement related directly to visitor enjoyment, visitor
access, and health and safety, for interpretation, visitor
information, visitor service, visitor needs assessments, and
signs, for habitat restoration directly related to wildlife-
dependent recreation that is limited to hunting, fishing,
wildlife observation, or photography, for law enforcement
related to public use and recreation, and for direct
operating or capital costs associated with the issuance of
such special use permits, including any fee management
agreement or reservation service used in the issuance of such
permits. The Secretary may not use such amounts for
biological monitoring for listed or candidate species under
the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.).
Not less than 80 percent of the permit fees collected at a
specific unit of the National Forest System shall be expended
for that unit, but the Secretary may transfer up to 20
percent of such fees to appropriations available to enhance
recreation opportunities at other units of the National
Forest System.''.
______
By Mrs. FEINSTEIN:
S. 3189. A bill to allow for renegotiating of the payment schedule of
contracts between the Secretary of the Interior and the Redwood Valley
Country Water District, and for other purposes; to the Committee on
Energy and Natural Resources.
Mrs. FEINSTEIN. Mr. President, I rise today to introduce the Redwood
Valley County Water District Loan Renegotiation Act of 2006.
This legislation seeks to implement prior congressional action taken
in 1988 to require the Secretary of the Interior to renegotiate debts
owed by the Redwood Valley County Water District to the United States.
It is an absolutely essential step if the Redwood County is to obtain a
firm and reliable water supply.
In 1983, the Redwood Valley County Water District completed a project
to supply water to a rural agricultural community near Ukiah, in
Northern California. Two Bureau of Reclamation loans totaling $7.3
million partially financed this project.
Unfortunately, the District was unable to repay these loans. This
occurred for several reasons: The initial use projections developed by
the District and reviewed by the Bureau were seriously flawed; the
District's ability to raise funds was restricted when a moratorium on
new hook-ups was imposed; and concerns for endangered species reduced
the District's water allotment by 15 percent.
As a result of this situation, in 1998 Congress passed Section 15 of
Public Law 100-516 that indefinitely suspended the District's
obligations to repay these Bureau loans and ordered the Secretary of
Interior to renegotiate the terms of the loans. This loan renegotiation
has never taken place and now the District finds its water supply
highly uncertain. The Bureau of Reclamation acknowledged in a 2000
report that the District needs a reliable water supply in order to
solve its current financial dilemma.
The District has recently identified two potential new projects,
either of which could supply a firm and reliable source. No government
funds will be sought for these projects, and the District will rely on
private financing, a strategy that the Bureau is encouraging. However,
before the District can secure private financing for new projects, it
must renegotiate the existing loans to provide for their repayment
subsequent to repayment of the new loans.
This legislation requires the District to repay the United States the
currently suspended loans once the new loans have been repaid. The new
water project will provide enough revenue to allow the District to
repay both its private loan and the United States government. By
providing a workable and reasonable solution to a longstanding problem,
the legislation creates a win-win solution for the Bureau of
Reclamation and the Redwood Valley County Water District.
I urge my colleagues to support this bill. I ask unanimous consent
that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3189
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. RENEGOTIATION OF PAYMENT SCHEDULE.
Section 15 of Public Law 100-516 (102 Stat. 2573) is
amended as follows:
(1) By amending paragraph (2) of subsection (a) to read as
follows:
``(2) If, as of January 1, 2006, the Secretary of the
Interior and the Redwood Valley County Water District have
not renegotiated the schedule of payment, the District may
enter into such additional non-Federal obligations as are
necessary to finance procurement of dedicated water rights
and improvements necessary to store and convey those rights
to provide for the District's water needs. The renegotiated
schedule of payments shall commence when which additional
obligations have been financially satisfied by the District.
The date of the initial payment owed by the District to the
United States shall be regarded as the start of the
District's repayment period and the time upon which any
interest shall first be computed and assessed under section 5
of the Small Reclamation Projects Act of 1956 (43 U.S.C. 422a
et seq.).''.
(2) By striking subsection (c).
______
By Mr. DAYTON (for himself and Mr. Lott):
S. 3239. A bill to require full disclosure of insurance coverage and
noncoverage by insurance companies and provide for Federal Trade
Commission enforcement; to the Committee on Commerce, Science, and
Transportation.
Mr. DAYTON. Mr. President, this legislation I am proud to cosponsor,
along with my distinguished colleague from Mississippi, is called the
Uniform Insurance Noncoverage Disclosure Act. I call it ``honesty is
the best insurance policy act.'' It says very simply that all insurance
policies--medical, homeowners, whatever they are--must state clearly on
the cover page what the policy does not cover.
My colleague from Mississippi can speak eloquently and powerfully
about his experiences in his State post-Katrina, but even before that
disaster occurred, I have seen similar situations in Minnesota of good
people whose lives were devastated by illnesses or natural disasters
and then were further devastated by discovering that their losses or
expenses were not covered by their insurance policies. For years, they
had faithfully paid their premiums believing they had comprehensive
coverage, only to find out too late that was untrue.
Insurance companies write the policies, they interpret the policies,
they decide what they will and will not cover, and then they handle the
appeals and make the final decisions. If they deny the claims, they
pocket those dollars in profits. If they honor the claims, they pay
them out in losses. Talk about a stacked deck in their favor and
against the consumer.
I have had aggrieved constituents show me their homeowners policies.
I am an intelligent, well-educated man, but it is impossible to
decipher them. They contain cross-references to paragraph numbers in
other policies that are not part of the agreement. They cannot be
understood, and they are not meant to be understood.
One Minnesota homeowner lost almost everything to a flood. Too late
he discovered that his blanket homeowners insurance did not cover
losses from a flood. He was protected, according to the policy, if an
airplane crashed into his house or if civil insurrection--meaning a
revolution--caused damage to his home, but not flooding. What are the
chances of those different events possibly occurring?
[[Page S5257]]
Another Minnesota family whose father had worked for a company for
over 20 years learned that their infant son had been born deaf and
needed a Cochlear implant. Two of the insurance companies that carried
those policies for the company covered that operation; the other did
not, claiming that it was experimental. The family made the unwitting
mistake of selecting the wrong policy. No one told them that policy
would not pay for Cochlear implant surgery in its comprehensive family
coverage, and they, obviously, did not know or could not have known
that their unborn son would need this surgery some several years later.
Fortunately, this story has a happy ending. The president of the
company, Honeywell, Inc., learning of this injustice, overrode the
policy and decreed that Honeywell, the company, would pay for that
missing coverage, and that child is now listening to human voices he
never would have had the opportunity to otherwise.
But not everyone is in that situation. Not everyone is that
fortunate.
So this legislation, again, no costs to it, no bureaucracy, nothing.
It simply says that the policy must state clearly, in plain English,
understandable on the cover page, what it will not cover. If it is
comprehensive, if it is complete, then nothing needs to be said. If it
is not, if they experience situations that will not be covered, then it
needs to tell the consumer up front on that front page what they will
be.
Mr. President, I yield to my distinguished colleague from
Mississippi.
The PRESIDING OFFICER. The Senator from Mississippi is recognized.
Mr. LOTT. I thank again my colleagues on the Judiciary Committee and
Senator Craig for allowing us to go ahead and introduce this
legislation and make brief statements. It is very generous, and we
thank him for it.
I am delighted to join my colleague, Senator Dayton, tonight in
cosponsoring this legislation. He was kind enough to invite me to do so
and even said: Why don't you be the lead sponsor? And I said no, but I
will be glad to cosponsor it.
I think this is an important statement here tonight. Honesty is the
best insurance policy. It has a good ring to it. It is not going to
revolutionize the world, but it could make a real difference. This is a
time when once again, in many parts of the country and particularly in
my home area, we are very sensitive to the threat of disasters because
in only 8 days, on June 1, the next hurricane season will begin, and
the National Oceanic and Atmospheric Administration predicts four to
six major hurricanes in the upcoming season. So once again people are
struggling with situations of having lost their homes or having their
homes badly damaged and being told: No, your insurance policy didn't
cover your damage. You didn't have flood insurance because, well, you
weren't in a flood plain, and oh, by the way, your house was washed
away. It wasn't blown away even though we had winds of 140 miles per
hour with gusts of 160 or 170 miles an hour, so therefore you didn't
have any wind damage. I must say it has been a disappointing shock to
me, the insensitivity and the decisions of certain insurance companies
and the positions they have taken. Sometimes they will say: Well, wait
a minute, we told you in the policy we don't cover this, we don't cover
that.
I represent a blue-collar community. Most people work in the paper
mills and the shipyards and are fishermen in my area. They have high
school educations, but they are not lawyers. They get a house insurance
policy and they think: I am covered. Now, go back and take a look at
your insurance policies. If you really take a look at it, you will find
that this is not covered, that is not covered, this is not covered, and
the next thing you know, you haven't got much coverage, but your
premium still goes forward. The standard policies, for instance, don't
cover earthquakes and floods, and depending on where you live,
hurricanes may not even be covered. That is going to be determined in
legal actions. Sometimes they say: Well, unless the policy specifically
says the hurricane was covered, then it is not covered. Well, that is
an ingenious argument, too.
So we have found that there are lots of problems here, and it breaks
my heart, what I have seen happen to thousands of my constituents and
people in the neighboring States of Louisiana, Texas, and Alabama. They
are being told: No, you didn't read the small print in your policy, you
are not covered, or because it didn't say you were covered, then you
are not covered. That is why I have joined in sponsoring this bill.
Surely we should have honesty in everything, including insurance
coverage. At least we should find a way to help the people understand.
So this is what this bill does. It is not all that complicated. It
would require that insurance companies include a noncoverage disclosure
box--a noncoverage disclosure box--restating in the body of the policy,
in font twice the current size of the text, all conditions, exclusions,
and other limitations of coverage under that policy. In other words,
make it clear. Don't hide it in legalese and gobbledegook. Make it
title size, make it bold, where people can go and see what they are not
getting.
Some people say: Wait a minute, this may be damaging to the
companies. No, I think it will help the companies. It will increase
consumer confidence. It will avoid disagreements or conflicts about
what is covered. You will have a clarification here, and if you have
questions, then at least you can clear them up. It would be in their
interests.
One other criticism, and that is, what is it going to cost the
Federal Government? Answer: Nothing. And very little to the companies.
They have these exclusions woven in there, but they are quite often way
down in the body of some long policy, incomprehensible to the minds of
normal and sane men and women.
So I think this is something which would be good. Frankly, I agree
with the Consumer Federation of America. This small requirement could
have saved many people pain and suffering and hundreds of millions of
dollars, maybe even billions, after Katrina. So I think it is a good
idea, and it is one I am glad to cosponsor. I hope that as we continue
to look at what we do in the aftermath of recent disasters and how we
do a better job compared to future disasters, this can be worked into
the body of legislation. So I am delighted to join as a cosponsor. I
thank Senator Dayton, and I thank Senator Leahy and Senator Cornyn for
allowing us to do this.
____________________