[Congressional Record Volume 153, Number 143 (Tuesday, September 25, 2007)]
[Senate]
[Pages S12056-S12067]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. FEINGOLD (for himself, Mr. Sununu, Mr. Durbin, Ms. 
        Murkowski, Mr. Salazar, and Mr. Hagel):
  S. 2088. A bill to place reasonable limitations on the use of 
National Security Letters, and for other purposes; to the Committee on 
the Judiciary.
  Mr. FEINGOLD. I am pleased today to introduce the National Security 
Reform Act of 2007, a bipartisan effort that has the support of 
Senators who I respect a great deal, and with whom I have worked over 
the years on the Patriot Act and other issues. It also has the support 
of organizations and activists across the political spectrum.
  This past spring, the Inspector General of the Justice Department 
issued the results of a congressionally mandated audit, an audit that 
examined the FBI's implementation of its dramatically expanded 
authority under the USA PATRIOT Act to issue National Security Letters, 
or NSLs. The Inspector General found, as he put it: ``widespread and 
serious misuse of the FBI's national security letter authorities. In 
many instances, the FBI's misuse of national security letters violated 
NSL statutes, Attorney General Guidelines, or the FBI's own internal 
policies.'' A subsequent internal audit conducted by the FBI itself 
confirmed the IG's findings.
  After the IG report came out, the Judiciary Committee heard from the 
Inspector General himself, who described his conclusions in detail, and 
from the FBI Director, who talked about some steps the FBI is taking in 
response to the report.
  I appreciate that the FBI agrees with the IG's conclusions and 
recognizes that it needs to change the way it does business when it 
comes to NSLs. But in my view, leaving it to the FBI to fix this 
problem is not enough.
  Unfortunately, Congress shares some responsibility for the FBI's 
troubling implementation of these broad authorities. The FBI's 
apparently lax attitude and in some cases grave misuse of these 
potentially very intrusive authorities is attributable in no small part 
to the USA PATRIOT Act. That flawed legislation greatly expanded the 
NSL authorities, essentially granting the FBI a blank check to obtain 
some very sensitive records about Americans, including people not under 
any suspicion of wrong-doing, without judicial approval. Congress gave 
the FBI very few rules to follow and failed to adequately remedy those 
shortcomings when it considered the NSL statutes as part of the Patriot 
Act reauthorization process.
  This Inspector General report proves that ``trust us'' doesn't cut it 
when it comes to the Government's power to obtain Americans' sensitive 
business records--without a court order and without any suspicion that 
they are tied to terrorism or espionage. It was a significant mistake 
for Congress to grant the Government broad authorities and just keep 
its fingers crossed that they wouldn't be misused.
  Congress has the responsibility to put appropriate limits on 
government authorities--limits that allow agents to actively pursue 
criminals, terrorists and spies, but that also protect the privacy of 
innocent Americans.
  In addition, a Federal district court recently struck down one of the 
new NSL statutes, as modified by the Patriot Act reauthorization 
legislation enacted in 2006. The court found that a statutory provision 
permitting the FBI to impose a permanent, blanket nondisclosure order 
on recipients of NSLs violated the First Amendment.
  Congress also has not provided sufficient privacy protections to 
govern the related authority in Section 215 of the Patriot Act, which 
permits the Government to obtain court orders for Americans' business 
records under the Foreign Intelligence Surveillance Act. Often referred 
to as the ``library'' provision, although it covers all types of 
business records, Section 215 was one of

[[Page S12057]]

the most controversial provisions in the Patriot Act. Unfortunately, 
Congress did not go nearly far enough in the reauthorization process in 
addressing the very legitimate privacy and civil liberties concerns 
that have been raised about this power, including with respect to the 
low standard the Government has to meet to obtain a Section 215 order, 
the entirely insufficient judicial review provisions, and the lack of 
other procedural protections.
  All of this is why a bipartisan group of Senators, three Democrats 
and three Republicans, are introducing the National Security Letter 
Reform Act of 2007.
  The bill places new safeguards on the use of National Security 
Letters and related Patriot Act authorities to protect against abuse. 
It restricts the types of records that can be obtained without a court 
order to those that are the least sensitive and private, and it ensures 
that the FBI can only use NSLs to obtain information about individuals 
with some nexus to a suspected terrorist or spy. It makes sure that the 
FBI can no longer obtain the sensitive records of individuals three or 
four times removed from a suspect, most of whom would be entirely 
innocent.
  It prevents the use of so-called ``exigent letters,'' which the IG 
found the FBI was using in violation of the NSL statutes. It requires 
additional congressional reporting on NSLs, and it requires the FBI to 
establish a compliance program and tracking database for NSLs. It 
requires the Attorney General to issue minimization and destruction 
procedures for information obtained through NSLs, so that information 
obtained about Americans is subject to enhanced protections and the FBI 
does not retain information obtained in error.
  On Section 215, the legislation establishes a standard of 
individualized suspicion for obtaining a FISA business records order, 
requiring that the government have reason to believe the records sought 
relate to a suspected terrorist or spy or someone directly linked to a 
suspected terrorist or spy, and it creates procedural protections to 
prevent abuses. The bill also ensures robust, meaningful and 
constitutionally sound judicial review of both National Security 
Letters and Section 215 business records orders, and the gag orders 
that accompany them.
  This legislation is a measured, reasonable response to a serious 
problem. The NSL authorities operate in secret. The Justice 
Department's classified reports to Congress on the use of NSLs were 
admittedly inaccurate. And when, during the reauthorization process, 
Congress asked questions about how these authorities were being used, 
we got empty assurances and platitudes that we now know were mistaken.
  Oversight alone is not enough. Congress also must take corrective 
action. The Inspector General report has shown both that the executive 
branch cannot be trusted to exercise those powers without oversight and 
that current statutory safeguards are inadequate. This National 
Security Letter Reform Act is the answer.
  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. 2088

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``National 
     Security Letter Reform Act of 2007'' or the ``NSL Reform Act 
     of 2007''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. National Security Letter authority for communications 
              subscriber records.
Sec. 3. National Security Letter authority for certain financial 
              records.
Sec. 4. National Security Letter authority for certain consumer report 
              records.
Sec. 5. Judicial review of National Security Letters.
Sec. 6. National Security Letter compliance program and tracking 
              database.
Sec. 7. Public reporting on National Security Letters.
Sec. 8. Sunset of expanded National Security Letter authorities.
Sec. 9. Privacy protections for section 215 business records orders.
Sec. 10. Judicial review of section 215 orders.
Sec. 11. Resources for FISA applications.
Sec. 12. Enhanced protections for emergency disclosures.
Sec. 13. Clarification regarding data retention.
Sec. 14. Least intrusive means.

     SEC. 2. NATIONAL SECURITY LETTER AUTHORITY FOR COMMUNICATIONS 
                   SUBSCRIBER RECORDS.

       Section 2709 of title 18, United States Code, is amended to 
     read as follows:

     ``Sec. 2709. National Security Letter for communications 
       subscriber records

       ``(a) Authorization.--
       ``(1) In general.--The Director of the Federal Bureau of 
     Investigation, or a designee of the Director whose rank shall 
     be no lower than Deputy Assistant Director at Bureau 
     headquarters or Special Agent in Charge of a Bureau field 
     office, may issue in writing and cause to be served on a wire 
     or electronic communications service provider a National 
     Security Letter requiring the production of the following:
       ``(A) The name of the customer or subscriber.
       ``(B) The address of the customer or subscriber.
       ``(C) The length of the provision of service by such 
     provider to the customer or subscriber (including start date) 
     and the types of service utilized by the customer or 
     subscriber.
       ``(D) The telephone number or instrument number, or other 
     subscriber number or identifier, of the customer or 
     subscriber, including any temporarily assigned network 
     address.
       ``(E) The means and sources of payment for such service 
     (including any credit card or bank account number).
       ``(F) Information about any service or merchandise orders, 
     including any shipping information and vendor locations.
       ``(G) The name and contact information, if available, of 
     any other wire or electronic communications service providers 
     facilitating the communications of the customer or 
     subscriber.
       ``(2) Limitation.--A National Security Letter issued 
     pursuant to this section shall not require the production of 
     local or long distance telephone records or electronic 
     communications transactional information not listed in 
     paragraph (1).
       ``(b) Requirements.--
       ``(1) In general.--A National Security Letter shall be 
     issued under subsection (a) only where--
       ``(A) the records sought are relevant to an ongoing, 
     authorized and specifically identified national security 
     investigation (other than a threat assessment); and
       ``(B) there are specific and articulable facts providing 
     reason to believe that the records--
       ``(i) pertain to a suspected agent of a foreign power; or
       ``(ii) pertain to an individual who has been in contact 
     with, or otherwise directly linked to, a suspected agent of a 
     foreign power who is the subject of an ongoing, authorized 
     and specifically identified national security investigation 
     (other than a threat assessment); or
       ``(iii) pertain to the activities of a suspected agent of a 
     foreign power, where those activities are the subject of an 
     ongoing, authorized and specifically identified national 
     security investigation (other than a threat assessment), and 
     obtaining the records is the least intrusive means that could 
     be used to identify persons believed to be involved in such 
     activities.
       ``(2) Investigation.--For purposes of this section, an 
     ongoing, authorized, and specifically identified national 
     security investigation--
       ``(A) shall be conducted under guidelines approved by the 
     Attorney General and Executive Order 12333 (or successor 
     order); and
       ``(B) shall not be conducted with respect to a United 
     States person upon the basis of activities protected by the 
     first amendment to the Constitution of the United States.
       ``(3) Contents.--A National Security Letter issued under 
     subsection (a) shall--
       ``(A) describe the records to be produced with sufficient 
     particularity to permit them to be fairly identified;
       ``(B) include the date on which the records must be 
     provided, which shall allow a reasonable period of time 
     within which the records can be assembled and made available;
       ``(C) provide clear and conspicuous notice of the 
     principles and procedures set forth in this section, 
     including notification of any nondisclosure requirement under 
     subsection (c) and a statement laying out the rights and 
     responsibilities of the recipient; and
       ``(D) not contain any requirement that would be held to be 
     unreasonable if contained in a subpoena duces tecum issued by 
     a court of the United States in aid of a grand jury 
     investigation or require the production of any documentary 
     evidence that would be privileged from disclosure if demanded 
     by a subpoena duces tecum issued by a court of the United 
     States in aid of a grand jury investigation.
       ``(4) Retention of records.--The Director of the Federal 
     Bureau of Investigation shall direct that a signed copy of 
     each National Security Letter issued under this section be 
     retained in the database required to be established by 
     section 6 of the National Security Letter Reform Act of 2007.
       ``(c) Prohibition of Certain Disclosure.--
       ``(1) In general.--
       ``(A) In general.--If a certification is issued pursuant to 
     subparagraph (B), no wire

[[Page S12058]]

     or electronic communication service provider, or officer, 
     employee, or agent thereof, who receives a National Security 
     Letter under this section, shall disclose to any person the 
     particular information specified in such certification for 30 
     days after receipt of such National Security Letter.
       ``(B) Certification.--The requirements of subparagraph (A) 
     shall apply if the Director of the Federal Bureau of 
     Investigation, or a designee of the Director whose rank shall 
     be no lower than Deputy Assistant Director at Bureau 
     headquarters or a Special Agent in charge of a Bureau field 
     office, certifies that--
       ``(i) there is reason to believe that disclosure of 
     particular information about the existence or contents of a 
     National Security Letter issued under this section will 
     result in--

       ``(I) endangering the life or physical safety of any 
     person;
       ``(II) flight from prosecution;
       ``(III) destruction of or tampering with evidence;
       ``(IV) intimidation of potential witnesses;
       ``(V) interference with diplomatic relations; or
       ``(VI) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and

       ``(ii) the nondisclosure requirement is narrowly tailored 
     to address the specific harm identified by the Government.
       ``(C) Termination.--If the facts supporting a nondisclosure 
     requirement cease to exist prior to the 30-day period 
     specified in subparagraph (A), an appropriate official of the 
     Federal Bureau of Investigation shall promptly notify the 
     wire or electronic service provider, or officer, employee, or 
     agent thereof, subject to the nondisclosure requirement that 
     such nondisclosure requirement is no longer in effect.
       ``(2) Exception.--
       ``(A) In general.--A wire or electronic communication 
     service provider, or officer, employee, or agent thereof, who 
     receives a National Security Letter under this section may 
     disclose information otherwise subject to any applicable 
     nondisclosure requirement to--
       ``(i) those persons to whom disclosure is necessary in 
     order to comply with a National Security Letter under this 
     section;
       ``(ii) an attorney in order to obtain legal advice or 
     assistance regarding such National Security Letter; or
       ``(iii) other persons as permitted by the Director of the 
     Federal Bureau of Investigation or the designee of the 
     Director.
       ``(B) Nondisclosure requirement.--A person to whom 
     disclosure is made pursuant to subparagraph (A) shall be 
     subject to the nondisclosure requirements applicable to a 
     person to whom a National Security Letter is directed under 
     this section in the same manner as such person.
       ``(C) Notice.--Any recipient who discloses to a person 
     described in subparagraph (A) information otherwise subject 
     to a nondisclosure requirement shall inform such person of 
     the applicable nondisclosure requirement.
       ``(3) Extension.--The Director of the Federal Bureau of 
     Investigation, or a designee of the Director whose rank shall 
     be no lower than Deputy Assistant Director at Bureau 
     headquarters or a Special Agent in Charge of a Bureau field 
     office, may apply for an order prohibiting disclosure of 
     particular information about the existence or contents of a 
     National Security Letter issued under this section for an 
     additional 180 days.
       ``(4) Jurisdiction.--An application for an order pursuant 
     to this subsection shall be filed in the district court of 
     the United States in any district within which the authorized 
     investigation that is the basis for a request pursuant to 
     this section is being conducted.
       ``(5) Application contents.--An application for an order 
     pursuant to this subsection shall include--
       ``(A) a statement of specific and articulable facts giving 
     the applicant reason to believe that disclosure of particular 
     information about the existence or contents of a National 
     Security Letter issued under this section will result in--
       ``(i) endangering the life or physical safety of any 
     person;
       ``(ii) flight from prosecution;
       ``(iii) destruction of or tampering with evidence;
       ``(iv) intimidation of potential witnesses;
       ``(v) interference with diplomatic relations; or
       ``(vi) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and
       ``(B) an explanation of how the nondisclosure requirement 
     is narrowly tailored to address the specific harm identified 
     by the Government.
       ``(6) Standard.--The court may issue an ex parte order 
     pursuant to this subsection if the court determines--
       ``(A) there is reason to believe that disclosure of 
     particular information about the existence or contents of a 
     National Security Letter issued under this section will 
     result in--
       ``(i) endangering the life or physical safety of any 
     person;
       ``(ii) flight from prosecution;
       ``(iii) destruction of or tampering with evidence;
       ``(iv) intimidation of potential witnesses;
       ``(v) interference with diplomatic relations; or
       ``(vi) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and
       ``(B) the nondisclosure requirement is narrowly tailored to 
     address the specific harm identified by the Government.
       ``(7) Renewal.--An order under this subsection may be 
     renewed for additional periods of up to 180 days upon another 
     application meeting the requirements of paragraph (5) and a 
     determination by the court that the circumstances described 
     in paragraph (6) continue to exist.
       ``(8) Termination.--If the facts supporting a nondisclosure 
     requirement cease to exist prior to the expiration of the 
     time period imposed by a court for that nondisclosure 
     requirement, an appropriate official of the Federal Bureau of 
     Investigation shall promptly notify the court, and the court 
     shall terminate such nondisclosure requirement.
       ``(d) Minimization and Destruction.--
       ``(1) In general.--Not later than 180 days after the 
     enactment of this section, the Attorney General shall 
     establish minimization and destruction procedures governing 
     the retention and dissemination by the Federal Bureau of 
     Investigation of any records received by the Federal Bureau 
     of Investigation in response to a National Security Letter 
     under this section.
       ``(2) Definition.--In this section, the term `minimization 
     and destruction procedures' means--
       ``(A) specific procedures that are reasonably designed in 
     light of the purpose and technique of a National Security 
     Letter, to minimize the retention, and prohibit the 
     dissemination, of nonpublicly available information 
     concerning unconsenting United States persons consistent with 
     the need of the United States to obtain, produce, and 
     disseminate foreign intelligence information, including 
     procedures to ensure that information obtained pursuant to a 
     National Security Letter regarding persons no longer of 
     interest in an authorized investigation, or information 
     obtained pursuant to a National Security Letter that does not 
     meet the requirements of this section or is outside the scope 
     of such National Security Letter, is returned or destroyed;
       ``(B) procedures that require that nonpublicly available 
     information, which is not foreign intelligence information, 
     as defined in section 101(e)(1) of the Foreign Intelligence 
     Surveillance Act of 1978, shall not be disseminated in a 
     manner that identifies any United States person, without such 
     person's consent, unless such person's identity is necessary 
     to understand foreign intelligence information or assess its 
     importance; and
       ``(C) notwithstanding subparagraphs (A) and (B), procedures 
     that allow for the retention and dissemination of information 
     that is evidence of a crime which has been, is being, or is 
     about to be committed and that is to be retained or 
     disseminated for law enforcement purposes.
       ``(e) Requirement That Certain Congressional Bodies Be 
     Informed.--
       ``(1) In general.--On a semiannual basis the Director of 
     the Federal Bureau of Investigation shall fully inform the 
     Permanent Select Committee on Intelligence of the Senate and 
     the Select Committee on Intelligence of the House of 
     Representatives, and the Committee on the Judiciary of the 
     Senate and the Committee on the Judiciary of the House of 
     Representatives, concerning all requests made under this 
     section.
       ``(2) Contents.--The report required by paragraph (1) shall 
     include--
       ``(A) a description of the minimization and destruction 
     procedures adopted by the Attorney General pursuant to 
     subsection (d), including any changes to such minimization 
     procedures previously adopted by the Attorney General;
       ``(B) a summary of the court challenges brought pursuant to 
     section 3511 of title 18, United States Code, by recipients 
     of National Security Letters;
       ``(C) a description of the extent to which information 
     obtained with National Security Letters under this section 
     has aided intelligence investigations and an explanation of 
     how such information has aided such investigations; and
       ``(D) a description of the extent to which information 
     obtained with National Security Letters under this section 
     has aided criminal prosecutions and an explanation of how 
     such information has aided such prosecutions.
       ``(f) Use of Information.--
       ``(1) In general.--
       ``(A) Consent.--Any information acquired from a National 
     Security Letter pursuant to this section concerning any 
     United States person may be used and disclosed by Federal 
     officers and employees without the consent of the United 
     States person only in accordance with the minimization and 
     destruction procedures required by this section.
       ``(B) Lawful purpose.--No information acquired from a 
     National Security Letter pursuant to this section may be used 
     or disclosed by Federal officers or employees except for 
     lawful purposes.
       ``(2) Disclosure for law enforcement purposes.--No 
     information acquired pursuant to this section shall be 
     disclosed for law enforcement purposes unless such disclosure

[[Page S12059]]

     is accompanied by a statement that such information, or any 
     information derived therefrom, may only be used in a criminal 
     proceeding with the advance authorization of the Attorney 
     General.
       ``(3) Notification of intended disclosure by the united 
     states.--Whenever the United States intends to enter into 
     evidence or otherwise use or disclose in any trial, hearing, 
     or other proceeding in or before any court, department, 
     officer, agency, regulatory body, or other authority of the 
     United States against an aggrieved person any information 
     obtained or derived from a National Security Letter pursuant 
     to this section, the United States shall, before the trial, 
     hearing, or other proceeding or at a reasonable time before 
     an effort to so disclose or so use this information or submit 
     it in evidence, notify the aggrieved person and the court or 
     other authority in which the information is to be disclosed 
     or used that the United States intends to so disclose or so 
     use such information.
       ``(4) Notification of intended disclosure by state or 
     political subdivision.--Whenever any State or political 
     subdivision thereof intends to enter into evidence or 
     otherwise use or disclose in any trial, hearing, or other 
     proceeding in or before any court, department, officer, 
     agency, regulatory body, or other authority of the State or 
     political subdivision thereof against an aggrieved person any 
     information obtained or derived from a National Security 
     Letter pursuant to this section, the State or political 
     subdivision thereof shall notify the aggrieved person, the 
     court or other authority in which the information is to be 
     disclosed or used, and the Attorney General that the State or 
     political subdivision thereof intends to so disclose or so 
     use such information.
       ``(5) Motion to suppress.--
       ``(A) In general.--Any aggrieved person against whom 
     evidence obtained or derived from a National Security Letter 
     pursuant to this section is to be, or has been, introduced or 
     otherwise used or disclosed in any trial, hearing, or other 
     proceeding in or before any court, department, officer, 
     agency, regulatory body, or other authority of the United 
     States, or a State or political subdivision thereof, may move 
     to suppress the evidence obtained or derived from the 
     National Security Letter, as the case may be, on the grounds 
     that--
       ``(i) the information was acquired in violation of the 
     Constitution or laws of the United States; or
       ``(ii) the National Security Letter was not issued in 
     conformity with the requirements of this section.
       ``(B) Timing.--A motion under subparagraph (A) shall be 
     made before the trial, hearing, or other proceeding unless 
     there was no opportunity to make such a motion or the 
     aggrieved person concerned was not aware of the grounds of 
     the motion.
       ``(6) Judicial review.--
       ``(A) In general.--Whenever--
       ``(i) a court or other authority is notified pursuant to 
     paragraph (3) or (4);
       ``(ii) a motion is made pursuant to paragraph (5); or
       ``(iii) any motion or request is made by an aggrieved 
     person pursuant to any other statute or rule of the United 
     States or any State before any court or other authority of 
     the United States or any State to--

       ``(I) discover or obtain materials relating to a National 
     Security Letter issued pursuant to this section; or
       ``(II) discover, obtain, or suppress evidence or 
     information obtained or derived from a National Security 
     Letter issued pursuant to this section;

     the United States district court or, where the motion is made 
     before another authority, the United States district court in 
     the same district as the authority shall, notwithstanding any 
     other provision of law and if the Attorney General files an 
     affidavit under oath that disclosure would harm the national 
     security of the United States, review in camera the materials 
     as may be necessary to determine whether the request was 
     lawful.
       ``(B) Disclosure.--In making a determination under 
     subparagraph (A), unless the court finds that such disclosure 
     would not assist in determining any legal or factual issue 
     pertinent to the case, the court shall disclose to the 
     aggrieved person, the counsel of the aggrieved person, or 
     both, under the procedures and standards provided in the 
     Classified Information Procedures Act (18 U.S.C. App.) or 
     other applicable law, portions of the application, order, or 
     other related materials, or evidence or information obtained 
     or derived from the order.
       ``(7) Effect of determination of lawfulness.--
       ``(A) Unlawful orders.--If the United States district court 
     determines pursuant to paragraph (6) that the National 
     Security Letter was not in compliance with the Constitution 
     or laws of the United States, the court may, in accordance 
     with the requirements of law, suppress the evidence which was 
     unlawfully obtained or derived from the National Security 
     Letter or otherwise grant the motion of the aggrieved person.
       ``(B) Lawful orders.--If the court determines that the 
     National Security Letter was lawful, it may deny the motion 
     of the aggrieved person except to the extent that due process 
     requires discovery or disclosure.
       ``(8) Binding final orders.--Orders granting motions or 
     requests under paragraph (6), decisions under this section 
     that a National Security Letter was not lawful, and orders of 
     the United States district court requiring review or granting 
     disclosure of applications, orders, or other related 
     materials shall be final orders and binding upon all courts 
     of the United States and the several States except a United 
     States court of appeals or the Supreme Court.
       ``(g) Definitions.--As used in this section--
       ``(1) the term `agent of a foreign power' has the meaning 
     given such term by section 101(b) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1801(b));
       ``(2) the term `aggrieved person' means a person whose 
     information or records were sought or obtained under this 
     section; and
       ``(3) the term `foreign power' has the meaning given such 
     term by section 101(a) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1801(a)).''.

     SEC. 3. NATIONAL SECURITY LETTER AUTHORITY FOR CERTAIN 
                   FINANCIAL RECORDS.

       Section 1114 of the Right to Financial Privacy Act of 1978 
     (12 U.S.C. 3414) is amended to read as follows:

     ``SEC. 1114. NATIONAL SECURITY LETTER FOR CERTAIN FINANCIAL 
                   RECORDS.

       ``(a) Authorization.--
       ``(1) In general.--The Director of the Federal Bureau of 
     Investigation, or a designee of the Director whose rank shall 
     be no lower than Deputy Assistant Director at Bureau 
     headquarters or Special Agent in Charge of a Bureau field 
     office, may issue in writing and cause to be served on a 
     financial institution, a National Security Letter requiring 
     the production of--
       ``(A) the name of the customer or entity with whom the 
     financial institution has a financial relationship;
       ``(B) the address of the customer or entity with whom the 
     financial institution has a financial relationship;
       ``(C) the length of time during which the customer or 
     entity has had an account or other financial relationship 
     with the financial institution (including the start date) and 
     the type of account or other financial relationship; and
       ``(D) any account number or other unique identifier 
     associated with the financial relationship of the customer or 
     entity to the financial institution.
       ``(2) Limitation.--A National Security Letter issued 
     pursuant to this section may require the production only of 
     records identified in subparagraphs (A) through (D) of 
     paragraph (1).
       ``(b) National Security Letter Requirements.--
       ``(1) In general.--A National Security Letter issued under 
     this section shall be subject to the requirements of 
     subsections (b) through (g) of section 2709 of title 18, 
     United States Code, in the same manner and to the same extent 
     as those provisions apply with respect to wire and electronic 
     communication service providers.
       ``(2) Reporting.--For purposes of this section, the 
     reporting requirement in section 2709(e) of title 18, United 
     States Code, shall also require informing the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives.
       ``(c) Definition of `Financial Institution'.--For purposes 
     of this section, section 1115, and section 1117, insofar as 
     they relate to the operation of this section, the term 
     `financial institution' has the same meaning as in 
     subsections (a)(2) and (c)(1) of section 5312 of title 31, 
     except that, for purposes of this section, such term shall 
     include only such a financial institution any part of which 
     is located inside any State or territory of the United 
     States, the District of Columbia, Puerto Rico, Guam, American 
     Samoa, the Commonwealth of the Northern Mariana Islands, or 
     the United States Virgin Islands.''.

     SEC. 4. NATIONAL SECURITY LETTER AUTHORITY FOR CERTAIN 
                   CONSUMER REPORT RECORDS.

       Section 626 of the Fair Credit Reporting Act (15 U.S.C. 
     1681u) is amended--
       (1) by striking the section heading and inserting the 
     following:

     ``Sec. 626. National Security Letters for certain consumer 
       report records'';

       (2) by striking subsections (a) through (d) and inserting 
     the following:
       ``(a) Authorization.--
       ``(1) In general.--The Director of the Federal Bureau of 
     Investigation, or a designee of the Director whose rank shall 
     be no lower than Deputy Assistant Director at Bureau 
     headquarters or Special Agent in Charge of a Bureau field 
     office, may issue in writing and cause to be served on a 
     consumer reporting agency a National Security Letter 
     requiring the production of--
       ``(A) the name of a consumer;
       ``(B) the current and former address of a consumer;
       ``(C) the current and former places of employment of a 
     consumer; and
       ``(D) the names and addresses of all financial institutions 
     (as that term is defined in section 1101 of the Right to 
     Financial Privacy Act of 1978) at which a consumer maintains 
     or has maintained an account, to the extent that such 
     information is in the files of the consumer reporting agency.
       ``(2) Limitation.--A National Security Letter issued 
     pursuant to this section may not require the production of a 
     consumer report.
       ``(b) National Security Letter Requirements.--
       ``(1) In general.--A National Security Letter issued under 
     this section shall be subject to the requirements of 
     subsections (b) through (g) of section 2709 of title 18, 
     United States Code, in the same manner and to the

[[Page S12060]]

     same extent as those provisions apply with respect to wire 
     and electronic communication service providers.
       ``(2) Reporting.--For purposes of this section, the 
     reporting requirement in section 2709(e) of title 18, United 
     States Code, shall also require informing the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives.'';
       (3) by striking subsections (f) through (h); and
       (4) by redesignating subsections (e) and (i) through (m) as 
     subsections (c) through (h), respectively.

     SEC. 5. JUDICIAL REVIEW OF NATIONAL SECURITY LETTERS.

       (a) Review of Nondisclosure Orders.--Section 3511(b) of 
     title 18, United States Code, is amended to read as follows:
       ``(b) Nondisclosure.--
       ``(1) In general.--The recipient of a request for records 
     or other information under section 2709 of this title, 
     section 626 of the Fair Credit Reporting Act, section 1114 of 
     the Right to Financial Privacy Act, or section 802(a) of the 
     National Security Act of 1947, may petition any court 
     described in subsection (a) to modify or set aside a 
     nondisclosure requirement imposed in connection with such a 
     request. Such petition shall specify each ground upon which 
     the petitioner relies in seeking relief, and may be based 
     upon any failure of the nondisclosure requirement to comply 
     with the provisions of section 2709 of this title, section 
     626 of the Fair Credit Reporting Act, section 1114 of the 
     Right to Financial Privacy Act, or section 802(a) of the 
     National Security Act of 1947, or upon any constitutional or 
     other legal right or privilege of such person.
       ``(2) Standard.--The court shall modify or set aside the 
     nondisclosure requirement unless the court determines that--
       ``(A) there is a reason to believe that disclosure of the 
     information subject to the nondisclosure requirement will 
     result in--
       ``(i) endangering the life or physical safety of any 
     person;
       ``(ii) flight from prosecution;
       ``(iii) destruction of or tampering with evidence;
       ``(iv) intimidation of potential witnesses;
       ``(v) interference with diplomatic relations; or
       ``(vi) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and
       ``(B) the nondisclosure requirement is narrowly tailored to 
     address the specific harm identified by the Government.''.
       (b) Disclosure.--Section 3511(d) of title 18, United States 
     Code, is amended to read as follows:
       ``(d) Disclosure.--In making determinations under this 
     section, unless the court finds that such disclosure would 
     not assist in determining any legal or factual issue 
     pertinent to the case, the court shall disclose to the 
     petitioner, the counsel of the petitioner, or both, under the 
     procedures and standards provided in the Classified 
     Information Procedures Act (18 U.S.C. App.) or other 
     applicable law, portions of the application, National 
     Security Letter, or other related materials.''.
       (c) Conforming Amendments.--Section 3511 of title 18, 
     United States Code, is amended--
       (1) in subsection (a), by--
       (A) inserting after ``(a)'' the following ``Request.--'';
       (B) striking ``2709(b)'' and inserting ``2709'';
       (C) striking ``626(a) or (b) or 627(a)'' and inserting 
     ``626''; and
       (D) striking ``1114(a)(5)(A)'' and inserting ``1114''; and
       (2) in subsection (c), by--
       (A) inserting after ``(c)'' the following ``Failure To 
     Comply.--'';
       (B) by striking ``2709(b)'' and inserting ``2709'';
       (C) by striking ``626(a) or (b) or 627(a)'' and inserting 
     ``626''; and
       (D) by striking ``1114(a)(5)(A)'' and inserting ``1114''. .
       (d) Repeal.--Section 3511(e) of title 18, United States 
     Code, is repealed.

     SEC. 6. NATIONAL SECURITY LETTER COMPLIANCE PROGRAM AND 
                   TRACKING DATABASE.

       (a) Compliance Program.--The Director of the Federal Bureau 
     of Investigation shall establish a program to ensure 
     compliance with the amendments made by sections 2, 3, and 4 
     of this Act.
       (b) Tracking Database.--The compliance program required by 
     subsection (a) shall include the establishment of a database, 
     the purpose of which shall be to track all National Security 
     Letters issued by the Federal Bureau of Investigation under 
     section 1114 of the Right to Financial Privacy Act of 1978 
     (12 U.S.C. 3414), section 626 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681u), and section 2709 of title 18, United 
     States Code.
       (c) Information.--The database required by this section 
     shall include--
       (1) a signed copy of each National Security Letter;
       (2) the date the National Security Letter was issued and 
     for what type of information;
       (3) whether the National Security Letter seeks information 
     regarding a United States person or non-United States person;
       (4) the ongoing, authorized, and specifically identified 
     national security investigation (other than a threat 
     assessment) to which the National Security Letter relates;
       (5) whether the National Security Letter seeks information 
     regarding an individual who is the subject of such 
     investigation;
       (6) when the information requested was received and, if 
     applicable, when it was destroyed; and
       (7) whether the information gathered was disclosed for law 
     enforcement purposes.

     SEC. 7. PUBLIC REPORTING ON NATIONAL SECURITY LETTERS.

       Section 118(c) of the USA PATRIOT Improvement and 
     Reauthorization Act of 2005 (Public Law 109-177) is amended--
       (1) in paragraph (1)--
       (A) by striking ``concerning different United States 
     persons''; and
       (B) in subparagraph (A), by striking ``, excluding the 
     number of requests for subscriber information'';
       (2) by redesignating paragraph (2) as paragraph (3); and
       (3) by inserting after paragraph (1) the following:
       ``(2) Content.--The report required by this subsection 
     shall include the total number of requests described in 
     paragraph (1) requiring disclosure of information 
     concerning--
       ``(A) United States persons;
       ``(B) non-United States persons;
       ``(C) persons who are the subjects of authorized national 
     security investigations; and
       ``(D) persons who are not the subjects of authorized 
     national security investigations.''.

     SEC. 8. SUNSET OF EXPANDED NATIONAL SECURITY LETTER 
                   AUTHORITIES.

       Subsection 102(b) of Public Law 109-177 is amended to read 
     as follows:
       ``(b) Sections 206, 215, 358(g), 505 Sunset.--
       ``(1) In general.--Effective December 31, 2009, the 
     following provisions are amended to read as they read on 
     October 25, 2001--
       ``(A) sections 501, 502, and 105(c)(2) of the Foreign 
     Intelligence Surveillance Act of 1978;
       ``(B) section 2709 of title 18, United States Code;
       ``(C) sections 626 and 627 of the Fair Credit Reporting Act 
     (15 U.S.C. 1681u, 1681v); and
       ``(D) section 1114 of the Right to Financial Privacy Act 
     (12 U.S.C. 3414).
       ``(2) Exception.--With respect to any particular foreign 
     intelligence investigation that began before the date on 
     which the provisions referred to in paragraph (1) cease to 
     have effect, or with respect to any particular offense or 
     potential offense that began or occurred before the date on 
     which such provisions cease to have effect, such provisions 
     shall continue in effect.''.

     SEC. 9. PRIVACY PROTECTIONS FOR SECTION 215 BUSINESS RECORDS 
                   ORDERS.

       (a) In General.--Section 501(b) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1861(b)(2)) is amended--
       (1) in paragraph (1)(B), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (2)--
       (A) in subparagraph (A), by striking ``, such things being 
     presumptively'' through the end of the subparagraph and 
     inserting a semicolon;
       (B) by redesignating subparagraph (B) as subparagraph (C) 
     and striking the period at the end and inserting ``; and''; 
     and
       (C) by inserting after subparagraph (A) the following:
       ``(B) a statement of specific and articulable facts 
     providing reason to believe that the tangible things sought--
       ``(i) pertain to a suspected agent of a foreign power; or
       ``(ii) pertain to an individual who has been in contact 
     with, or otherwise directly linked to, a suspected agent of a 
     foreign power if the circumstances of that contact or link 
     suggest that the records sought will be relevant to an 
     ongoing, authorized and specifically identified national 
     security investigation (other than a threat assessment) of 
     that suspected agent of a foreign power; and''; and
       (3) by inserting at the end the following:
       ``(3) if the applicant is seeking a nondisclosure 
     requirement described in subsection (d), shall include--
       ``(A) a statement of specific and articulable facts 
     providing reason to believe that disclosure of particular 
     information about the existence or contents of the order 
     requiring the production of tangible things under this 
     section will result in--
       ``(i) endangering the life or physical safety of any 
     person;
       ``(ii) flight from prosecution;
       ``(iii) destruction of or tampering with evidence;
       ``(iv) intimidation of potential witnesses;
       ``(v) interference with diplomatic relations; or
       ``(vi) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and
       ``(B) an explanation of how the nondisclosure requirement 
     is narrowly tailored to address the specific harm identified 
     by the Government.''.
       (b) Order.--Section 501(c) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1861(c)) is amended--
       (1) in paragraph (1), by--
       (A) striking ``subsections (a) and (b)'' and inserting 
     ``subsection (a) and paragraphs (1) and (2) of subsection 
     (b)''; and
       (B) inserting at the end the following: ``If the judge 
     finds that the requirements of subsection (b)(3) have been 
     met, such order shall include a nondisclosure requirement 
     subject

[[Page S12061]]

     to the principles and procedures described in subsection 
     (d)''; and
       (2) in paragraph (2)(C), by inserting before the semicolon 
     ``, if applicable''.
       (c) Nondisclosure.--Section 501(d) of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1861(d)) is 
     amended to read as follows:
       ``(d) Nondisclosure.--
       ``(1) In general.--No person who receives an order under 
     subsection (c) that contains a nondisclosure requirement 
     shall disclose to any person the particular information 
     specified in such nondisclosure requirement for 180 days 
     after receipt of such order.
       ``(2) Exception.--
       ``(A) Disclosure.--A person who receives an order under 
     subsection (c) that contains a nondisclosure requirement may 
     disclose information otherwise subject to any applicable 
     nondisclosure requirement to--
       ``(i) those persons to whom disclosure is necessary in 
     order to comply with an order under this section;
       ``(ii) an attorney in order to obtain legal advice or 
     assistance regarding such order; or
       ``(iii) other persons as permitted by the Director of the 
     Federal Bureau of Investigation or the designee of the 
     Director.
       ``(B) Application.--A person to whom disclosure is made 
     pursuant to subparagraph (A) shall be subject to the 
     nondisclosure requirements applicable to a person to whom an 
     order is directed under this section in the same manner as 
     such person.
       ``(C) Notification.--Any person who discloses to a person 
     described in subparagraph (A) information otherwise subject 
     to a nondisclosure requirement shall notify such person of 
     the applicable nondisclosure requirement.
       ``(3) Extension.--The Director of the Federal Bureau of 
     Investigation, or a designee of the Director (whose rank 
     shall be no lower than Assistant Special Agent in Charge), 
     may apply for renewals for the prohibition on disclosure of 
     particular information about the existence or contents of an 
     order requiring the production of tangible things under this 
     section for additional periods of up to 180 days each. Such 
     nondisclosure requirement shall be renewed if a court having 
     jurisdiction pursuant to paragraph (4) determines that the 
     application meets the requirements of subsection (b)(3).
       ``(4) Jurisdiction.--An application for a renewal pursuant 
     to this subsection shall be made to--
       ``(A) a judge of the court established under section 
     103(a); or
       ``(B) a United States Magistrate Judge under chapter 43 of 
     title 28, who is publicly designated by the Chief Justice of 
     the United States to have the power to hear applications and 
     grant orders for the production of tangible things under this 
     section on behalf of a judge of the court established under 
     section 103(a).''.
       (d) Use of Information.--Section 501(h) of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1861) is 
     amended to read as follows:
       ``(h) Use of Information.--
       ``(1) In general.--
       ``(A) Consent.--Any tangible things or information acquired 
     from an order pursuant to this section concerning any United 
     States person may be used and disclosed by Federal officers 
     and employees without the consent of the United States person 
     only in accordance with the minimization procedures required 
     by this section.
       ``(B) Use and disclosure.--No tangible things or 
     information acquired from an order pursuant to this section 
     may be used or disclosed by Federal officers or employees 
     except for lawful purposes.
       ``(2) Disclosure for law enforcement purposes.--No tangible 
     things or information acquired pursuant to this section shall 
     be disclosed for law enforcement purposes unless such 
     disclosure is accompanied by a statement that such tangible 
     things or information, or any information derived therefrom, 
     may only be used in a criminal proceeding with the advance 
     authorization of the Attorney General.
       ``(3) Notification of intended disclosure by the united 
     states.--Whenever the United States intends to enter into 
     evidence or otherwise use or disclose in any trial, hearing, 
     or other proceeding in or before any court, department, 
     officer, agency, regulatory body, or other authority of the 
     United States against an aggrieved person any tangible things 
     or information obtained or derived from an order pursuant to 
     this section, the United States shall, before the trial, 
     hearing, or other proceeding or at a reasonable time before 
     an effort to so disclose or so use the tangible things or 
     information or submit them in evidence, notify the aggrieved 
     person and the court or other authority in which the tangible 
     things or information are to be disclosed or used that the 
     United States intends to so disclose or so use such tangible 
     things or information.
       ``(4) Notification of intended disclosure by state or 
     political subdivision.--Whenever any State or political 
     subdivision thereof intends to enter into evidence or 
     otherwise use or disclose in any trial, hearing, or other 
     proceeding in or before any court, department, officer, 
     agency, regulatory body, or other authority of the State or 
     political subdivision thereof against an aggrieved person any 
     tangible things or information obtained or derived from an 
     order pursuant to this section, the State or political 
     subdivision thereof shall notify the aggrieved person, the 
     court or other authority in which the tangible things or 
     information are to be disclosed or used, and the Attorney 
     General that the State or political subdivision thereof 
     intends to so disclose or so use such tangible things or 
     information.
       ``(5) Motion to suppress.--
       ``(A) In general.--Any aggrieved person against whom 
     evidence obtained or derived from an order pursuant to this 
     section is to be, or has been, introduced or otherwise used 
     or disclosed in any trial, hearing, or other proceeding in or 
     before any court, department, officer, agency, regulatory 
     body, or other authority of the United States, or a State or 
     political subdivision thereof, may move to suppress the 
     evidence obtained or derived from the order, as the case may 
     be, on the grounds that--
       ``(i) the tangible things or information were acquired in 
     violation of the Constitution or laws of the United States; 
     or
       ``(ii) the order was not issued in conformity with the 
     requirements of this section.
       ``(B) Timing.--A motion under subparagraph (A) shall be 
     made before the trial, hearing, or other proceeding unless 
     there was no opportunity to make such a motion or the 
     aggrieved person concerned was not aware of the grounds of 
     the motion.
       ``(6) Judicial review.--
       ``(A) In general.--Whenever--
       ``(i) a court or other authority is notified pursuant to 
     paragraph (3) or (4);
       ``(ii) a motion is made pursuant to paragraph (5); or
       ``(iii) any motion or request is made by an aggrieved 
     person pursuant to any other statute or rule of the United 
     States or any State before any court or other authority of 
     the United States or any State to--

       ``(I) discover or obtain applications, orders, or other 
     materials relating to an order issued pursuant to this 
     section; or
       ``(II) discover, obtain, or suppress evidence or 
     information obtained or derived from an order issued pursuant 
     to this section;

     the United States district court or, where the motion is made 
     before another authority, the United States district court in 
     the same district as the authority shall, notwithstanding any 
     other provision of law and if the Attorney General files an 
     affidavit under oath that disclosure would harm the national 
     security of the United States, review in camera the 
     application, order, and such other related materials as may 
     be necessary to determine whether the order was lawfully 
     authorized and served.
       ``(B) Disclosure.--In making a determination under 
     subparagraph (A), unless the court finds that such disclosure 
     would not assist in determining any legal or factual issue 
     pertinent to the case, the court shall disclose to the 
     aggrieved person, the counsel of the aggrieved person, or 
     both, under the procedures and standards provided in the 
     Classified Information Procedures Act (18 U.S.C. App.) or 
     other applicable law, portions of the application, order, or 
     other related materials, or evidence or information obtained 
     or derived from the order.
       ``(7) Effect of determination of lawfulness.--
       ``(A) Unlawful orders.--If the United States district court 
     determines pursuant to paragraph (6) that the order was not 
     authorized or served in compliance with the Constitution or 
     laws of the United States, the court may, in accordance with 
     the requirements of law, suppress the evidence which was 
     unlawfully obtained or derived from the order or otherwise 
     grant the motion of the aggrieved person.
       ``(B) Lawful orders.--If the court determines that the 
     order was lawfully authorized and served, it may deny the 
     motion of the aggrieved person except to the extent that due 
     process requires discovery or disclosure.
       ``(8) Binding final orders.--Orders granting motions or 
     requests under paragraph (6), decisions under this section 
     that an order was not lawfully authorized or served, and 
     orders of the United States district court requiring review 
     or granting disclosure of applications, orders, or other 
     related materials shall be final orders and binding upon all 
     courts of the United States and the several States except a 
     United States court of appeals or the Supreme Court.''.
       (e) Definition.--Title V of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1861 et seq.) is amended 
     by adding at the end the following:

     ``SEC. 503. DEFINITIONS.

       ``In this title, the following definitions apply:
       ``(1) In general.--Except as provided in this section, 
     terms used in this title that are also used in title I shall 
     have the meanings given such terms by section 101.
       ``(2) Aggrieved person.--The term `aggrieved person' means 
     any person whose tangible things or information were acquired 
     pursuant to an order under this title.''.

     SEC. 10. JUDICIAL REVIEW OF SECTION 215 ORDERS.

       Section 501(f) of the Foreign Intelligence Surveillance Act 
     of 1978 (50 U.S.C. 1861) is amended to read as follows:
       ``(f) Judicial Review.--
       ``(1) Order for production.--Not later than 20 days after 
     the service upon any person of an order pursuant to 
     subsection (c), or at any time before the return date 
     specified in the order, whichever period is shorter, such 
     person may file, in the court established under section 
     103(a) or in the district court of the United States for the 
     judicial district within which such person resides, is found, 
     or transacts business, a petition for

[[Page S12062]]

     such court to modify or set aside such order. The time 
     allowed for compliance with the order in whole or in part as 
     deemed proper and ordered by the court shall not run during 
     the pendency of such petition in the court. Such petition 
     shall specify each ground upon which the petitioner relies in 
     seeking relief, and may be based upon any failure of such 
     order to comply with the provisions of this section or upon 
     any constitutional or other legal right or privilege of such 
     person.
       ``(2) Nondisclosure order.--
       ``(A) In general.--A person prohibited from disclosing 
     information under subsection (d) may file, in the courts 
     established by section 103(a) or in the district court of the 
     United States for the judicial district within which such 
     person resides, is found, or transacts business, a petition 
     for such court to set aside the nondisclosure requirement. 
     Such petition shall specify each ground upon which the 
     petitioner relies in seeking relief, and may be based upon 
     any failure of the nondisclosure requirement to comply with 
     the provisions of this section or upon any constitutional or 
     other legal right or privilege of such person.
       ``(B) Standard.--The court shall modify or set aside the 
     nondisclosure requirement unless the court determines that--
       ``(i) there is reason to believe that disclosure of the 
     information subject to the nondisclosure requirement will 
     result in--

       ``(I) endangering the life or physical safety of any 
     person;
       ``(II) flight from prosecution;
       ``(III) destruction of or tampering with evidence;
       ``(IV) intimidation of potential witnesses;
       ``(V) interference with diplomatic relations; or
       ``(VI) otherwise seriously endangering the national 
     security of the United States by alerting a target, a 
     target's associates, or the foreign power of which the target 
     is an agent, of the Government's interest in the target; and

       ``(ii) the nondisclosure requirement is narrowly tailored 
     to address the specific harm identified by the Government.
       ``(3) Rulemaking.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of the National Security Letter Reform Act of 
     2007, the courts established pursuant to section 103(a) shall 
     establish such rules and procedures and take such actions as 
     are reasonably necessary to administer their responsibilities 
     under this subsection.
       ``(B) Reporting.--Not later than 30 days after promulgating 
     rules and procedures under subparagraph (A), the courts 
     established pursuant to section 103(a) shall transmit a copy 
     of the rules and procedures, unclassified to the greatest 
     extent possible (with a classified annex, if necessary), to 
     the Committee on the Judiciary and the Select Committee on 
     Intelligence of the Senate and the Committee on the Judiciary 
     and the Permanent Select Committee on Intelligence of the 
     House of Representatives.
       ``(4) Disclosures to petitioners.--In making determinations 
     under this subsection, unless the court finds that such 
     disclosure would not assist in determining any legal or 
     factual issue pertinent to the case, the court shall disclose 
     to the petitioner, the counsel of the petitioner, or both, 
     under the procedures and standards provided in the Classified 
     Information Procedures Act (18 U.S.C. App.) or other 
     applicable law, portions of the application, order, or other 
     related materials.''.

     SEC. 11. RESOURCES FOR FISA APPLICATIONS.

       (a) Electronic Filing.--
       (1) In general.--The Department of Justice shall establish 
     a secure electronic system for the submission of documents 
     and other information to the court established under section 
     103(a) of the Foreign Intelligence Surveillance Act of 1978 
     (50 U.S.C. 1803) relating to applications for orders under 
     chapter 36 of title 50, authorizing electronic surveillance, 
     physical searches, the use of pen register and trap and trace 
     devices, and the production of tangible things.
       (2) Funding source.--Section 1103(4) of the Violence 
     Against Women and Department of Justice Reauthorization Act 
     of 2005 is amended--
       (A) in subparagraph (C), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (D), by striking the period and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(E) $5,000,000 for the implementation of the secure 
     electronic filing system established by Section 11(a)(1) of 
     the National Security Letter Reform Act.''.
       (b) Personnel and Information Technology Needs.--
       (1) Office of intelligence policy and review.--
       (A) In general.--The Office of Intelligence Policy and 
     Review of the Department of Justice may hire personnel and 
     procure information technology, as needed, to ensure the 
     timely and efficient processing of applications to the court 
     established under section 103(a) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1803).
       (B) Funding source.--
       (i) Section 1103(4) of the Violence Against Women and 
     Department of Justice Reauthorization Act of 2005 is 
     amended--

       (I) in subparagraph (D), by striking ``and'' after the 
     semicolon;
       (II) in subparagraph (E), by striking the period and 
     inserting ``; and''; and
       (III) by adding at the end the following:

       ``(F) not to exceed $3,000,000 for the personnel and 
     information technology as specified in Section 11(b)(1)(A) of 
     the National Security Letter Reform Act.''.
       (ii) Section 1104(4) of the Violence Against Women and 
     Department of Justice Reauthorization Act of 2005 is 
     amended--

       (I) in subparagraph (C), by striking ``and'' after the 
     semicolon;
       (II) in subparagraph (D), by striking the period and 
     inserting ``; and''; and
       (III) by adding at the end the following:

       ``(E) not to exceed $3,000,000 for the personnel and 
     information technology as specified in Section 11(b)(1)(A) of 
     the National Security Letter Reform Act.''.
       (2) FBI.--
       (A) In general.--The Federal Bureau of Investigation may 
     hire personnel and procure information technology, as needed, 
     to ensure the timely and efficient processing of applications 
     to the Foreign Intelligence Surveillance Court.
       (B) Funding source.--
       (i) Section 1103(7) of the Violence Against Women and 
     Department of Justice Reauthorization Act of 2005 is amended 
     by inserting before the period the following: ``, and which 
     shall include not to exceed $3,000,000 for the personnel and 
     information technology as specified in Section 11(b)(2)(A) of 
     the National Security Letter Reform Act''.
       (ii) Section 1104(7) of the Violence Against Women and 
     Department of Justice Reauthorization Act of 2005 is amended 
     by inserting before the period the following: ``, and which 
     shall include not to exceed $3,000,000 for the personnel and 
     information technology as specified in Section 11(b)(2)(A) of 
     the National Security Letter Reform Act''.

     SEC. 12. ENHANCED PROTECTIONS FOR EMERGENCY DISCLOSURES.

       (a) Stored Communications Act.--Section 2702 of title 18, 
     United States Code is amended--
       (1) in subsection (b)(8), by--
       (A) striking ``, in good faith,'' and inserting 
     ``reasonably'';
       (B) inserting ``immediate'' after ``involving''; and
       (C) adding before the period: ``, subject to the 
     limitations of subsection (d) of this section;'';
       (2) in subsection (c)(4) by--
       (A) striking ``. in good faith,'' and inserting 
     ``reasonably'';
       (B) inserting ``immediate'' after ``involving''; and
       (C) adding before the period: ``, subject to the 
     limitations of subsection (d) of this section.'';
       (3) redesignating subsection (d) as subsection (e) and 
     adding after subsection (c) the following:
       ``(d) Requirement.--
       ``(1) Request.--If a governmental entity requests that a 
     provider divulge information pursuant to subsection (b)(8) or 
     (c)(4), the request shall specify that the disclosure is on a 
     voluntary basis and shall document the factual basis for 
     believing that an emergency involving immediate danger of 
     death or serious physical injury to any person requires 
     disclosure without delay of the information.
       ``(2) Notice to court.--Within 5 days of obtaining access 
     to records under subsection (b)(8) or (c)(4), the 
     governmental entity shall file with the appropriate court a 
     signed, sworn statement of a supervisory official of a rank 
     designated by the head of the governmental entity setting 
     forth the grounds for the emergency access.''; and
       (4) in subsection (e), as redesignated in paragraphs (1) 
     and (2), by striking ``subsection (b)(8)'' and inserting 
     ``subsections (b)(8) and (c)(4)''.
       (b) Right to Financial Privacy Act.--
       (1) Emergency disclosures.--The Right to Financial Privacy 
     Act of 1978 (12 U.S.C. 3401 et seq.) is amended by inserting 
     after section 1120 the following:

     ``SEC. 1121. EMERGENCY DISCLOSURES.

       ``(a) In General.--
       ``(1) Standard.--A financial institution (as defined in 
     section 1114(c)) may divulge a record described in section 
     1114(a) pertaining to a customer to a Government authority, 
     if the financial institution reasonably believes that an 
     emergency involving immediate danger of death or serious 
     physical injury to any person requires disclosure without 
     delay of information relating to the emergency.
       ``(2) Notice in request.--If a Government authority 
     requests that a financial institution divulge information 
     pursuant to this section, the request shall specify that the 
     disclosure is on a voluntary basis, and shall document the 
     factual basis for believing that an emergency involving 
     immediate danger of death or serious physical injury to any 
     person requires disclosure without delay of the information.
       ``(b) Certificate.--In the instances specified in 
     subsection (a), the Government shall submit to the financial 
     institution the certificate required in section 1103(b), 
     signed by a supervisory official of a rank designated by the 
     head of the Government authority.
       ``(c) Notice to Court.--Within 5 days of obtaining access 
     to financial records under this section, the Government 
     authority shall file with the appropriate court a signed, 
     sworn statement of a supervisory official of a rank 
     designated by the head of the Government authority setting 
     forth the grounds for the emergency access. The Government 
     authority shall thereafter comply with the notice provisions 
     of section 1109.
       ``(d) Reporting of Emergency Disclosures.--On an annual 
     basis, the Attorney General of the United States shall submit 
     to the Committee on the Judiciary and the

[[Page S12063]]

     Committee on Financial Services of the House of 
     Representatives and the Committee on the Judiciary and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate a report containing--
       ``(1) the number of individuals for whom the Department of 
     Justice has received voluntary disclosures under this 
     section; and
       ``(2) a summary of the bases for disclosure in those 
     instances where--
       ``(A) voluntary disclosures under this section were made to 
     the Department of Justice; and
       ``(B) the investigation pertaining to those disclosures was 
     closed without the filing of criminal charges.''.
       (2) Conforming amendments.--The Right to Financial Privacy 
     Act of 1978 (12 U.S.C. 3401 et seq.) is amended--
       (A) in section 1102 (12 U.S.C. 3402), by striking ``or 
     1114'' and inserting ``1114, or 1121''; and
       (B) in section 1109(c) (12 U.S.C. 3409(c)), by striking 
     ``1114(b)'' and inserting ``1121''.
       (c) Fair Credit Reporting Act.--Section 627 of the Fair 
     Credit Reporting Act (15 U.S.C. 1681v) is amended to read as 
     follows:

     ``SEC. 627. EMERGENCY DISCLOSURES.

       ``(a) In General.--
       ``(1) Standard.--A consumer reporting agency may divulge 
     identifying information respecting any consumer, limited to 
     the name, address, former addresses, places of employment, or 
     former places of employment of the consumer, to a Government 
     agency, if the consumer reporting agency reasonably believes 
     that an emergency involving immediate danger of death or 
     serious physical injury to any person requires disclosure 
     without delay of information relating to the emergency.
       ``(2) Notice in request.--If a Government agency requests 
     that a consumer reporting agency divulge information pursuant 
     to this section, the request shall specify that the 
     disclosure is on a voluntary basis, and shall document the 
     factual basis for believing that an emergency involving 
     immediate danger of death or serious physical injury to any 
     person requires disclosure without delay of the information.
       ``(b) Notice to Court.--Within 5 days of obtaining access 
     to identifying information under this section, the Government 
     agency shall file with the appropriate court a signed, sworn 
     statement of a supervisory official of a rank designated by 
     the head of the Government agency setting forth the grounds 
     for the emergency access.
       ``(c) Reporting of Emergency Disclosures.--On an annual 
     basis, the Attorney General of the United States shall submit 
     to the Committee on the Judiciary and the Committee on 
     Financial Services of the House of Representatives and the 
     Committee on the Judiciary and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate a report 
     containing--
       ``(1) the number of individuals for whom the Department of 
     Justice has received voluntary disclosures under this 
     section; and
       ``(2) a summary of the bases for disclosure in those 
     instances where--
       ``(A) voluntary disclosures under this section were made to 
     the Department of Justice; and
       ``(B) the investigation pertaining to those disclosures was 
     closed without the filing of criminal charges.''.

     SEC. 13. CLARIFICATION REGARDING DATA RETENTION.

       Subsection 2703(f) of title 18, United States Code, is 
     amended by adding at the end the following:
       ``(3) A provider of wire or electronic communications 
     services or a remote computing service who has received a 
     request under this subsection shall not disclose the records 
     referred to in paragraph (1) until such provider has received 
     a court order or other process.''.

     SEC. 14. LEAST INTRUSIVE MEANS.

       (a) Guidelines.--
       (1) In general.--The Attorney General shall issue 
     guidelines (consistent with Executive Order 12333 or 
     successor order) instructing that when choices are available 
     between the use of information collection methods in national 
     security investigations that are more or less intrusive, the 
     least intrusive collection techniques feasible are to be 
     used.
       (2) Specific collection techniques.--The guidelines 
     required by this section shall provide guidance with regard 
     to specific collection techniques, including the use of 
     national security letters, considering such factors as--
       (A) the effect on the privacy of individuals;
       (B) the potential damage to reputation of individuals; and
       (C) any special First Amendment concerns relating to a 
     potential recipient of a National Security Letter or other 
     legal process, including a direction that prior to issuing 
     such National Security Letter or other legal process to a 
     library or bookseller, investigative procedures aimed at 
     obtaining the relevant information from entities other than a 
     library or bookseller be utilized and have failed, or 
     reasonably appear to be unlikely to succeed if tried or 
     endanger lives if tried.
       (b) Definitions.--In this section:
       (1) Bookseller.--The term ``bookseller'' means a person or 
     entity engaged in the sale, rental, or delivery of books, 
     journals, magazines, or other similar forms of communication 
     in print or digitally.
       (2) Library.--The term ``library'' means a library (as that 
     term is defined in section 213(2) of the Library Services and 
     Technology Act (20 U.S.C. 9122(2))) whose services include 
     access to the Internet, books, journals, magazines, 
     newspapers, or other similar forms of communication in print 
     or digitally to patrons for their use, review, examination, 
     or circulation.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Kennedy, Mr. Feingold, and Mr. 
        Obama):
  S. 2092. A bill to amend title 11, United States Code, to improve 
protections for employees and retirees in business bankruptcies; to the 
Committee on the Judiciary.
  Mr. DURBIN. Mr. President, I rise today to support this Nations' 
workers, who deserve better treatment than they currently experience 
when their employers fail them.
  We all remember what happened with Enron. Thousands of workers toiled 
over decades to slowly build up good, solid companies of which they 
could be proud. Then, in just a few short years, these companies were 
bought up by a conglomerate and run into the ground.
  Enron went bankrupt and, just like that, the workers and retirees who 
spent their lives building something lost their jobs, their benefits, 
and most of their pensions. Our bankruptcy system helped facilitate 
that loss.
  It is not just Enron. Workers and retirees are always near the back 
of the line when their companies go into bankruptcy. Some firms have 
gone into bankruptcy at least in part because companies can walk away 
forever from some of their obligations to their employees.
  Today I am introducing the Protecting Employees and Retirees in 
Business Bankruptcies Act, along with Senators Kennedy and Feingold. I 
am pleased that Chairman Conyers of the House Judiciary Committee will 
be introducing the House companion.
  The Protecting Employees and Retirees in Business Bankruptcies Act 
will increase the value of worker claims in bankruptcy. The bill 
doubles the maximum value of wage claims for each worker to $20,000; 
allows a second claim of up to $20,000 for benefits earned; eliminates 
the requirement that employees earn wage and benefit claims within 180 
days of the bankruptcy filing; creates a new priority claim for the 
loss in value of workers' pensions; and establishes a new priority 
administrative expense for workers' collective severance pay.
  The bill also will reduce the loss of wages and benefits. It protects 
the value of collective bargaining agreements by limiting the 
situations in which they can be rejected and by tightening the criteria 
by which they can be amended. It also protects retiree benefits and 
ensures that bidders for assets of the bankrupt company that promise to 
honor back wages, vacation time, and other benefits are considered 
favorably.
  Finally, the bill will increase the parity of worker and executive 
claims. For example, the bill prohibits deferred executive compensation 
in situations where employee compensation plans have been terminated in 
bankruptcy.
  No longer will executives and insiders be able to pay themselves huge 
bonuses in the midst of slashing payroll and benefit costs.
  No longer will consultants receive huge fees while retirees are 
losing most of their pensions.
  No longer will companies be able to sell off all of the assets that 
make the company worthwhile, and yet refuse to use those proceeds to 
support the workers who have lost their livelihoods.
  I am proud to introduce this legislation with Senators Kennedy and 
Feingold, and I thank the AFL-CIO and all of its workers for their 
wholehearted support.
  Mr. President, 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. 2092

       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 ``Protecting Employees and 
     Retirees in Business Bankruptcies Act of 2007''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) Recent corporate restructurings have exacted a 
     devastating toll on workers through deep cuts in wages and 
     benefits, termination of defined benefit pension plans, and 
     the transfer of productive assets to

[[Page S12064]]

     lower wage economies outside the United States. Retirees have 
     suffered deep cutbacks in benefits when companies in 
     bankruptcy renege on their retiree health obligations and 
     terminate pension plans.
       (2) Congress enacted chapter 11 of title 11, United States 
     Code, to protect jobs and enhance enterprise value for all 
     stakeholders and not to be used as a strategic weapon to 
     eliminate good paying jobs, strip employees and their 
     families of a lifetime's worth of earned benefits and hinder 
     their ability to participate in a prosperous and sustainable 
     economy. Specific laws designed to treat workers and retirees 
     fairly and keep companies operating are instead causing the 
     burdens of bankruptcy to fall disproportionately and 
     overwhelmingly on employees and retirees, those least able to 
     absorb the losses.
       (3) At the same time that working families and retirees are 
     forced to make substantial economic sacrifices, executive pay 
     enhancements continue to flourish in business bankruptcies, 
     despite recent congressional enactments designed to curb 
     lavish pay packages for those in charge of failing 
     enterprises. Bankruptcy should not be a haven for the 
     excesses of executive pay.
       (4) Employees and retirees, unlike other creditors, have no 
     way to diversify the risk of their employer's bankruptcy.
       (5) Comprehensive reform is essential in order to remedy 
     these fundamental inequities in the bankruptcy process and to 
     recognize the unique firm-specific investment by employees 
     and retirees in their employers' business through their 
     labor.

     SEC. 3. INCREASED WAGE PRIORITY.

       Section 507(a) of title 11, United States Code, is 
     amended--
       (1) in paragraph (4)--
       (A) by striking ``$10,000'' and inserting ``$20,000'';
       (B) by striking ``within 180 days''; and
       (C) by striking ``or the date of the cessation of the 
     debtor's business, whichever occurs first,'';
       (2) in paragraph (5)(A), by striking--
       (A) ``within 180 days''; and
       (B) ``or the date of the cessation of the debtor's 
     business, whichever occurs first''; and
       (3) in paragraph (5), by striking subparagraph (B) and 
     inserting the following:
       ``(B) for each such plan, to the extent of the number of 
     employees covered by each such plan, multiplied by 
     $20,000.''.

     SEC. 4. PRIORITY FOR STOCK VALUE LOSSES IN DEFINED 
                   CONTRIBUTION PLANS.

       (a) Section 101(5) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by inserting ``or'' after the 
     semicolon; and
       (3) by adding at the end the following:
       ``(C) right or interest in equity securities of the debtor, 
     or an affiliate of the debtor, held in a defined contribution 
     plan (within the meaning of section 3(34) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1002(34)) 
     for the benefit of an individual who is not an insider or 1 
     of the 10 most highly compensated employees of the debtor (if 
     1 or more are not insiders), if such securities were 
     attributable to--
       ``(i) employer contributions by the debtor or an affiliate 
     of the debtor, other than elective deferrals (within the 
     meaning of section 402(g) of the Internal Revenue Code of 
     1986), and any earnings thereon; or
       ``(ii) elective deferrals and any earnings thereon.''.
       (b) Section 507(a) of title 11, United States Code, is 
     amended--
       (1) by redesignating paragraphs (6) through (10) as 
     paragraphs (7) through (11), respectively;
       (2) by inserting after paragraph (5) the following:
       ``(6) Sixth, loss of the value of equity securities of the 
     debtor or affiliate of the debtor that are held in a defined 
     contribution plan (within the meaning of section 3(34) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(34)), without regard to when services resulting in the 
     contribution of stock to the plan were rendered, measured by 
     the market value of the stock at the time of contribution to, 
     or purchase by, the plan and the value as of the commencement 
     of the case where an employer or plan sponsor that has 
     commenced a case under this title has committed fraud with 
     respect to such plan or has otherwise breached a duty to the 
     participant that has proximately caused the loss of value.'';
       (3) in paragraph (7), as redesignated, by striking 
     ``Sixth'' and inserting ``Seventh'';
       (4) in paragraph (8), as redesignated, by striking 
     ``Seventh'' and inserting ``Eighth'';
       (5) in paragraph (9), as redesignated, by striking 
     ``Eighth'' and inserting ``Ninth'';
       (6) in paragraph (10), as redesignated, by striking 
     ``Ninth'' and inserting ``Tenth''; and
       (7) in paragraph (11), as redesignated, by striking 
     ``Tenth'' and inserting ``Eleventh''.

     SEC. 5. PRIORITY FOR SEVERANCE PAY.

       Section 503(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (8) by striking ``and'' at the end;
       (2) in paragraph (9) by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(10) severance pay owed to employees of the debtor (other 
     than to an insider, other senior management, or a consultant 
     retained to provide services to the debtor), under a plan, 
     program, or policy generally applicable to employees of the 
     debtor, or owed pursuant to a collective bargaining 
     agreement, but not under an individual contract of 
     employment, for termination or layoff on or after the date of 
     the filing of the petition, which pay shall be deemed earned 
     in full upon such layoff or termination of employment.''.

     SEC. 6. EXECUTIVE COMPENSATION UPON EXIT FROM BANKRUPTCY.

       Section 1129(a)(5) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A)(ii), by striking ``and'' at the 
     end; and
       (2) in subparagraph (B), by striking the period at the end 
     and inserting the following: ``; and
       ``(C) the compensation disclosed pursuant to subparagraph 
     (B) has been approved by, or is subject to the approval of, 
     the court, as reasonable when compared to persons holding 
     comparable positions at comparable companies in the same 
     industry and not disproportionate in light of economic 
     concessions by the debtor's nonmanagement workforce during 
     the case.''.

     SEC. 7. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

       Section 503(c) of title 11, United States Code, is 
     amended--
       (1) in paragraph (1), by inserting ``or for the payment of 
     performance or incentive compensation, or a bonus of any 
     kind, or other financial returns designed to replace or 
     enhance incentive, stock, or other compensation in effect 
     prior to the date of the commencement of the case,'' after 
     ``remain with the debtor's business,''; and
       (2) by amending paragraph (3) to read as follows:
       ``(3) other transfers or obligations, to or for the benefit 
     of officers, of managers, or of consultants retained to 
     provide services to the debtor, before or after the date of 
     filing of the petition, in the absence of a finding by the 
     court based upon evidence in the record, and without 
     deference to the debtor's request for such payments, that 
     such transfers or obligations are essential to the survival 
     of the debtor's business or (in the case of a liquidation of 
     some or all of the debtor's assets) essential to the orderly 
     liquidation and maximization of value of the assets of the 
     debtor, in either case, because of the essential nature of 
     the services provided, and then only to the extent that the 
     court finds such transfers or obligations are reasonable 
     compared to individuals holding comparable positions at 
     comparable companies in the same industry and not 
     disproportionate in light of economic concessions by the 
     debtor's nonmanagement workforce during the case.''.

     SEC. 8. REJECTION OF COLLECTIVE BARGAINING AGREEMENTS.

       Section 1113 of title 11, United States Code, is amended--
       (1) by striking subsections (a) through (c) and inserting 
     the following:
       ``(a) The debtor in possession, or the trustee if one has 
     been appointed under this chapter, other than a trustee in a 
     case covered by subchapter IV of this chapter and by title I 
     of the Railway Labor Act, may reject a collective bargaining 
     agreement only in accordance with the provisions of this 
     section.
       ``(b)(1) Where a debtor in possession or trustee 
     (hereinafter in this section referred to collectively as a 
     `trustee') seeks rejection of a collective bargaining 
     agreement, a motion seeking rejection shall not be filed 
     unless the trustee has first met with the authorized 
     representative (at reasonable times and for a reasonable 
     period in light of the complexity of the case) to confer in 
     good faith in attempting to reach mutually acceptable 
     modifications of such agreement. Proposals by the trustee to 
     modify the agreement shall be limited to modifications to the 
     agreement that--
       ``(A) are designed to achieve a total aggregate financial 
     contribution for the affected labor group for a period not to 
     exceed 2 years after the effective date of the plan;
       ``(B) shall be no more than the minimal savings necessary 
     to permit the debtor to exit bankruptcy, such that 
     confirmation of such plan is not likely to be followed by the 
     liquidation of the debtor or any successor to the debtor; and
       ``(C) shall not overly burden the affected labor group, 
     either in the amount of the savings sought from such group or 
     the nature of the modifications, when compared to other 
     constituent groups expected to maintain ongoing relationships 
     with the debtor, including management personnel.
       ``(2) Proposals by the trustee under paragraph (1) shall be 
     based upon the most complete and reliable information 
     available. Information that is relevant for the negotiations 
     shall be provided to the authorized representative.
       ``(c)(1) If, after a period of negotiations, the debtor and 
     the authorized representative have not reached agreement over 
     mutually satisfactory modifications and the parties are at an 
     impasse, the debtor may file a motion seeking rejection of 
     the collective bargaining agreement after notice and a 
     hearing held pursuant to subsection (d). The court may grant 
     a motion to reject a collective bargaining agreement only if 
     the court finds that--
       ``(A) the debtor has, prior to such hearing, complied with 
     the requirements of subsection (b) and has conferred in good 
     faith with the authorized representative regarding such 
     proposed modifications, and the parties were at an impasse;
       ``(B) the court has considered alternative proposals by the 
     authorized representative and has determined that such 
     proposals do not meet the requirements of subparagraphs (A) 
     and (B) of subsection (b)(1);

[[Page S12065]]

       ``(C) further negotiations are not likely to produce a 
     mutually satisfactory agreement; and
       ``(D) the court has considered--
       ``(i) the effect of the proposed financial relief on the 
     affected labor group;
       ``(ii) the ability of the debtor to retain an experienced 
     and qualified workforce; and
       ``(iii) the effect of a strike in the event of rejection of 
     the collective bargaining agreement.
       ``(2) In reaching a decision under this subsection 
     regarding whether modifications proposed by the debtor and 
     the total aggregate savings meet the requirements of 
     subsection (b), the court shall take into account--
       ``(A) the ongoing impact on the debtor of the debtor's 
     relationship with all subsidiaries and affiliates, regardless 
     of whether any such subsidiary or affiliate is domestic or 
     nondomestic, or whether any such subsidiary or affiliate is a 
     debtor entity; and
       ``(B) whether the authorized representative agreed to 
     provide financial relief to the debtor within the 24-month 
     period prior to the date of the commencement of the case, and 
     if so, shall consider the total value of such relief in 
     evaluating the debtor's proposed modifications.
       ``(3) In reaching a decision under this subsection, where a 
     debtor has implemented a program of incentive pay, bonuses, 
     or other financial returns for insiders or senior management 
     personnel during the bankruptcy, or has implemented such a 
     program within 180 days before the date of the commencement 
     of the case, the court shall presume that the debtor has 
     failed to satisfy the requirements of subsection 
     (b)(1)(C).'';
       (2) in subsection (d)--
       (A) by striking ``(d)'' and all that follows through 
     paragraph (2) and inserting the following:
       ``(d)(1) Upon the filing of a motion for rejection of a 
     collective bargaining agreement, the court shall schedule a 
     hearing to be held on not less than 21 days notice (unless 
     the debtor and the authorized representative agree to a 
     shorter time). Only the debtor and the authorized 
     representative may appear and be heard at such hearing.''; 
     and
       (B) by redesignating paragraph (3) as paragraph (2);
       (3) in subsection (f), by adding at the end the following: 
     ``Any payment required to be made under this section before 
     the date on which a plan confirmed under section 1129 is 
     effective has the status of an allowed administrative 
     expense, as provided in section 503.''; and
       (4) by adding at the end the following:
       ``(g) The rejection of a collective bargaining agreement 
     constitutes a breach of such contract with the same effect as 
     rejection of an executory contract pursuant to section 
     365(g). No claim for rejection damages shall be limited by 
     section 502(b)(7). Economic self-help by an authorized 
     representative shall be permitted upon a court order granting 
     a motion to reject a collective bargaining agreement under 
     subsection (c) or court-authorized interim changes under 
     subsection (e), and no provision of this title or of any 
     other Federal or State law shall be construed to the 
     contrary.
       ``(h) At any time after the date on which an order is 
     entered authorizing rejection, or where an agreement 
     providing mutually satisfactory modifications has been 
     entered into between the debtor and the authorized 
     representative, at any time after such agreement has been 
     entered into, the authorized representative may apply to the 
     court for an order seeking an increase in the level of wages 
     or benefits, or relief from working conditions, based upon 
     changed circumstances. The court shall grant the request so 
     long as the increase or other relief is consistent with the 
     standard set forth in subsection (b)(1)(B).
       ``(i) Upon request by the authorized representative, and 
     where the court finds that the prospects for reaching a 
     mutually satisfactory agreement would be aided by granting 
     the request, the court may direct that a dispute under 
     subsection (c) be heard and determined by a neutral panel of 
     experienced labor arbitrators in lieu of a court proceeding 
     under subsection (d). The decision of such panel shall have 
     the same effect as a decision by the court. The court's 
     decision directing the appointment of a neutral panel is not 
     subject to appeal.
       ``(j) Upon request by the authorized representative, the 
     debtor shall provide for the reasonable fees and costs 
     incurred by the authorized representative under this section, 
     after notice and a hearing.
       ``(k) If a plan to be confirmed under section 1129 provides 
     for the liquidation of the debtor, whether by sale or 
     cessation of all or part of the business, the trustee and the 
     authorized representative shall confer regarding the effects 
     of such liquidation on the affected labor group, in 
     accordance with applicable nonbankruptcy law, and shall 
     provide for the payment of all accrued obligations not 
     assumed as part of a sale transaction, and for such other 
     terms as may be agreed upon, in order to ensure an orderly 
     transfer of assets or cessation of the business. Any such 
     payments shall have the status of allowed administrative 
     expenses under section 503.
       ``(l) A collective bargaining agreement that is assumed 
     shall be assumed in accordance with section 365.''.

     SEC. 9. PAYMENT OF INSURANCE BENEFITS TO RETIRED EMPLOYEES.

       Section 1114 of title 11, United States Code, is amended--
       (1) in subsection (a), by inserting ``, whether or not the 
     debtor asserts a right to unilaterally modify such payments 
     under such plan, fund, or program'' before the period at the 
     end;
       (2) in subsection (c)(1), by adding at the end the 
     following: ``Where a labor organization elects to serve as 
     the authorized representative, the debtor shall provide for 
     the reasonable fees and costs incurred by the authorized 
     representative under this section after notice and a 
     hearing.'';
       (3) in subsection (f), by striking ``(f)'' and all that 
     follows through paragraph (2) and inserting the following:
       ``(f)(1) Where a trustee seeks modification of retiree 
     benefits, a motion seeking modification of such benefits 
     shall not be filed, unless the trustee has first met with the 
     authorized representative (at reasonable times and for a 
     reasonable period in light of the complexity of the case) to 
     confer in good faith in attempting to reach mutually 
     satisfactory modifications. Proposals by the trustee to 
     modify retiree benefits shall be limited to modifications in 
     retiree benefits that--
       ``(A) are designed to achieve a total aggregate financial 
     contribution for the affected retiree group for a period not 
     to exceed 2 years after the effective date of the plan;
       ``(B) shall be no more than the minimal savings necessary 
     to permit the debtor to exit bankruptcy, such that 
     confirmation of such plan is not likely to be followed by the 
     liquidation of the debtor or any successor to the debtor; and
       ``(C) shall not overly burden the affected retirees, either 
     in the amount of the savings sought or the nature of the 
     modifications, when compared to other constituent groups 
     expected to maintain ongoing relationships with the debtor, 
     including management personnel.
       ``(2) Proposals by the trustee under paragraph (1) shall be 
     based upon the most complete and reliable information 
     available. Information that is relevant for the negotiations 
     shall be provided to the authorized representative.'';
       (4) in subsection (g), by striking ``(g)'' and all that 
     follows through the semicolon at the end of paragraph (3) and 
     inserting the following:
       ``(g) If, after a period of negotiations, the debtor and 
     the authorized representative have not reached agreement over 
     mutually satisfactory modifications and the parties are at an 
     impasse, the debtor may apply to the court for modifications 
     in the payment of retiree benefits after notice and a hearing 
     held pursuant to subsection (k). The court may grant a motion 
     to modify the payment of retiree benefits only if the court 
     finds that--
       ``(1) the debtor has, prior to the hearing, complied with 
     the requirements of subsection (f) and has conferred in good 
     faith with the authorized representative regarding such 
     proposed modifications and the parties were at an impasse;
       ``(2) the court has considered alternative proposals by the 
     authorized representative and has determined that such 
     proposals do not meet the requirements of subparagraphs (A) 
     and (B) of subsection (f)(1);
       ``(3) further negotiations are not likely to produce a 
     mutually satisfactory agreement; and
       ``(4) the court has considered--
       ``(A) the effect of the proposed modifications on the 
     affected retirees; and
       ``(B) where the authorized representative is a labor 
     organization, the effect of a strike in the event of 
     modification of retiree health benefits;'';
       (5) in subsection (k)--
       (A) in paragraph (1)--
       (i) in the first sentence, by striking ``fourteen'' and 
     inserting ``21''; and
       (ii) by striking the second and third sentences, and 
     inserting the following: ``Only the debtor and the authorized 
     representative may appear and be heard at such hearing.'';
       (B) by striking paragraph (2); and
       (C) by redesignating paragraph (3) as paragraph (2); and
       (6) by redesignating subsections (l) and (m) as subsections 
     (n) and (o), respectively, and inserting the following:
       ``(l) In determining whether the proposed modifications 
     comply with subsection (f)(1)(A), the court shall take into 
     account the ongoing impact on the debtor of the debtor's 
     relationship with all subsidiaries and affiliates, regardless 
     of whether any such subsidiary or affiliate is domestic or 
     nondomestic, or whether any such subsidiary or affiliate is a 
     debtor entity.
       ``(m) No plan, fund, program, or contract to provide 
     retiree benefits for insiders or senior management shall be 
     assumed by the debtor if the debtor has obtained relief under 
     subsection (g) or (h) for reductions in retiree benefits or 
     under subsection (c) or (e) of section 1113 for reductions in 
     the health benefits of active employees of the debtor on or 
     after the commencement of the case or reduced or eliminated 
     active or retiree benefits within 180 days prior to the date 
     of the commencement of the case.''.

     SEC. 10. PROTECTION OF EMPLOYEE BENEFITS IN A SALE OF ASSETS.

       Section 363 of title 11, United States Code, is amended--
       (1) in subsection (b), by adding at the end the following:
       ``(3) In approving a sale under this subsection, the court 
     shall consider the extent to which a bidder has offered to 
     maintain existing jobs, has preserved retiree health 
     benefits, and has assumed the obligations of any defined 
     benefit plan, in determining whether an offer constitutes the 
     highest or best offer for such property.''; and

[[Page S12066]]

       (2) by adding at the end the following:
       ``(q) If, as a result of a sale approved under this 
     section, retiree benefits, as defined under section 1114(a), 
     are modified or eliminated pursuant to the provisions of 
     subsection (e)(1) or (h) of section 1114 or otherwise, then, 
     except as otherwise provided in an agreement with the 
     authorized representative of such retirees, a charge of 
     $20,000 per retiree shall be made against the proceeds of 
     such sale (or paid by the buyer as part of the sale) for the 
     purpose of--
       ``(1) funding 12 months of health coverage following the 
     termination or modification of such coverage through a plan, 
     fund, or program made available by the buyer, by the debtor, 
     or by a third party; or
       ``(2) providing the means by which affected retirees may 
     obtain replacement coverage on their own,

     except that the selection of either paragraph (1) or (2) 
     shall be upon the consent of the authorized representative, 
     within the meaning of section 1114(b), if any. Any claim for 
     modification or elimination of retiree benefits pursuant to 
     section 1114(i) shall be offset by the amounts paid under 
     this subsection.''.

     SEC. 11. UNION PROOF OF CLAIM.

       Section 501(a) of title 11, United States Code, is amended 
     by inserting ``, including a labor organization,'' after ``A 
     creditor''.

     SEC. 12. CLAIM FOR LOSS OF PENSION BENEFITS.

       Section 502 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(l) The court shall allow a claim asserted by an active 
     or retired participant in a defined benefit plan terminated 
     under section 4041 or 4042 of the Employee Retirement Income 
     Security Act of 1974, for any shortfall in pension benefits 
     accrued as of the effective date of the termination of such 
     pension plan as a result of the termination of the plan and 
     limitations upon the payment of benefits imposed pursuant to 
     section 4022 of such Act, notwithstanding any claim asserted 
     and collected by the Pension Benefit Guaranty Corporation 
     with respect to such termination.''.

     SEC. 13. PAYMENTS BY SECURED LENDER.

       Section 506(c) of title 11, United States Code, is amended 
     by adding at the end the following: ``Where employees have 
     not received wages, accrued vacation, severance, or other 
     benefits owed pursuant to the terms of a collective 
     bargaining agreement for services rendered on and after the 
     date of the commencement of the case, such unpaid obligations 
     shall be deemed necessary costs and expenses of preserving, 
     or disposing of, property securing an allowed secured claim 
     and shall be recovered even if the trustee has otherwise 
     waived the provisions of this subsection under an agreement 
     with the holder of the allowed secured claim or successor or 
     predecessor in interest.''.

     SEC. 14. PRESERVATION OF JOBS AND BENEFITS.

       Title 11, United States Code, is amended--
       (1) by inserting before section 1101 the following:

     ``SEC. 1100. STATEMENT OF PURPOSE.

       ``A debtor commencing a case under this chapter shall have 
     as its purpose the reorganization of its business and, to the 
     greatest extent possible, maintaining or enhancing the 
     productive use of its assets, so as to preserve jobs.'';
       (2) in section 1129(a), by adding at the end the following:
       ``(17) The debtor has demonstrated that every reasonable 
     effort has been made to maintain existing jobs and mitigate 
     losses to employees and retirees.'';
       (3) in section 1129(c), by striking the last sentence and 
     inserting the following: ``If the requirements of subsections 
     (a) and (b) are met with respect to more than 1 plan, the 
     court shall, in determining which plan to confirm, consider--
       ``(1) the extent to which each plan would maintain existing 
     jobs, has preserved retiree health benefits, and has 
     maintained any existing defined benefit plans; and
       ``(2) the preferences of creditors and equity security 
     holders, and shall confirm the plan that better serves the 
     interests of employees and retirees.''; and
       (4) in the table of sections in chapter 11, by inserting 
     the following before the item relating to section 1101:

``1100. Statement of purpose.''.

     SEC. 15. ASSUMPTION OF EXECUTIVE RETIREMENT PLANS.

       Section 365 of title 11, United States Code, is amended--
       (1) in subsection (a), by striking ``and (d)'' and 
     inserting ``(d), and (q)''; and
       (2) by adding at the end the following:
       ``(q) No deferred compensation arrangement for the benefit 
     of insiders or senior management of the debtor shall be 
     assumed if a defined benefit plan for employees of the debtor 
     has been terminated pursuant to section 4041 or 4042 of the 
     Employee Retirement Income Security Act of 1974, on or after 
     the date of the commencement of the case or within 180 days 
     prior to the date of the commencement of the case.''.

     SEC. 16. RECOVERY OF EXECUTIVE COMPENSATION.

       Title 11, United States Code, is amended by inserting after 
     section 562 the following:

     ``Sec. 563. Recovery of executive compensation

       ``(a) If a debtor has obtained relief under subsection (c) 
     or (e) of section 1113, or subsection (g) or (h) of section 
     1114, by which the debtor reduces its contractual obligations 
     under a collective bargaining agreement or retiree benefits 
     plan, the court, as part of the entry of such order granting 
     relief, shall determine the percentage diminution, as a 
     result of the relief granted under section 1113 or 1114, in 
     the value of the obligations when compared to the debtor's 
     obligations under the collective bargaining agreement or with 
     respect to retiree benefits, as of the date of the 
     commencement of the case under this title. In making its 
     determination, the court shall include reductions in 
     benefits, if any, as a result of the termination pursuant to 
     section 4041 or 4042 of the Employee Retirement Income 
     Security Act of 1974, of a defined benefit plan administered 
     by the debtor, or for which the debtor is a contributing 
     employer, effective at any time on or after 180 days before 
     the date of the commencement of a case under this title. The 
     court shall not take into account pension benefits paid or 
     payable under the provisions of title IV of such Act as a 
     result of any such termination.
       ``(b) Where a defined benefit plan administered by the 
     debtor, or for which the debtor is a contributing employer, 
     has been terminated pursuant to section 4041 or 4042 of the 
     Employee Retirement Income Security Act of 1974, effective at 
     any time on or after 180 days before the date of the 
     commencement of a case under this title, but a debtor has not 
     obtained relief under subsection (c) or (e) of section 1113, 
     or subsection (g) or (h) of section 1114 of this title, the 
     court, upon motion of a party in interest, shall determine 
     the percentage diminution in the value of benefit obligations 
     when compared to the total benefit liabilities prior to such 
     termination. The court shall not take into account pension 
     benefits paid or payable under the provisions of title IV of 
     the Employee Retirement Income Security Act of 1974 as a 
     result of any such termination.
       ``(c) Upon the determination of the percentage diminution 
     in value under subsection (a) or (b), the estate shall have a 
     claim for the return of the same percentage of the 
     compensation paid, directly or indirectly (including any 
     transfer to a self-settled trust or similar device, or to a 
     nonqualified deferred compensation plan under section 
     409A(d)(1) of the Internal Revenue Code of 1986) to any 
     officer of the debtor serving as member of the board of 
     directors of the debtor within the year before the date of 
     the commencement of the case, and any individual serving as 
     chairman and any individual serving as lead director of the 
     board of directors at the time of the granting of relief 
     under section 1113 or 1114 of this title or, if no such 
     relief has been granted, the termination of the defined 
     benefit plan.
       ``(d) The trustee or a committee appointed pursuant to 
     section 1102 may commence an action to recover such claims, 
     except that if neither the trustee nor such committee 
     commences an action to recover such claim by the first date 
     set for the hearing on the confirmation of plan under section 
     1129, any party in interest may apply to the court for 
     authority to recover such claim for the benefit of the 
     estate. The costs of recovery shall be borne by the estate.
       ``(e) The court shall not award postpetition compensation 
     under section 503(c) or otherwise to any person subject to 
     the provisions of subsection (c) if there is a reasonable 
     likelihood that such compensation is intended to reimburse or 
     replace compensation recovered by the estate under this 
     section.''.

     SEC. 17. EXCEPTION FROM AUTOMATIC STAY.

       Section 362(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (27), by striking ``and'' at the end;
       (2) in paragraph (28), by striking the period at the end 
     and inserting ``; and'' and
       (3) by adding at the end the following:
       ``(29) of the commencement or continuation of a grievance, 
     arbitration, or similar dispute resolution proceeding 
     established by a collective bargaining agreement that was or 
     could have been commenced against the debtor before the 
     filing of a case under this title, or the payment or 
     enforcement of an award or settlement under such 
     proceeding.''.

     SEC. 18. PREFERENTIAL COMPENSATION TRANSFER.

       Section 547 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(j) The trustee may avoid a transfer to or for the 
     benefit of an insider (including an obligation incurred for 
     the benefit of an insider under an employment contract) made 
     in anticipation of bankruptcy, or a transfer made in 
     anticipation of bankruptcy to a consultant who is formerly an 
     insider and who is retained to provide services to an entity 
     that becomes a debtor (including an obligation under a 
     contract to provide services to such entity or to a debtor) 
     made or incurred on or within 1 year before the filing of the 
     petition. No provision of subsection (c) shall constitute a 
     defense against the recovery of such transfer. The trustee or 
     a committee appointed pursuant to section 1102 may commence 
     an action to recover such transfer, except that, if neither 
     the trustee nor such committee commences an action to recover 
     such transfer by the time of the commencement of a hearing on 
     the confirmation of a plan under section 1129, any party in 
     interest may apply to the court for authority to recover the 
     claims for the benefit of the estate. The costs of recovery 
     shall be borne by the estate.''.

     SEC. 19. FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES.

       Section 1129(a) of title 11, United States Code, is 
     amended--

[[Page S12067]]

       (1) by adding at the end the following:
       ``(18) In a case in which the debtor initiated proceedings 
     under section 1113, the plan provides for recovery of 
     rejection damages (where the debtor obtained relief under 
     subsection (c) or (e) of section 1113 prior to confirmation 
     of the plan) or for other financial returns, as negotiated by 
     the debtor and the authorized representative (to the extent 
     that such returns are paid under, rather than outside of, a 
     plan).''; and
       (2) by striking paragraph (13) and inserting the following:
       ``(13) With respect to retiree benefits, as that term is 
     defined in section 1114, the plan--
       ``(A) provides for the continuation after its effective 
     date of payment of all retiree benefits at the level 
     established pursuant to subsection (e)(1)(B) or (g) of 
     section 1114 at any time prior to the date of confirmation of 
     the plan, for the duration of the period for which the debtor 
     has obligated itself to provide such benefits, or, if no 
     modifications are made prior to confirmation of the plan, the 
     continuation of all such retiree benefits maintained or 
     established in whole or in part by the debtor prior to the 
     date of the filing of the petition; and
       ``(B) provides for allowed claims for modification of 
     retiree benefits or for other financial returns, as 
     negotiated by the debtor and the authorized representative, 
     to the extent that such returns are paid under, rather than 
     outside of, a plan).''.

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