[Congressional Record Volume 154, Number 71 (Thursday, May 1, 2008)]
[Senate]
[Pages S3701-S3719]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CRAIG (for himself, Mr. Warner, and Mr. Inhofe):
S. 2953. A bill to provide for the development and inventory of
certain outer Continental Shelf resources, to suspend petroleum
acquisition for the Strategic Petroleum Reserve, and for other
purposes; to the Committee on Energy and Natural Resources.
Mr. CRAIG. Mr. President, during consideration of the reauthorization
of the FAA, a great deal of conversation has gone on on this floor
about energy and the cost of energy. It is appropriate that we talk
about it at a time when our airlines are struggling and we are
attempting to reauthorize FAA. Part of the reason our airlines are
struggling is the unprecedented aviation fuel prices. It is only one of
the many reasons they are having difficulty today, but clearly the
doubling of their costs are putting at risk their corporate structure
and their ability to serve an American public.
But it is not just the airlines that are at risk. Every American
consumer and every business is finding the tremendous increase in the
cost of energy a significant problem. For example, just a few minutes
ago, my BlackBerry buzzed. My wife Suzanne is out in Boise, ID. I got
an e-mail about the temperature, which is 31 degrees in Boise this
morning. At the bottom of the e-mail, she said regular gas just hit
$3.53 a gallon. That is a lot of money. Now, that is not as much as
others are paying across our Nation, but when an Idahoan fills their
tank and they go from community to community, oftentimes they drive
hundreds of miles--not just a few miles but literally hundreds of
miles. Idaho is a great big Western State. Our distance is oftentimes a
significant part of our commerce and our ability to conduct economic
activity, and fuel prices have always been significant and important.
Idaho is also a large agricultural State. The cost of the production
of foods today has gone up dramatically because of the cost of diesel,
if you will, the cost of fertilizer, and all of those components that
go into the production of food and the transporting of the food.
Part of the reason food is going up on the retail shelf of the
supermarket today is the cost of getting it there, let alone the cost
of producing and refining it. Many truckers are saying that just to
fill up their truck now can be as much as $1,000. They are not able to
change their freight rates to adjust as quickly to the high cost of
energy, and they simply have to--this is the term--``eat it.'' Well,
they cannot afford to eat it. Oftentimes, those trucks are simply
turning off their motors and sitting idle.
So the impact of energy costs on our economy can be dramatic. I came
to the floor yesterday to talk about it and to say that, in large part,
the American consumer, in their frustration, is saying: Whom do we
blame? I don't think they have to look any further than the U.S.
Congress and the failure of this Congress--the House and Senate--over
the last 20 years to do the things that were necessary to continue
production, to ensure refinery capacity, to ensure exploration and the
development of reserves, while we were doing all of the other things in
conservation, in CAFE standards, assuring that we had a new form of
transportation energy. But, no, we have failed to do the right things,
and as a result of that, the American consumer is, in fact, paying a
great deal for our failure.
What do we do to change that? Instead of just wringing our hands,
there are all kinds of ideas out there about changing it.
Some would suggest that you just tax the big oil companies; if you
just tax those big oil companies and put that money somewhere else,
that will solve the problem. There is an old adage in economics that is
quite simple: You usually get less of that which you tax. In other
words, the higher you tax something, the less you are going to get from
it. Do you want to, by taxation, nationalize America's independent oil
companies? Is that a way to get production and more oil and gas at the
pump? Remember, there are not any gas lines out there today. There
aren't the kinds of lines we saw in the 1970s during the last energy
crisis. There is supply. It is the cost of supply that we are
frustrated about and the impact that cost is having on our economy.
Here is one of the problems we have. I talked about a Congress that
failed, a public policy that failed, a policy that failed to continue
to produce as demand went dramatically up--not just in this country but
around the world.
The blue line on this chart is the supply line. As you can see, in
the 1990s it peaked and it began to drop. That is, of course, U.S.
production versus U.S. consumption. In other words, as a nation we
began to produce less and less crude oil into our refineries.
Today, we are near 60 percent dependent upon other sources of energy,
from outside our country, to come into our refineries and to go out of
the gas pump to the consumer. In fact, you can see that the red line--
demand--has gone up dramatically as our economy continued to grow over
the years, as more people were driving cars, and as more cars consumed
more gas.
The only way you are going to keep price down is when the supply line
and the demand line are somewhat in concert, somewhat tracking each
other. That simply stopped in the 1950s, as we began to grow
increasingly dependent upon foreign nations.
We passed the Energy Policy Act of 2005, but it wasn't really
directed at transportation fuels. Last year, we added to that and we
began to address transportation fuels. We brought ethanol into the
market by subsidizing that and allowing our farmers, and those who take
corn from them, to produce ethanol to become increasingly effective in
the market. That is working to some degree. In fact, it is estimated
today that 20 cents would be put on the price of gas at the pump if
[[Page S3702]]
it wasn't for national and rural ethanol production. Now, it has caused
other problems. Some would argue that it has caused problems in the
food chain, and it probably has. I think the marketplace will work that
out. So there are things we have been doing.
But I think, most importantly, it is the things we have not done. It
is the failure of our country to recognize the increased dependency we
were developing from other countries around the world. I think that has
become one of our greater frustrations. While you have some on the
campaign trail today talking about taxing the big oil companies, the
big oil companies don't own the oil. It is the cartels. It is the
nations. It is not oil companies, it is oil countries that we have to
worry about today.
I didn't coin the phrase, but I use the phrase quite often, ``petro-
nationalism.'' If I am a country and I am small but I am sitting on a
pool of oil, I become rich overnight. The reason I become rich
overnight is because Americans will come and buy my oil. If I want to
form a cartel and I want to control the supply of that oil, then they
will pay even more for it because Americans quit producing for
themselves.
Here is a statistic that I find fascinating, and some have said that
if we don't stop this in the near future, we will spend our Nation into
poverty as we spend all of this money on oil. We are now spending well
over $1 billion a day outside our country to buy oil. That is a
phenomenal figure. Our neighbors to the north, we send them $280
million a day; to Saudi Arabia, we send $190 million a day; to
Venezuela and Dictator Chavez, we send $160 million; to Nigeria, we
send $140 million; to Algeria, we send $70 million. Do Venezuela and
Nigeria and Algeria have our best interests in mind? I don't believe
so. They have their own interests in mind. We are literally making them
wealthy because we are buying their oil.
Many of us talk about energy independence, and last year when we
passed that legislation I was talking about, the Energy Independence
and Security Act of 2007, we did some very good things in it. As I
said, we looked at increasing production by conservation, by CAFE
standards, and by renewable fuels standards. We said to the automobile
industry: You have to design cars that burn less, and in doing that, we
will improve our overall position on dependency by dropping it
significantly by 2030. But it takes a long time to redesign a car, make
it efficient, produce it, and then sell it into the market.
Those are the realities of a problem where you cannot just fix this
tomorrow. We cannot just change the price of gas at the pump tomorrow
because we cannot fix the underlying problems instantly. But as I said
earlier, if Congress is at fault, the problem in this, then Congress
ought to be doing more about it. And it is not just wringing your hands
and wanting to tax. It is doing things that get us back into production
while we learn to conserve, while we have cleaner automobiles, while we
look at alternative fuel sources, while we get more hybrid cars and
electric plug-in cars in the market. That is all coming, but that is 10
years, 15 years, and 20 years out.
What do we do in the interim? I believe there is something we can do,
and we ought to do. In America today and in our territorial waters we
are sitting still on a lot of oil, a dramatic amount of oil. Some would
argue under old U.S. Geological Survey analysis that we are sitting on
at least 100 billion barrels of oil. If we are sitting on it, why
aren't we using it? Once again, the politics of Congress and the
politics of States enter into the debate.
A couple of years ago, I began to talk about an issue I called the no
zone. What was I talking about at the time? I was talking about that
area of the United States and Outer Continental Shelf of waters that we
knew had large volumes of oil. But California said no. We said no in
Alaska. We have said no off the east coast. We have said no around
Florida. Because we have said no, the American consumer today is paying
the highest price for gasoline ever. That is a fact. It is a simple
reality. Our dependency on foreign nations grew. As I just expressed,
over 60 percent of our oil is coming from outside the continental
United States when we know there is a significant amount of oil outside
the continent.
When I introduced this chart a couple of years ago and I began to
talk about the no zone and there were a few folks wringing their hands,
we went to work. We went to work and we looked at oil sales in the gulf
and the development in the Outer Continental Shelf in the deep waters
of the Gulf of Mexico.
Thanks to our effort, we did something. The American consumer needs
to know we went into lease sale 181 off the coast of Florida. We looked
at and found a tremendous amount of capability there and we began to
develop it and we are developing it today. We have allowed other lease
sales to occur. That is tremendously important. We are beginning to tap
some of that oil supply that we know is out there and about which we
ought to be doing more. That is what I think is important, and that is
on what I think we ought to be focused.
To sit and wring our hands and tell the American people there is
nothing we can do, and all we are going to do is go out and tax and
tax, which will not produce--we ought to be talking about production.
The legislation I have introduced today talks about production. It
talks about production in a positive way.
I mentioned a few moments ago the action we took last year in lease
sale 181. We were successful in bringing Florida along in their
cooperation and understanding, which was phenomenally important.
We know there are millions of barrels of oil and trillions of cubic
feet of gas out there. What is most significant about oil development
in this region is that the infrastructure is in place. What do I mean?
Refineries, pipelines, capacity. We don't have to wait 5, 6, and 7
years just to build the infrastructure. It is there, and the oil is
under it. That is why we did lease sale 181. But there is a lot more we
can and should do. That is why the legislation I have introduced today
does just that. It doesn't start drilling, but it says a couple of
things that are quite simple.
As we have heard others talk about the fact we are putting money into
the Strategic Petroleum Reserve at this time, we are buying oil off the
market and putting it underground in the salt domes in the South for a
time of necessity, I suggest we stop doing that for the time being, and
I suggest we take that money we are using for those purposes and we
modernize our inventory of our known reserves, our unknown reserves,
and our capacity because the true SPR--SPR means Strategic Petroleum
Reserve--the greatest reserve in the world is to know what we have,
where it is, and how we can access it. That is one of the most
important things we can do for the consumers of America today.
I know it frustrated some of my Floridian friends when I talked about
our inability because of policy to allow our companies to go in to the
northern area off Cuba and drill because Cuba was allowing other
countries to come in and develop. Just 90 miles--45 miles until you hit
the zone--90 miles off our coast on the extreme of the Florida Keys
there are foreign nations drilling oil today. India is there, and India
has now discovered oil. China is there, and China has now discovered
oil. We are not there today because our policy is 45 years old and
still says: No, no, Americans cannot get involved with Cuba, even
though we believe Cuba has phenomenal potential oil reserves. Shame on
us.
America, listen up: It is Government policy today in large part that
has caused you the pain at the pump, and it is very important that
Government act today to reduce that pain.
The legislation I am offering would create an inventory that would do
just that. It would allow us to know what our reserves are.
We have moratoriums off the coast of Florida, and yet we know there
are huge oil reserves out there. Why are we not doing something about
it? Well, it is local politics. It is national politics. It is green
politics. It is politics. That is why we have the price of oil we have
today, nothing more and nothing less but politics, and our economy is
growing more fragile by the moment because of it.
Is it demagogic to say that? I don't think so. I don't think so at
all. I pulled out the sign, the no zone. The no is a result of
politics, whether it is the politics of the State of Florida or the
[[Page S3703]]
politics of the State of California or whether it is the national
politics of this Senate that will not allow for us to drill for the
reserves in what is known as ANWR, the Alaskan national wildlife area,
where we know there is phenomenal abundance.
It was all done, all of this no, this political no was all done in
the name of the environment. There was some reason at the time these
old ideas were put in place. We had the oil spills off the coast of
Santa Barbara, and as a result of that, Americans were concerned. So
California said no more drilling there, and then we followed up.
A few years ago, we had a great national tragedy in the gulf area of
our country. That tragedy was called Katrina. She came rolling up and
through the gulf. We know what she did in New Orleans. She did
something else nobody wants to talk about today. She knocked offline
hundreds of oil wells that were producing out in the gulf--knocked them
off. She even set some of the drilling rigs adrift. But not a drop of
oil was spilled. Why? Because modern technology today and American
know-how and a concern for protecting our environment has produced one
of the cleanest deepwater oil drilling industries in the world. We are
producing in this area of the gulf off the coast of Texas, off the
coast of Louisiana, off the coast of Mississippi, and with 181, we just
brought into or soon will be bringing into production off the coast of
Alabama. Why not off the coast of Florida? Why not off the coast of
California? Why not off the coast of the Carolinas, Virginia, and on up
where we believe there is significant gas and oil reserves?
It is old politics of the past that is caught in the ghosts of Santa
Barbara of decades ago. Yet our technology today will take us there,
but our politics will not take us there. That is why I have introduced
the legislation I have. The least we can do is inventory with modern
technology to know where our oil is.
I notice the president of Shell said in a press release the other
day: If Americans sent a message to the world that we were going to
start drilling our own reserves and bringing them into production, the
price of gas at the pump would drop dramatically, 25 or 30 cents a
gallon or more. That is significant stuff, both short term and long
term, to the economy of this country.
I say to my colleagues, I say to our country, and I say to our
consumers: Is it a time to act? You bet it is a time to act. While some
suggest we tax the big boys out of existence, we do not produce
anything by doing that, while we can create all kinds of other
structures. Do we produce more, do we build refinery capacity, and do
we assure the American public while we are transitioning into hybrid
cars and electric cars and hydrogen cars and all of those kinds of
activities that we support and are doing research and development on
today that they will still have an abundant supply of energy? That is
our job. That is the job we failed in doing over the last good number
of years, and that is the job we ought to stop and start over and do it
right and reward the States that are the boundary States to the
production of the Outer Continental Shelf.
We have huge oil reserves in this country, and yet we are letting the
rest of the world have our wealth. Why not keep our wealth in this
country by the development of these reserves?
The first step is the legislation I have introduced today. Let's at
least in the next few years do the inventory, the modern, sophisticated
seismographic inventory that USGS can do to let us know how much is out
there because what we know today is simply old stuff. Those efforts
were done years ago. Already out at the edge of this green line in the
deepest waters in the gulf under the newest drilling technologies, we
are finding phenomenal oil that just a few years ago we did not even
know we could get to. We are getting to it. We are producing it. It is
clean, and it is environmentally sound. We ought to be doing that
everywhere else.
I have joined my colleague from Louisiana who just came to the floor,
who introduced legislation that says when oil gets to $125 a barrel, we
ought to give the States the option to allow the development of the
Outer Continental Shelf off their State. You darn bet we ought to, and
those States ought to be rewarded for it.
There is so much this country can continue to do instead of standing
still and wringing our hands and trying to blame somebody else for our
failure over the last 20 years to continue to allow this great country
to produce for its consumers.
Mr. WARNER. Mr. President, will the Senator yield for 10 seconds?
Mr. CRAIG. I will be happy to yield to the senior Senator from
Virginia.
Mr. WARNER. Mr. President, I commend him for this initiative, but I
hope he says ``oil and gas'' because off the east coast there is an
abundance of gas, as shown by the previous studies. As he says, they
have to be brought up to date. Do let us invoke gas because along the
beaches--and I, as the Senator knows, twice tried to get legislation
through, and a collection of Senators--and I say this in a lighthearted
way; I call them the beach boys--will not permit this for fear that
pollution could emanate from the drilling process onto their beaches.
I suggest let's start with gas. There would not be any potential for
the erosion of beaches as a consequence of an accidental spill. I do
hope the Senator puts in the word ``gas.''
Mr. CRAIG. Mr. President, I thank the senior Senator from Virginia.
He is absolutely right. When I think oil, I think gas because,
obviously, in lease sale 181 and in other areas where there is gas,
there is oftentimes oil, and oftentimes where there is gas, there is no
oil. We believe that to be the case off the coast of Virginia.
The Senator from Virginia has been a leader, without doubt, in that
very kind of effort to allow at least the seismographic effort, the
exploration that would determine for us the kinds of reserves we have
and may have for the future.
I thank the Senator from Virginia for his leadership in this area.
Mr. WARNER. Mr. President, I thank my good friend from Idaho. I also
emphasize that the technology to do it safely and not be the victim of
a disruption by Mother Nature is there.
Mr. CRAIG. Without question it is there today, and we know that. We
are the leaders of clean drilling in deep water for the world, no
question.
Mr. WARNER. I thank the Senator. I wish him well. He has my support.
Mr. NELSON of Florida. Mr. President, will the Senator further yield?
Mr. CRAIG. I will be happy to yield to the Senator from Florida.
Mr. NELSON of Florida. Would the Senator mind putting up his map with
the State of Florida on it?
Mr. CRAIG. I am more than happy to.
Mr. NELSON of Florida. Would the Senator recognize that the area in
yellow there on the west coast of Florida that he indicates for future
drilling--would he recognize almost that entire area is the largest
testing and training area for the U.S. military in the world? The
military is on record at all levels, of all generals and admirals, that
drilling should not be done in that area to compromise our training and
testing mission for the U.S. military.
Mr. CRAIG. I do recognize that. I do appreciate what our military has
said.
I also understand a few years ago we took offline a naval training
area in Vieques. Why? It was no longer a popular thing to do.
If there is oil under this area--and we believe there is--and it is a
training area, why couldn't we train here? Or why couldn't we train
over here? The reality is, what is at this time more valuable?
It is very easy to say don't do it. Or is it possible to say can we
do both? There are a good many experts and professionals in the field
who said that. We can have a military training area, and guess what we
also can do. We can pull the oil out from under. How do you do it?
Quite simply. You put a location, a location and you slant drill
thousands of feet and you do not have to pepper the area with all kinds
of drilling rigs.
Today's technology is amazing. It is politically comfortable, I
appreciate that, and I understand the State's politics and I do not
deny that--but this is not the oil of the State of Florida. This is the
oil of the citizens of our country. It is the politics of Florida today
that deny us the oil, not the politics of America. So it is a simple
question: Should we inventory it? Should we know what it is? And should
we, under modern technology, reward the State of Florida for the
potential benefit?
[[Page S3704]]
It is ironic we did not move at all to stop drilling 45 miles off the
Florida coast. We could even take a 45-mile zone here, or more,
consistent with what is going on in Florida today and still protect
this.
But the Senator is right. It is a military area. Guess what. I am
kind of a modern guy. I believe in technology taking us where we can go
and having the best of both worlds. But right now the American consumer
has the worst of the world we have created for them--a scarcity of a
supply that is driving costs and impacting our economy in a significant
way.
I suggest the legislation I have introduced, while it will not impact
the State of Florida, will give us a base and an understanding and
knowledge of what we have as a reserve. We are spending millions of
dollars a day to buy oil and put it in the ground when, in fact, we
ought to spend a few million dollars and find out about all the oil we
already have.
______
By Mr. LEVIN (for himself, Mr. Coleman, and Mr. Obama):
S. 2956. A bill to ensure that persons who form corporations in the
United States disclose the beneficial owners of those corporations, in
order to prevent wrongdoers from exploiting United States corporations
for criminal gain, to assist law enforcement in detecting, preventing,
and punishing terrorism, money laundering, and other misconduct
involving United States corporations, and for other purposes; to the
Committee on Homeland Security and Governmental Affairs.
Mr. LEVIN. Mr. President, I am introducing today, with my colleagues
Senator Coleman and Senator Obama, the Incorporation Transparency and
Law Enforcement Assistance Act. This bill tackles a longstanding
homeland security problem involving inadequate State incorporation
practices that leave this country unnecessarily vulnerable to
terrorists, criminals, and other wrongdoers, hinder law enforcement,
and damage the international stature of the U.S.
The problem is straightforward. Each year, the States allow persons
to form nearly 2 million corporations and limited liability companies
in this country without knowing--or even asking--who the beneficial
owners are behind those corporations. Right now, a person forming a
U.S. corporation or limited liability company, LLC, provides less
information to the State than is required to open a bank account or
obtain a driver's license. Instead, States routinely permit persons to
form corporations and LLCs under State laws without disclosing the
names of any of the people who will control or benefit from them.
It is a fact that criminals are exploiting this weakness in our State
incorporation practices. They are forming new U.S. corporations and
LLCs, and using these entities to commit crimes ranging from terrorism
to drug trafficking, money laundering, tax evasion, financial fraud,
and corruption. Law enforcement authorities investigating these crimes
have complained loudly for years about the lack of beneficial ownership
information.
Last year, for example, the U.S. Department of the Treasury sent a
letter to the States stating: ``the lack of transparency with respect
to the individuals who control privately held for-profit legal entities
created in the U.S. continues to represent a substantial vulnerability
in the U.S. anti-money laundering/counter terrorist financing, AML/CFT,
regime. . . . [T]he use of U.S. companies to mask the identity of
criminals presents an ongoing and substantial problem . . . for U.S.
and global law enforcement authorities.''
Last month, Secretary Michael Chertoff, head of the U.S. Department
of Homeland Security, wrote the following: ``In countless
investigations, where the criminal targets utilize shell corporations,
the lack of law enforcement's ability to gain access to true beneficial
ownership information slows, confuses or impedes the efforts by
investigators to follow criminal proceeds. This is the case in
financial fraud, terrorist financing and money laundering
investigations. . . . It is imperative that States maintain beneficial
ownership information while the company is active and to have a set
time frame for preserving those records. . . . Shell companies can be
sold and resold to several beneficial owners in the course of a year or
less. . . . By maintaining records not only of the initial beneficial
ownership but of the subsequent beneficial owners, States will provide
law enforcement the tools necessary to clearly identify the individuals
who utilized the company at any given period of time.''
These types of complaints by U.S. law enforcement, their pleas for
assistance, and their warnings about the dangers of anonymous U.S.
corporations operating here and abroad are catalogued in a stack of
reports and hearing testimony from the Department of Justice, the
Department of Homeland Security, the Financial Crimes Enforcement
Network of the Department of the Treasury, the Internal Revenue
Service, and others.
To add insult to injury, our law enforcement officials have too often
had to stand silent when asked by their counterparts in other countries
for information about who owns a U.S. corporation committing crimes in
their jurisdictions. The reality is that the United States is as bad as
any offshore jurisdiction when it comes to responding to those
requests--we can't answer them because we don't have the information.
In 2006, the leading international anti-money laundering body in the
world, the Financial Action Task Force on Money Laundering--known as
FATF--issued a report criticizing the U.S. for its failure to comply
with a FATF standard requiring countries to obtain beneficial ownership
information for the corporations formed under their laws. This standard
is one of 40 FATF standards that this country has publicly committed
itself to implementing as part of its efforts to promote strong anti-
money laundering laws around the world.
FATF gave the U.S. 2 years, until July 2008, to make progress toward
coming into compliance with the FATF standard on beneficial ownership
information. That deadline is right around the comer, but we have yet
to make any real progress. That is another reason why we are
introducing this bill today. Enacting the bill would bring the U.S.
into compliance with the FATF standard by requiring the States to
obtain beneficial ownership information for the corporations formed
under their laws. It would ensure that the U.S. met its international
commitment to comply with FATF anti-money laundering standards.
The bill being introduced today is the product of years of work by
the U.S. Senate Permanent Subcommittee on Investigations, on which I,
Senator Coleman, and Senator Obama serve together. As long ago as 2000,
the Government Accountability Office, GAO, at my request, conducted an
investigation and released a report entitled, Suspicious Banking
Activities: Possible Money Laundering by U.S. Corporations Formed for
Russian Entities. This report revealed that one person was able to set
up more than 2,000 Delaware shell corporations and, without disclosing
the identity of the beneficial owners, open U.S. bank accounts for
those corporations, which then collectively moved about $1.4 billion
through the accounts. It is one of the earliest Government reports to
give some sense of the law enforcement problems caused by U.S.
corporations with unknown owners. It sounded the alarm sounded 8 years
ago, but to little effect.
In April 2006, in response to a Levin-Coleman request, GAO released a
report entitled, Company Formations: Minimal Ownership Information Is
Collected and Available, which reviewed the corporate formation laws in
all 50 States. GAO disclosed that the vast majority of the States don't
collect any information at all on the beneficial owners of the
corporations and LLCs formed under their laws. The report also found
that many States have established automated procedures that allow a
person to form a new corporation or LLC within the State within 24
hours of filing an online application without any prior review of that
application by a State official. In exchange for a substantial fee, two
States will even form a corporation or LLC within one hour of a
request. After examining these State incorporation practices, the GAO
report described the problems that the lack of beneficial ownership
information has caused for a range of law enforcement investigations.
In November 2006, our Subcommittee held a hearing further exploring
this
[[Page S3705]]
issue. At that hearing, representatives of the U.S. Department of
Justice, DOJ, the Internal Revenue Service, and the Department of
Treasury's Financial Crimes Enforcement Network, FinCEN, testified that
the failure of States to collect adequate information on the beneficial
owners of the legal entities they form has impeded Federal efforts to
investigate and prosecute criminal acts such as terrorism, money
laundering, securities fraud, and tax evasion. At the hearing, DOJ
testified: ``We had allegations of corrupt foreign officials using
these [U.S.] shell accounts to launder money, but were unable--due to
lack of identifying information in the corporate records--to fully
investigate this area.'' The IRS testified: ``Within our own borders,
the laws of some states regarding the formation of legal entities have
significant transparency gaps which may even rival the secrecy afforded
in the most attractive tax havens.'' FinCEN identified 768 incidents of
suspicious international wire transfer activity involving U.S. shell
companies.
In addition, last year, when listing the ``Dirty Dozen'' tax scams
for 2007, the IRS highlighted shell companies with unknown owners as
number four on the list, as follows:
``4. Disguised Corporate Ownership: Domestic shell
corporations and other entities are being formed and operated
in certain states for the purpose of disguising the ownership
of the business or financial activity. Once formed, these
anonymous entities can be, and are being, used to facilitate
underreporting of income, non-filing of tax returns, listed
transactions, money laundering, financial crimes and possibly
terrorist financing. The IRS is working with state
authorities to identify these entities and to bring their
owners into compliance.''
That is not all. Dozens of Internet websites advertising corporate
formation services highlight the fact that some of our States allow
corporations to be formed under their laws without asking for the
identity of the beneficial owners. These websites explicitly point to
anonymous ownership as a reason to incorporate within the U.S., and
often list certain States alongside notorious offshore jurisdictions as
preferred locations for the formation of new corporations, essentially
providing an open invitation for wrongdoers to form entities within the
U.S.
One website, for example, set up by an international incorporation
firm, advocates setting up companies in Delaware by saying:
``DELAWARE--An Offshore Tax Haven for Non US Residents.'' It cites as
one of Delaware's advantages that: ``Owners' names are not disclosed to
the state.'' Another website, from a U.K. firm called ``formacompany-
offshore.com,'' lists the advantages to incorporating in Nevada. Those
advantages include: ``No I.R.S. Information Sharing Agreement'' and
``Stockholders are not on Public Record allowing complete anonymity.''
Despite this type of advertising, years of law enforcement
complaints, and mounting evidence of abuse, many of our States are
reluctant to admit there is a problem with establishing U.S.
corporations and LLCs with unknown owners. Too many of our States are
eager to explain how quick and easy it is to set up corporations within
their borders, without acknowledging that those same quick and easy
procedures enable wrongdoers to utilize U.S. corporations in a variety
of crimes and tax dodges both here and abroad.
Since 2006, the Subcommittee has worked with the States to encourage
them to recognize the homeland security problem they've created and to
come up with their own solution. After the Subcommittee's hearing on
this issue, for example, the National Association of Secretaries of
State, NASS, convened a 2007 task force to examine State incorporation
practices. At the request of NASS and several States, I delayed
introducing legislation while they worked on a proposal to require the
collection of beneficial ownership information. My Subcommittee staff
participated in multiple conferences, telephone calls, and meetings;
suggested key principles; and provided comments to the Task Force.
In July 2007, the NASS task force issued a proposal. Rather than cure
the problem, however, the proposal was full of deficiencies, leading
the Treasury Department to state in a letter that the NASS proposal
``falls short'' and ``does not fully address the problem of legal
entities masking the identity of criminals.''
Among other shortcomings, the NASS proposal does not require States
to obtain the names of the natural individuals who would be the
beneficial owners of a U.S. corporation or LLC. Instead, it would allow
States to obtain a list of a company's ``owners of record'' who can be,
and often are, offshore corporations or trusts. The NASS proposal also
doesn't require the States themselves to maintain the beneficial
ownership information, or to supply it to law enforcement upon receipt
of a subpoena or summons. The proposal also fails to require the
beneficial ownership information to be updated over time. These and
other flaws in the proposal have been identified by the Treasury
Department, the Department of Justice, myself, and others, but NASS has
given no indication that the flaws will be corrected.
It is deeply disappointing that the States, despite the passage of
more than one year, have been unable to devise an effective proposal.
Part of the difficulty is that the States have a wide range of
practices, differ on the extent to which they rely on incorporation
fees as a major source of revenue, and differ on the extent to which
they attract non-U.S. persons as incorporators. In addition, the States
are competing against each other to attract persons who want to set up
U.S. corporations, and that competition creates pressure for each
individual State to favor procedures that allow quick and easy
incorporations. It is a classic case of competition causing a race to
the bottom, making it difficult for any one State to do the right thing
and request the names of the beneficial owners.
That is why we are introducing Federal legislation today. Federal
legislation is needed to level the playing field among the States, set
minimum standards for obtaining beneficial ownership information, put
an end to the practice of States forming millions of legal entities
each year without knowing who is behind them, and bring the U.S. into
compliance with its international commitments.
The bill's provisions would require the States to obtain a list of
the beneficial owners of each corporation or LLC formed under their
laws, to maintain this information for 5 years after the corporation is
terminated, and to provide the information to law enforcement upon
receipt of a subpoena or summons. If enacted, this bill would ensure,
for the first time, that law enforcement seeking beneficial ownership
information from a State about one of its corporations or LLCs would
not be turned away empty-handed.
The bill would also require corporations and LLCs to update their
beneficial ownership information in an annual filing with the State of
incorporation. If a State did not require an annual filing, the
information would have to be updated each time the beneficial ownership
changed.
In the special case of U.S. corporations formed by non-U.S. persons,
the bill would go farther. Following the lead of the Patriot Act which
imposed additional due diligence requirements on certain financial
accounts opened by non-U.S. persons, our bill would require additional
due diligence for corporations beneficially owned by non-U.S. persons.
This added due diligence would have to be performed--not by the
States--but by the persons seeking to establish the corporations. These
incorporators would have to file with the State a written certification
from a corporate formation agent residing within the State attesting to
the fact that the agent had verified the identity of the non-U.S.
beneficial owners of the corporation by obtaining their names,
addresses, and passport photographs. The formation agent would be
required to retain this information for a specified period of time and
produce it upon request.
The bill would not require the States to verify the ownership
information provided to them by a formation agent, corporation, LLC, or
other person filing an incorporation application. Instead, the bill
would establish Federal civil and criminal penalties for anyone who
knowingly provided a State with false beneficial ownership information
or intentionally failed to provide the State with the information
requested.
The bill would also exempt certain corporations from the disclosure
obligation. For example, it would exempt
[[Page S3706]]
all publicly-traded corporations and the entities they form, since
these corporations are already overseen by the Security and Exchange
Commission SEC. It would also allow the States, with the written
concurrence of the Homeland Security Secretary and the U.S. Attorney
General, to identify certain corporations, either individually or as a
class, that would not have to list their beneficial owners, if
requiring such ownership information would not serve the public
interest or assist law enforcement in their investigations. These
exemptions are expected to be narrowly drafted and rarely granted, but
are intended to provide the States and Federal law enforcement added
flexibility to fine-tune the disclosure obligation and focus it where
it is most needed to stop crime, tax evasion, and other wrongdoing.
Another area of flexibility in the bill involves privacy issues. The
bill deliberately does not take a position on the issue of whether the
States should make the beneficial ownership information they receive
available to the public. Instead, the bill leaves it entirely up to the
States to decide whether and under what circumstances to make
beneficial ownership information available to the public. The bill
explicitly permits the States to place restrictions on providing
beneficial ownership information to persons other than government
officials. The bill focuses instead only on ensuring that law
enforcement and Congress, when equipped with a subpoena or summons, are
given ready access to the beneficial ownership information collected by
the States.
To ensure that the States have the funds needed to meet the new
beneficial ownership information requirements, the bill makes it clear
that States can use their DHS State grant funds for this purpose. Every
State is guaranteed a minimum amount of DHS grant funds every year and
may receive funds substantially above that minimum. Every State will be
able to use all or a portion of these funds to modify their
incorporation practices to meet the requirements in the Act. The bill
also authorizes DHS to use appropriated funds to carry out its
responsibilities under the Act. These provisions will ensure that the
States have the funds needed for the modest compliance costs involved
with amending their incorporation forms to request the names of
beneficial owners.
It is common for bills establishing Federal standards to seek to
ensure State action by making some Federal funding dependent upon a
State's meeting the specified standards. This bill, however, states
explicitly that nothing in the bill authorizes DHS to withhold funds
from a State for failing to modify its incorporation practices to meet
the beneficial ownership information requirements in the Act. Instead,
the bill simply calls for a GAO report in 2012 to identify which
States, if any, have failed to strengthen their incorporation practices
as required by the Act. After getting this status report, a future
Congress can decide what steps to take, including whether to reduce any
DHS funding going to the noncompliant States.
Finally, the bill would require the U.S. Department of the Treasury
to issue a rule requiring formation agents to establish anti-money
laundering programs to ensure they are not forming U.S. corporations or
LLCs for criminals or other wrongdoers. GAO would also be asked to
conduct a study of existing State formation procedures for partnerships
and trusts.
We have worked hard to craft a bill that would address, in a fair and
reasonable way, the homeland security problem created by States
allowing the formation of millions of U.S. corporations and LLCs with
unknown owners. What the bill comes down to is a simple requirement
that States change their incorporation applications to add a question
requesting the names and addresses of the prospective beneficial
owners. That is not too much to ask to protect this country and the
international community from U.S. corporations engaged in wrongdoing
and to help law enforcement track down the wrongdoers.
For those who say that, if the United States tightens its
incorporation rules, new companies will be formed elsewhere, it is
appropriate to ask exactly where they will go? Every country in the
European Union is already required to get beneficial information for
the corporations formed under their laws. Most offshore jurisdictions
already request this information as well, including the Bahamas, Cayman
Islands, Jersey, and the Island of Man. Our States should be asking for
the same ownership information, but they don't, and there is no
indication that they will any time in the near future, unless required
to do so.
I wish Federal legislation weren't necessary. I wish the States could
solve this homeland security problem on their own, but ongoing
competitive pressures make it unlikely that the States will reach
agreement. We have waited more than a year already with no real
progress to show for it, despite repeated pleas from law enforcement.
Federal legislation is necessary to reduce the vulnerability of the
United States to wrongdoing by U.S. corporations with unknown owners,
to protect interstate and international commerce from criminals
misusing U.S. corporations, to strengthen the ability of law
enforcement to investigate suspect U.S. corporations, to level the
playing field among the States, and to bring the U.S. into compliance
with its international anti-money laundering obligations.
There is also an issue of consistency. For years, I have been
fighting offshore corporate secrecy laws and practices that enable
wrongdoers to secretly control offshore corporations involved in money
laundering, tax evasion, and other misconduct. I have pointed out on
more than one occasion that corporations were not created to hide
ownership, but to shield owners from personal liability for corporate
acts. Unfortunately, today, the corporate form has too often been
corrupted into serving those wishing to conceal their identities and
commit crimes or dodge taxes without alerting authorities. It is past
time to stop this misuse of the corporate form. But if we want to stop
inappropriate corporate secrecy offshore, we need to stop it here at
home as well.
For these reasons, I urge my colleagues to support this legislation
and put an end to incorporation practices that promote corporate
secrecy and render the United States and other countries vulnerable to
abuse by U.S. corporations with unknown owners.
Mr. President, I ask unanimous consent that the text of the bill and
a bill summary be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows.
S. 2956
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 ``Incorporation Transparency
and Law Enforcement Assistance Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Nearly 2,000,000 corporations and limited liability
companies are being formed under the laws of the States each
year.
(2) Very few States obtain meaningful information about the
beneficial owners of the corporations and limited liability
companies formed under their laws.
(3) A person forming a corporation or limited liability
company within the United States typically provides less
information to the State of incorporation than is needed to
obtain a bank account or driver's license and typically does
not name a single beneficial owner.
(4) Criminals have exploited the weaknesses in State
formation procedures to conceal their identities when forming
corporations or limited liability companies in the United
States, and have then used the newly created entities to
commit crimes affecting interstate and international commerce
such as terrorism, drug trafficking, money laundering, tax
evasion, securities fraud, financial fraud, and acts of
foreign corruption.
(5) Law enforcement efforts to investigate corporations and
limited liability companies suspected of committing crimes
have been impeded by the lack of available beneficial
ownership information, as documented in reports and testimony
by officials from the Department of Justice, the Department
of Homeland Security, the Financial Crimes Enforcement
Network of the Department of the Treasury, the Internal
Revenue Service, and the Government Accountability Office,
and others.
(6) In July 2006, a leading international anti-money
laundering organization, the Financial Action Task Force on
Money Laundering (in this section referred to as the
``FATF''), of which the United States is a member, issued a
report that criticizes the United States for failing to
comply with a FATF standard on the need to collect beneficial
ownership information and urged the
[[Page S3707]]
United States to correct this deficiency by July 2008.
(7) In response to the FATF report, the United States has
repeatedly urged the States to strengthen their incorporation
practices by obtaining beneficial ownership information for
the corporations and limited liability companies formed under
the laws of such States.
(8) Many States have established automated procedures that
allow a person to form a new corporation or limited liability
company within the State within 24 hours of filing an online
application, without any prior review of the application by a
State official. In exchange for a substantial fee, 2 States
will form a corporation within 1 hour of a request.
(9) Dozens of Internet websites highlight the anonymity of
beneficial owners allowed under the incorporation practices
of some States, point to those practices as a reason to
incorporate in those States, and list those States together
with offshore jurisdictions as preferred locations for the
formation of new corporations, essentially providing an open
invitation to criminals and other wrongdoers to form entities
within the United States.
(10) In contrast to practices in the United States, all
countries in the European Union are required to identify the
beneficial owners of the corporations they form.
(11) To reduce the vulnerability of the United States to
wrongdoing by United States corporations and limited
liability companies with unknown owners, to protect
interstate and international commerce from criminals misusing
United States corporations and limited liability companies,
to strengthen law enforcement investigations of suspect
corporations and limited liability companies, to set minimum
standards for and level the playing field among State
incorporation practices, and to bring the United States into
compliance with its international anti-money laundering
obligations, Federal legislation is needed to require the
States to obtain beneficial ownership information for the
corporations and limited liability companies formed under the
laws of such States.
SEC. 3. TRANSPARENT INCORPORATION PRACTICES.
(a) Transparent Incorporation Practices.--
(1) In general.--Subtitle A of title XX of the Homeland
Security Act of 2002 (6 U.S.C. 601 et seq.) is amended by
adding at the end the following:
``SEC. 2009. TRANSPARENT INCORPORATION PRACTICES.
``(a) Incorporation Systems.--
``(1) In general.--To protect the security of the United
States, each State that receives funding from the Department
under section 2004 shall, not later than the beginning of
fiscal year 2011, use an incorporation system that meets the
following requirements:
``(A) Each applicant to form a corporation or limited
liability company under the laws of the State is required to
provide to the State during the formation process a list of
the beneficial owners of the corporation or limited liability
company that--
``(i) identifies each beneficial owner by name and current
address; and
``(ii) if any beneficial owner exercises control over the
corporation or limited liability company through another
legal entity, such as a corporation, partnership, or trust,
identifies each such legal entity and each such beneficial
owner who will use that entity to exercise control over the
corporation or limited liability company.
``(B) Each corporation or limited liability company formed
under the laws of the State is required by the State to
update the list of the beneficial owners of the corporation
or limited liability company by providing the information
described in subparagraph (A)--
``(i) in an annual filing with the State; or
``(ii) if no annual filing is required under the law of
that State, each time a change is made in the beneficial
ownership of the corporation or limited liability company.
``(C) Beneficial ownership information relating to each
corporation or limited liability company formed under the
laws of the State is required to be maintained by the State
until the end of the 5-year period beginning on the date that
the corporation or limited liability company terminates under
the laws of the State.
``(D) Beneficial ownership information relating to each
corporation or limited liability company formed under the
laws of the State shall be provided by the State upon receipt
of--
``(i) a civil or criminal subpoena or summons from a State
agency, Federal agency, or congressional committee or
subcommittee requesting such information; or
``(ii) a written request made by a Federal agency on behalf
of another country under an international treaty, agreement,
or convention, or section 1782 of title 28, United States
Code.
``(2) Non-united states beneficial owners.--To further
protect the security of the United States, each State that
accepts funding from the Department under section 2004 shall,
not later than the beginning of fiscal year 2011, require
that, if any beneficial owner of a corporation or limited
liability company formed under the laws of the State is not a
United States citizen or a lawful permanent resident of the
United States, each application described in paragraph (1)(A)
and each update described in paragraph (1)(B) shall include a
written certification by a formation agent residing in the
State that the formation agent--
``(A) has verified the name, address, and identity of each
beneficial owner that is not a United States citizen or a
lawful permanent resident of the United States;
``(B) has obtained for each beneficial owner that is not a
United States citizen or a lawful permanent resident of the
United States a copy of the page of the government-issued
passport on which a photograph of the beneficial owner
appears;
``(C) will provide proof of the verification described in
subparagraph (A) and the photograph described in subparagraph
(B) upon request; and
``(D) will retain information and documents relating to the
verification described in subparagraph (A) and the photograph
described in subparagraph (B) until the end of the 5-year
period beginning on the date that the corporation or limited
liability company terminates, under the laws of the State.
``(b) Penalties for False Beneficial Ownership
Information.--In addition to any civil or criminal penalty
that may be imposed by a State, any person who affects
interstate or foreign commerce by knowingly providing, or
attempting to provide, false beneficial ownership information
to a State, by intentionally failing to provide beneficial
ownership information to a State upon request, or by
intentionally failing to provide updated beneficial ownership
information to a State--
``(1) shall be liable to the United States for a civil
penalty of not more than $10,000; and
``(2) may be fined under title 18, United States Code,
imprisoned for not more than 3 years, or both.
``(c) Funding Authorization.--To carry out this section--
``(1) a State may use all or a portion of the funds made
available to the State under section 2004; and
``(2) the Administrator may use funds appropriated to carry
out this title, including unobligated or reprogrammed funds,
to enable a State to obtain and manage beneficial ownership
information for the corporations and limited liability
companies formed under the laws of the State, including by
funding measures to assess, plan, develop, test, or implement
relevant policies, procedures, or system modifications.
``(d) State Compliance Report.--Nothing in this section
authorizes the Administrator to withhold from a State any
funding otherwise available to the State under section 2004
because of a failure by that State to comply with this
section. Not later than June 1, 2012, the Comptroller General
of the United States shall submit to the Committee on
Homeland Security and Governmental Affairs of the Senate and
the Committee on Homeland Security of the House of
Representatives a report identifying which States are in
compliance with this section and, for any State not in
compliance, what measures must be taken by that State to
achieve compliance with this section.
``(e) Definitions.--In this section:
``(1) Beneficial owner.--The term `beneficial owner' means
an individual who has a level of control over, or entitlement
to, the funds or assets of a corporation or limited liability
company that, as a practical matter, enables the individual,
directly or indirectly, to control, manage, or direct the
corporation or limited liability company.
``(2) Corporation; limited liability company.--The terms
`corporation' and `limited liability company'--
``(A) have the meanings given such terms under the laws of
the applicable State;
``(B) do not include any business concern that is an issuer
of a class of securities registered under section 12 of the
Securities Exchange Act of 1934 (15 U.S.C. 781) or that is
required to file reports under section 15(d) of that Act (15
U.S.C. 78o(d)), or any corporation or limited liability
company formed by such a business concern;
``(C) do not include any business concern formed by a
State, a political subdivision of a State, under an
interstate compact between 2 or more States, by a department
or agency of the United States, or under the laws of the
United States; and
``(D) do not include any individual business concern or
class of business concerns which a State, after obtaining the
written concurrence of the Administrator and the Attorney
General of the United States, has determined in writing
should be exempt from the requirements of subsection (a),
because requiring beneficial ownership information from the
business concern would not serve the public interest and
would not assist law enforcement efforts to detect, prevent,
or punish terrorism, money laundering, tax evasion, or other
misconduct.
``(3) Formation agent.--The term `formation agent' means a
person who, for compensation, acts on behalf of another
person to assist in the formation of a corporation or limited
liability company under the laws of a State.''.
(2) Table of contents.--The table of contents in section 1
of the Homeland Security Act of 2002 (6 U.S.C. 101 et seq.)
is amended by inserting after the item relating to section
2008 the following:
``Sec. 2009. Transparent incorporation practices.''.
(b) Effect on State Law.--
(1) In general.--This Act and the amendments made by this
Act do not supersede, alter, or affect any statute,
regulation,
[[Page S3708]]
order, or interpretation in effect in any State, except where
a State has elected to receive funding from the Department of
Homeland Security under section 2004 of the Homeland Security
Act of 2002 (6 U.S.C. 605), and then only to the extent that
such State statute, regulation, order, or interpretation is
inconsistent with this Act or an amendment made by this Act.
(2) Not inconsistent.--A State statute, regulation, order,
or interpretation is not inconsistent with this Act or an
amendment made by this Act if such statute, regulation,
order, or interpretation--
(A) requires additional information, more frequently
updated information, or additional measures to verify
information related to a corporation, limited liability
company, or beneficial owner, than is specified under this
Act or an amendment made by this Act; or
(B) imposes additional limits on public access to the
beneficial ownership information obtained by the State than
is specified under this Act or an amendment made by this Act.
SEC. 4. ANTI-MONEY LAUNDERING OBLIGATIONS OF FORMATION
AGENTS.
(a) Anti-Money Laundering Obligations of Formation
Agents.--Section 5312(a)(2) of title 31, United States Code,
is amended--
(1) in subparagraph (Y), by striking ``or'' at the end;
(2) by redesignating subparagraph (Z) as subparagraph (AA);
and
(3) by inserting after subparagraph (Y) the following:
``(Z) any person involved in forming a corporation, limited
liability company, partnership, trust, or other legal entity;
or''.
(b) Deadline for Anti-Money Laundering Rule for Formation
Agents.--
(1) Proposed rule.--Not later than 90 days after the date
of enactment of this Act, the Secretary of the Treasury, in
consultation with the Attorney General of the United States,
the Secretary of Homeland Security, and the Commissioner of
the Internal Revenue Service, shall publish a proposed rule
in the Federal Register requiring persons described in
section 5312(a)(2)(Z) of title 31, United States Code, as
amended by this section, to establish anti-money laundering
programs under subsection (h) of section 5318 of that title.
(2) Final rule.--Not later than 270 days after the date of
enactment of this Act, the Secretary of the Treasury shall
publish the rule described in this subsection in final form
in the Federal Register.
SEC. 5. STUDY AND REPORT BY GOVERNMENT ACCOUNTABILITY OFFICE.
Not later than 1 year after the date of enactment of this
Act, the Comptroller General of the United States shall
conduct a study and submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Homeland Security of the House of
Representatives a report--
(1) identifying each State that has procedures that enable
persons to form or register under the laws of the State
partnerships, trusts, or other legal entities, and the nature
of those procedures;
(2) identifying each State that requires persons seeking to
form or register partnerships, trusts, or other legal
entities under the laws of the State to provide information
about the beneficial owners (as that term is defined in
section 2009 of the Homeland Security Act of 2002, as added
by this Act) or beneficiaries of such entities, and the
nature of the required information;
(3) evaluating whether the lack of available beneficial
ownership information for partnerships, trusts, or other
legal entities--
(A) raises concerns about the involvement of such entities
in terrorism, money laundering, tax evasion, securities
fraud, or other misconduct; and
(B) has impeded investigations into entities suspected of
such misconduct; and
(4) evaluating whether the failure of the United States to
require beneficial ownership information for partnerships and
trusts formed or registered in the United States has elicited
international criticism and what steps, if any, the United
States has taken or is planning to take in response.
____
Summary of Incorporation Transparency and Law Enforcement Assistance
Act, May 1, 2008
To protect the United States from U.S. corporations being
misused to commit terrorism, money laundering, tax evasion,
or other misconduct, the Incorporation Transparency and Law
Enforcement Assistance Act would:
Beneficial Ownership Information. Require the States to
obtain a list of the beneficial owners of each corporation or
limited liability company (LLC) formed under their laws,
ensure this information is updated annually, and provide the
information to civil or criminal law enforcement upon receipt
of a subpoena or summons.
Non-U.S. Beneficial Owners. Require corporations and LLCs
with non-U.S. beneficial owners to provide a certification
from an in-State formation agent that the agent has verified
the identity of those owners.
Penalties for False Information. Establish civil and
criminal penalties under federal law for persons who
knowingly provide false beneficial ownership information or
intentionally fail to provide required beneficial ownership
information to a State.
Exemptions. Provide exemptions for certain corporations,
including publicly traded corporations and the corporations
and LLCs they form, since the Securities and Exchange
Commission already oversees them; and corporations which a
State has determined, with concurrence from the Homeland
Security and Justice Departments, should be exempt because
requiring beneficial ownership information from them would
not serve the public interest or assist law enforcement.
Funding. Authorize States to use an existing DHS grant
program, and authorize DHS to use already appropriated funds,
to meet the requirements of this Act.
State Compliance Report. Clarify that nothing in the Act
authorizes DHS to withhold funds from a State for failing to
comply with the beneficial ownership requirements. Require a
GAO report by 2012 identifying which States are not in
compliance so that a future Congress can determine at that
time what steps to take.
Transition Period. Give the States until October 2011 to
require beneficial ownership information for the corporations
and LLCs formed under their laws.
Anti-Money Laundering Rule. Require the Treasury Secretary
to issue a rule requiring formation agents to establish anti-
money laundering programs to ensure they are not forming U.S.
corporations or other entities for criminals or other suspect
persons.
GAO Study. Require GAO to complete a study of State
beneficial ownership information requirements for in-state
partnerships and trusts.
______
By Mr. LIEBERMAN:
S. 2957. A bill to modernize credit union net worth standards,
advance credit union efforts to promote economic growth, and modify
credit union regularity standards and reduce burdens, and for other
purposes; to the Committee on Banking, Housing, and Urban Affairs.
Mr. LIEBERMAN. Mr. President today more than ever, credit unions are
a critical component of our nation's financial landscape. At a time
when most financial institutions are retreating from the credit
markets, credit unions are among the few lenders in the financial
industry demonstrating resiliency and strength. For example, while many
mortgage lenders are struggling to stay afloat, the delinquency rate on
mortgages issued by credit unions is less than one percent, and credit
unions are still lending. Nonetheless, certain outdated regulatory
rules impede the ability of credit unions to effectively carry out
their role as savings and lending institutions for local communities
and small businesses. Because I believe that credit unions are a
stabilizing force in the domestic economy and play an important role in
providing financial services to local community and underserved groups,
I am introducing the Credit Union Regulatory Improvements Act of 2008,
CURIA.
The health of credit unions in today's turbulent economy is
attributable to a business model that differs significantly from that
of other financial institutions. Similar to banks and thrifts, credit
unions act as intermediaries in the market for consumer finance. Credit
unions, however, are governed by certain rules that take into account
their position as cooperative lenders. Notably, credit unions operate
as tax-exempt, nonprofit institutions. All credit union earnings are
retained as capital or returned to members in the form of higher
interest rates on savings accounts, lower interest rates on loans, and
other financial benefits. Second, credit unions are member-owned with
each member entitled to one vote in selecting board members and other
decisions. Third, credit unions do not issue capital stock. Rather,
credit unions create capital by retaining earnings. Fourth, credit
unions rely on volunteer, generally unpaid boards of directors elected
from the membership. Lastly, credit unions are limited to accepting
members identified in a credit union's articulated field of
membership--usually reflecting occupational, associational, or
geographical links or affinity.
In short, through a cooperative ownership structure, credit unions
offer access to financial services to millions of Americans. As a
result of strong ties to their communities, credit unions help meet
local needs, and in the process, encourage economic growth, job
creation, savings, and opportunities for small business owners. At the
end of 2007, over 88 million individuals were members of state or
federally charted credit unions in the United States, including close
to a million individuals in the State of Connecticut.
The legislation I am introducing will help modernize the Federal
Credit Union Act, bringing antiquated rules into the era of twenty-
first century consumer finance. CURIA would remove several instances of
statutory
[[Page S3709]]
micromanagement that place unreasonable constraints on the ability of
credit unions and their boards to function efficiently and in the best
interests of their members. The first title would update current
capital requirements by implementing recommendations from the National
Credit Union Administration, NCUA, the Federal regulatory body that
oversees credit unions. For purposes of setting capital requirements,
CURIA would implement a rigorous, two-part net worth test that would
more closely track an institution's actual asset risk. The second title
would promote community development and local economic growth by
providing for modest expansion in credit union business lending. The
title also includes provisions that would permit credit unions to
extend services to areas with high unemployment and low incomes. The
third title would provide credit unions with relief from outdated
regulatory burdens by authorizing the NCUA to increase maximum loan
terms and raise interest rate ceilings in response to sustained
increases in prevailing market interest rate levels. The title would
further allow greater credit union investment in credit union service
organizations, allow limited investments in securities, and update
credit union governance rules.
Vigorous competition among financial service providers, new
technology, and globalization have resulted in a financial marketplace
where the products and actors are evolving at a much more rapid rate
than the statutes and regulations that govern them. While recent events
demonstrate that we must be prudent in our approach to financial
regulation, we must not allow our rules to unjustifiably constrain
those actors, such as credit unions, that contribute to financial
stability, community development, and long-term growth. The Credit
Union Regulatory Improvements Act is an important step toward
modernizing and calibrating our financial regulatory rules, I encourage
my colleagues to support it.
Mr. President, I ask unanimous consent a section-by-section analysis
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record as follows:
The Credit Union Regulatory Improvements Act of 2008
Section-by-Section Analysis
Section 1. Short title
Section 1 would establish the short title of the bill as
the Credit Union Regulatory Improvements Act of 2008.
Title I: Capital Reform
Section 101. Amendments to net worth categories
The Federal Credit Union Act presently specifies the amount
of capital credit unions must hold in order to protect their
safety and soundness and the solvency of the National Credit
Union Share Insurance Fund (``Insurance Fund''). Many
experts, however, have noted that this capital allocation
system is inefficient and does not appropriately account for
risk. Section 101 incorporates recent recommendations of the
National Credit Union Administration, NCUA, to provide a two-
tier capital and Prompt Corrective Action, PCA, system for
federally insured credit unions involving complementary
leverage and risk-based minimum capital requirements. Under
the proposed system, a well capitalized credit union must
maintain a leverage net worth ratio of 5.25% and a minimum
risk-based ratio of 10%. When a credit union's capital
deposit to the Insurance Fund (equal to 1% of insured
deposits) is added, a credit union's total net worth would
equal or exceed the capital requirements for FDIC-insured
banks and thrifts.
Section 102. Amendments relating to risk-based net worth
categories
Currently, only federally insured credit unions that are
considered ``complex'' must meet a risk-based net worth
requirement under the Federal Credit Union Act. Section 102
would instead require all federally insured credit unions to
meet a risk-based net worth requirement, and it directs the
Board to take into account comparable risk standards for
FDIC-insured institutions when designing the risk-based
requirements appropriate to credit unions.
Section 103. Treatment based on other criteria
Section 103 would permit the NCUA Board to delegate to
regional directors the authority to lower by one level a
credit union's net worth category for reasons related to
interest-rate risk not captured in the risk-based ratios,
with any regional action subject to Board review.
Section 104. Definitions relating to net worth
Net worth, for purposes of prompt corrective action, is
currently defined as a credit union's retained earnings
balance under generally accepted accounting principles.
Section 104 would make three important revisions to this
definition. First, it clarifies that credit union net worth
ratios must be calculated without a credit union's capital
deposit with the Insurance Fund. Second, it provides a new
definition for ``risk-based net worth ratio'' as the ratio of
the net worth of the credit union to the risk assets of the
credit union. Third, it would permit the NCUA to impose
additional limitations on the secondary capital accounts used
to determine net worth for low-income community credit unions
where necessary to address safety and soundness concerns.
Section 105. Amendments relating to net worth restoration Plans
Section 105 would provide the NCUA Board with authority to
waive temporarily the requirement to implement a net worth
restoration plan for a credit union that becomes
undercapitalized due to disruption of its operations by a
natural disaster or a terrorist act. It would further permit
the Board to require any credit union that is no longer well
capitalized to implement a net worth restoration plan if it
determines the loss of capital is due to safety and soundness
concerns and those concerns remain unresolved by the credit
union.
This section would also modify the required actions of the
Board in the case of critically undercapitalized credit
unions in several ways. First, it would authorize the Board
to issue an order to a critically undercapitalized credit
union. Second, the timing of the period before appointment of
a liquidating agent could be shortened. Third, the section
would clarify the coordination requirement with state
officials in the case of state-chartered credit unions.
Title II: Economic Growth
Section 201. Limits on member business loans
Section 201 would increase the current arbitrary asset
limit on credit union member business loans from the lesser
of 1.75 times actual net worth or 1.75 percent times net
worth for a well-capitalized credit union (12.25% of total
assets) to a flat limit of 20% of the total assets of a
credit union. This update would facilitate added member
business lending without jeopardizing safety and soundness at
participating credit unions, as the 20% cap would still be
equal to or stricter than business lending caps imposed on
other depository institutions.
Section 202. Definition of member business loans
Section 202 would give NCUA the authority to exclude loans
of $100,000 or less as de minimis, rather than the current
$50,000 exclusion, from calculation of the 20% cap on member
business loans. This change would thus facilitate the ability
of credit unions to make additional loans and encourage them
to make very small business loans. It also builds upon the
findings in a 2001 study by the Treasury Department that
found that ``. . . credit union member business loans share
many characteristics of consumer loans'' and that ``. . .
these loans are generally smaller and fully collateralized,
and borrower risk profiles are more easily determined.''
Section 203. Restrictions on member business loans
Section 203 would modify language in the Federal Credit
Union Act that currently prohibits a credit union from making
any new member business loans if its net worth falls below 6
percent. This change would permit the NCUA to determine if
such a policy is appropriate and to oversee all member
business loans granted by an undercapitalized institution.
Section 204. Member business loan exclusion for loans to non-
profit religious organizations
To facilitate the ability of credit unions to support the
community development activities of non-profit religious
institutions, Section 204 would exclude loans or loan
participations by credit unions to non-profit religious
organizations from the member business loan limits contained
in the Federal Credit Union Act.
Section 205. Credit unions authorized to lease space in
buildings in underserved areas
In order to enhance the ability of federal credit unions to
assist underserved communities with their economic
revitalization efforts, Section 205 would allow a credit
union to lease space in a building or on property on which it
maintains a physical presence in an underserved area to other
parties on a more permanent basis. It would also permit a
federal credit union to acquire, construct, or refurbish a
building in an underserved community, then lease out excess
space in that building.
Section 206. Amendments relating to credit union service to
underserved areas
Section 206 would revise a provision of the 1998 Credit
Union Membership Access Act that has been incorrectly
interpreted as permitting only federal credit unions with
multiple common bond charters to expand services to
individuals and groups living or working in areas of high
unemployment and below median incomes that typically are
underserved by other depository institutions. The change
would reestablish prior NCUA policy of permitting all federal
credit unions, regardless of charter type, to expand services
to eligible communities that the Treasury Department
determines meet income, unemployment and other distress
criteria.
Section 207. Underserved areas defined
Section 207 would expand the criteria for determining
whether a community or rural area qualifies as an underserved
area. The
[[Page S3710]]
definition of a qualified underserved area includes not only
areas currently eligible as ``investment areas'' under the
Treasury Department's Community Development Financial
Institutions (CDFI) program, but also census tracts
qualifying as ``low income areas'' under the New Markets Tax
Credit targeting formula adopted by Congress in 2000.
Title III: Regulatory Modernization
Section 301. Investments in securities by federal credit
unions
The Federal Credit Union Act presently limits the
investment authority of federal credit unions to loans,
government securities, deposits in other financial
institutions, and certain other limited investments. Section
301 would provide additional investment authority to allow
credit unions to purchase for the credit union's own account
certain investment grade securities. The total amount of the
investment securities of any one obligor or maker could not
exceed 10% of the credit union's net worth and total
investments could not exceed 10% of total assets.
Section 302. Authority of NCUA to establish longer maturities
for certain credit union loans
The Federal Credit Union Act was amended in 2006 to allow
the NCUA Board to increase the 12-year maturity limit on non-
real estate secured loans to 15 years. Section 302 would
further provide the Board with additional flexibility to
issue regulations providing for loan terms exceeding 15 years
for specific types of loans.
Section 303. Increase in 1 percent investment and loan limits
in credit union service organizations
The Federal Credit Union Act authorizes federal credit
unions to invest in organizations providing services to
credit unions and credit union members. Currently, an
individual federal credit union may invest in aggregate no
more than one percent of its unimpaired capital and surplus
in these organizations, commonly known as credit union
service organizations or CUSOs. Credit unions also are
limited in the amount they may loan to all CUSOs to one
percent of unimpaired capital and surplus. Section 303 would
double the amount a credit union may invest in all CUSOs, and
the aggregate amount it may lend to CUSOs, to two percent of
credit union unimpaired capital and surplus.
Section 304. Voluntary mergers involving multiple common bond
credit unions
NCUA has identified ambiguous language in the 1998 Credit
Union Membership Access Act as creating uncertainty for
certain voluntary credit union mergers by requiring that
groups of more than 3,000 members be required to start a new
credit union rather than be incorporated as a new group
within a multiple common-bond credit union. Section 304 would
clarify that this numerical limitation would not apply to bar
groups of more than 3,000 members that are transferred
between two existing credit unions as part of a voluntary
merger.
Section 305. Conversions involving certain credit unions to a
community charter
In cases when a single or multiple common-bond federal
credit union converts to a community credit union charter,
there may be groups within the credit union's existing
membership that are located outside the new community
charter's geographic boundaries, but which desire to remain
part of the credit union and can be adequately served by the
credit union. Section 305 would require NCUA to establish the
criteria whereby it may determine that a member group or
other portion of a credit union's existing membership,
located outside of the community, can be satisfactorily
served and remain within the credit union's field of
membership.
Section 306. Credit union governance
Section 306 would provide federal credit union boards the
flexibility to expel a member, based on just cause, who is
disruptive to the operations of the credit union, including
harassing personnel and creating safety concerns, without the
need for a two-thirds vote of the membership present at a
special meeting as required by current law. The section would
also permit federal credit unions to limit the length of
service of their boards of directors to ensure broader
representation from the membership.
Section 307. Providing the National Credit Union
Administration with greater flexibility in responding to
market conditions
Currently, the NCUA Board may raise the usury interest rate
ceiling on loans by federal credit unions whenever it
determines that money market rates have increased over the
preceding six-month period and prevailing interest rates
threaten the safety and soundness of individual credit
unions. Section 307 would give the Board greater flexibility
to make such determinations based either on sustained
increases in money market interest rates or prevailing market
interest rate levels.
Section 308. Credit union conversion voting requirements
Section 308 includes several changes to current law
pertaining to credit union conversions to mutual thrift
institutions. It would increase the minimum member
participation requirement in any vote to approve a conversion
to 30% of the credit union's membership. It would require the
board of directors of a credit union considering conversion
to hold a general membership meeting one month prior to
sending out any notices about a conversion vote that contain
a voting ballot. It would also prohibit use of raffles,
contest, or any other promotions to encourage member voting
in a conversion vote.
Section 309. Exemption from pre-merger notification
requirement of the Clayton Act
Section 309 would give all federally insured credit unions
the same exemption that banks and thrift institutions already
have from pre-merger notification requirements and fees for
purposes of antitrust review by the Federal Trade Commission
under the Clayton Act.
______
By Mr. DOMENICI (for himself, Mr. Bunning, Mr. Sessions, Mrs.
Hutchison, Mr. Bond, Mr. Inhofe, Ms. Murkowski, Mr. Barrasso,
Mr. Bennett, Mr. Wicker, Mr. Chambliss, Mr. Stevens, Mr.
Cornyn, Mr. Enzi, Mr. Isakson, Mr. Thune, Mr. Voinovich, Mr.
Allard, and Mr. McConnell).
S. 2958. A bill to promote the energy security of the United States,
and for other purposes; to the Committee on Energy and Natural
Resources.
Mr. DOMENICI. Mr. President, I have a few remarks about the energy
situation I would like to share with the Senate. Two months ago, I came
to the floor to deliver a series of speeches on the State of our
Nation's energy security. I said then, unequivocally, that our Nation's
economic strength had been put in great peril by our growing dependence
on foreign oil.
I have been a member of the Energy Committee for 30 years and have
served as chairman of that committee, as well as the Budget Committee,
for a long period during that time. I have seen my share of serious
debate on energy and the economy, and I recognize how vital these
issues are to our Nation's well-being.
Unfortunately, in these times of high gas prices and an approaching
election, I have also seen my share of not-so-serious debate. The
American people deserve better than false promises of short-term fixes,
driving season gimmicks, and empty threats to the Middle East.
I said in February--and I say it again today--the American people
deserve serious, thoughtful, long-term solutions to our ever-growing
energy crisis. If there are short-term solutions, or short-term aids,
we ought to share those, too, and get on with adopting them.
Investigating, taxing, and threatening our American oil and gas
companies will do nothing to reduce the stranglehold foreign oil
dependence has put on our economic strength, national security, and
foreign policy agenda.
To blame either side of the aisle for the trouble this Nation is in
misses the point. The American people did not send us here to cast
blame on one side or the other, and they certainly didn't send us here
to put bandaids on serious illnesses that threaten our Nation.
My first year in the Senate was during a Republican administration,
when a President set out an aggressive agenda to reduce our Nation's
oil imports.
At that time, we were importing 6 million barrels of oil a day, which
represented 35 percent of our total oil consumption.
Fast forward 36 years to today. The aggressive agenda through several
administrations and Congresses under the control of both parties has
failed time and again. Today, we are more than 60 percent dependent on
foreign oil which comes from some of the most hostile regimes in the
world. Over time, our consumption has grown at a moderate rate, but our
imports have more than doubled to 13.4 million barrels per day. The
result is a rising cost of energy, a rising threat of disruption in our
energy supply, and a rising anger among our already burdened
constituents.
As I said today, the average price of gasoline is $3.62 a gallon, an
alltime high for the 17th straight day. Crude oil closed above $113 per
barrel last night. The average approval rating of Congress has
plummeted to 22 percent, and yet we continue to point fingers back and
forth.
In the past few years, Congress has achieved significant success in
addressing long-term energy security. We passed a 2005 bill that will
bring us a nuclear renaissance, a 2006 bill that will bring us greater
domestic oil and gas production in the Gulf of Mexico, and a 2007 bill
that will bring us increased fuel efficiency. That is a dramatic change
in the CAFE standards.
[[Page S3711]]
These were not little things, and they were hard to do. They were done
without finger-pointing and with bipartisan support.
To face this new challenge, however, we must do even more. Debate
about energy, oil, and the environment has reached a fever pitch. The
challenge of our time will be how we meet a rising demand for energy
from the literally billions of new consumers who wish to share in the
benefits of a global economy. I think we all know what that means. That
means India, China, and other countries are adding to the demand part
of the supply-and-demand cycles in mammoth ways. Already, China is
moving ahead as one of the largest importers of oil and users of oil in
the whole world. Just 10 years ago, or 12, they were hardly on the map.
For our Nation's future energy security and the world's, we will need
to ensure our supply of energy is reliable, affordable, and abundant.
Today, I introduced the Domestic Energy Production Act of 2008. I ask
unanimous consent that title be changed to the American Energy
Production Act of 2008.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DOMENICI. I ask that the clerk so change the bill, if they can.
If not, the Senator from New Mexico asks for the right to change it.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DOMENICI. Madam President, the policies set forth in this bill
will begin to move us in the right direction. I urge my colleagues to
support its passage and to look at it seriously.
First, the bill allows for States on the Atlantic and Pacific coasts
to petition the Federal Government to opt out of the broad moratorium
that for two decades has locked up America's assets and forced us to
turn toward unstable foreign nations to power our lives. I believe it
is time that we ask the Atlantic and Pacific coastal States to take a
real look at whether we could drill distances from their shores without
doing any harm and adding substantially to the American supply for all
our citizens, not just the coastal citizens. I believe the time is
ripe. I believe right-headed people will consider that might be a
reality. If we were to do it, we were told just that contains literally
millions of barrels of crude oil and billions of cubic feet of natural
gas for the American energy future.
First, this bill allows these Atlantic and Pacific coasts to petition
their Government to opt out, as I said, and these are large quantities
of assets that are American. Together, the Atlantic and Pacific Oceans
contain oil reserves, and here are the numbers, what we know without
doing a detailed reconnaissance. There are reserves of up to 14 billion
barrels and natural gas reserves totaling 55 trillion cubic feet. Those
are big enough for the American people to demand that everyone who
represents States in this Senate look at this, whether they are coastal
State Senators or not. America needs an honest evaluation because with
these States, if there was no damage--and I believe we can drill
without any damage today--we might move in a direction, an honest
direction, of reducing dramatically what we must import overseas.
Opening them to leasing would literally bring billions of dollars to
the Federal Treasury and billions of dollars to the coastal States
because they would share in it 37 percent, as we did with the coastal
States of Louisiana, Mississippi, and Texas when we, 2 years ago, did
the same thing for Gulf States and opened those areas for drilling.
Those States abutting were positively impressed and helped by it
because they wanted development and they also wanted to share in the
royalties. The new way we build platforms and drill is a far cry from
20 years ago when coastal States were so worried. Actually, we can do
it with little or no footprint, little or no seepage or damage, there
is no question about it.
Next, the bill opens 2,000 acres of the 19 million acres of the
Arctic plain, or ANWR, for oil and gas leasing. In 1995, President
Clinton vetoed an ANWR bill, and the price of oil was $19 a barrel. As
a result, 1 million barrels of oil continue to sit beneath our ground
each day instead of in our gas tanks. I believe the ultimate find, if
we are permitted to drill, would be much more than the million barrels,
without a question. The footprint is so small, the new directional
drilling is so accurate that I believe it deserves an opportunity for
the Senate to look again and think again and for the American people to
look again and think again with us on what should be done. The price of
oil is now $113 a barrel. When we last voted, the price was somewhere
above $50 but certainly nothing like this.
Yesterday, I heard a colleague on the other side of the aisle urge
OPEC nations to release 500,000 barrels of oil to the global market.
Today, in introducing this bill, I respond to my colleagues to release
more than 1 million barrels to that supply, from our own lands, by
supporting my bill. We don't know how much more we will get if the
coastal States join in and begin lifting the moratorium. We may be able
to send a message that more than the 500,000 barrels my colleague on
the other side sought and far more than the 1 million we would get from
Alaska would be released into the American market.
This bill provides for a consolidated permitting process to ease
constraints on building refineries in this country. While we improved
the capacity over years, we consistently hear the criticism that no new
refinery has been built in our country for over 30 years. Our Nation
cannot afford to go 30 more years without building additional
refineries.
The bill also provides a small measure of relief by suspending
delivery to the Strategic Petroleum Reserve. I ask my colleagues to
consider their views on certain issues. I remind them that this issue I
have reconsidered on my own. I believe it is appropriate in this
pricing environment that we stop filling the SPR for up to 6 months,
thus providing 70,000 additional barrels of light sweet crude per day.
That might have an effect. Although it will be minor, it might be
recognizable on the price of oil. I think it is time to do that.
I told the chairman of the Subcommittee on Energy and Water
Development, with whom I serve and was the principal sponsor of this,
that I would join him in this when he was ready to move on the Senate
floor.
By its very nature, this is just a fraction of the oil that will be
gained through OCS production. OCS is what I am talking about in the
bill I introduced today, and ANWR, oil shale production, and coal-to-
liquid production are in this bill. In today's environment, any small
amount helps the people of this country.
In the area of alternative resources, this bill requires studies on
ethanol to help ensure that smart decisions are made as we move toward
cellulosic and other advanced biofuels. This bill provides incentives
for the advancement of breakthrough energy technologies, such as
battery-powered vehicles. That is important. It is obvious to everyone
that we have not moved ahead as rapidly as we should in battery
development, and we ought to push hard with our greatest scientists
because a change in the right direction there would be a dramatic
change in the right direction for automobiles that would be electric-
motored and that would be good for our country.
Our Nation is often called the Saudi Arabia of coal, and we should
use that domestic resource to help reduce our dependence on foreign
oil. This bill creates a mandate for up to 3 billion gallons of clean
coal-derived fuels over the next decade and 6 billion gallons over the
next 14 years. This will provide diesel and jet fuel to help power our
economy and create jobs throughout our coal-producing States.
Additionally, this provision requires that the mandated fuels have
life-cycle greenhouse gas emissions no greater than conventional
gasoline.
This is a win-win for our economy and our environment. I don't know
why it is so violently opposed by some in America. I think they just
don't want us to use our own if it means we are going to use it in
automobiles, diesel trucks, or the like. I don't understand. If we
don't do it, we will be using foreign oil unless and until we find a
total new substitute, which will be years from now.
This bill also allows for the long-term procurement of synthetic
fuels by the Department of Defense and repeals section 526 of last
year's Energy bill.
[[Page S3712]]
That provision ties greenhouse gas emission requirements to the types
of fuels our Air Force can purchase. The practical translation is that
in a time of war, this policy would direct our military to purchase oil
from the sands of the Middle East rather than the oil sands of Canada.
While this bill takes many steps to strengthen our Nation's energy
security, it also repeals several provisions in last year's
appropriations bills that threaten to damage our Nation's energy
security. At this point, most everyone knows what they are. I will
merely mention one of those that is big, and that is a mandate that was
imposed on oil shale development in America.
Somebody in conference--I think we know which one but need not say
since it is not certain--put a rider on that bill that said the final
regulations for shale development have a moratorium imposed. That comes
at a time when Shell Oil and others are exploring the great potential
of shale converted to oil. I don't see why we should do this. I believe
we should take that off and let them proceed. They will be bound by the
laws of our land, and obviously, with the high price of crude oil, it
is clear to me that they are going to find a way to make oil shale
equal to conventional oil and thus usable by Americans as American-
produced oil. We should let that happen as rapidly as possible and not
deter it. I know some will not agree, but I would think that debate,
carried to the American people, would be voted overwhelmingly in favor
of letting it happen. That is why we put it in this bill.
Finally, this bill repeals a $4,000 fee for drilling permits. These
costs, slipped into a large Omnibus measure without notice or debate,
hit the smallest oil and gas companies in our States. Making it more
difficult to produce domestic energy for domestic use will only serve
to further increase the prices we pay at the pump.
As I complete my final year in the Senate, I look back on the many
accomplishments this body has achieved for the American people. This
great work has often been done when Members reached across the aisle
after thoughtful deliberation, serious debate, and reasoned judgment. I
hope, as the Congress makes a serious effort to tackle the energy
challenges of our time, that we will address these challenges in the
same spirit.
As I said a few months ago on this floor that America faces a serious
energy crisis with vital implications for our national security,
economic strength, and foreign policy. The American people deserve a
serious debate, for our present challenge will require thoughtfulness,
vision, and judgment--not just today, but when the cameras are off, the
elections are far away, and gas prices subside.
______
By Mr. FEINGOLD (for himself, Ms.Klobuchar, Mr. Tester, and Mr.
Harkin):
S. 2959. A bill to amend the Help America Vote Act of 2002 to require
States to provide for election day registration; to the Committee on
Rules and Administration.
Mr. FEINGOLD. Mr. President, today I will introduce, along with
Senators Klobuchar, Tester, and Harkin, the Election Day Registration
Act of 2008, which would significantly increase voter participation by
allowing all eligible citizens to register to vote in Federal elections
on Election Day.
In many ways, the machinery of our democracy needs significant
repair. We live in an age of low turnout and high cynicism. The
American people have lost faith in our election system, in part because
they are not confident that their votes will be counted or that the
ballot box is accessible to each and every voter regardless of ability,
race, or means.
What we see instead are long lines at polling places; faulty voting
machines; under-trained, under-paid, over-worked poll workers; partisan
election administrators; suspect vote tallies; caging lists;
intimidation at the polling place; misleading flyers; illegal voter-
file purges; and now, the Supreme Court approving discriminatory voter
ID laws. If people cannot trust their elections, why should they trust
their elected officials?
Two years ago, Professor Dan Tokaji, a leading election law expert,
called for a ``moneyball approach to election reform.'' Named after
Michael Lewis's book about the Oakland A's data-driven hiring system,
Tokaji's approach is quintessentially progressive, as that term was
understood at the turn of the century. ``I mean to suggest a research-
driven inquiry,'' Tokaji wrote, ``in place of the anecdotal approach
that has too often dominated election reform conversations. While
anecdotes and intuition have their place, they're no substitute for
hard data and rigorous analysis.''
This bill embodies the moneyball approach to election reform. In
stark contrast to many so-called election reform proposals, this bill
addresses a real problem--low voter turnout--it targets a major cause
of the problem--archaic registration laws--and it offers a proven
solution--Election Day registration.
The bill is very simple: it amends the Help America Vote Act to
require every State to allow eligible citizens to register and vote in
a Federal election on the day of the election. Voters may register
using any form that satisfies the requirements of the National Voter
Registration Act, including the Federal mail-in voter registration form
and any state's standard registration form. North Dakota, which does
not have voter registration, is exempted from the bill's requirements.
The bill itself is simple, but it addresses a significant problem:
the low voter turnout that has plagued this country for the last 40
years. We live in a participatory democracy, where our Government
derives its power from the consent of the governed, a consent embodied
in the people's exercise of their fundamental right to vote. It is self
evident that a participatory democracy depends on participation.
This may be a government of the people, but the people are not
voting. Since 1968, American political participation has hovered around
50 percent for Presidential elections and 40 percent for congressional
elections. Even in 2004, a record-breaking year, turnout was only 55
percent of the voting age population. The U.S. may be the only
established democracy where the fact that a little under half of the
electorate stayed home is considered cause for celebration.
In fact, our predecessors in the Senate would be surprised to find us
celebrating such low turnout: a 1974 report by the Senate Committee on
the Post Office and Civil Service bemoaned the ``shocking'' drop in
turnout in the 1972 election. And what was the number that so troubled
the Committee--55 percent.
The report went on: ``[i]t is the Committee's conviction that our
disquieting record of voter participation is in large part due to the
hodgepodge of registration barriers put in the way of the voter. Such
obstacles have little, if anything, to recommend them. At best, current
registration laws in the various states are outmoded and simply
inappropriate for a highly mobile population. At worst, registration
laws can be construed as a deliberate effort to disenfranchise voters
who desperately need entry into the decision-making processes of our
country.''
What a shame, that the Committee's findings are still valid. Our
archaic registration laws have been reformed, but they are still
archaic. We have passed a number of important bills designed to combat
low turnout, but turnout is still low. America is even more mobile than
it was in 1974, and yet our registration laws are still out of touch
with the reality that more than 40 million Americans move every year.
Worst of all, our registration laws still fall especially hard on the
young, the old, and the poor.
We have long known that complicated voter registration requirements
constitute one of the major barriers to voting. In fact, many States
adopted voter registration in order to prevent certain segments of the
population from voting. Alexander Keyssar, the preeminent scholar on
the history of the right to vote in this country, writes that although
``[r]egistration laws emerged in the nineteenth century as a means of
keeping track of voters and preventing fraud; they also served--and
were intended to serve--as a means of keeping African-American,
working-class, immigrant, and poor voters from the polls.''
It is time for a fundamental change. A large body of research tells
us that unnecessarily burdensome voter registration requirements are
the single
[[Page S3713]]
largest factor in preventing people from voting. Simply put, voter
registration restrictions should not keep eligible Americans from
exercising their right to vote. The solution to this problem is
Election Day registration.
Decades of empirical research confirm Election Day registration's
positive impact on turnout. As one academic paper states, ``the
evidence on whether EDR augments the electorate is remarkably clear and
consistent. Studies finding positive and significant turnout impacts
are too numerous to list.'' Studies indicate that Election Day
registration alone increases turnout by roughly 5 to 10 percentage
points.
In general, States with Election Day registration boast voter turnout
that is 10-12 percentage points higher than States that require voters
to register before Election Day. Turnout in Minnesota and Wisconsin,
which implemented Election Day registration over 35 years ago, has been
especially high: in 2004, for example, 78 percent of eligible
Minnesotans and 75 percent of eligible Wisconsinites went to the polls.
The last time national voter turnout was above 70 percent, it was 1896,
there were only 45 States, and the gold standard was the dominant
campaign issue.
Critics might worry about the possibility of fraud, but Election Day
registration actually makes the registration process more secure.
Voters registering on Election Day do so in the presence of an
elections official who verifies the voter's residency and identity on
the spot. Mark Ritchie, Minnesota's Secretary of State, points out that
Election Day registration ``is much more secure because you have the
person right in front of you--not a postcard in the mail. That is a no-
brainer. We have 33 years of experience with this.''
In contrast to most election reforms, the cost of Election Day
registration is negligible. A recent survey of 26 local elections
officials in six EDR States found that ``officials agreed that
incidental expense of administering EDR is minimal.'' In fact, Election
Day registration may actually result in a net savings because it
significantly reduces the use of provisional ballots. Provisional
ballots, which are required by the Help America Vote Act, are expensive
to administer. The Congressional Budget Office estimates that
provisional ballots cost State and local governments about $25 million
a year.
In some states the number of provisional ballots cast is surprisingly
large. For example, in 2004, more than 4 percent of California's
registered voters cast provisional ballots--that's 644,642 provisional
ballots. In Ohio, 157,714 provisional ballots were cast, about 2
percent of all registered voters.
In contrast, in 2004 only 0.03 percent of voters in EDR States cast a
provisional ballot. In Wisconsin, only 374 provisional ballots were
cast. In Maine, only 95 provisional ballots were cast. In fact, only
952 provisional ballots were cast in all the EDR States combined in
2004. To be sure, this bill is no cure-all: it does not address long
lines, deceptive flyers, and faulty voting machines. Other bills, good
bills, address those issues.
The bottom line is this: the Election Day Registration Act would
substantially increase civic participation, improve the integrity of
the electoral process, reduce election administration costs, and
reaffirm that voting is a fundamental right. It has been proven
effective by more than 30 years of successful implementation in
Minnesota and Wisconsin and decades of empirical research. Election Day
registration is good for voters, good for taxpayers, and good for
democracy.
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. 2959
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 ``Election Day Registration
Act''.
SEC. 2. ELECTION DAY REGISTRATION.
(a) In General.--Title III of the Help America Vote Act of
2002 (42 U.S.C. 15481 et seq.) is amended--
(1) by redesignating sections 304 and 305 as sections 305
and 306, respectively; and
(2) by inserting after section 303 the following new
section:
``SEC. 304. ELECTION DAY REGISTRATION.
``(a) In General.--
``(1) Registration.--Notwithstanding section 8(a)(1)(D) of
the National Voter Registration Act of 1993 (42 U.S.C.
1973gg-6), each State shall permit any eligible individual on
the day of a Federal election--
``(A) to register to vote in such election at the polling
place using a form that meets the requirements under section
9(b) of the National Voter Registration Act of 1993; and
``(B) to cast a vote in such election.
``(2) Exception.--The requirements under paragraph (1)
shall not apply to a State in which, under a State law in
effect continuously on and after the date of the enactment of
this section, there is no voter registration requirement for
individuals in the State with respect to elections for
Federal office.
``(b) Eligible Individual.--For purposes of this section,
the term `eligible individual' means any individual who is
otherwise qualified to vote in a Federal election in such
State.
``(c) Effective Date.--Each State shall be required to
comply with the requirements of subsection (a) for the
regularly scheduled general election for Federal office
occurring in November 2008 and for any subsequent election
for Federal office.''.
(b) Conforming Amendments.--
(1) Section 401 of such Act (42 U.S.C. 15511) is amended by
striking ``and 303'' and inserting ``303, and 304''.
(2) The table of contents of such Act is amended--
(A) by redesignating the items relating to sections 304 and
305 as relating to sections 305 and 306, respectively; and
(B) by inserting after the item relating to section 303 the
following new item:
``Sec. 304. Election day registration.''.
Ms. KLOBUCHAR. Mr. President, I come to the floor today to speak
about a fundamental right in this country: the right to vote. Although
it is one of the greatest rights we have built this government on, we
have states across the country that still limit that right by not
allowing people to vote if they have not met an arbitrary registration
deadline. A deadline that is sometimes set months in advance of
Election Day. Since 1973, Minnesota has allowed citizens in the state
to register to vote on the same day as the election, and, not
coincidentally, year after year, my state has the highest voter turnout
in the country.
As the Presidential election is fast approaching, we need to ensure
that people across the country have the ability to vote when November
4th, 2008, rolls around. This is why, Mr. President, I am happy that
this afternoon, Senator Feingold and I introduced legislation that
enables voters in every state to register on Election Day for Federal
elections. My colleague's home state of Wisconsin, like Minnesota, has
put a high price on voter registration, and has allowed Election Day
Registration for over 30 years with great success. I am also pleased
that we are joined on this bill by Senator Harkin from Iowa and Senator
Tester from Montana. Both Iowa and Montana recently enacted same-day
voter registration laws--significantly improving voter turnout
throughout the state.
This legislation comes at a critical time--it is on the heels of a
Supreme Court decision that tightens the ability of Indiana citizens to
vote by requiring valid photo identification at the polling booth. And
just this last week, several election registration volunteers in
Florida stopped their registration work for fear that they would be
fined upwards of $1000 if they made a mistake.
In Minnesota, some credit the election of Jesse Ventura as Governor
in 1998 to our same-day registration voting policy. Voters who had
never voted before showed up at the polls and voted in unprecedented
numbers. I can't say that I ever imagined that we would have a Governor
wear a pink boa at his inaugural celebration, but the ability for the
citizens of Minnesota to cast their ballot and enact change is the kind
of democracy this country is founded upon.
In the past decade, as states around the country are experimenting
with new and innovative ways to combat voter fraud, Election Day
Registration has actually helped eliminate voter fraud at the polls.
I've worked a great deal with the Secretary of State in Minnesota, Mark
Ritchie, and he has found that registering at the polls, instead of by
mail with a postcard, decreases the chance for fraud. When citizens are
registering right in front of the election official, on the day of the
election, chances of fraud are decreased. It's a pretty simple concept,
but a fundamental one. As Secretary of State Ritchie has said, it's ``a
no-brainer.''
[[Page S3714]]
The myriad of voter registration laws across the country are mind-
boggling. In Nevada, you must register by 9 p.m., on the fifth Saturday
before the election. A handful of states require registration 25 days
before the election, another handful require 29 days. Some have to be
postmarked by that date, and others have to be received by the
deadline. A few set the cutoff at 20 days, a few at 10 days, and in
Vermont, you have until 5 p.m., the Wednesday before the election. If
you're in Utah, you must register 30 days before the election by mail,
but if you miss that, you can register in person on the 18th or 15th
day before the election. Where we have one, national, election day of
November 4th this year, it is hard to imagine voters, because of the
State they reside, could miss their chance to vote.
There are 8 States that allow citizens to register at the polls:
Maine, Minnesota, New Hampshire, Wisconsin, Wyoming, and now Iowa and
Montana have joined the list. Historically, these first six States have
seen voter turnout that is 8 to 15 percent higher than the national
average. In the 2004 Presidential election, only 64 percent of the
eligible population voted; but in Minnesota, 79 percent of the
population turned out to vote. As Senator Feingold mentioned, the last
time we had turnout that high on a national level was 1896, and we only
had 45 states. No matter what side of the aisle, we are seeing an
unprecedented interest in the upcoming Presidential election, and we
need to give the citizens the ability to register on Election Day.
This is a simple, yet fundamental bill. It amends legislation we
passed in 2002, the Help America Vote Act, to allow voters to register
and cast their ballot on the same day in a Federal election. Where
Americans across the country are facing skyrocketing gas prices, health
costs that many cannot afford, and an economy that is approaching
recession, we need to ensure that every citizen has the right to wake
up on Election Day and decide they will cast their ballot for
President.
Mr. TESTER. Mr. President, I rise today to join my colleagues,
Senators Feingold, Harkin and Klobuchar in introducing a bill that
would significantly increase voter participation. The Election Day
Registration Act of 2008, EDR, would allow all eligible citizens to
register to vote in federal elections on Election Day.
Studies have shown a strong increase in voter turnout in those States
who have EDR. In 2004, 73.8 percent of all eligible voters in EDR
states voted, compared with 60.2 percent of eligible voters in states
without EDR--a difference of 13.6 percentage points. The top four
States for turnout in 2004 had EDR--Minnesota 78 percent, Wisconsin 75
percent, Maine 73 percent, and New Hampshire 71 percent. The fifth
highest state was Oregon--the universal vote-by-mail state. Even more
compelling, the turnout is higher even when controlling for
competitiveness--in terms of voter participation, ``safe'' states with
EDR significantly outperformed ``safe'' states without EDR. Voter
participation in those ``Battleground'' States with EDR was
significantly higher than in those ``battleground'' states without EDR.
High voter participation is a fundamental part of a healthy
democracy. This year we have seen record numbers of voters
participating in the presidential primaries. The implementation of EDR
for federal elections would build upon this momentum. Montana is
expecting record turnout for our presidential primary on June 3rd.
EDR permits eligible citizens to register and vote on Election Day.
There are currently 9 states that have some form of EDR: Minnesota,
Maine, Wisconsin, Idaho, Wyoming, New Hampshire, Iowa, North Carolina
and of course my home state of Montana. Iowa adopted EDR in March 2007
and North Carolina has implemented Same Day Registration at early
voting sites. While the version in North Carolina isn't complete EDR,
it is a strong move for increased access to the democratic process.
There is nationwide interest in EDR. Last year, 21 States had bills
before their legislature to implement, or begin feasibility studies in
support of, EDR.
In my home state of Montana we have had Election Day Registration.
Montana adopted EDR in 2005 while I was president of the Montana state
senate. Montana's version is a little different from EDR in Wisconsin
and Minnesota--in Montana, the voter registers, election day, at the
county courthouse rather than at the polling place. Whether it is at
the polling place or the courthouse, the important fundamentals of
access are maintained.
With EDR, the use of and reliance upon provisional ballots would be
minimized. Provisional ballots are useful and valuable tools, however
with EDR, the costly validation process that takes place after election
day could be avoided, as eligibility considerations could be made on
election day and the voter would then use a standard ballot. EDR
streamlines the administrative process and makes sure that votes are
counted.
Enactment of EDR would be a major step in the right direction towards
inclusive and fully participatory elections. It's clear that people are
more likely to vote when they know their votes will be counted. EDR has
proven track record of increasing participation, and those concerns
raised have been largely disproven or are easily addressed. In the end
EDR allows more Americans to do that which is most fundamental to the
democracy we love and the freedom we, as Americans, stand for--vote.
My cosponsors and I think this Election Day Registration Act of 2008
is necessary to strengthen our democracy. We welcome our fellow
senators to support this important legislation.
______
By Mr. DODD:
S. 2960. A bill to amend the Homeland Security Act of 2002, to
establish the Office for Bombing Prevention, to enhance the role of
State and local bomb squads, public safety dive teams, explosive
detection canine teams, and special weapons and tactics teams in
national improvised explosive device prevention policy, to establish a
grant program to provide for training, equipment, and staffing of State
and local improvised explosive device prevention, and for other
purposes; to the Committee on Homeland Security and Governmental
Affairs.
Mr. DODD. Mr. President, today I am introducing the National
Improvised Explosive Device, IED, Preparedness and Prevention Act of
2008. This bill will ensure that the brave men and women who are called
on to respond to bomb threats around the country have the necessary
tools, training, and personnel to keep our communities safe.
Furthermore, this bill gives our State and local responders
unprecedented access to the federal policy making committees directing
the national agencies that keep our homeland secure.
Regrettably, over the years, our people have suffered attacks from
home-made bombs, not only on distant battlefields of Iraq and
Afghanistan, but here in America. From the 1983 truck bombing of the
Beirut Barracks to the Alfred P. Murrah Federal Building bombing in
Oklahoma City to the recent Times Square Military Recruiting Office
bombing in New York City, we have seen the devastating effects such
attacks wield.
These bombs, which have become known in the lexicon of the Pentagon
as ``Improvised Explosive Devices'' or IEDs, are the number one cause
of death and injury to our troops overseas. Whether it is in lives
lost, economic damage, or the simple loss of feeling safe in our
communities, IEDs pose a threat to American security.
We must therefore ensure that our state and local bomb squads, SWAT
Teams, K-9 units, and public safety dive teams are sufficiently
prepared to meet this challenge, as they most certainly will be the
first on the scene to respond to the next IED scare. These courageous
public servants put their lives on the line every day to keep us safe.
The least we can do is to make certain that they have the resources
they need and a seat at the table in critical IED policy making
discussions. That is why I have introduced this legislation and have
worked hard to address these very real needs.
Beginning in April 2006, I worked with Senator Robert Byrd to attach
a provision to a Homeland Security Appropriations bill requiring DHS to
produce a national strategy for IED preparedness.
After numerous delays, and a letter to Homeland Security Secretary
[[Page S3715]]
Chertoff from Senator Byrd and me, the National Security Council
finally approved the document in late 2007.
Unfortunately, the strategy did not include adequate detail on how
state and local input would contribute to the federal government's IED
prevention and preparedness. It also failed to create an IED-specific
grant program to ensure that State and local governments can carry out
their responsibilities under the strategy.
My bill will address the threat of IEDs by:
First, statutorily establishing the Office for Bombing Prevention OBP
within FEMA's Grant Programs Directorate.
Second, tbe bill establishes a Senior Advisory Committee, SAC, for
IED Prevention and Response as a subcommittee under the Homeland
Security Advisory Council.
Third, the bill requires State, Local, and Practicing Professional
input in Advisory Committee Selection, giving voice to our First
Responders who understand first-hand the needs of our communities.
Fourth, the legislation establishes a risk-based IED Prevention and
Response Grant Program within the Homeland Security Department's Grant
Program Directorate to specifically provide funds for equipment,
training, and personnel in areas where DHS has identified shortfalls.
Last, my bill requires the Coast Guard to assess the preparedness of
our Nation's Public Safety Dive Teams, PSDT, in the completion of Area
Maritime Transportation Security and Facility Plans.
Mr. President, we can no longer afford to sit on our hands while many
of our IED First Responders have to scrape by with antiquated equipment
and training.
We have an opportunity to be proactive, to prepare for the
unthinkable events that befell the people of London and Madrid, just a
few short years ago.
Our Nation needs demonstrated capability in this vital area, and we
in Congress need to lead. I urge my colleagues to join me in this
endeavor.
______
By Mr. AKAKA:
S. 2961. A bill to amend title 38, United States Code, to enhance the
refinancing of home loans by veterans; to the Committee on Veterans'
Affairs.
Mr. AKAKA. Mr. President, today I introduce a bill that will offer
veterans more options for refinancing their mortgages. My legislation
would raise the guarantee on VA refinance loans and decrease equity
requirements for refinancing to a VA loan. These provisions would allow
more qualified veterans to refinance their home loans under the VA
program.
At present, the maximum VA loan guaranty limit for all loans in
excess of $144,000, except regular refinance loans, is equal to 25
percent of the Freddie Mac conforming loan limit for a single family
home. Presently this is $104,250. This means lenders making loans up to
$417,000 will receive at least a 25 percent guaranty, which is
typically required to place the loan on the secondary market.
However, current law limits to $36,000 the guaranty that can be used
for a regular refinance loan. This restriction means a refinance over
$144,000 will result in a lender not receiving 25 percent backing from
VA and probably not making the loan at all. This situation essentially
precludes a veteran from being able to refinance his or her existing
FHA or conventional loan into a VA guaranteed loan if the loan is
greater than $144,000.
To assist veterans in overcoming this obstacle in refinancing, this
legislation would increase the maximum guaranty limit for refinance
loans to the same level as conventional loans--25 percent limit for a
single family home. Importantly, this increase would make the maximum
VA home loan guaranty equal across the board.
This bill will also increase the percentage of an existing loan that
VA will refinance from the current maximum of 90 percent to 95 percent,
thus allowing more veterans to use their VA benefit to refinance their
mortgages. Many veterans do not have ten percent equity and thus are
precluded from refinancing to a VA home loan. Given the anticipated
number of non-VA adjustable mortgages that are approaching the reset
time when payments are likely to increase, it seems prudent to
facilitate veterans refinancing to VA loans.
In light of today's housing and home loan crises, these further
refinancing options will help some veterans to bridge financial gaps
and allow them to stay in their homes and escape possible foreclosures.
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. 2961
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. ENHANCEMENT OF REFINANCING OF HOME LOANS BY
VETERANS.
(a) Inclusion of Refinancing Loans Among Loans Subject to
Guaranty Maximum.--Section 3703(a)(1)(A)(i)(IV) of title 38,
United States Code, is amended by inserting ``(5),'' after
``(3),''.
(b) Increase in Maximum Percentage of Loan-to-Value of
Refinancing Loans Subject to Guaranty.--Section 3710(b)(8) of
such title is amended by striking ``90 percent'' and
inserting ``95 percent''.
______
By Mr. BOND (for himself, Mrs. Boxer, Mr. Stevens, Mr. Obama, Mr.
Domenici, Mrs. Dole, and Ms. Murkowski):
S. 2963. A bill to improve and enhance the mental health care
benefits available to members of the Armed Forces and veterans, to
enhance counseling and other benefits available to survivors of members
of the Armed Forces and veterans, and for other purposes; to the
Committee on Veterans' Affairs.
Mr. BOND. Mr. President, there is an issue that has been festering in
our military ranks for quite some time that we must address now.
America's warriors voluntarily leave the comfort of their homes and
families to serve the greater good under very difficult conditions.
They are fighting an incredibly complex battle on an asymmetric
battlefield, against an enemy that is not bound by rules of war or
human decency. They are courageously protecting our freedoms--each and
every day--against those who seek to do us harm. As the father of a
two-tour Iraq War Veteran, this issue is very close to my heart, and
should be at the forefront of the Senate's day-to-day business.
Many of our military service members bear the physical scars of war.
Thanks to advances in modern medicine and the efforts of brilliant
medical personnel in the field, many of our war-wounded are able to
return to a relatively normal life. Our practice of compensating
disabled veterans financially helps our heroes reintegrate and assume
again civilian status.
A growing concern revolves around those soldiers, sailors, airmen and
Marines who return home with invisible injuries, the psychological
wounds of war that have had a huge impact on a large percentage of our
military forces.
Post Traumatic Stress Disorder, PTSD, Traumatic Brain Injuries, TBI,
are not quickly diagnosed because we cannot see them. But we know they
exist, and they often manifest years later and wreak all sorts of havoc
on our military, on our military families, and on our society.
The recently-released Rand Study and American Psychiatric Association
studies acknowledge the issue and paint a bleak social and financial
future. The question is: What are we doing to help these men and women?
The answer now is: Not enough. There are simply not enough resources
available to our combat veterans to deal adequately with the problem.
Today we are proposing legislation that will address this crisis. Our
proposal will address both short- and long-term solutions for those
suffering from PTSD and TBI. We will increase our troops' access to
qualified behavioral-health specialists and increase the number of
those specialists annually in an effort to treat our men and women and
help them cope with their ailments.
My staff has worked closely with the VA on these proposals and our
legislation has the support of the Iraq and Afghanistan Veterans'
Association and Veterans for Common Sense.
First, our bill improves veterans' access to care by expanding the
use of our Vet Centers. Currently, our Active, Guard, and Reserve
military personnel do not have access to the VA's Vet Centers,
community-based counseling
[[Page S3716]]
centers which are successfully providing mental health care to
veterans.
An estimated 30 percent of troops return from combat suffering from
Post Traumatic Stress Disorder, Traumatic Brain Injury, or other mental
health problems. But there are grossly insufficient numbers of military
behavioral health specialists to provide the care our troops need.
Recent testimony from all military Surgeons General highlighted the
shortage of mental health professionals service-wide.
This legislation will give our troops the same access to Vet Centers
our veterans receive for mental health care, which not only opens the
door to additional resources but also lightens the load on our
currently over-tasked specialists. Additionally, the legislation will
reduce the stigma associated with behavior disorders by allowing troops
to seek treatment outside of conventional military channels.
We also propose to enhance the recruitment and training of Military
Behavioral Health Specialists through a scholarship program that
targets former service members or service members preparing to separate
from the military.
This legislation, overseen by the Veterans Health Administration,
will provide incentives for retiring or separating military personnel
and veterans to pursue an education in the behavioral health field.
Over time, that will alleviate the shortage of behavioral health
specialists who serve our troops and veterans.
The estimated cost to recruit an additional 80 to 90 behavioral
health specialists a year is $1.5--$2 million annually. This program
would pay for itself if it were to save just one veteran from
developing 100 percent service-connected PTSD.
We also propose extending the survivor benefits for Service Members
who commit suicide and have a medical history of PTSD or TBI.
We know that mental-health issues often manifest long after the
service member has left active duty. As a result, Congress has extended
free health care to five years for recently-discharged veterans with
any condition that may be related to their combat service.
Unfortunately, survivor benefits have not kept up with this logic.
Current coverage for veterans who commit suicide does not take into
account the time it takes for PTSD and TBI to manifest.
This legislation guarantees benefits for any Service Member who
commits suicide within two years of separation or retirement from the
military, provided they have a documented medical history of a combat-
related mental-health condition, including PTSD or TBI.
The Service Member's survivor will be entitled to the same Social
Security, Survivor Benefit Plan, Veteran's Affairs Benefits, and active
duty burial benefits that they would have received had the Service
Member died on their last day of active duty.
Our legislation also creates a grant program for non-profit
organizations to provide support services to the families of our
deceased Active, Guard, and Reserve Military personnel and Veterans.
The psychological impact associated with the loss of a loved one in a
combat zone is tremendous. Unfortunately, there are not adequate
numbers of military Casualty Assistance Officers to serve surviving
families. While norofit organizations have professional staff that
provide long-term and peer-based emotional support, Department of
Defense Casualty Assistance Officers are only temporarily detailed to
these duties and often are unfamiliar with the regulations or the
emotional needs of surviving families.
This legislation establishes a competitive federal grant program for
nonprofit support organizations to provide vital support services to
the surviving families of deceased military personnel.
Next, our legislation will ensure the fair treatment and care of all
of our military personnel, including those whose discharges may have
been caused by combat-related mental-health condition, including Post
Traumatic Stress Disorder or Traumatic Brain Injury.
Many of those who are forced to leave the military because of
performance issues such as substance abuse or anger problems have
underlying mental health conditions such as TBI or PTSD that are not
being properly diagnosed.
In many cases the military has inappropriately discharged these
veterans, and they subsequently lose access to VA care and other
benefits.
No veteran that has served this nation in combat should be denied the
benefits they earned on the battlefield. This provision allows the VA
to screen the veteran's discharge, and, if the veteran is found to have
been improperly diagnosed, to take action to correct the problem
accordingly.
Specifically, this legislation would reinstate the provision repealed
from the law in 1996 giving the Vet Centers the authority to help the
new generation of war veterans to resolve any problems presented with
the character of their discharges.
Finally, our legislation will better prepare our troops for combat
through the creation of a pilot program at Ft. Leonard Wood, Missouri
and Ft. Carson, Colorado. We will provide comprehensive training to
educate U.S. military personnel on Post Traumatic Stress Disorder--how
to prevent it, how to recognize it when it occurs, and what to do about
it when it happens. We hope to build resiliency, enhance performance,
and mitigate stress among the troops.
The rise in PTSD cases demands a new approach to preparing U.S.
military personnel and their families for the stresses associated with
combat.
The pilot program is designed to enhance the individual's
neurophysiological understanding of stress and trauma resolution and to
equip them with performance-enhancing skills drawn from both the
military special-operations community and the elite sports world.
The program will train and support an Army Brigade Combat Team and
their families at all stages of a soldier's tour: pre-deployment, mid-
deployment and post-deployment.
Addressing PTSD head on through self-awareness training will teach
military personnel to cope better with combat-related issues and reduce
the need and cost for long-term treatment.
The long-term effects of untreated mental illness are severe: drug
and alcohol abuse, job and marital problems, even suicide.
We can prevent much of this unfortunate legacy by prompt and
effective treatment when our troops come home.
We are all the beneficiaries of the sacrifices of others. Our
responsibility is to continue to improve the ways in which we support
our troops and their families.
They do not take our freedom for granted; we should not take their
sacrifices for granted.
I ask my colleagues on both sides of the aisle to support these
proposals.
______
By Mr. AKAKA:
S. 2969. A bill to amend title 38, United States Code, to enhance the
capacity of the Department of Veterans Affairs to recruit and retain
nurses and other critical health-care professionals, and for other
purposes; to the Committee on Veterans' Affairs.
Mr. AKAKA. Mr. President, today I am introducing legislation to
address personnel issues in the Department of Veterans Affairs. This
legislation, proposed Veterans' Medical Personnel Recruitment and
Retention Act of 2008, would help ensure that VA has the workforce
necessary to serve America's veterans most effectively.
Health care providers are the backbone of the VA system. Yet today,
the Department faces a shortage of these professionals. Around the
country, too many facilities are understaffed, at the cost of services
for veterans. A recent report by the Partnership for Public Service
gave the Veterans Health Administration poor marks for pay and
benefits, and for family support. VHA also rated poorly among younger
employees. To be the health care employer of choice, VA must be able to
offer competitive salaries, work schedules, and benefits.
As Chairman of the Committee on Veterans' Affairs, I held a hearing
on April 9, 2008, that focused on personnel issues within the VA health
care system. We heard detailed testimony from VA administrators and
health care providers. Their testimony outlined the challenges VA
faces, and suggested possible solutions.
This legislation would benefit a wide range of positions within VA.
Here are
[[Page S3717]]
some of the challenges VA faces, and the solutions I propose.
Local labor markets for health care providers vary widely, and VA
must be better prepared to compete in every market. Locality pay
surveys are a crucial tool in this effort. However, a recent GAO report
on nurse anesthetists revealed a locality pay system that is
inconsistent and often dysfunctional. The bill I am introducing would
make implementation of locality pay surveys more effective by requiring
additional training on proper implementation, and improving
transparency to allow for better oversight.
This legislation would also encourage retention of experienced
professionals by removing salary offsets for retired employees who
choose to return to work at VA. In the coming years, a significant
portion of the VA workforce will reach the age of retirement.
Eliminating the salary offset by the amount of an employee's retirement
annuity would encourage these experienced professionals to return to
VA.
Education benefits are often among the chief advantages of employment
at VA, and I believe these benefits can be used for an even greater
effect. VA has extensive programs to encourage further education within
their workforce, and to provide financial assistance for employees with
educational debt. This legislation would increase yearly benefit limits
on the Education Debt Reduction Program--EDRP--and would broaden the
goals of that program to include retention as well as recruitment. In
so doing, the EDRP would be made available to both long-time VA
employees and new hires. It would also reauthorize the Health
Professionals Scholarship Program, and would broaden eligibility to a
wider range of health professions.
Further, to make VA more attractive to clinical researchers, this
legislation would provide VA with authorities similar to the Loan
Repayment Program of the National Health Service Corps. VA would be
authorized to use funds from medical services appropriations to help
researchers in need of financial assistance to payoff their education
loans. This program would compliment EDRP, which is not available to
researchers.
In recent years, VA has been challenged to retain top administrators,
especially those who have spent their careers at VA. Their expert
knowledge is indispensable to the effective management of the VA health
care system. However, given the high rates of compensation available
outside of VA, retention of these professionals is often difficult.
This legislation would provide VA with the authority to pay national
administrators additional compensation so as to better compete with the
private sector. It would also give VA the authority to increase, under
limited circumstances, compensation for pharmacists, doctors, and
dentists, in order for VA to be more competitive in local labor
markets.
VA faces many challenges in recruiting and retaining nurses. I have
worked with VA administrators and nurses to develop solutions to these
challenges. This legislation would give VA more tools to attract and
keep these employees.
Alternative work schedules are now commonly available in other health
care systems. At VA, part-time and alternative work schedules are
under-utilized, and as a result, VA loses prospective hires and damages
employee morale. This legislation would clarify alternative work
schedule and weekend duty rules. By making these schedules easier to
implement, it is my hope that VA will expand their use.
This bill would also make it easier for VA to hire and retain part-
time nurses by limiting probationary periods and expanding eligibility
for overtime pay. For nurses who transition from full-time to part-
time, this legislation would eliminate the probationary period they are
now required to serve. This provision would be extremely helpful in
encouraging experienced nurses to extend their careers at VA beyond the
customary age of retirement.
In many locations, VA cannot compete with other health care systems
for many nursing positions, particularly certified registered nurse
anesthetists--CRNAs--and licensed practical and vocational nurses. A
recent GAO report on CRNAs in VA noted that VA spends thousands of
dollars on contract nurses to cover staffing gaps. The use of contract
nurses, while appropriate in some situations, is not a permanent
solution to the long-term staffing shortfall. The bill I am introducing
would raise or eliminate pay caps currently placed on these difficult-
to-fill positions. These provisions are derived directly from testimony
the Committee heard from VA nurses and administrators at the April 9,
2008, hearing.
This legislation would also clarify rules about emergency duty for
VA nurses. The use of emergency mandatory overtime has been an issue in
many VA facilities, and in other health care systems. I believe this
legislation provides a reasonable solution. By standardizing the
definition of ``emergency,'' it would facilitate more consistent and
equitable use of emergency mandatory overtime.
I believe that this legislation will give VA the tools it needs to
recruit and retain the best health care professionals in the Nation. I
also anticipate that it will improve employee morale, as well as
improving transparency and oversight. As we have heard many times, VA
faces a looming retirement crisis. The solutions proposed in this
legislation seek to address these challenges.
I urge my colleagues to support the proposed Veterans' Medical
Personnel Recruitment and Retention Act of 2008.
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. 2969
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans' Medical Personnel
Recruitment and Retention Act of 2008''.
SEC. 2. ENHANCEMENT OF AUTHORITIES FOR RETENTION OF MEDICAL
PROFESSIONALS.
(a) Secretarial Authority to Extend Title 38 Status to
Additional Positions.--
(1) In general.--Paragraph (3) of section 7401 of title 38,
United States Code, is amended by striking ``and blind
rehabilitation outpatient specialists.'' and inserting the
following: ``blind rehabilitation outpatient specialists, and
such other classes of health care occupations as the
Secretary considers necessary for the recruitment and
retention needs of the Department subject to the following
requirements:
``(A) Not later than 45 days before the Secretary appoints
any personnel for a class of health care occupations that is
not specifically listed in this paragraph, the Secretary
shall submit to the Committee on Veterans' Affairs of the
Senate, the Committee on Veterans' Affairs of the House of
Representatives, and the Office of Management and Budget
notice of such appointment.
``(B) Before submitting notice under subparagraph (A), the
Secretary shall solicit comments from any labor organization
representing employees in such class and include such
comments in such notice.''.
(2) Appointment of nurse assistants.--Such paragraph is
further amended by inserting ``nurse assistants,'' after
``licensed practical or vocational nurses,''.
(b) Probationary Periods for Nurses.--Section 7403(b) of
such title is amended--
(1) in paragraph (1), by striking ``Appointments'' and
inserting ``Except as otherwise provided in this subsection,
appointments'';
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) An appointment of a nurse under this chapter, whether
on a full-time basis or a part-time basis, shall be for a
probationary period ending upon the completion by the person
so appointed of 4,180 hours of work pursuant to such
appointment.
``(3) An appointment described in subsection (a) on a part-
time basis of a person who has previously served on a full-
time basis for the probationary period for the position
concerned shall be without a probationary period.''.
(c) Prohibition on Temporary Part-Time Nurse Appointments
in Excess of 4,180 Hours.--Section 7405(f)(2) of such title
is amended by inserting after ``year'' the following: ``,
except that a part-time appointment of a nurse shall not
exceed 4,180 hours''.
(d) Waiver of Offset From Pay for Certain Reemployed
Annuitants.--
(1) In general.--Section 7405 of such title is amended by
adding at the end the following:
``(g)(1) The Secretary may waive the application of
sections 8344 and 8468 of title 5 (relating to annuities and
pay on reemployment) or any other similar provision of law
under a Government retirement system on a case-by-case basis
for an annuitant reemployed on a temporary basis under the
authority of subsection (a) in a position described under
paragraph (1) of that subsection.
[[Page S3718]]
``(2) An annuitant to whom a waiver under paragraph (1) is
in effect shall not be considered an employee for purposes of
any Government retirement system.
``(3) An annuitant to whom a waiver under paragraph (1) is
in effect shall be subject to the provisions of chapter 71 of
title 5 (including all labor authority and labor
representative collective bargaining agreements) applicable
to the position to which appointed.
``(4) In this subsection:
``(A) The term `annuitant' means an annuitant under a
Government retirement system.
``(B) The term `employee' has the meaning under section
2105 of title 5.
``(C) The term `Government retirement system' means a
retirement system established by law for employees of the
Government of the United States.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date that is six months after the
date of the enactment of this Act, and shall apply to pay
periods beginning on or after such effective date.
(e) Minimum Rate of Basic Pay for Appointees to the Office
of the Under Secretary for Health Set to Lowest Rate of Basic
Pay Payable for a Senior Executive Service Position.--
(1) In general.--Section 7404(a) of such title is amended--
(A) by striking ``The annual'' and inserting ``(1) The
annual'';
(B) by striking ``The pay'' and inserting the following:
``(2) The pay'';
(C) by striking ``under the preceding sentence'' and
inserting ``under paragraph (1)''; and
(D) by adding at the end the following:
``(3) The minimum rate of basic pay for a position to which
an Executive order applies under paragraph (1) and is not
described by paragraph (2) may not be less than the lowest
rate of basic pay payable for a Senior Executive Service
position under section 5382 of title 5.''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on the first day of the first pay period
beginning after the day that is 180 days after the date of
the enactment of this Act.
(f) Comparability Pay Program for Appointees to the Office
of the Under Secretary for Health.--Section 7410 of such
title is amended--
(1) by striking ``The Secretary may'' and inserting ``(a)
In General.--The Secretary may''; and
(2) by adding at the end the following new subsection:
``(b) Comparability Pay for Appointees to the Office of the
Under Secretary for Health.--(1) The Secretary may authorize
the Under Secretary for Health to provide comparability pay
of not more than $100,000 per year to individuals of the
Veterans Health Administration appointed under section 7306
of this title who are not physicians or dentists to achieve
annual pay levels for such individuals that are comparable
with annual pay levels of individuals with similar positions
in the private sector.
``(2) Comparability pay under paragraph (1) for an
individual is in addition to all other pay, awards, and
performance bonuses paid to such individual under this title.
``(3) Except as provided in paragraph (4), comparability
pay under paragraph (1) for an individual shall be considered
basic pay for all purposes, including retirement benefits
under chapters 83 and 84 of title 5, and other benefits.
``(4) Comparability pay under paragraph (1) for an
individual shall not be considered basic pay for purposes of
adverse actions under subchapter V of this chapter.
``(5) Comparability pay under paragraph (1) may not be
awarded to an individual in an amount that would result in an
aggregate amount of pay (including bonuses and awards)
received by such individual in a year under this title that
is greater than the annual pay of the President.''.
(g) Special Incentive Pay for Department Pharmacist
Executives.--Section 7410 of such title, as amended by
subsection (f), is further amended by adding at the end the
following new subsection:
``(c) Special Incentive Pay for Department Pharmacist
Executives.--(1) In order to recruit and retain highly
qualified Department pharmacist executives, the Secretary may
authorize the Under Secretary for Health to pay special
incentive pay of not more than $40,000 per year to an
individual of the Veterans Health Administration who is a
pharmacist executive.
``(2) In determining whether and how much special pay to
provide to such individual, the Under Secretary shall
consider the following:
``(A) The grade and step of the position of the individual.
``(B) The scope and complexity of the position of the
individual.
``(C) The personal qualifications of the individual.
``(D) The characteristics of the labor market concerned.
``(E) Such other factors as the Secretary considers
appropriate.
``(3) Special incentive pay under paragraph (1) for an
individual is in addition to all other pay (including basic
pay) and allowances to which the individual is entitled.
``(4) Except as provided in paragraph (5), special
incentive pay under paragraph (1) for an individual shall be
considered basic pay for all purposes, including retirement
benefits under chapters 83 and 84 of title 5, and other
benefits.
``(5) Special incentive pay under paragraph (1) for an
individual shall not be considered basic pay for purposes of
adverse actions under subchapter V of this chapter.
``(6) Special incentive pay under paragraph (1) may not be
awarded to an individual in an amount that would result in an
aggregate amount of pay (including bonuses and awards)
received by such individual in a year under this title that
is greater than the annual pay of the President.''.
(h) Pay for Physicians and Dentists.--
(1) Non-foreign cost of living adjustment allowance.--
Section 7431(b) of such title is amended by adding at the end
the following:
``(5) The non-foreign cost of living adjustment allowance
authorized under section 5941 of title 5 for physicians and
dentists whose pay is set under this section shall be
determined as a percentage of base pay only.''.
(2) Market pay determinations for physicians and dentists
in administrative or executive leadership positions.--Section
7431(c)(4)(B)(i) of such title is amended by adding at the
end the following: ``The Secretary may exempt physicians and
dentists occupying administrative or executive leadership
positions from the requirements of the previous sentence.''.
(3) Exception to prohibition on reduction of market pay.--
Section 7431(c)(7) of such title is amended by striking
``concerned.'' and inserting ``concerned, unless there is a
change in board certification or reduction of privileges.''.
(i) Adjustment of Pay Cap for Nurses.--Section 7451(c)(2)
of such title is amended by striking ``title 5'' and
inserting ``title 5 or the level of GS-15 as prescribed under
section 5332 of such title, whichever is greater''.
(j) Exemption for Certified Registered Nurse Anesthetists
From Limitation on Authorized Competitive Pay.--Section
7451(c)(2) of such title is further amended by adding at the
end the following new sentence: ``The maximum rate of basic
pay for a grade for the position of certified registered
nurse anesthetist pursuant to an adjustment under subsection
(d) may exceed the maximum rate otherwise provided in the
preceding sentence.''.
(k) Locality Pay Scale Computations.--
(1) Education, training, and support for facility directors
in wage surveys.--Section 7451(d)(3) of such title is amended
by adding at the end the following new subparagraph:
``(F) The Under Secretary for Health shall provide
appropriate education, training, and support to directors of
Department health-care facilities in the conduct and use of
surveys under this paragraph.''.
(2) Information on methodology used in wage surveys.--
Section 7451(e)(4) of such title is amended--
(A) by redesignating subparagraph (D) as subparagraph (E);
and
(B) by inserting after subparagraph (C) the following new
subparagraph (D):
``(D) In any case in which the director conducts such a
wage survey during the period covered by the report and makes
adjustment in rates of basic pay applicable to one or more
covered positions at the facility, information on the
methodology used in making such adjustment or adjustments.''.
(3) Disclosure of information to persons in covered
positions.--Section 7451(e) of such title is further amended
by adding at the end the following new paragraph:
``(6)(A) Upon the request of an individual described in
subparagraph (B) for a report provided under paragraph (4)
with respect to a Department health-care facility, the Under
Secretary for Health or the director of such facility shall
provide to the individual the most current report for such
facility provided under such paragraph.
``(B) An individual described in this subparagraph is--
``(i) an individual in a covered position at a Department
health-care facility; or
``(ii) a representative of the labor organization
representing that individual who is designated by that
individual to make the request.''.
(l) Increased Limitation on Special Pay for Nurse
Executives.--Section 7452(g)(2) of such title is amended by
striking ``$25,000'' and inserting ``$100,000''.
(m) Eligibility of Part-Time Nurses for Additional Nurse
Pay.--
(1) In general.--Section 7453 of such title is amended--
(A) in subsection (a), by striking ``a nurse'' and
inserting ``a full-time nurse or part-time nurse'';
(B) in subsection (b)--
(i) in the first sentence--
(I) by striking ``on a tour of duty'';
(II) by striking ``on such tour''; and
(III) by striking ``of such tour'' and inserting ``of such
service''; and
(ii) in the second sentence, by striking ``of such tour''
and inserting ``of such service'';
(C) in subsection (c)--
(i) by striking ``on a tour of duty''; and
(ii) by striking ``on such tour''; and
(D) in subsection (e)--
(i) in paragraph (1), by striking ``eight hours in a day''
and inserting ``eight consecutive hours''; and
(ii) in paragraph (5)(A), by striking ``tour of duty'' and
inserting ``period of service''.
(2) Exclusion of application of additional nurse pay
provisions to certain additional employees.--Section
7454(b)(3) of such title is amended to read as follows:
``(3) Employees appointed under section 7408 of this title
performing service on a tour
[[Page S3719]]
of duty, any part of which is within the period commencing at
midnight Friday and ending at midnight Sunday, shall receive
additional pay in addition to the rate of basic pay provided
such employees for each hour of service on such tour at a
rate equal to 25 percent of such employee's hourly rate of
basic pay.''.
(n) Exemption of Additional Nurse Positions From Limitation
on Increase in Rates of Basic Pay.--Section 7455(c)(1) of
such title is amended by inserting after ``nurse
anesthetists,'' the following: ``licensed practical nurses,
licensed vocational nurses, and nursing positions otherwise
covered by title 5,''.
SEC. 3. LIMITATIONS ON OVERTIME DUTY, WEEKEND DUTY, AND
ALTERNATIVE WORK SCHEDULES FOR NURSES.
(a) Overtime Duty.--
(1) In general.--Subchapter IV of chapter 74 of title 38,
United States Code, is amended by adding at the end the
following new section:
``Sec. 7459. Nurses: special rules for overtime duty
``(a) Limitation.--Except as provided in subsection (c),
the Secretary may not require a nurse to work more than 40
hours (or 24 hours if such nurse is covered under section
7456) in an administrative work week or more than eight
consecutive hours (or 12 hours if such nurse is covered under
section 7456 or 7456A).
``(b) Voluntary Overtime.--(1) A nurse may on a voluntary
basis elect to work hours otherwise prohibited by subsection
(a).
``(2) The refusal of a nurse to work hours prohibited by
subsection (a) shall not be grounds to discriminate (within
the meaning of section 704(a) of the Civil Rights Act of 1964
(42 U.S.C. 2000e-3(a))) against the nurse, dismissal or
discharge of the nurse, or any other adverse personnel action
against the nurse.
``(c) Overtime Under Emergency Circumstances.--(1) Subject
to paragraph (2), the Secretary may require a nurse to work
hours otherwise prohibited by subsection (a) if--
``(A) the work is a consequence of an emergency that could
not have been reasonably anticipated;
``(B) the emergency is non-recurring and is not caused by
or aggravated by the inattention of the Secretary or lack of
reasonable contingency planning by the Secretary;
``(C) the Secretary has exhausted all good faith,
reasonable attempts to obtain voluntary workers;
``(D) the nurse has critical skills and expertise that are
required for the work; and
``(E) the work involves work for which the standard of care
for a patient assignment requires continuity of care through
completion of a case, treatment, or procedure.
``(2) A nurse may not be required to work hours under this
subsection after the requirement for a direct role by the
nurse in responding to medical needs resulting from the
emergency ends.
``(d) Nurse Defined.--In this section, the term `nurse'
includes the following;
``(1) A registered nurse.
``(2) A licensed practical or vocational nurse.
``(3) A nurse assistant appointed under this chapter or
title 5.
``(4) Any other nurse position designated by the Secretary
for purposes of this section.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 74 of such title is amended by inserting
after the item relating to section 7458 the following new
item:
``7459. Nurses: special rules for overtime duty.''.
(b) Weekend Duty.--Section 7456 of such title is amended--
(1) in subsection (a) by striking ``regularly scheduled 12-
hour tour of duty'' and inserting ``scheduled 12-hour periods
of service'';
(2) in subsection (b)--
(A) in paragraph (2), by striking ``service performed as
part of a regularly scheduled 12-hour tour of duty'' and
inserting ``any service performed''; and
(B) in paragraph (3)--
(i) in subparagraph (A), by striking ``regularly scheduled
two 12-hour tours of duty'' and inserting ``scheduled 12-hour
period of service'';
(ii) in subparagraph (B), by striking ``regularly scheduled
two 12-hour tour of duty'' and inserting ``scheduled 12-hour
period of service''; and
(iii) in subparagraph (C), by striking ``regularly
scheduled two 12-hour tours of duty'' and inserting
``scheduled two 12-hour periods of service'';
(3) by striking subsection (c); and
(4) by redesignating subsection (d) as (c).
(c) Alternate Work Schedules.--
(1) In general.--Section 7456A(b)(1)(A) of such title is
amended by striking ``three regularly scheduled'' and all
that follows through the period at the end and inserting
``six regularly scheduled 12-hour periods of service within a
pay period shall be considered for all purposes to have
worked a full 80-hour pay period.''.
(2) Conforming amendments.--Section 7456A(b) of such title
is amended--
(A) in the subsection heading, by striking ``36/40'' and
inserting ``72/80'';
(B) in paragraph (2)--
(i) in subparagraph (A), by striking ``40-hour basic work
week'' and inserting ``80-hour pay period'';
(ii) in subparagraph (B), by striking ``regularly scheduled
36-hour tour of duty within the work week'' and inserting
``scheduled 72-hour period of service within the bi-weekly
pay period'';
(iii) in subparagraph (C)--
(I) in clause (i), by striking ``regularly scheduled 36-
hour tour of duty within an administrative work week'' and
inserting ``scheduled 72-hour period of service within an
administrative pay period'';
(II) in clause (ii), by striking ``regularly scheduled 12-
hour tour of duty'' and inserting ``scheduled 12-hour period
of service''; and
(III) in clause (iii), by striking ``regularly scheduled
36-hour tour of duty work week'' and inserting ``scheduled
72-hour period of service pay period''; and
(iv) in subparagraph (D), by striking ``regularly scheduled
12-hour tour of duty'' and inserting ``scheduled 12-hour
period of service''; and
(C) in paragraph (3), by striking ``regularly scheduled 12-
hour tour of duty'' and inserting ``scheduled 12-hour period
of service''.
SEC. 4. IMPROVEMENTS TO CERTAIN EDUCATIONAL ASSISTANCE
PROGRAMS.
(a) Reinstatement of Health Professionals Educational
Assistance Scholarship Program.--
(1) In general.--Section 7618 of title 38, United States
Code, is amended by striking ``December 31, 1998'' and
inserting ``December 31, 2013''.
(2) Expansion of eligibility requirements.--Paragraph (2)
of section 7612(b) of such title is amended by striking
``(under section'' and all that follows through the period at
the end and inserting the following: ``as an appointee under
paragraph (1) or (3) of section 7401 of this title.''.
(b) Improvements to Education Debt Reduction Program.--
(1) Inclusion of employee retention as purpose of
program.--Section 7681(a)(2) of such title is amended by
inserting ``and retention'' after ``recruitment'' the first
time it appears.
(2) Eligibility.--Section 7682 of such title is amended--
(A) in subsection (a)(1), by striking ``a recently
appointed'' and inserting ``an''; and
(B) by striking subsection (c).
(3) Maximum amounts of assistance.--Section 7683(d)(1) of
such title is amended--
(A) by striking ``$44,000'' and inserting ``$60,000''; and
(B) by striking ``$10,000'' and inserting ``$12,000''.
(c) Loan Repayment Program for Clinical Researchers From
Disadvantaged Backgrounds.--
(1) In general.--The Secretary of Veterans Affairs may, in
consultation with the Secretary of Health and Human Services,
utilize the authorities available in section 487E of the
Public Health Service Act (42 U.S.C. 288-5) for the repayment
of the principal and interest of educational loans of
appropriately qualified health professionals who are from
disadvantaged backgrounds in order to secure clinical
research by such professionals for the Veterans Health
Administration.
(2) Limitations.--The exercise by the Secretary of Veterans
Affairs of the authorities referred to in paragraph (1) shall
be subject to the conditions and limitations specified in
paragraphs (2) and (3) of section 487E(a) of the Public
Health Service Act (42 U.S.C. 288-5(2) and (3)).
(3) Funding.--Amounts for the repayment of principal and
interest of educational loans under this subsection shall be
derived from amounts available to the Secretary of Veterans
for the Veterans Health Administration for Medical Services.
____________________