[Congressional Record Volume 158, Number 104 (Thursday, July 12, 2012)]
[Senate]
[Pages S4952-S4960]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. ROCKEFELLER:
  S. 3378. A bill to establish scientific standards and protocols 
across forensic disciplines, and for other purposes; to the Committee 
on Commerce, Science, and Transportation.
  Mr. ROCKEFELLER. Mr. President, the criminal justice system relies on 
forensic science to identify and prosecute criminals and exonerate the 
falsely accused. But in a pathbreaking 2009 report to Congress, the 
National Academy of Sciences found that the interpretation of forensic 
evidence is severely compromised by the lack of supporting science and 
standards. They concluded, ``The bottom line is simple: In a number of 
forensic science disciplines, forensic science professionals have yet 
to establish either the validity of their approach or the accuracy of 
their conclusions, and the courts have been utterly ineffective in 
addressing this problem.''
  In a series of recent articles, the Washington Post reported on 
flawed forensic work that may be responsible for the wrongful 
convictions in thousands of criminal cases. An April Post editorial 
urged the Justice Department to conduct a full review of all cases that 
ended in conviction, and a July 11 story reports that the Justice 
Department and the FBI have now launched such a review. The National 
Academy of Sciences, the Washington Post, the Innocence Project, and 
the National Association of Criminal Defense Lawyers, among others, 
have all called for strengthened forensic science and standards.
  The Forensic Science and Standards Act of 2012 responds to this call 
by promoting research. The bill would establish a National Forensic 
Science Coordinating Office, housed at the National Science Foundation, 
NSF, to develop a research strategy and roadmap and to support the 
implementation of that roadmap across relevant Federal agencies.
  NSF would establish a forensic science grant program to award funding 
in areas specifically identified by the research strategy. NSF would be 
directed to award two grants to create forensic science research 
centers to conduct research, build relationships with forensic 
practitioners, and educate students. All agencies with equities in 
forensic science would be encouraged to use prizes and challenges to 
stimulate innovative and creative solutions to satisfy the research 
needs and priorities identified in the research strategy.
  The bill requires standard development. The National Institute of 
Standards and Technology, NIST, would be directed to develop forensic 
science standards, in consultation with standards development 
organizations and other stakeholders. NIST could establish and solicit 
advice from discipline-specific expert working groups to identify 
standards development priorities and opportunities.
  The bill requires implementing uniform standards. To advise on the 
application of the new standards, a Forensic Science Advisory Committee 
chaired by the Director of NIST and the Attorney General would be 
established. The Advisory Committee, composed of research scientists, 
forensic science practitioners, and users from the legal and law 
enforcement communities, would make recommendations to the Attorney 
General on adoption of standards. The Attorney General would direct the 
standards' implementation in Federal forensic science laboratories and 
would encourage adoption in non-Federal laboratories as a condition of 
Federal funding or for inclusion in national databases.
  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. 3378

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Forensic 
     Science and Standards Act of 2012''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. National forensic science research program.
Sec. 5. Forensic science research grants program.
Sec. 6. Forensic science research challenges.
Sec. 7. Forensic science standards.
Sec. 8. Forensic science advisory committee.
Sec. 9. Adoption, accreditation, and certification.
Sec. 10. National Institute of Standards and Technology functions.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) at the direction of Congress, the National Academy of 
     Sciences led a comprehensive review of the state of forensic 
     science and issued its findings in a 2009 report, 
     ``Strengthening Forensic Science in the United States: A Path 
     Forward'';
       (2) the report's findings indicate the need for independent 
     scientific research to support the foundation of forensic 
     disciplines;
       (3) the report stresses the need for standards in methods, 
     data interpretation, and reporting, and the importance of 
     preventing cognitive bias and mitigating human factors; and
       (4) according to the report, forensic science research is 
     not financially well supported, and there is a need for a 
     unified strategy for developing a forensic science research 
     plan across Federal agencies.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Advisory committee.--The term ``Advisory Committee'' 
     means the Forensic Science Advisory Committee established 
     under section 8.
       (2) Coordinating office.--The term ``Coordinating Office'' 
     means the National Forensic Science Coordinating Office 
     established under section 4.
       (3) Forensic science.--
       (A) In general.--The term ``forensic science'' means the 
     basic and applied scientific research applicable to the 
     collection, evaluation, and analysis of physical evidence, 
     including digital evidence, for use in investigations and 
     legal proceedings, including all tests, methods, 
     measurements, and procedures.
       (B) Applied scientific research.--In subparagraph (A), the 
     term ``applied scientific research'' means a systematic study 
     to gain knowledge or understanding necessary to determine the 
     means by which a recognized and specific need may be met.
       (C) Basic scientific research.--In subparagraph (A), the 
     term ``basic scientific research'' means a systematic study 
     directed toward fuller knowledge or understanding of the 
     fundamental aspects of phenomena and of observable facts 
     without specific applications towards processes or products.
       (4) Standards development organization.--The term 
     ``standards development organization'' means a domestic or an 
     international organization that plans, develops, establishes, 
     or coordinates voluntary consensus standards using procedures 
     that incorporate openness, a balance of interests, consensus, 
     due process, and an appeals process.

     SEC. 4. NATIONAL FORENSIC SCIENCE RESEARCH PROGRAM.

       (a) Establishment.--There shall be a national forensic 
     science research program to improve, expand, and coordinate 
     Federal research in the forensic sciences.
       (b) National Academy of Sciences Report on Forensic 
     Science.--The Director of the National Science Foundation 
     shall contract

[[Page S4953]]

     with the National Academy of Sciences to develop, not later 
     than 180 days after the date of enactment of this Act, a 
     report that--
       (1) identifies the most critical forensic science 
     disciplines, which may include forensic pathology and digital 
     forensics, that require further research to strengthen the 
     scientific foundation in those disciplines; and
       (2) makes recommendations regarding research that will help 
     strengthen the scientific foundation in the forensic science 
     disciplines identified under paragraph (1).
       (c) National Forensic Science Coordinating Office.--
       (1) Establishment.--There is established a National 
     Forensic Science Coordinating Office, with a director and 
     full time staff, to be located at the National Science 
     Foundation. The Director of the Coordinating Office shall be 
     responsible for carrying out the provisions of this 
     subsection.
       (2) Unified federal research strategy.--The Coordinating 
     Office established under paragraph (1) shall coordinate among 
     relevant Federal departments, agencies, or offices--
       (A) the development of a unified Federal research strategy 
     that--
       (i) specifies and prioritizes the research necessary to 
     enhance the validity and reliability of the forensic science 
     disciplines; and
       (ii) is consistent with the recommendations in the National 
     Academy of Sciences report on forensic science under 
     subsection (b);
       (B) the development of a 5-year roadmap, updated 
     triennially thereafter, for the unified Federal research 
     strategy under subparagraph (A) that includes a description 
     of--
       (i) which department, agency, or office will carry out each 
     specific element of the unified Federal research strategy;
       (ii) short-term and long-term priorities and objectives; 
     and
       (iii) common metrics and other evaluation criteria that 
     will be used to assess progress toward achieving the 
     priorities and objectives under clause (ii); and
       (C) any necessary programs, policies, and budgets to 
     support the implementation of the roadmap under subparagraph 
     (B).
       (3) Additional duties.--The Coordinating Office shall--
       (A) evaluate annually the national forensic science 
     research program to determine whether it is achieving its 
     objectives; and
       (B) report annually to Congress the findings under 
     subparagraph (A).
       (4) Deadlines.--The Coordinating Office shall submit to 
     Congress--
       (A) not later than 1 year after the date of enactment of 
     this Act, the unified Federal research strategy under 
     paragraph (2)(A);
       (B) not later than 1 year after the date of enactment of 
     this Act, the initial 5-year roadmap under paragraph (2)(B); 
     and
       (C) not later than 1 month after the date it is updated, 
     each updated 5-year roadmap under paragraph (2)(B).

     SEC. 5. FORENSIC SCIENCE RESEARCH GRANTS PROGRAM.

       (a) Establishment.--Not later than 1 year after the date of 
     enactment of this Act, the National Science Foundation shall 
     establish a forensic science research grants program to 
     improve the foundation and practice of forensic science in 
     the United States based on the recommendations in the unified 
     Federal research strategy under section 4.
       (b) Merit Review.--Each grant under this section shall be 
     awarded on a merit-reviewed, competitive basis.
       (c) Publication.--The National Science Foundation shall 
     support, as appropriate, the publication of research results 
     under this section in scholarly, peer-reviewed scientific 
     journals.
       (d) Forensic Science Research Centers.--
       (1) In general.--As part of the forensic science research 
     grants program under subsection (a), the Director of the 
     National Science Foundation shall establish 2 forensic 
     science research centers--
       (A) to conduct research consistent with the unified Federal 
     research strategy under section 4;
       (B) to build relationships between forensic science 
     practitioners and members of the research community;
       (C) to encourage and promote the education and training of 
     a diverse group of people to be leaders in the 
     interdisciplinary field of forensic science; and
       (D) to broadly disseminate the results of the research 
     under subparagraph (A).
       (2) Terms of designation.--
       (A) In general.--The Director shall designate each forensic 
     science research center for a 4-year term.
       (B) Revocation.--The Director may revoke a designation 
     under subparagraph (A) if the Director determines that the 
     forensic science research center is not demonstrating 
     adequate performance.
       (C) Amount of award.--Subject to subsection (f), the 
     Director shall award a grant up to $10,000,000 to each 
     forensic science research center. A grant awarded under this 
     subparagraph shall be for a period of 4 years.
       (D) Limitation on use of funds.--No funds authorized under 
     this section may be used to construct or renovate a building 
     or structure.
       (3) Reports.--Each forensic science research center shall 
     submit an annual report to the Director, at such time and in 
     such manner as the Director may require, that contains a 
     description of the activities the center carried out with the 
     funds received under this subsection, including a description 
     of how those activities satisfy the requirement under 
     paragraph (2)(D).
       (e) Evaluation.--
       (1) In general.--The Director of the National Science 
     Foundation shall conduct a comprehensive evaluation of the 
     forensic science research grants program every 4 years--
       (A) to determine whether the program is achieving the 
     objectives of improving the foundation and practice of 
     forensic science in the United States; and
       (B) to evaluate the extent to which the program is 
     contributing toward the priorities and objectives described 
     in the roadmap under section 4(c)(2)(B).
       (2) Report to congress.--The Director of the National 
     Science Foundation shall report to Congress the results of 
     each comprehensive evaluation under paragraph (1).
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the National Science Foundation to 
     carry out this section--
       (1) $34,000,000 for fiscal year 2013;
       (2) $37,000,000 for fiscal year 2014;
       (3) $40,000,000 for fiscal year 2015;
       (4) $43,000,000 for fiscal year 2016; and
       (5) $46,000,000 for fiscal year 2017.

     SEC. 6. FORENSIC SCIENCE RESEARCH CHALLENGES.

       (a) Prizes and Challenges.--
       (1) In general.--A Federal department, agency, or office 
     may assist in satisfying the research needs and priorities 
     identified in the unified Federal research strategy under 
     section 4 by using prizes and challenges under the America 
     COMPETES Reauthorization Act (124 Stat. 3982) or under any 
     other provision of law, as appropriate.
       (2) Purposes.--The purpose of a prize or challenge under 
     this section, among other possible purposes, may be--
       (A) to determine or develop the best data collection 
     practices or analytical methods to evaluate a specific type 
     of forensic data; or
       (B) to determine the accuracy of an analytical method.
       (b) Forensic Evidence Prizes and Challenges.--
       (1) In general.--A Federal department, agency, or office, 
     or multiple Federal departments, agencies, or offices in 
     cooperation, carrying out a prize or challenge under this 
     section--
       (A) may establish a prize advisory board; and
       (B) shall select each member of the prize advisory board 
     with input from relevant Federal departments, agencies, or 
     offices.
       (2) Prize advisory board.--The prize advisory board shall--
       (A) identify 1 or more types of forensic evidence for 
     purposes of a prize or challenge;
       (B) using the samples under paragraph (3), recommend how to 
     structure a prize or challenge that requires a competitor to 
     develop a forensic data collection practice, an analytical 
     method, or a relevant approach or technology to be tested 
     relative to a known outcome or other proposed judging 
     methodology; and
       (C) through the Coordinating Office, advise relevant 
     Federal departments, agencies, or offices in designing prizes 
     or challenges that satisfy the research needs and priorities 
     identified in the unified Federal research strategy under 
     section 4.
       (3) Samples.--The National Institute of Standards and 
     Technology or the Department of Justice shall provide or 
     contract with a non-Federal party to prepare, for each type 
     of forensic evidence under paragraph (2)(A), a sufficient set 
     of samples, including associated digital data that could be 
     shared without limitation and physical specimens that could 
     be shared with qualified parties, for purposes of a prize or 
     challenge.
       (4) Fingerprint data interoperability.--At least 1 prize or 
     challenge under this section shall be focused on achieving 
     nationwide fingerprint data interoperability if the prize 
     advisory board, the Coordinating Office, or a Federal 
     department, agency, or office identifies an area where a 
     prize or challenge will assist in satisfying a strategy 
     related to this issue.

     SEC. 7. FORENSIC SCIENCE STANDARDS.

       (a) Establishment.--
       (1) In general.--The National Institute of Standards and 
     Technology shall--
       (A) identify or coordinate the development of forensic 
     science standards to enhance the validity and reliability of 
     forensic science activities, including--
       (i) authoritative methods, standards, and technical 
     guidance, including protocols and best practices, for 
     forensic measurements, analysis, and interpretation;
       (ii) technical standards for products and services used by 
     forensic science practitioners;
       (iii) standard content, terminology, and parameters to be 
     used in reporting and testifying on the results and 
     interpretation of forensic science measurements, tests, and 
     procedures; and
       (iv) standards to provide for the interoperability of 
     forensic science-related technology and databases;
       (B) test and validate existing forensics standards, as 
     appropriate; and
       (C) provide independent validation of forensic science 
     measurements and methods.
       (2) Consultation.--
       (A) In general.--In carrying out its responsibilities under 
     paragraph (1), the National Institute of Standards and 
     Technology shall consult with--
       (i) standards development organizations and other 
     stakeholders, including relevant

[[Page S4954]]

     Federal departments, agencies, and offices; and
       (ii) testing laboratories and accreditation bodies to 
     ensure that products and services meet necessary performance 
     levels.
       (3) Prioritization.--When prioritizing its responsibilities 
     under paragraph (1), the National Institute of Standards and 
     Technology shall consider--
       (A) the unified Federal research strategy under section 4; 
     and
       (B) the recommendations of any expert working group under 
     subsection (b).
       (4) Report to congress.--The Director of the National 
     Institute of Standards and Technology shall report annually, 
     with the President's budget request, to Congress on the 
     progress in carrying out the National Institute of Standards 
     and Technology's responsibilities under paragraph (1).
       (b) Expert Working Groups.--
       (1) In general.--The Director of the National Institute of 
     Standards and Technology may establish 1 or more discipline-
     specific expert working groups to identify gaps, areas of 
     need, and opportunities for standards development with 
     respect to forensic science.
       (2) Members.--A member of an expert working group shall--
       (A) be appointed by the Director of the National Institute 
     of Standards and Technology;
       (B) have significant academic, research, or practical 
     expertise in a discipline of forensic science or in another 
     area relevant to the purpose of the expert working group; and
       (C) balance scientific rigor with practical and regulatory 
     constraints.
       (3) Federal advisory committee act.--An expert working 
     group established under this subsection shall not be subject 
     to the Federal Advisory Committee Act (5 U.S.C. App.).
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the National Institute of Standards and 
     Technology to carry out this section--
       (1) $5,000,000 for fiscal year 2013;
       (2) $12,000,000 for fiscal year 2014;
       (3) $20,000,000 for fiscal year 2015;
       (4) $27,000,000 for fiscal year 2016; and
       (5) $35,000,000 for fiscal year 2017.

     SEC. 8. FORENSIC SCIENCE ADVISORY COMMITTEE.

       (a) Establishment.--The Director of the National Institute 
     of Standards and Technology and the Attorney General, in 
     collaboration with the Director of the National Science 
     Foundation, shall establish a Forensic Science Advisory 
     Committee.
       (b) Duties.--The Advisory Committee shall provide advice 
     to--
       (1) the Federal departments, agencies, and offices 
     implementing the unified Federal research strategy under 
     section 4;
       (2) the National Institute of Standards and Technology, 
     including recommendations regarding the National Institute of 
     Standards and Technology's responsibilities under section 7; 
     and
       (3) the Department of Justice, including recommendations 
     regarding the Department of Justice's responsibilities under 
     section 9.
       (c) Subcommittees.--The Advisory Committee may form 
     subcommittees related to specific disciplines in forensic 
     science or as necessary to further its duties under 
     subsection (b). A subcommittee may include an individual who 
     is not a member of the Advisory Committee.
       (d) Chairs.--The Director of the National Institute of 
     Standards and Technology and the Attorney General, or their 
     designees, shall co-chair the Advisory Committee.
       (e) Membership.--The Director of the National Institute of 
     Standards and Technology and the Attorney General, in 
     consultation with the Director of the National Science 
     Foundation, shall appoint each member of the Advisory 
     Committee. The Advisory Committee shall include balanced 
     representation between forensic science disciplines 
     (including academic scientists, statisticians, social 
     scientists, engineers, and representatives of other related 
     scientific disciplines) and relevant forensic science 
     applications (including Federal, State, and local 
     representatives of the forensic science community, the legal 
     community, victim advocate organizations, and law 
     enforcement).
       (f) Administration.--The Attorney General shall provide 
     administrative support to the Advisory Committee.
       (g) Federal Advisory Committee Act.--The Advisory Committee 
     established under this section shall not be subject to 
     section 14 of the Federal Advisory Committee Act (5 U.S.C. 
     App.).

     SEC. 9. ADOPTION, ACCREDITATION, AND CERTIFICATION.

       The Attorney General--
       (1) shall promote the adoption of forensic science 
     standards developed under section 7, including--
       (A) by requiring each Federal forensic laboratory to adopt 
     the forensic science standards;
       (B) by encouraging each non-Federal forensic laboratory to 
     adopt the forensic science standards;
       (C) by promoting accreditation and certification 
     requirements based on the forensic science standards; and
       (D) by promoting any recommendations made by the Advisory 
     Committee for adoption and implementation of forensic science 
     standards; and
       (2) may promote the adoption of the forensic science 
     standards as a condition of Federal funding or for inclusion 
     in national data sets.

     SEC. 10. NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY 
                   FUNCTIONS.

       Section 2(b) of the National Institute of Standards and 
     Technology Act (15 U.S.C. 272(b)) is amended--
       (1) in paragraph (12), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (13), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(14) to identify and coordinate the development of 
     forensic science standards to enhance the validity and 
     reliability of forensic science activities.''.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Franken, Mr. Harkin, Mr. 
        Whitehouse, and Mr. Brown of Ohio):
  S. 3381. A bill to amend title 11, United States Code, to improve 
protections for employees and retirees in business bankruptcies; to the 
Committee on the Judiciary.
  Mr. DURBIN. Mr. President, I 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. 3381

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Protecting 
     Employees and Retirees in Business Bankruptcies Act of 
     2012''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

        TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES

Sec. 101. Increased wage priority.
Sec. 102. Claim for stock value losses in defined contribution plans.
Sec. 103. Priority for severance pay.
Sec. 104. Financial returns for employees and retirees.
Sec. 105. Priority for WARN Act damages.

           TITLE II--REDUCING EMPLOYEES' AND RETIREES' LOSSES

Sec. 201. Rejection of collective bargaining agreements.
Sec. 202. Payment of insurance benefits to retired employees.
Sec. 203. Protection of employee benefits in a sale of assets.
Sec. 204. Claim for pension losses.
Sec. 205. Payments by secured lender.
Sec. 206. Preservation of jobs and benefits.
Sec. 207. Termination of exclusivity.
Sec. 208. Claim for withdrawal liability.

         TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

Sec. 301. Executive compensation upon exit from bankruptcy.
Sec. 302. Limitations on executive compensation enhancements.
Sec. 303. Assumption of executive benefit plans.
Sec. 304. Recovery of executive compensation.
Sec. 305. Preferential compensation transfer.

                       TITLE IV--OTHER PROVISIONS

Sec. 401. Union proof of claim.
Sec. 402. Exception from automatic stay.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) Business bankruptcies have increased sharply in recent 
     years and remain at high levels. These bankruptcies include 
     several of the largest business bankruptcy filings in 
     history. As the use of bankruptcy has expanded, job 
     preservation and retirement security are placed at greater 
     risk.
       (2) Laws enacted to improve recoveries for employees and 
     retirees and limit their losses in bankruptcy cases have not 
     kept pace with the increasing and broader use of bankruptcy 
     by businesses in all sectors of the economy. However, while 
     protections for employees and retirees in bankruptcy cases 
     have eroded, management compensation plans devised for those 
     in charge of troubled businesses have become more prevalent 
     and are escaping adequate scrutiny.
       (3) Changes in the law regarding these matters are urgently 
     needed as bankruptcy is used to address increasingly more 
     complex and diverse conditions affecting troubled businesses 
     and industries.

        TITLE I--IMPROVING RECOVERIES FOR EMPLOYEES AND RETIREES

     SEC. 101. INCREASED WAGE PRIORITY.

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

     SEC. 102. CLAIM FOR STOCK VALUE LOSSES IN DEFINED 
                   CONTRIBUTION PLANS.

       Section 101(5) of title 11, United States Code, is 
     amended--

[[Page S4955]]

       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by inserting ``or'' after the 
     semicolon; and
       (3) by adding at the end the following:
       ``(C) right or interest in equity securities of the debtor, 
     or an affiliate of the debtor, held in a defined contribution 
     plan (within the meaning of section 3(34) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1002(34))) 
     for the benefit of an individual who is not an insider, a 
     senior executive officer, or any of the 20 next most highly 
     compensated employees of the debtor (if 1 or more are not 
     insiders), if such securities were attributable to either 
     employer contributions by the debtor or an affiliate of the 
     debtor, or elective deferrals (within the meaning of section 
     402(g) of the Internal Revenue Code of 1986), and any 
     earnings thereon, if an employer or plan sponsor who has 
     commenced a case under this title has committed fraud with 
     respect to such plan or has otherwise breached a duty to the 
     participant that has proximately caused the loss of value.''.

     SEC. 103. PRIORITY FOR SEVERANCE PAY.

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

     SEC. 104. FINANCIAL RETURNS FOR EMPLOYEES AND RETIREES.

       Section 1129(a) of title 11, United States Code is 
     amended--
       (1) by adding at the end the following:
       ``(17) The plan provides for recovery of damages payable 
     for the rejection of a collective bargaining agreement, or 
     for other financial returns as negotiated by the debtor and 
     the authorized representative under section 1113 (to the 
     extent that such returns are paid under, rather than outside 
     of, a plan).''; and
       (2) by striking paragraph (13) and inserting the following:
       ``(13) With respect to retiree benefits, as that term is 
     defined in section 1114(a), the plan--
       ``(A) provides for the continuation after its effective 
     date of payment of all retiree benefits at the level 
     established pursuant to subsection (e)(1)(B) or (g) of 
     section 1114 at any time before the date of confirmation of 
     the plan, for the duration of the period for which the debtor 
     has obligated itself to provide such benefits, or if no 
     modifications are made before confirmation of the plan, the 
     continuation of all such retiree benefits maintained or 
     established in whole or in part by the debtor before the date 
     of the filing of the petition; and
       ``(B) provides for recovery of claims arising from the 
     modification of retiree benefits or for other financial 
     returns, as negotiated by the debtor and the authorized 
     representative (to the extent that such returns are paid 
     under, rather than outside of, a plan).''.

     SEC. 105. PRIORITY FOR WARN ACT DAMAGES.

       Section 503(b)(1)(A)(ii) of title 11, United States Code is 
     amended to read as follows:
       ``(ii) wages and benefits awarded pursuant to a judicial 
     proceeding or a proceeding of the National Labor Relations 
     Board as back pay or damages attributable to any period of 
     time occurring after the date of commencement of the case 
     under this title, as a result of a violation of Federal or 
     State law by the debtor, without regard to the time of the 
     occurrence of unlawful conduct on which the award is based or 
     to whether any services were rendered on or after the 
     commencement of the case, including an award by a court under 
     section 2901 of title 29, United States Code, of up to 60 
     days' pay and benefits following a layoff that occurred or 
     commenced at a time when such award period includes a period 
     on or after the commencement of the case, if the court 
     determines that payment of wages and benefits by reason of 
     the operation of this clause will not substantially increase 
     the probability of layoff or termination of current employees 
     or of nonpayment of domestic support obligations during the 
     case under this title.''.

           TITLE II--REDUCING EMPLOYEES' AND RETIREES' LOSSES

     SEC. 201. REJECTION OF COLLECTIVE BARGAINING AGREEMENTS.

       Section 1113 of title 11, United States Code, is amended by 
     striking subsections (a) through (f) and inserting the 
     following:
       ``(a) The debtor in possession, or the trustee if one has 
     been appointed under this chapter, other than a trustee in a 
     case covered by subchapter IV of this chapter and by title I 
     of the Railway Labor Act, may reject a collective bargaining 
     agreement only in accordance with this section. Hereinafter 
     in this section, a reference to the trustee includes a 
     reference to the debtor in possession.
       ``(b) No provision of this title shall be construed to 
     permit the trustee to unilaterally terminate or alter any 
     provision of a collective bargaining agreement before 
     complying with this section. The trustee shall timely pay all 
     monetary obligations arising under the terms of the 
     collective bargaining agreement. Any such payment required to 
     be made before a plan confirmed under section 1129 is 
     effective has the status of an allowed administrative expense 
     under section 503.
       ``(c)(1) If the trustee seeks modification of a collective 
     bargaining agreement, then the trustee shall provide notice 
     to the labor organization representing the employees covered 
     by the agreement that modifications are being proposed under 
     this section, and shall promptly provide an initial proposal 
     for modifications to the agreement. Thereafter, the trustee 
     shall confer in good faith with the labor organization, at 
     reasonable times and for a reasonable period in light of the 
     complexity of the case, in attempting to reach mutually 
     acceptable modifications of such agreement.
       ``(2) The initial proposal and subsequent proposals by the 
     trustee for modification of a collective bargaining agreement 
     shall be based upon a business plan for the reorganization of 
     the debtor, and shall reflect the most complete and reliable 
     information available. The trustee shall provide to the labor 
     organization all information that is relevant for 
     negotiations. The court may enter a protective order to 
     prevent the disclosure of information if disclosure could 
     compromise the debtor's position with respect to its 
     competitors in the industry, subject to the needs of the 
     labor organization to evaluate the trustee's proposals and 
     any application for rejection of the agreement or for interim 
     relief pursuant to this section.
       ``(3) In consideration of Federal policy encouraging the 
     practice and process of collective bargaining and in 
     recognition of the bargained-for expectations of the 
     employees covered by the agreement, modifications proposed by 
     the trustee--
       ``(A) shall be proposed only as part of a program of 
     workforce and nonworkforce cost savings devised for the 
     reorganization of the debtor, including savings in management 
     personnel costs;
       ``(B) shall be limited to modifications designed to achieve 
     a specified aggregate financial contribution for the 
     employees covered by the agreement (taking into consideration 
     any labor cost savings negotiated within the 12-month period 
     before the filing of the petition), and shall be not more 
     than the minimum savings essential to permit the debtor to 
     exit bankruptcy, such that confirmation of a plan of 
     reorganization is not likely to be followed by the 
     liquidation, or the need for further financial 
     reorganization, of the debtor (or any successor to the 
     debtor) in the short term; and
       ``(C) shall not be disproportionate or overly burden the 
     employees covered by the agreement, either in the amount of 
     the cost savings sought from such employees or the nature of 
     the modifications.
       ``(d)(1) If, after a period of negotiations, the trustee 
     and the labor organization have not reached an agreement over 
     mutually satisfactory modifications, and further negotiations 
     are not likely to produce mutually satisfactory 
     modifications, the trustee may file a motion seeking 
     rejection of the collective bargaining agreement after notice 
     and a hearing. Absent agreement of the parties, no such 
     hearing shall be held before the expiration of the 21-day 
     period beginning on the date on which notice of the hearing 
     is provided to the labor organization representing the 
     employees covered by the agreement. Only the debtor and the 
     labor organization may appear and be heard at such hearing. 
     An application for rejection shall seek rejection effective 
     upon the entry of an order granting the relief.
       ``(2) In consideration of Federal policy encouraging the 
     practice and process of collective bargaining and in 
     recognition of the bargained-for expectations of the 
     employees covered by the agreement, the court may grant a 
     motion seeking rejection of a collective bargaining agreement 
     only if, based on clear and convincing evidence--
       ``(A) the court finds that the trustee has complied with 
     the requirements of subsection (c);
       ``(B) the court has considered alternative proposals by the 
     labor organization and has concluded that such proposals do 
     not meet the requirements of paragraph (3)(B) of subsection 
     (c);
       ``(C) the court finds that further negotiations regarding 
     the trustee's proposal or an alternative proposal by the 
     labor organization are not likely to produce an agreement;
       ``(D) the court finds that implementation of the trustee's 
     proposal shall not--
       ``(i) cause a material diminution in the purchasing power 
     of the employees covered by the agreement;
       ``(ii) adversely affect the ability of the debtor to retain 
     an experienced and qualified workforce; or
       ``(iii) impair the debtor's labor relations such that the 
     ability to achieve a feasible reorganization would be 
     compromised; and
       ``(E) the court concludes that rejection of the agreement 
     and immediate implementation of the trustee's proposal is 
     essential to permit the debtor to exit bankruptcy, such that 
     confirmation of a plan of reorganization is not likely to be 
     followed by liquidation, or the need for further financial 
     reorganization, of the debtor (or any successor to the 
     debtor) in the short term.
       ``(3) If the trustee has implemented a program of incentive 
     pay, bonuses, or other financial returns for insiders, senior 
     executive officers, or the 20 next most highly compensated 
     employees or consultants providing services to the debtor 
     during the bankruptcy, or such a program was implemented

[[Page S4956]]

     within 180 days before the date of the filing of the 
     petition, the court shall presume that the trustee has failed 
     to satisfy the requirements of subsection (c)(3)(C).
       ``(4) In no case shall the court enter an order rejecting a 
     collective bargaining agreement that would result in 
     modifications to a level lower than the level proposed by the 
     trustee in the proposal found by the court to have complied 
     with the requirements of this section.
       ``(5) At any time after the date on which an order 
     rejecting a collective bargaining agreement is entered, or in 
     the case of an agreement entered into between the trustee and 
     the labor organization providing mutually satisfactory 
     modifications, at any time after such agreement has been 
     entered into, the labor organization may apply to the court 
     for an order seeking an increase in the level of wages or 
     benefits, or relief from working conditions, based upon 
     changed circumstances. The court shall grant the request only 
     if the increase or other relief is not inconsistent with the 
     standard set forth in paragraph (2)(E).
       ``(e) During a period in which a collective bargaining 
     agreement at issue under this section continues in effect, 
     and if essential to the continuation of the debtor's business 
     or in order to avoid irreparable damage to the estate, the 
     court, after notice and a hearing, may authorize the trustee 
     to implement interim changes in the terms, conditions, wages, 
     benefits, or work rules provided by the collective bargaining 
     agreement. Any hearing under this subsection shall be 
     scheduled in accordance with the needs of the trustee. The 
     implementation of such interim changes shall not render the 
     application for rejection moot.
       ``(f) Rejection of a collective bargaining agreement 
     constitutes a breach of the agreement, and shall be effective 
     no earlier than the entry of an order granting such relief. 
     Notwithstanding the foregoing, solely for purposes of 
     determining and allowing a claim arising from the rejection 
     of a collective bargaining agreement, rejection shall be 
     treated as rejection of an executory contract under section 
     365(g) and shall be allowed or disallowed in accordance with 
     section 502(g)(1). No claim for rejection damages shall be 
     limited by section 502(b)(7). Economic self-help by a labor 
     organization shall be permitted upon a court order granting a 
     motion to reject a collective bargaining agreement under 
     subsection (d) or pursuant to subsection (e), and no 
     provision of this title or of any other provision of Federal 
     or State law may be construed to the contrary.
       ``(g) The trustee shall provide for the reasonable fees and 
     costs incurred by a labor organization under this section, 
     upon request and after notice and a hearing.
       ``(h) A collective bargaining agreement that is assumed 
     shall be assumed in accordance with section 365.''.

     SEC. 202. PAYMENT OF INSURANCE BENEFITS TO RETIRED EMPLOYEES.

       Section 1114 of title 11, United States Code, is amended--
       (1) in subsection (a), by inserting ``, whether or not the 
     debtor asserts a right to unilaterally modify such payments 
     under such plan, fund, or program'' before the period at the 
     end;
       (2) in subsection (b)(2), by inserting after ``section'' 
     the following: ``, and a labor organization serving as the 
     authorized representative under subsection (c)(1),'';
       (3) in subsection (f), by striking ``(f)'' and all that 
     follows through paragraph (2) and inserting the following:
       ``(f)(1) If a trustee seeks modification of retiree 
     benefits, then the trustee shall provide a notice to the 
     authorized representative that modifications are being 
     proposed pursuant to this section, and shall promptly provide 
     an initial proposal. Thereafter, the trustee shall confer in 
     good faith with the authorized representative at reasonable 
     times and for a reasonable period in light of the complexity 
     of the case in attempting to reach mutually satisfactory 
     modifications.
       ``(2) The initial proposal and subsequent proposals by the 
     trustee shall be based upon a business plan for the 
     reorganization of the debtor and shall reflect the most 
     complete and reliable information available. The trustee 
     shall provide to the authorized representative all 
     information that is relevant for the negotiations. The court 
     may enter a protective order to prevent the disclosure of 
     information if disclosure could compromise the debtor's 
     position with respect to its competitors in the industry, 
     subject to the needs of the authorized representative to 
     evaluate the trustee's proposals and an application pursuant 
     to subsection (g) or (h).
       ``(3) Modifications proposed by the trustee--
       ``(A) shall be proposed only as part of a program of 
     workforce and nonworkforce cost savings devised for the 
     reorganization of the debtor, including savings in management 
     personnel costs;
       ``(B) shall be limited to modifications that are designed 
     to achieve a specified aggregate financial contribution for 
     the retiree group represented by the authorized 
     representative (taking into consideration any cost savings 
     implemented within the 12-month period before the date of 
     filing of the petition with respect to the retiree group), 
     and shall be no more than the minimum savings essential to 
     permit the debtor to exit bankruptcy, such that confirmation 
     of a plan of reorganization is not likely to be followed by 
     the liquidation, or the need for further financial 
     reorganization, of the debtor (or any successor to the 
     debtor) in the short term; and
       ``(C) shall not be disproportionate or overly burden the 
     retiree group, either in the amount of the cost savings 
     sought from such group or the nature of the modifications.'';
       (4) in subsection (g)--
       (A) by striking ``(g)'' and all that follows through the 
     semicolon at the end of paragraph (3) and inserting the 
     following:
       ``(g)(1) If, after a period of negotiations, the trustee 
     and the authorized representative have not reached agreement 
     over mutually satisfactory modifications and further 
     negotiations are not likely to produce mutually satisfactory 
     modifications, then the trustee may file a motion seeking 
     modifications in the payment of retiree benefits after notice 
     and a hearing. Absent agreement of the parties, no such 
     hearing shall be held before the expiration of the 21-day 
     period beginning on the date on which notice of the hearing 
     is provided to the authorized representative. Only the debtor 
     and the authorized representative may appear and be heard at 
     such hearing.
       ``(2) The court may grant a motion to modify the payment of 
     retiree benefits only if, based on clear and convincing 
     evidence--
       ``(A) the court finds that the trustee has complied with 
     the requirements of subsection (f);
       ``(B) the court has considered alternative proposals by the 
     authorized representative and has determined that such 
     proposals do not meet the requirements of subsection 
     (f)(3)(B);
       ``(C) the court finds that further negotiations regarding 
     the trustee's proposal or an alternative proposal by the 
     authorized representative are not likely to produce a 
     mutually satisfactory agreement;
       ``(D) the court finds that implementation of the proposal 
     shall not cause irreparable harm to the affected retirees; 
     and
       ``(E) the court concludes that an order granting the motion 
     and immediate implementation of the trustee's proposal is 
     essential to permit the debtor to exit bankruptcy, such that 
     confirmation of a plan of reorganization is not likely to be 
     followed by liquidation, or the need for further financial 
     reorganization, of the debtor (or a successor to the debtor) 
     in the short term.
       ``(3) If a trustee has implemented a program of incentive 
     pay, bonuses, or other financial returns for insiders, senior 
     executive officers, or the 20 next most highly-compensated 
     employees or consultants providing services to the debtor 
     during the bankruptcy, or such a program was implemented 
     within 180 days before the date of the filing of the 
     petition, the court shall presume that the trustee has failed 
     to satisfy the requirements of subparagraph (f)(3)(C).''; and
       (B) by striking ``except that in no case'' and inserting 
     the following:
       ``(4) In no case''; and
       (5) by striking subsection (k) and redesignating 
     subsections (l) and (m) as subsections (k) and (l), 
     respectively.

     SEC. 203. PROTECTION OF EMPLOYEE BENEFITS IN A SALE OF 
                   ASSETS.

       Section 363(b) of title 11, United States Code, is amended 
     by adding at the end the following:
       ``(3) In approving a sale under this subsection, the court 
     shall consider the extent to which a bidder has offered to 
     maintain existing jobs, preserve terms and conditions of 
     employment, and assume or match pension and retiree health 
     benefit obligations in determining whether an offer 
     constitutes the highest or best offer for such property.''.

     SEC. 204. CLAIM FOR PENSION LOSSES.

       Section 502 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(l) The court shall allow a claim asserted by an active 
     or retired participant, or by a labor organization 
     representing such participants, in a defined benefit plan 
     terminated under section 4041 or 4042 of the Employee 
     Retirement Income Security Act of 1974, for any shortfall in 
     pension benefits accrued as of the effective date of the 
     termination of such pension plan as a result of the 
     termination of the plan and limitations upon the payment of 
     benefits imposed pursuant to section 4022 of such Act, 
     notwithstanding any claim asserted and collected by the 
     Pension Benefit Guaranty Corporation with respect to such 
     termination.
       ``(m) The court shall allow a claim of a kind described in 
     section 101(5)(C) by an active or retired participant in a 
     defined contribution plan (within the meaning of section 
     3(34) of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1002(34))), or by a labor organization 
     representing such participants. The amount of such claim 
     shall be measured by the market value of the stock at the 
     time of contribution to, or purchase by, the plan and the 
     value as of the commencement of the case.''.

     SEC. 205. PAYMENTS BY SECURED LENDER.

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

     SEC. 206. PRESERVATION OF JOBS AND BENEFITS.

       Title 11, United States Code, is amended--

[[Page S4957]]

       (1) by inserting before section 1101 the following:

     ``SEC. 1100. STATEMENT OF PURPOSE.

       ``A debtor commencing a case under this chapter shall have 
     as its principal purpose the reorganization of its business 
     to preserve going concern value to the maximum extent 
     possible through the productive use of its assets and the 
     preservation of jobs that will sustain productive economic 
     activity.'';
       (2) in section 1129(a), as amended by section 104, by 
     adding at the end the following:
       ``(18) The debtor has demonstrated that the reorganization 
     preserves going concern value to the maximum extent possible 
     through the productive use of the debtor's assets and 
     preserves jobs that sustain productive economic activity.'';
       (3) in section 1129(c), by striking the last sentence and 
     inserting the following: ``If the requirements of subsections 
     (a) and (b) are met with respect to more than 1 plan, the 
     court shall, in determining which plan to confirm--
       ``(1) consider the extent to which each plan would preserve 
     going concern value through the productive use of the 
     debtor's assets and the preservation of jobs that sustain 
     productive economic activity; and
       ``(2) confirm the plan that better serves such interests.

     A plan that incorporates the terms of a settlement with a 
     labor organization representing employees of the debtor shall 
     presumptively constitute the plan that satisfies this 
     subsection.''; and
       (4) in the table of sections for chapter 11, by inserting 
     the following before the item relating to section 1101:

``1100. Statement of purpose.''.

     SEC. 207. TERMINATION OF EXCLUSIVITY.

       Section 1121(d) of title 11, United States Code, is amended 
     by adding at the end the following:
       ``(3) For purposes of this subsection, cause for reducing 
     the 120-day period or the 180-day period includes the 
     following:
       ``(A) The filing of a motion pursuant to section 1113 
     seeking rejection of a collective bargaining agreement if a 
     plan based upon an alternative proposal by the labor 
     organization is reasonably likely to be confirmed within a 
     reasonable time.
       ``(B) The proposed filing of a plan by a proponent other 
     than the debtor, which incorporates the terms of a settlement 
     with a labor organization if such plan is reasonably likely 
     to be confirmed within a reasonable time.''.

     SEC. 208. CLAIM FOR WITHDRAWAL LIABILITY.

       Section 503(b) of title 11, United States Code, as amended 
     by section 103 of this Act, is amended by adding at the end 
     the following:
       ``(11) with respect to withdrawal liability owed to a 
     multiemployer pension plan for a complete or partial 
     withdrawal pursuant to section 4201 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1381) where 
     such withdrawal occurs on or after the commencement of the 
     case, an amount equal to the amount of vested benefits 
     payable from such pension plan that accrued as a result of 
     employees' services rendered to the debtor during the period 
     beginning on the date of commencement of the case and ending 
     on the date of the withdrawal from the plan.''.

         TITLE III--RESTRICTING EXECUTIVE COMPENSATION PROGRAMS

     SEC. 301. EXECUTIVE COMPENSATION UPON EXIT FROM BANKRUPTCY.

       Section 1129(a) of title 11, United States Code, is 
     amended--
       (1) in paragraph (4), by adding at the end the following: 
     ``Except for compensation subject to review under paragraph 
     (5), payments or other distributions under the plan to or for 
     the benefit of insiders, senior executive officers, and any 
     of the 20 next most highly compensated employees or 
     consultants providing services to the debtor, shall not be 
     approved except as part of a program of payments or 
     distributions generally applicable to employees of the 
     debtor, and only to the extent that the court determines that 
     such payments are not excessive or disproportionate compared 
     to distributions to the debtor's nonmanagement workforce.''; 
     and
       (2) in paragraph (5)--
       (A) in subparagraph (A)(ii), by striking ``and'' at the 
     end; and
       (B) in subparagraph (B), by striking the period at the end 
     and inserting the following: ``; and
       ``(C) the compensation disclosed pursuant to subparagraph 
     (B) has been approved by, or is subject to the approval of, 
     the court as reasonable when compared to individuals holding 
     comparable positions at comparable companies in the same 
     industry and not disproportionate in light of economic 
     concessions by the debtor's nonmanagement workforce during 
     the case.''.

     SEC. 302. LIMITATIONS ON EXECUTIVE COMPENSATION ENHANCEMENTS.

       Section 503(c) of title 11, United States Code, is 
     amended--
       (1) in paragraph (1)--
       (A) by inserting ``, a senior executive officer, or any of 
     the 20 next most highly compensated employees or 
     consultants'' after ``an insider'';
       (B) by inserting ``or for the payment of performance or 
     incentive compensation, or a bonus of any kind, or other 
     financial returns designed to replace or enhance incentive, 
     stock, or other compensation in effect before the date of the 
     commencement of the case,'' after ``remain with the debtor's 
     business,''; and
       (C) by inserting ``clear and convincing'' before ``evidence 
     in the record''; and
       (2) by amending paragraph (3) to read as follows:
       ``(3) other transfers or obligations, to or for the benefit 
     of insiders, senior executive officers, managers, or 
     consultants providing services to the debtor, in the absence 
     of a finding by the court, based upon clear and convincing 
     evidence, and without deference to the debtor's request for 
     such payments, that such transfers or obligations are 
     essential to the survival of the debtor's business or (in the 
     case of a liquidation of some or all of the debtor's assets) 
     essential to the orderly liquidation and maximization of 
     value of the assets of the debtor, in either case, because of 
     the essential nature of the services provided, and then only 
     to the extent that the court finds such transfers or 
     obligations are reasonable compared to individuals holding 
     comparable positions at comparable companies in the same 
     industry and not disproportionate in light of economic 
     concessions by the debtor's nonmanagement workforce during 
     the case.''.

     SEC. 303. ASSUMPTION OF EXECUTIVE BENEFIT PLANS.

       Section 365 of title 11, United States Code, is amended--
       (1) in subsection (a), by striking ``and (d)'' and 
     inserting ``(d), (q), and (r)''; and
       (2) by adding at the end the following:
       ``(q) No deferred compensation arrangement for the benefit 
     of insiders, senior executive officers, or any of the 20 next 
     most highly compensated employees of the debtor shall be 
     assumed if a defined benefit plan for employees of the debtor 
     has been terminated pursuant to section 4041 or 4042 of the 
     Employee Retirement Income Security Act of 1974, on or after 
     the date of the commencement of the case or within 180 days 
     before the date of the commencement of the case.
       ``(r) No plan, fund, program, or contract to provide 
     retiree benefits for insiders, senior executive officers, or 
     any of the 20 next most highly compensated employees of the 
     debtor shall be assumed if the debtor has obtained relief 
     under subsection (g) or (h) of section 1114 to impose 
     reductions in retiree benefits or under subsection (d) or (e) 
     of section 1113 to impose reductions in the health benefits 
     of active employees of the debtor, or reduced or eliminated 
     health benefits for active or retired employees within 180 
     days before the date of the commencement of the case.''.

     SEC. 304. RECOVERY OF EXECUTIVE COMPENSATION.

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

     ``SEC. 563. RECOVERY OF EXECUTIVE COMPENSATION.

       ``(a) If a debtor has obtained relief under subsection (d) 
     of section 1113, or subsection (g) of section 1114, by which 
     the debtor reduces the cost of its obligations under a 
     collective bargaining agreement or a plan, fund, or program 
     for retiree benefits as defined in section 1114(a), the 
     court, in granting relief, shall determine the percentage 
     diminution in the value of the obligations when compared to 
     the debtor's obligations under the collective bargaining 
     agreement, or with respect to retiree benefits, as of the 
     date of the commencement of the case under this title before 
     granting such relief. In making its determination, the court 
     shall include reductions in benefits, if any, as a result of 
     the termination pursuant to section 4041 or 4042 of the 
     Employee Retirement Income Security Act of 1974, of a defined 
     benefit plan administered by the debtor, or for which the 
     debtor is a contributing employer, effective at any time on 
     or after 180 days before the date of the commencement of a 
     case under this title. The court shall not take into account 
     pension benefits paid or payable under of such Act as a 
     result of any such termination.
       ``(b) If a defined benefit pension plan administered by the 
     debtor, or for which the debtor is a contributing employer, 
     has been terminated pursuant to section 4041 or 4042 of the 
     Employee Retirement Income Security Act of 1974, effective at 
     any time on or after 180 days before the date of the 
     commencement of a case under this title, but a debtor has not 
     obtained relief under subsection (d) of section 1113, or 
     subsection (g) of section 1114, then the court, upon motion 
     of a party in interest, shall determine the percentage 
     diminution in the value of benefit obligations when compared 
     to the total benefit liabilities before such termination. The 
     court shall not take into account pension benefits paid or 
     payable under title IV of the Employee Retirement Income 
     Security Act of 1974 as a result of any such termination.
       ``(c) Upon the determination of the percentage diminution 
     in value under subsection (a) or (b), the estate shall have a 
     claim for the return of the same percentage of the 
     compensation paid, directly or indirectly (including any 
     transfer to a self-settled trust or similar device, or to a 
     nonqualified deferred compensation plan under section 
     409A(d)(1) of the Internal Revenue Code of 1986) to any 
     officer of the debtor serving as member of the board of 
     directors of the debtor within the year before the date of 
     the commencement of the case, and any individual serving as 
     chairman or lead director of the board of directors at the 
     time of the granting of relief under section 1113 or 1114 or, 
     if no such relief has been granted, the termination of the 
     defined benefit plan.
       ``(d) The trustee or a committee appointed pursuant to 
     section 1102 may commence an

[[Page S4958]]

     action to recover such claims, except that if neither the 
     trustee nor such committee commences an action to recover 
     such claim by the first date set for the hearing on the 
     confirmation of plan under section 1129, any party in 
     interest may apply to the court for authority to recover such 
     claim for the benefit of the estate. The costs of recovery 
     shall be borne by the estate.
       ``(e) The court shall not award postpetition compensation 
     under section 503(c) or otherwise to any person subject to 
     subsection (c) if there is a reasonable likelihood that such 
     compensation is intended to reimburse or replace compensation 
     recovered by the estate under this section.''.

     SEC. 305. PREFERENTIAL COMPENSATION TRANSFER.

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

                       TITLE IV--OTHER PROVISIONS

     SEC. 401. UNION PROOF OF CLAIM.

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

     SEC. 402. EXCEPTION FROM AUTOMATIC STAY.

       Section 362(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (27), by striking ``and'' at the end;
       (2) in paragraph (28), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(29) of the commencement or continuation of a grievance, 
     arbitration, or similar dispute resolution proceeding 
     established by a collective bargaining agreement that was or 
     could have been commenced against the debtor before the 
     filing of a case under this title, or the payment or 
     enforcement of an award or settlement under such 
     proceeding.''.
                                 ______
                                 
      By Mr. GRASSLEY (for himself, Mr. Kyl, Mr. Cornyn, Mr. Lee, Mr. 
        Paul, and Mr. Coburn):
  S. 3382. A bill to impose certain limitations on consent decrees and 
settlement agreements by agencies that require the agencies to take 
regulatory action in accordance with the terms thereof, and for other 
purposes; to the Committee on the Judiciary.
  Mr. GRASSLEY. Mr. President, I rise today to introduce important 
regulatory reform legislation.
  Recently, when describing the state of our economy, President Obama 
said that the private sector was ``doing fine.''
  I disagree. I think that the American people disagree with the 
President's statement.
  There are 12.7 million Americans unemployed and another 8.2 million 
underemployed. 5.4 million Americans have been unemployed for 27 weeks 
or more.
  That's not ``doing fine.''
  The Federal Government needs to do everything possible to create an 
environment that will allow private sector employers to create jobs. To 
accomplish that, common sense would tell us that the government needs 
to remove barriers to job creation rather than erect new ones. The 
Federal Government needs to listen to employers so it can learn from 
them exactly what it can do to help.
  Unfortunately, the Obama administration hasn't listened. In fact, 
unbelievably it is actually doing the opposite of what employers are 
saying they need.
  Employers are saying that they need relief from job killing 
regulations.
  For example, according to a Gallup survey, small-business owners in 
the United States are most likely to say that complying with government 
regulations is the biggest problem facing them today.
  Indeed, the burden of regulations is overwhelming. Recently, the 
Small Business Administration estimated that the Federal regulatory 
burden has reached $1.75 trillion per year.
  So what has the Obama administration's response been?
  It is planning to increase the number of regulations.
  The Obama administration's regulatory agenda has thousands of 
regulations in its production line, more than a hundred of which will 
have a major impact on the economy. Those are on top of more than one 
thousand regulations already completed.
  I am sorry to say that the news gets even worse. On top of the 
thousands of new regulations it to impose, it appears that the 
administration is trying to get around the procedures governing how 
regulations are enacted.
  In recent years, consent decrees and settlement agreements have been 
used to circumvent the laws and procedures that govern how regulations 
are enacted and to speed up the process in ways that limit the public's 
ability to fully participate and to exercise the rights guaranteed by 
our laws.
  These consent decrees or settlement agreements may come as a surprise 
to the regulated industry and the public. They usually establish 
truncated deadlines for the agency to promulgate a regulation.
  The lack of advance notice and the expedited schedule for the 
proposal and promulgation of regulations allows an agency to avoid the 
input that comes with meaningful public participation. It may also 
allow agencies to short-circuit the analytical requirements of 
regulatory process statutes, such as the Administrative Procedure Act. 
Expedited deadlines further allow agencies to undercut the review of 
proposed regulations by the Office of Management and Budget's Office of 
Information and Regulatory Affairs OIRA.
  The practice of using consent decrees and settlement agreements to 
enact regulations has become known as ``sue-and-settle'' litigation.
  The dangers of sue-and-settle litigation and of government by consent 
decree are not a new problem.
  Nearly 30 years ago, Judge Malcom Wilkey of the D.C. Circuit warned 
about the dangers of collusive consent decrees. In his dissenting 
opinion in Citizens for a Better Environment v. Gorsuch, Judge Wilkey 
explained:

       Government by consent decree enshrines at its very center 
     those special interest groups who are party to the decree. 
     They stand in a strong tactical position to oppose changing 
     the decree, and so likely will enjoy material influence on 
     proposed changes in agency policy.
       As a policy device, then, government by consent decree 
     serves no necessary end. It opens the door to unforeseeable 
     mischief; it degrades the institutions of representative 
     democracy and augments the power of special interest groups. 
     It does all of this in a society that hardly needs new 
     devices that emasculate representative democracy and 
     strengthen the power of special interests.

  Because the Obama administration is trying to dramatically increase 
the number of regulations, we must make sure that the laws and 
procedures governing rulemaking are followed and followed in a 
meaningful way.
  The debate about sue-and-settle litigation is important because it 
raises questions about fairness, transparency and public participation 
in administrative rulemaking. It also raises the issue of whether 
meaningful judicial review is taking place.
  Under the Administrative Procedure Act and other laws, the public and 
affected persons, in particular, have a right to adequate notice and an 
opportunity to comment on a proposed regulation. They also have a right 
to have their comments fully considered.
  However, when sue-and-settle litigation is used real, public 
participation is effectively eliminated.
  Generally speaking, the agreement on how to regulate is reached 
without the full input of the people and businesses that are affected. 
Discussions are held and agreements may be reached between government 
officials and special interest groups outside the public process. This 
is particularly true where career employees and political appointees at 
agencies share the agenda of the special interest group suing the 
agency and use the lawsuit as an opportunity to implement their common 
goals.
  Also, the negotiated deadlines for creating the new regulation can be 
so accelerated that the public's comments might receive little or no 
true consideration.
  Keep in mind that these regulations often involve complex scientific 
and

[[Page S4959]]

economic issues. Those issues cannot generally be fully and properly 
considered under a truncated time frame.
  Another fundamental aspect of rulemaking is the opportunity to 
challenge a decision by participating as an intervenor. However, with 
sue-and-settle litigation, special interest groups and the government 
may reach an agreement before a lawsuit is even filed. This eliminates 
the opportunity for members of the public to intervene in the case to 
protect their interests.
  Even where a settlement occurs after affected parties may have been 
granted intervention, these parties have little or no chance to 
participate in settlement discussions because they are not invited by 
the government and the special interest groups.
  Moreover, when an agency creates a regulation through sue-and-settle 
litigation, it reorganizes its work by promising to take specific 
actions at specific times, before or instead of other projects that may 
be of greater benefit to the public.
  Also, sue-and-settle litigation helps officials and administrations 
to avoid accountability. Instead of having to answer to the public for 
controversial regulations and policy decisions, officials are able to 
point to a court order and maintain that they were required or forced 
to promulgate a controversial regulation.
  The case of American Nurses Association v. Jackson is an example of 
the sue-and-settle phenomenon.
  In that case, a group of environmental organizations sued the 
Environmental Protection Agency, EPA, in December 2008, challenging the 
agency's failure to create emissions standards for pollutants from 
power plants under the Clean Air Act. Subsequently, the Utility Air 
Regulatory Group, UARG, representing the utility industry, intervened 
as a defendant in the case.
  On October 22, 2009, the plaintiffs and the EPA filed a proposed 
consent decree. It was the result of a deal struck exclusively between 
them. They did not include the UARG in their discussions. Although the 
judge expressed concerns about the exclusion of the UARG from the 
settlement discussions, she was satisfied when the plaintiffs and the 
EPA informed her that this practice was the ``norm.''
  Under the consent decree, the EPA conceded that it had failed to 
perform a mandatory duty under the Clean Air Act by failing to issue a 
``maximum achievable control technology'', MACT, regulation for power 
plants. The EPA pledged that it would issue a proposed regulation by 
March 16, 2011 and a final regulation by November 16, 2011.
  The UARG objected to the consent decree. It argued that the proposed 
decree improperly limited the government's discretion because it 
required the EPA to find that standards under 112(d) of the Clean Air 
Act were required. Consequently, the decree prevented the agency from 
either declining to issue standards or adopting other standards instead 
of the more burdensome MACT standard.
  Although acknowledging the significance of the UARG's arguments, the 
judge nevertheless rejected them in its short opinion approving the 
consent decree.
  As to the language limiting the EPA's discretion in the rulemaking, 
the judge stated that the EPA believed itself to be obligated to 
promulgate 112(d) standards and, ``and by entering this consent decree 
the Court [wa]s only accepting the parties' agreement to settle, not 
adjudicating whether EPA's legal position [wa]s correct.'' The judge 
simply believed that ``[i]f necessary, [the] UARG c[ould] challenge 
[the] EPA's final rule and its legal position.''
  With regard to the UARG's argument that the time frame within which 
the EPA proposed to carry out the rulemaking was insufficient, the 
judge noted that she ``appreciate[d]'' the concern that the schedule 
was too short for the critical and expensive regulatory decisions that 
would be made. Nevertheless, she held that it was enough that the 
proposed consent decree allowed for a change of the schedule if needed.
  The judge's reasoning on this point was interesting given that she 
acknowledged in a footnote that under the consent decree, the UARG 
could not petition for an extension of the deadlines.
  In the end, the judge acknowledged that the concerns raised by the 
UARG were not insubstantial. However, she did not believe that she 
could gauge the adequacy, or lack thereof, of the schedule. 
Consequently, in a somewhat cavalier manner the judge concluded that: 
``[s]hould haste make waste, the resulting regulations will be subject 
to successful challenge''. . . . If EPA needs more time to get it 
right, it can seek more time.''
  Unfortunately, it appears that the EPA's proposed regulation 
contained significant errors. Indeed, the EPA did not analyze the 
impact of its regulation on electric reliability or provide sufficient 
time for industry to do so.
  In November of 2011, the UARG brought its concerns to the judge, 
asking for relief from the consent decree.
  In particular, it argued that more time was needed to respond to the 
voluminous comments submitted during the rulemaking process, to fix the 
serious flaws, and to then more carefully consider the promulgation of 
a rule with such serious and far-reaching consequences. For example, 
the schedule under the consent decree only allowed 104 days for the EPA 
to consider and respond to 20,000 unique, public comments received 
before it published the final rule. In total, there were 960,000 
comments submitted.
  The UARG's motion was supported by twenty-four states and Governor 
Terry Branstad on behalf of the people of Iowa. As part of their amicus 
brief, they pointed out that the American Coalition for Clean Coal 
Electricity, ACCCE, had estimated that the rule promulgated under the 
consent decree would result in the loss of 1.44 million jobs in the 
United States between 2013 and 2020. Because of the rule, the ACCCE 
also predicts national electricity price increases in 2016 to average 
11.5 percent, with an increase of 23.5 percent in some regions.
  The EPA issued a final rule on December 21, 2011, and has argued that 
the UARG's motion is moot.
  As it stands, the rule is among the most costly of rules ever 
promulgated by the EPA with the agency estimating that the annualized 
cost at $9.6 billion in 2015. Industry estimates are even higher. 
Petitions for reconsideration of the rule are pending and more lawsuits 
are likely.
  The EPA could have done it right the first time by crafting a 
sensible, workable rule that both protects the environment and can be 
implemented without causing unnecessary job losses or higher 
electricity prices for hard-working families. Instead, we have flawed, 
controversial regulation that may have to be rewritten.
  Although we don't know how this will all turn out, we have to 
remember that the process by which this rule was created was the 
product of a consent decree.
  In sum, when special interest groups and agencies engage in sue-and-
settle litigation, the end product is a regulation that implements the 
priorities of the special interest groups. Moreover, these regulations 
are created under schedules that render notice-and-comment rights a 
mere formality, eliminating the opportunities for regulated entities, 
the public and the OIRA to have any input on the content of final 
regulations.
  That is why I'm introducing the Sunshine for Regulatory Decrees and 
Settlements Act of 2012. Senators Kyl, Cornyn, Coburn, Lee and Paul are 
cosponsors of the bill.
  Representative Benjamin Quayle of Arizona has introduced a companion 
bill in the House.
  The Sunshine bill endeavors to solve the problems I have outlined. It 
does this by enacting reasonable pro-transparency measures. I'll just 
outline a few of those measures.
  First, the Sunshine bill provides for greater transparency, requiring 
agencies publicly to post and report to Congress information on sue-
and-settle complaints, decrees and settlements.
  Second, the bill prohibits same-day filing of complaints and pre-
negotiated consent decrees and settlement agreements in cases seeking 
to compel agency action. Instead, it requires that consent decrees and 
settlement agreements be filed only after interested parties have been 
able to intervene in the litigation and join settlement negotiations 
and only after any proposed decree or settlement has been published for 
notice and comment.

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  Third, the Sunshine bill requires courts considering whether to 
approve proposed consent decrees and settlement agreements to account 
for public comments and compliance with regulatory process statutes and 
executive orders. This bill would facilitate public participation by 
allowing comment on any issue related to the matters alleged in the 
complaint or addressed in the proposed agreement. Government agencies 
would be required to respond to comments, and the court would assess 
whether the proposed schedule allows sufficient time for real and 
meaningful, public comment on the regulation.
  Fourth, the bill requires the Attorney General or, where appropriate, 
the defendant agency's head, to certify to the court that he or she has 
approved any proposed consent decree or settlement agreement that 
includes terms that: convert into a duty a discretionary authority of 
an agency to propose, promulgate, revise, or amend regulations, commit 
an agency to expend funds that have not been appropriated and budgeted, 
commit an agency to seek a particular appropriation or budget 
authorization, divest an agency of discretion committed to it by 
statute or the Constitution, or otherwise afford any relief that the 
court could not enter under its own authority.
  Finally, the Sunshine bill makes it easier for succeeding 
administrations to successfully move the courts for modifications of a 
prior administration's consent decrees by providing for de novo review 
of motions to modify if the circumstances have changed.
  Sue-and-settle litigation damages the transparency, public 
participation and judicial review protections Congress has guaranteed 
for all of our citizens in the rulemaking process.
  Regulations are laws. The procedure and process used to create them 
are important. They are part of our system. The American system of 
lawmaking and judicial review is a model for the world. Our system 
should not be distorted or manipulated.
  Regulations must be made in the open, through the procedures and 
processes established under our laws.
  The Sunshine for Regulatory Decrees and Settlements Act will help to 
ensure that established and well-grounded protections remain in place, 
while maintaining the government's ability to enter into consent 
decrees and settlement agreements, when appropriate.
  I urge all of my colleagues to work with me and to support this 
legislation.

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