[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[Senate]
[Pages 1705-1740]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. LEAHY (for himself, Mr. Torricelli, Mr. DeWine, Mr. 
        Jeffords, Mr. Kennedy, Mr. Harkin, Ms. Mikulski, Mr. Levin, Mr. 
        Kerry, Mrs. Murray, Mrs. Boxer, and Mr. Sarbanes):
  S. 333. A bill to amend the Federal Agriculture Improvement and 
Reform Act of 1996 to improve the farmland protection program; to the 
Committee on Agriculture, Nutrition, and Forestry.


       federal agriculture improvement and reform act amendments

  Mr. LEAHY. Mr. President, I am pleased to have Senators Torricelli, 
DeWine, Jeffords, Kennedy, Harkin, Mikulski, Levin, Kerry, Murray and 
Boxer join me today to reauthorize a program that has helped hundreds 
of farmers across the country save their farms and stay in the business 
of farming. Today, we are introducing a bill to reauthorize the 
Farmland Protection Program at a funding level of $55 million a year. 
This new authorization supports the efforts of President Clinton to 
restart the program with $50 million in Fiscal Year 2000.
  Since its creation in the 1996 Farm Bill, the Farmland Protection 
Program has been instrumental in curbing the loss of some of our 
nation's most productive farmland to urban sprawl. The Farmland 
Protection Program help shield farmers from development pressures by 
providing federal matching grants to state and local conservation 
organizations to purchase easements on farms.
  We have all seen the impact of urban sprawl in our home states, 
whether it be large, multi-tract housing or mega-malls that bring 
national superstores and nation-sized parking lots. We are losing 
farmland across the country at an alarming rate. This bill will step up 
our efforts to halt this disturbing trend before too many of America's 
farms are permanently transformed into asphalt jungles.
  In Vermont, we are also seeing the impact of development on our 
farmland. Increasing land prices and development pressure have forced 
too many Vermont farmers to sell to developers instead of passing on 
their farms to the next generation. With the former Farms for the 
Future program and the Farmland Protection Program, farmers now have a 
fighting chance against development. Since its inception in Vermont, 
these programs have helped conserve 78,000 acres of land on more than 
220 Vermont farms.
  The success of the program should not just be measured in acres 
though. The program also has helped farmers expand and re-invest in 
farm facilities and equipment. Some of the farm projects have also led 
to construction of affordable housing and preservation of wildlife 
habitat. There are now success stories all over Vermont. One is the 
story of Paul and Marian Connor of Bridport, Vermont. Working with the 
Vermont Land Trust they were able to conserve their 221-acre farm while 
continuing their dairy operation, raising seven children and retire 
their mortgage.
  Although Vermont is making great progress, across the nation we 
continue to lose as much as one million acres of prime farmland 
annually. This land is critically important to agriculture. For 
example, nearly three-quarters of America's dairy products, fruits and 
vegetables are grown in counties affected by urban growth.
  For American farmers and ranchers, farmland protection is an issue of 
the survival of both family farms and agricultural regions. When urban 
pressure pushes up the value of agricultural land above its 
agricultural value, it threatens the end of family farms because the 
next generation simply cannot afford to farm land valued at development 
prices. As some farmers sell their land for development, it places 
increasing pressure on their neighbors to sell as well.
  The 1996 Farm Bill recognized this problem by directly providing $35 
million for farmland protection matching funds that have leveraged 
million more from local and private programs. The Farmland Protection 
Program is a model of what new federal conservation programs ought to 
be, enjoying the unanimous support of the National Governors 
Association. It preserves the private property rights of farmers.
  It offers the Congress a way to demonstrate a realistic and 
meaningful commitment to the conservation of America's natural heritage 
without expanding the role of the federal government, and it encourages 
local communities and states to contribute their own efforts. The 
program's overwhelming success though has led to increased demand for 
the program--applicants requested a federal match of more than $130 
million.
  Our bill will help address some of this demand and encourage more 
state governments, local communities and private groups to start new 
matching programs. This modest federal investment will maintain our 
commitment to the protection of our rural heritage and working 
landscape.
                                 ______
                                 
      By Ms. COLLINS (for herself, Mr. Cochran, Mr. Levin, Mr. Durbin, 
        and Mr. Burns):
  S. 335. A bill to amend chapter 30 of title 39, United States Code, 
to provide for the nonmailability of certain deceptive matter relating 
to games of chance, administrative procedures, orders, and civil 
penalties relating to such matter, and for other purposes; to the 
Committee on Governmental Affairs.


       DECEPTIVE MAIL PREVENTION AND ENFORCEMENT IMPROVEMENT ACT

  Ms. COLLINS. Mr. President, today, during National Consumer 
Protection Week, I am introducing the Deceptive Mail Prevention and 
Enforcement Act, a comprehensive bill designed to stem the rising tide 
of deceptive mailings that are flooding the mailboxes of the people of 
Maine and people throughout the country.
  I am very pleased to have the cosponsorship of a trio of 
distinguished Senators in this regard: Senator Cochran, the chairman of 
the subcommittee with legislative jurisdiction over these types of 
mailings, who has been a leader in the effort to curtail deceptive 
mailings and sweepstakes fraud; Senator Levin, who serves as the 
ranking minority member of the Permanent Subcommittee on 
Investigations, and who has played an active role not only in the 
hearings held last year, but also in introducing his own legislation on 
this issue, which I am pleased to cosponsor. He has a longstanding 
interest in curtailing deceptive mailings. I am also pleased to have 
the support of Senator Durbin, with whom I have worked very closely on 
many consumer issues.
  Mr. President, several months ago, prompted by complaints that I have 
received from my constituents in Maine, I initiated an investigation 
into sweepstakes fraud and deceptive mailings. Over the course of this 
investigation, I have seen countless examples of mailings that 
deceptively promise extravagant prizes in order to entice consumers to 
make unnecessary and unneeded purchases. Unfortunately, this calculated 
confusion works far too often. In one particularly egregious example, 
one deceptive mailing prompted some of its victims to fly to Florida, 
believing that they then would be the first to claim the grand prize 
promised in a major sweepstakes.
  Deceptive mailings take many forms. One such form that I find 
particularly offensive is ``Government look-alike mailings,'' which 
appear deceptively like a mailing from a Federal agency or other 
official entity. An example of such a deceptive mailing was recently

[[Page 1706]]

sent to me by a woman from Machiasport, ME. The postcard that she 
received was marked ``Urgent Delivery, a Special Notification of Cash 
Currently Being Held by the U.S. Government is ready for shipment to 
you.'' I have blown up a copy of the postcard she received so you can 
see just how deceptive this mailing was. On the back of the postcard, 
the consumer was asked to send $9.97 to learn how to receive this cash. 
Of course, this was not a legitimate mailing from the Federal 
Government, but simply a ploy used by an unscrupulous individual to 
trick an unsuspecting consumer into sending money.
  Mr. President, millions of Americans have received sweepstakes 
letters that use deceptive marketing ploys to encourage the purchase of 
magazines and other products. A common tactic is a ``promise'' of 
winning printed in large type, such as this example: ``You Were 
Declared One of Our Latest Sweepstakes Winners and You're About to be 
Paid $833,337 in Cash.'' A constituent of mine from Portland, ME, 
received this mailing, but, of course, he wasn't really a winner. It 
takes an awfully sharp eye and very careful scrutiny to notice the very 
fine print that states that the money is won only ``if you have and 
return the grand prize-winning number in time.''
  Mr. President, thousands of consumers have made very frequent 
purchases, often of more than $1,000 a year, in response to deceptive 
sweepstakes mailings. I have heard sad stories from many people who 
have described personal horror stories caused by these deceptive 
mailings. Some people have told me of their elderly parents spending 
$10,000, $20,000, even as much as $60,000 in one case, hoping that 
their next purchase would result in a large prize. Senior citizens are 
particularly vulnerable, as they generally trust the statements made by 
these marketing appeals, particularly if they are pitched by 
celebrities, or if the mailing appears to be connected or in some way 
sanctioned by the Federal Government.
  To increase consumer protections, and to punish those who use such 
deceptive mailings to prey on our senior citizens, the bill that I am 
introducing today, along with Senators Cochran, Levin and Durbin, will 
attack sweepstakes fraud and deceptive mailings on four fronts.
  First, the bill will prevent fraud and deception by requiring 
companies to be more honest with the American people when using 
sweepstakes and other promotional mailings. My legislation would 
establish new standards for sweepstakes, including clear disclosure. In 
addition, my legislation would strengthen the law against mailings that 
mimic Government documents. Mailings could not use any language or 
device that gives the appearance that the mailing is connected, 
approved, or endorsed by the Federal Government.
  Second, this bill provides strong new financial penalties for sending 
mail that does not comply with these and existing standards. Civil 
penalties include fines ranging from $50,000 to $2 million would be 
allowed depending on the number of mailings sent.
  Third, the bill strengthens Federal law enforcement efforts and makes 
them more effective by giving the U.S. Postal Inspection Service 
additional tools to combat these deceptive practices.
  Fourth, my legislation would preserve the important role the States 
play in fighting this type of fraud and deception. Our bill would not 
preempt States and local laws protecting consumers from fraudulent and 
deceptive mailings.
  Mr. President, hundreds of millions of these promotional materials 
are sent out each year to consumers across the country. By design, they 
are meant to confuse their recipients and to trick them into spending 
money needlessly under the false pretense that doing so will earn them 
huge rewards.
  As the chairman of the Permanent Subcommittee on Investigations, I 
will shortly be holding hearings on this issue in the coming months to 
document the nature and extent of the problem and how these deceptive 
mailings affect Americans, particularly our senior citizens.
  I look forward to working with my colleagues, particularly the 
subcommittee's ranking member, Senator Levin, who has been such a 
leader in this area. It is my hope that Congress will enact the 
Deceptive Mail Prevention and Enforcement Improvement Act to increase 
consumer protections, to improve law enforcement efforts, and to 
provide effective penalties for those who deceive American consumers.
  Mr. President, I yield any remaining time to the Senator from 
Michigan, Senator Levin.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Mr. LEVIN. Mr. President, I thank my good friend from Maine for her 
leadership, her kind words, and for her bill, which I am proud to 
cosponsor. The bill I am introducing today, with her support and the 
support of Senator Durbin, addresses the same kinds of practices. These 
two bills together, if adopted, would go a long way toward addressing 
the deceptive mailing practices that we see under the general heading 
of ``sweepstakes.''
  The bill that I am introducing, with the cosponsorship of Senator 
Collins and Senator Durbin, will help eliminate the deceptive practices 
in mailings that use games of chance, like sweepstakes, to induce 
consumers to purchase a product that they may not need and to play a 
game that they will not win.
  I originally introduced this bill last year. It was not enacted. It 
was introduced late in the session. I am very hopeful that this bill 
and Senator Collins' bill will be enacted this year following the 
hearings that she has just described--important hearings which I 
commend our chairman of the subcommittee for scheduling, for 
initiating.
  The bill that I am introducing--this part of the remedy for the 
current abuses--will stiffen the penalties for deceptive mailings, will 
give the Postal Service administrative subpoena power, will restrict 
the use of misleading language and symbols, and require better 
disclosure about chances of winning and statements that no purchase is 
necessary to win.
  The elderly are easy prey for the gimmicks used in these kinds of 
contests, such as a large notice declaring the recipient a winner--
oftentimes a ``guaranteed'' winner or one of two final competitors for 
a large cash prize--and these gimmicks have proliferated to the point 
that American consumers are being duped into purchasing products they 
don't want or need because they think they have won or will win a big 
prize if they do so. Complaints about these mailings are one of the top 
ten consumer complaints in the nation. I have received numerous 
complaints from my constituents in Michigan asking that something be 
done to provide relief from these very misleading mailings.
  In early September 1998, we held a hearing in our Governmental 
Affairs Committee federal services subcommittee on the problem of 
deceptive sweepstakes and other mailings involving games of chance. We 
learned from three of our witnesses, the Florida Attorney General, the 
Michigan Assistant Attorney General and the Postal Inspection Service, 
that senior citizens are particular targets of these deceptive 
solicitations, because they are the most vulnerable. State Attorneys 
General have taken action against many of the companies that use 
deceptive mailings. The states have entered into agreements to stop the 
most egregious practices, but the agreements apply only to the states 
that enter into the agreements. This allows companies to continue their 
deceptive practices in other states. That's one reason why federal 
legislation in this area is needed. The bill I'm introducing today will 
help eliminate deceptive practices by prohibiting misleading 
statements, requiring more disclosure, imposing a $10,000 civil penalty 
for each deceptive mailing, and providing the Postal Service with 
additional tools to pursue deceptive and fraudulent offenders.
  Sweepstakes solicitations are put together by teams of clever 
marketers who package their sweepstakes offers in such a way so as to 
get people to purchase a product by implying that

[[Page 1707]]

the chances of winning are enhanced if the product being offered is 
purchased.
  That is not allowed. You cannot require that a purchase be made in 
order to win a prize. But these deceptive practices are such and they 
are so finely honed that, no matter what the fine print says about no 
purchase being necessary, the recipient of the mailing often is led to 
believe, by the nature of the mailing, that a purchase indeed will 
enhance the opportunity to win the prize. Senator Collins addresses the 
sum of those issues in her bill.
  Rules and important disclaimers are written in fine print and hidden 
away in obscure sections of the solicitation or on the back of the 
envelope that is frequently tossed away. Even when one can find and 
read the rules, it frequently takes a law degree to understand them.
  The bill I am introducing will help to protect consumers from 
deceptive practices by directing the Postal Service to develop and 
issue regulations that restrict the use of misleading language and 
symbols in direct mail game of chance solicitations, including 
sweepstakes. The bill also requires additional disclosure about chances 
of winning and the statement that no purchase is necessary. Any mail 
that is designated by the Postal Service as being deceptive will not be 
delivered. This will significantly reduce the deceptive practices being 
used in the direct mail industry to dupe unsuspecting consumers into 
thinking they are grand prize winners. The direct mail industry also 
would benefit, in that the adverse publicity recently aimed at the 
industry because of ``You Have Won a Prize'' campaigns has maligned the 
industry as a whole. Cleaning up deceptive advertising could improve 
the industry's image.
  For those entities that continue to use deceptive mailings, my bill 
imposes a civil penalty of $10,000 for each piece of mail that violates 
Postal Service regulations. Currently the Postal Service can impose a 
fine for noncompliance with a Postal Service order. My bill imposes a 
fine whether or not the order actually has been issued. This has the 
effect of applying the penalty to the deceptive offense, not for 
noncompliance with the order.
  My bill also allows the Postal Service to quickly respond to changes 
in deceptive marketing practices by giving the Postal Service the 
authority to draft regulations that will be effective against the 
``scheme du jour.'' A deceptive practice used today, may not be used 
tomorrow. As soon as the Post Office learns about one scheme, it 
changes. If legislation is passed that requires a specific notice, it 
can take just a short time before another deceptive practice pops up to 
by-pass the legislation. My bill gives the Postal Service the authority 
to evaluate what regulatory changes will be required to keep pace with 
the ever changing deceptive practices. This will help weed out 
deceptive practices in a timely manner.
  The bill also gives the Postal Service administrative subpoena power 
to respond more quickly to deceptive and fraudulent mail schemes. 
Currently the Postal Service must go through a lengthy administrative 
procedure before it can get evidence to shut down illegal operations. 
Currently the $10,000 fine--and civil penalty which exists--can only be 
imposed for noncompliance with a Postal Service order. There has to be 
an order issued which is violated before there can even be a civil 
fine. Our bill would impose a fine for violating the law, a penalty for 
perpetrating the deceptive offense or practice, and it would not 
require that there be an order previously entered. By the time the 
Postal Service gets through all the administrative hoops, the 
sweepstakes promoter may have folded up operations and disappeared, or 
has destroyed all the evidence. By granting the Postal Service limited 
subpoena authority to obtain relevant material records for an 
investigation, the Postal Service will be able to act more efficiently 
against illegal activities. Subpoena authority will make the Postal 
Service more effective and efficient in its pursuit of justice.
  The Deceptive Sweepstakes Mailings Elimination Act of 1999 takes a 
tough approach to dealing with sweepstakes solicitations and other 
games of chance offerings that are sent through the mail. If you use 
sweepstakes or a game of chance to promote the sale of a legitimate 
product, provide adequate disclosure, and abide with Postal Service 
regulations, then the Postal Service will deliver that solicitation. If 
deceptive practices are used in a sweepstakes or a game of chance 
solicitation, the Postal Service will be able to stop the solicitation 
and impose a significant penalty.
  So we are going to take a tough approach, both through Senator 
Collins' bill which I have cosponsored, through my bill which she has 
cosponsored, along with others, and this tough approach that is 
absolutely essential if we are going to protect seniors and others from 
the kind of deceptive practices which cost them so much money by 
encouraging them, through these practices, to buy items that they 
really do not want in order to win prizes that truly are unlikely or 
impossible to win.
                                 ______
                                 
      By Mr. LEVIN (for himself, Mr. Durbin, and Ms. Collins):
  S. 336. A bill to curb deceptive and misleading games of chance 
mailings, to provide Federal agencies with additional investigative 
tools to police such mailings, to establish additional penalties for 
such mailings, and for other purposes; to the Committee on Governmental 
Affairs.


       deceptive games of chance mailings elimination act of 1999

  Mr. DURBIN. Mr. President, I am pleased to join my distinguished 
colleagues, Senators Levin and Collins, today in introducing the 
Deceptive Games of Chance Mailing Elimination Act of 1999.
  It's rare that any American household has escaped receipt of a flurry 
of envelopes boldly proclaiming ``You're our next million-dollar 
winner!'' or similar claim of impending good fortune. Most of us 
recognize these prominent lines as the special language of direct mail 
sweepstakes. While many companies have used sweepstakes responsibly, 
others have bilked consumers out of millions of dollars by falsely 
suggesting a purchase is necessary to qualify for the sweepstakes or to 
increase the odds of winning a prize. Some of these operators promise 
fame and fortune, but they deliver fraud and false promises.
  As Senator Levin has outlined, this bill sharpens the teeth of the 
current postal statutes by directing the Postal Service to develop and 
issue rules that restrict the use of misleading language and symbols on 
direct mail games of chance such as sweepstakes that mislead the 
recipient into believing they've already won or will win a prize. This 
rulemaking authority will allow the Postal Service to respond more 
rapidly to emerging deceptive practices. The bill also requires that 
additional disclosures be given to recipients of mailed solicitations 
involving sweepstakes giveaways about their chances of winning and that 
no purchase is necessary to enter the contest. Furthermore, the bill 
gives the Postal Service administrative subpoena power so it can react 
and respond more rapidly to deceptive and fraudulent mail schemes. 
Under our bill, civil fines can be imposed upon the issuance of an 
enforcement order, or alternatively, in lieu of an enforcement order, 
rather than awaiting a violation of that order.
  By giving the Postal Service these additional tools and authority, 
this legislation will help combat the growing problem of consumer fraud 
in the form of deceptive or misleading mailings that use games of 
chance or sweepstakes contests to solicit the purchase of a product. 
Other deceptions have included packaging sweepstakes solicitations to 
closely resemble government documents and promising recipients that 
they have already won, even though the fine print reveals minuscule 
odds of winning.
  The elderly are particularly vulnerable to sweepstakes fraud. Some 
senior citizen sweepstakes recipients have traveled thousands of miles 
to claim prizes they thought they had been assured of winning. Others 
spend thousands of dollars on magazines and other merchandise because 
they are convinced it will boost their chances of winning.

[[Page 1708]]

  Like Senators Levin and Collins, I have heard from numerous 
constituents about how some crafty purveyors prey on the public, often 
persons on fixed or limited incomes, through these deceptive envelopes 
and packaging techniques. Recently, one constituent related how her 
elderly mother has become ``hooked'' on sweepstakes. She shared with me 
a bulky stack of envelopes, representing just a sample of the mailings. 
She remarked how her mother is convinced that the company will think 
better of her if she orders lots of merchandise, and that buying more 
products will accord her special consideration and improve her chances 
to win a lucrative prize. She noted that some companies, by using 
clever typefaces, sophisticated and official-looking symbols, gimmicky 
labels, and personalization, lead people to believe the company is 
writing to them personally, and that the odds of winning are high. Her 
story is but one example of what we have heard, and why it is so 
important to ensure that strong laws are enacted to address deceptive 
practices.
  I am pleased that the United States Postal Inspector, the National 
Fraud Information Center, the Direct Marketing Association, the 
American Association of Retired Persons, and a special committee of the 
Association of Attorneys General are among those who are actively 
seeking ways to ensure that consumers are informed and protected from 
dishonest marketing ploys.
  I look forward to the hearings planned by Senator Collins in the 
Permanent Subcommittee on Investigations to examine the problem of 
deceptive mailings and legislative solutions. I urge my colleagues to 
join me in supporting enactment of legislation to promote more honesty 
by product marketers, clearer disclosure for consumers, tighter 
penalties for violators, and quicker and more effective enforcement 
tools for more rapid response to unscrupulous practices.
                                 ______
                                 
      By Mr. HUTCHINSON (for himself, Mr. Lott, Mr. Nickles, Mr. Mack, 
        Mr. Craig, Mr. Coverdell, Mr. Warner, Mr. Hatch, Ms. Collins, 
        Mr. Cochran, Mr. Bunning, Mr. Ashcroft, Mr. Helms. Mr. 
        Grassley, Mr. Enzi, Mr. Inhofe, Mr. Bond, Mr. Gorton, Mr. 
        Frist, Mr. Thurmond, Mr. Hagel, Mr. Allard, Mr. Grams, Mr. Kyl, 
        Mr. Roberts, Mr. Sessions, and Mr. Shelby):
  S. 337. A bill to preserve the balance of rights between employers, 
employees, and labor organizations which is fundamental to our system 
of collective bargaining while preserving the rights of workers to 
organize, or otherwise engage in concerted activities protected under 
the National Labor Relations Act; to the Committee on Health, 
Education, Labor, and Pensions.


                    TRUTH IN EMPLOYMENT ACT OF 1999

  Mr. HUTCHINSON. Mr. President, I am honored to have the opportunity 
to introduce today an important piece of legislation which will provide 
thousands of businesses in my home state of Arkansas and across the 
nation with a defense against an unscrupulous practice which is 
literally crippling them. The Truth in Employment will protect these 
businesses and curtail the destructive abuse of the union tactic known 
as salting.
  ``Salting abuse'' is the calculated practice of placing trained union 
professional organizers and agents in the non-union workplace whose 
sole purpose is to harass or disrupt company operation, apply economic 
pressure, increase operating and legal costs, and ultimately put a 
company out of business. The objectives of these union agents are 
accomplished through filing frivolous and unfair labor practice 
complaints or discrimination charges against the employer with the 
National Labor Relations Board (NLRB), the Occupational Safety and 
Health Administration (OSHA), and the Equal Employment Opportunity 
Commission (EEOC). Salting campaigns have been used successfully to 
cause economic harm to construction companies and are quickly expanding 
into other industries across the country. It can cost employers 
anywhere from $5,000 to hundreds of thousands of dollars to defend him 
or herself against this practice.
  Salting is not merely a union organizing tool. It has become an 
instrument of economic destruction aimed at non-union companies. Unions 
send their agents into non-union workplaces under the guise of seeking 
employment. Hiding behind the shield of the National Labor Relations 
Act, these ``salts'' use its provisions offensively to bring hardship 
on their employers. They deliberately increase the operating costs of 
their employers through actions such as sabotage and frivolous 
discrimination complaints.
  In the 1995 Town & Country decision, the U.S. Supreme Court held that 
paid union organizers are ``employees'' within the meaning of the 
National Labor Relations Act. Because of their broad interpretation of 
this Act, employers who refuse to hire paid union employees or their 
agents violate the Act if they are shown to have discriminated against 
the union salts.
  This leaves employers in a precarious position. If employers refuse 
to hire union salts, they will file frivolous charges and accuse the 
employer of discrimination. Yet, if salts are employed, they will 
create internal disruption through a pattern of dissension and 
harassment. They are not there to work--only to disrupt. In a classic 
example of salting abuse, John Gaylor of Gaylor Electric had to fire 
one employee after his refusal to wear his hard hat on his head. This 
employee would strap the hard hat to his knee and then dare Gaylor to 
fire him because he said the employee manual stated only that he had to 
wear the hard hat, it didn't state where he had to wear it.
  As a result of the salting abuse, whenever many small businesses make 
hiring decisions, the future of the company, and its very existence, 
may be at stake. A wrong decision can mean frivolous charges, legal 
fees, and lost time, which may threaten the very existence of their 
business.
  I have received many accounts from across the nation of how salting 
abuse is affecting small businesses. The following examples were 
received as testimony in Congressional hearings. In my home state of 
Arkansas, Little Rock Electrical Contractors, Inc. incurred in excess 
of $80,000 in legal fees over the course of one year to fight 72 unfair 
labor practice charges, of which 20 were dismissed, 45 were set for 
trial, and 7 were appealed. In Cape Elizabeth, Maine, over a period of 
four years, Bay Electric incurred $100,000 in legal fees plus lost time 
to defend itself against 14 unfair labor practices, all of which were 
dismissed. In Delano, Minnesota, Wright Electric incurred $150,000 in 
legal fees and lost between $200,000 and $300,000 in lost time to win 
the dismissal of 14 of 15 unfair labor practices charges. And, in 
Clearfield, Pennsylvania, R.D. Goss incurred $75,000 battling 
approximately 20 unfair labor practices; while all but one of the 
charges were dismissed, the company was forced to close its doors after 
doing business for thirty-eight years. Finally, in Union, Missouri, it 
cost the Companies $150,000 to win the dismissal of 47 unfair labor 
practices charges and to achieve one settlement for $200.
  Another common salting abuse is for salts to actually create 
Occupational Safety and Health Administration (OSHA) violations and 
then report those violations to OSHA. When the employer terminates 
these individuals, they file frivolous unfair labor practices against 
the employer. This results in wasted time and money, as well as bad 
publicity for the company.
  These are just a few of the many examples of how devastating salting 
abuse can be to small businesses. What makes this practice even more 
appalling is how organized labor openly advocates its use. According to 
the group, the ``Coalition For Fairness For Small Businesses And 
Employees,'' the labor unions are even advocating this practice in 
their manuals.
  The Union Organizing Manual of the International Brotherhood of 
Electrical Workers explains why salts are used. Their purpose is to 
gather information that will ``. . . shape the strategy the organizer 
will use later in the campaign to threaten or actually apply the 
economic pressure necessary to cause the employer to . . . raise his

[[Page 1709]]

prices to recoup additional costs, scale back his business, leave the 
union's jurisdiction, go out of business, and so on. . .''
  Thomas J. Cook, a former ``salt,'' explained the ultimate goal of 
salting abuse. Mr. Cook said, ``Salting has become a method to stifle 
competition in the marketplace, steal away employees, and to inflict 
financial harm on the competition.'' Mr. Cook concluded by stating that 
``[i]n a country where free enterprise and independence is so highly 
valued, I find these activities nothing more than legalized 
extortion.''
  The balance of rights must be restored between employers, employees 
and labor organizations. The Truth in Employment Act seeks to do this 
by inserting a provision in the National Labor Relations Act 
establishing that an employer is not required to employ any person who 
is not a bona fide employee applicant, in that such person is seeking 
employment for the primary purpose of furthering interests unrelated to 
those of that employer. Furthermore, this legislation will continue to 
allow employees to organize and engage in activities designed to be 
protected by the National Labor Relations Act.
  This measure is not intended to undermine those legitimate rights or 
protections. Employers will gain no ability to discriminate against 
union membership or activities. This bill only seeks to stop the 
destructive results of salting abuse. Salting abuse must be curtailed 
if we are to protect the small business owners and employees of this 
nation. This legislation will insure these protections are possible.
  It is for these reasons that I am introducing the Truth in Employment 
Act. I ask that my colleagues support this bill and restore fairness to 
the American workplace.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 338. A bill to provide for the collection of fees for the making 
of motion pictures, television productions, and sound tracks in units 
of the Department of the Interior, and for other purposes; to the 
Committee on Energy and Natural Resources.


    National Park Service Commercial Filming Permit Fee Act of 1999

  Mr. CAMPBELL. Mr. President, today I introduce the National Park 
Service Commercial Filming Permit Fee Act of 1999. This bill gives the 
National Park Service (NPS) and the National Wildlife Refuge System 
(NWRS) the authority to require fee-based permits for the use of Park 
Service and National Wildlife Reserve lands in the production of motion 
pictures, television programs, advertisements or other similar 
commercial purposes. This bill is based on legislation which I 
introduced in the 105th Congress, S. 1614.
  Our National Parks are among our nation's most valuable resources. 
The National Park Service Commercial Filming Permit Fee Act of 1999 
would help us to protect them and ensure that future generations will 
be able to enjoy their beauty by making sure the parks are reimbursed 
for their commercial use.
  The Bureau of Land Management and the Forest Service already have a 
similar permit and fee system for commercial filming on public lands. 
It doesn't make sense that our National Parks, which have been deemed 
to be even more precious by their designation, should be used 
commercially for free. This is especially important now when taxpayers 
are facing increased fees to enter the national parks and more people 
are enjoying our natural wonders every year in record numbers.
  My bill allows the National Park Service to collect a fair return fee 
when the American peoples' parks are used in these commercial media 
ventures and then devotes those fees to the preservation of our 
National Parks. Common sense directs us to do this, and I believe this 
bill is fair for the commercial users of our National Parks, and more 
importantly, for the American taxpayers.
  This bill builds upon progress made through hearings, conferences, 
and other valuable input received during the 105th Congress. The 
revised legislative language reflects input from the administration, 
industry groups--including the Motion Picture Association of America--
and public interest groups such as the National Parks and Conservation 
Association. This bill is similar to legislation that my friend and 
colleague from Colorado, Congressman Hefley, introduced in the 105th 
and reintroduced in the 106th Congress as H.R. 154.
  Mr. President, I have letters from two key interested associations in 
support of my bill's goals. I ask unanimous consent that these letters 
of support from the Motion Picture Association of America and the 
National Parks and Conservation Association and my bill be printed in 
the Record. I urge my colleagues to support passage of this bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 338

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

     SECTION 1. USE OF LAND; FEE AUTHORITY.

       (a) Authority.--
       (1) In general.--The Secretary of the Interior (referred to 
     in this Act as the ``Secretary'') may permit the use of land 
     and facilities in units administered by the Secretary for--
       (A) motion picture production;
       (B) television production;
       (C) soundtrack production;
       (D) the production of an advertisement using a prop or a 
     model; or
       (E) any similar commercial project.
       (2) Exception.--The Secretary shall not permit a use of 
     land or a facility described in paragraph (1) if the 
     Secretary determines that a proposed use--
       (A) is not appropriate; or
       (B) will impair the value or resources of the land or 
     facility.
       (3) Bonding and insurance.--The Secretary may require a 
     bond, insurance, or such other means as is necessary to 
     protect the interests of the United States in connection with 
     an activity conducted under a permit issued under this Act.
       (b) Fees.--
       (1) In general.--For any use of land or a facility in a 
     unit described in subsection (a), the Secretary shall 
     assess--
       (A) a reimbursement fee; and
       (B) a special use fee.
       (2) Reimbursement fee.--
       (A) In general.--The Secretary shall require the payment of 
     a reimbursement fee in an amount that is not less than the 
     amount of any direct and indirect costs to the Government 
     incurred--
       (i) in processing the application for a permit for a use of 
     land or facilities; and
       (ii) as a result of the use of land and facilities under 
     the permit, including any necessary costs of cleanup and 
     restoration.
       (B) Funds collected.--An amount equal to the amount of a 
     reimbursement fee collected under this subparagraph shall--
       (i) be retained by the Secretary; and
       (ii) be available for use by the Secretary, without further 
     Act of appropriation, in the unit in which the reimbursement 
     fee is collected.
       (3) Special use fee.--
       (A) Factors in determining special use fee.--To determine 
     the amount of a special use fee, the Secretary shall 
     establish a schedule of rates sufficient to provide a fair 
     return to the Government, based on factors such as--
       (i) the number of people on site under a permit;
       (ii) the duration of activities under a permit;
       (iii) the conduct of activities under a permit in any area 
     designated by a statute or regulation as a special use area, 
     including a wilderness or research natural area;
       (iv) the amount of equipment on site under a permit; and
       (v) any disruption of normal park function or 
     accessibility, including temporary closure of land or a 
     facility to the public.
       (B) Funds collected.--A special use fee under this 
     subparagraph shall be distributed as follows:
       (i) 80 percent shall be deposited in a special account in 
     the Treasury, and shall be available, without further Act of 
     appropriation, for use by the supervisors of units where the 
     fee was collected.
       (ii) 20 percent shall be deposited in a special account in 
     the Treasury, and shall be available, without further Act of 
     appropriation, for use by supervisors of units in the region 
     where the fee was collected.
       (4) Exceptions.--
       (A) Fee waiver or reduction.--The Secretary may waive a 
     special use fee or charge a reduced special use fee if the 
     activity for which the fee is charged provides clear 
     educational or interpretive benefits for the Department of 
     the Interior or the public.
       (B) Regular visitor entrance fee.--Nothing in this 
     subsection affects the requirement that, in addition to fees 
     under in subparagraph (A), each individual entering a unit 
     for purposes described in subsection (a)

[[Page 1710]]

     shall pay any regular visitor entrance fee charged to 
     visitors to the unit.
       (c) Regulations.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Secretary shall promulgate 
     regulations that establish a schedule of rates for fees 
     collected under subsection (b) based on factors listed in 
     subsection (b)(2)(C)(ii).
       (2) Review of regulations.--
       (A) Initial review.--Not later than 3 years after the date 
     of enactment of this Act, the Secretary shall review and, as 
     appropriate, revise the regulations promulgated under this 
     subsection.
       (B) Continuing review.--After the date of promulgation of 
     regulations under subparagraph (A), the Secretary shall 
     periodically review the regulations and make necessary 
     revisions.
       (d) Applicability of Regulations.--
       (1) Prohibition on certain fees.--The prohibition on fees 
     set forth in section 5.1(b)(1) of title 43, Code of Federal 
     Regulations, shall cease to apply beginning on the effective 
     date of regulations promulgated under this Act.
       (2) Effect on other regulations.--Nothing in this Act, 
     other than paragraph (1), affects the regulations set forth 
     in part 5 of title 43, Code of Federal Regulations.
       (e) Civil Penalty.--
       (1) In general.--A person that violates any regulation 
     promulgated under this Act, or conducts or attempts to 
     conduct an activity under subsection (a)(1) without obtaining 
     a permit or paying a fee, shall be assessed a civil penalty--
       (A) for the first violation, in the amount that is equal to 
     twice the amount of the fees charged (or fees that would have 
     been charged) under subsection (b)(2);
       (B) for the second violation, in the amount that is equal 
     to 5 times the amount of the fees charged (or fees that would 
     have been charged) under subsection (b)(2); and
       (C) for the third and each subsequent violation, in the 
     amount that is equal to 10 times the amount of the fees 
     charged (or fees that would have been charged) under 
     subsection (b)(2).
       (2) Costs.--A person that violates this Act or any 
     regulation promulgated under this Act shall be required to 
     pay all costs of any proceedings instituted to enforce this 
     subsection.
       (f) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), this 
     Act and the regulations promulgated under this Act take 
     effect 180 days after the date of enactment of this Act.
       (2) Exception.--This subsection and the authority of the 
     Secretary to promulgate regulations under subsection (c) take 
     effect on the date of enactment of this Act.
                                  ____

                                        Motion Picture Association


                                             of America, Inc.,

                                 Washington, DC, February 2, 1999.
     Hon. Ben Nighthorse Campbell,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Ben: I am writing to you today about your legislation 
     dealing with the filming of motion pictures in national park 
     and public lands. I would like to lend my support for the aim 
     of this bill and pledge to work with you on some areas of 
     concern to our industry.
       Right now, the National Parks Service cannot charge fees 
     for filming. Although the parks can be reimbursed for costs 
     of filming, these reimbursements do not provide real 
     financial support to the parks. As a result, park 
     administrators can become indifferent to filming, or even 
     hostile because their efforts to promote movie making in the 
     park don't produce for them any direct return.
       Your legislation provides a reasonable solution by setting 
     forth a fee schedule that is predictable. We think the fee 
     schedule approach is an improvement over the ``fair market 
     value'' approach from previous legislation. The fee schedule 
     provides a more simple, clear and predictable way of 
     collecting fees. Furthermore, we urge you to limit the 
     factors as much as possible to the number of people in the 
     crew and the number of days in the shoot.
       As the bill moves through the legislative process, we hope 
     to work with you further. A particular area of concern is the 
     provision related to regular visitor entrance fees.
       All in all, I applaud your efforts. I know that you, 
     Senator are one who particularly appreciates the treasure of 
     our national park system and public lands. I am pleased that 
     the American movie, exhibited in over 150 countries, 
     advertises to the world the unduplicatable beauties of our 
     national parks, irreplaceable treasures which belong to the 
     American citizenry.
       I look forward to working with you and your staff.
           With great affection,
     Jack Valenti.
                                  ____

                                                    National Parks


                                 and Conservation Association,

                                 Washington, DC, February 2, 1999.
     Hon. Ben Nighthorse Campbell,
     U.S. Senate, Washington, DC.
       Dear Senator Campbell: The National Parks and Conservation 
     Association appreciates your efforts to close the ``equity 
     gap'' between visitors to the National Park System and those 
     in Hollywood and on Madison Avenue who have profited from 
     their commercial use of the national parks.
       For the past five decades, the National Park Service has 
     been prohibited from collecting anything but a nominal 
     permitting fee and a modest amount of cost recovery 
     (associated with monitoring filming activity and any 
     necessary site remediation) from those who undertake 
     commercial filming projects in our national parks. Yet, the 
     individuals and institutions using the parks as a backdrop 
     for their films, commercials, television programs, etc. have 
     profited handsomely.
       It is grossly unfair to allow a few businesses to profit 
     from the parks while the visiting public is being asked to 
     pay more in entrance and use fees, and while the parks suffer 
     from a significant and ongoing budgetary shortfall.
       We are optimistic that your legislation will help generate 
     the debate necessary to result in the remedying of this 
     inequity. Thank you for taking this first and positive step 
     towards solving this problem.
           Sincerely,
                                              William J. Chandler,
                           Vice President for Conservation Policy.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Inouye):
  S. 339. A bill to amend the Indian Gaming Regulatory Act, and for 
other purposes; to the Committee on Indian Affairs.


            INDIAN GAMING REGULATORY ACT AMENDMENTS OF 1999

  Mr. McCAIN. Mr. President, I rise today, along with my distinguished 
colleague, Senator Inouye, to propose the Indian Gaming Regulatory Act 
Amendments of 1999. The good Senator and I have sponsored this bill for 
the past four years because of our continuing belief that we must 
strengthen the Indian gaming law and protect the authority of tribal 
governments to engage in gaming activities.
  Senator Inouye and I have sat through hundreds of hours of 
discussions with Indian tribes, the States and interested parties over 
the expansion of Indian gaming. While the interest grows stronger in 
amending IGRA, a proposal has not been endorsed by either the Tribes or 
the States. Our intention in forwarding this bill is to once again set 
forth a balanced and fair discussion over necessary changes to the 
Indian gaming law.
  The bill we are introducing today will provide for minimum federal 
standards in the regulation and licensing of class II and III gaming as 
well as all of the contractors, suppliers, and industries associated 
with such gaming. This will be accomplished through the Federal Indian 
Gaming Regulatory Commission which will be funded through assessments 
on Indian gaming revenues and fees imposed on license applicants.
  In addition, this bill is consistent with the 1987 decision of the 
U.S. Supreme Court in the case of California v. Cabazon Band of Mission 
Indians in that it neither expands or further restricts the scope of 
Indian gaming. The laws of each State would continue to be the basis 
for determining what gaming activities may be available to an Indian 
tribe located in that State.
  Under the Indian Gaming Regulatory Act of 1988, Indian tribes are 
required to expend the profits from gaming activities to fund tribal 
government operations or programs and to promote tribal economic 
development. Profits may only be distributed directly to the members of 
an Indian tribe under a plan which has been approved by the Secretary 
of Interior. Virtually all of the proceeds from Indian gaming 
activities are used to fund the social welfare, education, and health 
needs of the Indian tribes. Schools, health facilities, roads, and 
other vital infrastructure are being built by the Indian tribes with 
the proceeds from Indian gaming.
  In the years before the enactment of the Indian Gaming Regulatory Act 
and in the years since its enactment, we have heard concerns about the 
possibility for organized criminal elements to penetrate Indian gaming. 
I believe the Act provides for a very substantial regulatory role and 
law enforcement role by the States and Indian tribes in class III 
gaming and by the Federal government in Class II gaming. The record 
clearly shows that in the few instances of known criminal activity in 
class III gaming, the Indian tribes have discovered the activity and 
have

[[Page 1711]]

sought Federal assistance in law enforcement.
  Indian gaming will continue to be scrutinized because of its 
increasing prominence in our nation's economy and political spectrum. I 
believe that any proposal to amend the Indian gaming law should respect 
both the rights of the Indian tribes and the States, while recognizing 
the benefits of well-regulated gaming to both Indian and non-Indian 
communities. I look forward to working with my colleagues and all 
affected entities on a continuing dialogue to protect the integrity of 
Indian gaming.
  I ask unanimous consent that a section-by-section analysis be printed 
in the Record.
  There being no objection, the item was ordered to be printed in the 
Record, as follows:

                      Section-by-Section Analysis

       Sections 1-3 set forth the title, findings and purpose of 
     the Act.
       Section 4 amends the Indian Gaming Regulatory Act to revise 
     definitions.
       Section 5 establishes (in lieu of the National Indian 
     Gaming Commission) the Federal Indian Gaming Regulatory 
     Commission as an independent U.S. agency. It directs the 
     Commission to establish minimum Federal standards for 
     background investigations, internal control systems, and 
     licensing. The Commission is granted investigatory authority.
       Section 6 sets forth the powers of the Chairperson of the 
     Federal Indian Gaming Regulatory Commission.
       Section 7 sets forth the powers and authority of the 
     Commission.
       Section 8 sets forth the regulatory framework for class II 
     and III gaming.
       Section 9 directs the President to establish the Advisory 
     Committee on Minimum Regulatory Requirements and Licensing 
     Standards.
       Sections 10, 11, 12, 13 and 14 set forth requirements for: 
     (1) licensing; (2) conduct of class I, II, and III gaming on 
     Indian lands; and (3) contract review.
       Sections 15 and 16 set forth civil penalty and judicial 
     review provisions.
       Sections 17 and 18 fund the Commission from authorized 
     appropriations and class II and III gaming fees.
       Section 19 applies specified tax withholding and bank 
     reporting requirements to Indian gaming operations. Requires 
     the Commission to make certain law enforcement information 
     available to State and tribal authorities.
      By Mr. ALLARD:
  S. 340. A bill to amend the Cache La Poudre River Corridor Act to 
make technical corrections, and for other purposes; to the Committee on 
Energy and Natural Resources.


    technical corrections to the cache la poudre river corridor act

  Mr. ALLARD. Mr. President, today I am introducing a bill to amend the 
Cache La Poudre River Corridor Act to make technical corrections.
  This Act became Public Law on October 19, 1996 thanks to the 
diligence and hard work of Senator Brown, my predecessor. The purpose 
of this Act is to designate the Cache La Poudre Corridor with the Cache 
La Poudre River Basin. The Poudre Corridor provides an educational and 
inspirational benefit to both present and future generations, as well 
as unique and significant contributions to our national heritage of 
cultural and historical lands, waterways, and structures within the 
Corridor.
  It is important that the following technical corrections be made to 
ensure that this act is interpreted and implemented correctly.
                                 ______
                                 
      By Mr. FRIST (for himself, Mr. McCain, and Mr. Burns):
  S. 342. A bill to authorize appropriations for the National 
Aeronautics and Space Administration for fiscal years 2000, 2001, and 
2002, and for other purposes; to the Committee on Commerce, Science, 
and Transportation.


the national aeronautics and space administration authorization act for 
                        fy 2000, 2001, and 2002

  Mr. FRIST. Mr. President, I rise to introduce the authorization bill 
for the National Aeronautics and Space Administration for fiscal years 
2000, 2001, and 2002.
  NASA's unique mission of exploration, discovery, and innovation has 
preserved America's role as both a world leader in aviation and the 
preeminent spacefaring nation. It is NASA's mission to:
  Explore, use, and enable the development of space for human 
enterprise;
  Advance scientific knowledge and understanding of the Earth, the 
Solar System, and the Universe and utilize the environment of space for 
research; and
  Research, develop, verify and transfer advanced aeronautics, space 
and related technologies.
  This bill is essentially the same as reported by the Commerce 
Committee last year. It contains provisions that had bi-partisan 
support and would have been included in a manager's amendment had the 
bill been brought up for discussion on the Senate floor.
  The bill, which authorizes $13.4 billion for NASA in FY 2000, $13.8 
billion for FY 2001, and $13.9 billion for FY 2002, provides for the 
continued development of the International Space Station, Space Shuttle 
operations and safety and performance upgrades, space science, life and 
micro gravity sciences and applications, the Earth Science program, 
aeronautics and space transportation technology, mission 
communications, academic programs, mission support and the Office of 
the Inspector General.
  The FY 2000 levels are consistent with the President's request with 
the exception of a reduction of $200 million for the International 
Space Station account. This reduction eliminates the funding requested 
for the Russian Program Assurance activities. I feel that it is only 
appropriate to withhold judgement on providing additional funding to 
assist Russia with their financial problems until NASA provides 
additional explanation on how these funds will be used. The situation 
in Russia is changing daily and we must fully understand the impact on 
the Station schedule and overall cost before committing more funds.
  The FY 2001 and FY 2002 levels represent a 3 percent increase over 
the previous year's amount with the exception of the Space Station. The 
Space Station has been authorized in accordance with NASA outyear 
projections for FY 2001 and FY 2002.
  The bill contains a price cap on the development costs of the 
International Space Station. The price cap language provides NASA with 
additional funding Space Station development and allows for additional 
Space Shuttle flights by exempting certain activities at the point when 
research, operating and crew return vehicles activities' costs comprise 
more than 95 percent of the annual funding for the Station. At this 
point, the majority of the activities are truly beyond the development 
phase of the project.
  The bill provides for liability cross-waivers for the Space Station. 
The provision authorizes, but does not require NASA to enter into 
agreements with any cooperating party participating in the Space 
Station program, whereby all involved parties agree to take the risk of 
damage to their own assets, and agrees not to sue other entities. These 
cross waivers would not apply in the case of sabotage or other 
deliberate and willful acts.
  NASA has indicated that these liability cross-waivers will be needed 
to fully commercialize the Space Station. I support the 
commercialization of the Station as a means of achieving a return on 
investment for the public through the creation of new industries and 
jobs for the Nation.
  I am concerned with the cost and schedule delays in other programs as 
well. The X-33 test vehicle and the Advanced X-ray Astrophysics 
Facility programs represents major investments of public funds and 
therefore should be managed such that program requirements are met in a 
timely manner.
  The balance between manned and unmanned flight, as well as the 
balance between fundamental science and development activities, is in 
need of review. I intend to pursue these balances further when the 
Commerce Committee holds hearings on the NASA budget and associated 
activities in the upcoming weeks.
  Therefore, I, along with my co-sponsors, urge the Members of this 
body to support this bill and allow NASA to continue its mission of 
support for all space flight, for technological progress in 
aeronautics, and for space science.
  Mr. McCAIN. Mr. President, I rise today as a cosponsor of the 
National

[[Page 1712]]

Aeronautics and Space Administration (NASA) authorization bill for 
fiscal years 2000, 2001, and 2002. As Chairman of the Committee on 
Commerce, Science, and Transportation, I am able to work closely with 
NASA and to review the agency's achievements on a continual basis. I am 
proud of NASA's accomplishments and want to applaud its sustained 
dominance throughout the world as the premier leader in basic 
aeronautics and space research.
  Yet leadership has a price. All one has to do is open the newspaper 
to learn about NASA's endless difficulties with the International Space 
Station, the agency's most comprehensive and complex endeavor to date.
  This one-of-a-kind research facility bears a lifetime price tag of 
approximately $100 billion dollars to the American taxpayers. Although 
this program is a long-term investment which will bring discoveries 
unimaginable to scientists today, it is our duty to protect the 
American people from the repeated inconsistent performance of the 
participating foreign partners, prime contractor, and program managers.
  During the 105th Congress, I offered an important amendment to this 
legislation that would impose a price cap on the development costs of 
the International Space Station. The language would ensure maximum 
program flexibility by providing NASA additional funding for Space 
Shuttle flights to service the Station, and by exempting specific 
activities when development costs are 5 percent or less of the 
Station's annual budget. I will again personally encourage my 
Congressional colleagues to enact a cost-cap measure this year to 
impose some semblance of fiscal restraint, however, it is up to NASA to 
prove that it is a responsible steward of public resources.
  The recent political and economic uncertainty in Russia has only 
exacerbated the development delay of the Russian components. Congress 
must pledge to work with NASA to bring further accountability to the 
Space Station if the United States is going to continue its leadership, 
both financially and managerially.
  NASA is not, and should not become a one mission agency. Congress 
must ensure that the Space Station does not impede progress on NASA's 
other important programs such as the Reusable Launch Vehicle, commonly 
referred to as the RLV.
  During the past year Congress has expressed its grave concerns about 
the alleged illegal transfers of U.S. missile technology to China and 
other nondemocratic nations. Yet, neither the transferring of licensing 
control from the Commerce Department back to State, nor an embargo on 
foreign launches will solve the underlying issues which result in 
American companies choosing foreign launch sites. Additional work is 
needed to substantially change the current environment for the domestic 
commercial launch industry.
  What the community needs is cheaper access to space including less 
expensive vehicles, launching costs, and insurance. The X-33, a joint 
venture between NASA and private industry, and X-34 programs are 
examples of promising flight demonstrators which will lead the path to 
stimulating the industry.
  Mr. President, we are at a unique juncture in the history of space 
discovery. I urge my colleagues to support this legislation, and to 
help restore Congressional confidence in NASA and the Nation's valuable 
space program.
                                 ______
                                 
      By Mr. CRAIG:
  S. 341. A bill to amend the Internal Revenue Code of 1986 to increase 
the amount allowable for qualified adoption expenses, to permanently 
extend the credit for adoption expenses, and to adjust the limitations 
on such credit for inflation, and for other purposes; to the Committee 
on Finance.


                         HOPE FOR CHILDREN ACT

  Mr. CRAIG. Mr. President, I rise to introduce the Hope for Children 
Act, which is also being introduced today in the House of 
Representatives by Congressman Tom Bliley of Virginia.
  I think all of us--no matter what party or philosophy--share the hope 
that every child in the world has a loving, permanent home. The Hope 
for Children Act is aimed at making that hope a reality for more 
children, by making it possible for more families to open their homes 
and hearts to a child through adoption.
  In the past few years, Congress has taken a number of steps to 
promote adoption in this country. I commend my colleagues on both sides 
of the aisle and in both chambers for their dedication to this effort. 
As an adoptive father myself, and co-chair of the bipartisan, bicameral 
Congressional Coalition on Adoption, I've been pleased to see more and 
more American families formed through adoption, and I sincerely believe 
the work of Congress has been a contributing factor.
  However, we have some unfinished business to take care of, and that's 
what I'm here to talk about today.
  Many of my colleagues will remember back in 1996, we succeeded in 
enacting a tax credit for adoption expenses. We did so, because we 
realized that adopting families face extraordinary challenges: not only 
must they forge a new family unit while navigating a labyrinth of legal 
or regulatory requirements, but they also have financial challenges 
above and beyond the usual expenses of caring for and raising children. 
The cost of adoption can easily push into the tens of thousands of 
dollars, counting legal fees, travel, medical bills and other expenses. 
All too often, it is the financial challenge that becomes an 
insurmountable obstacle to bringing a child who is alone in the world 
together with a loving family.
  We knew the adoption tax credit wouldn't eliminate the expense of 
adoption outright, but would only allow eligible adoptive families to 
keep a bit more of their own hard-earned income to devote to those 
expenses. As a result, adoptive parents may be eligible to receive a 
tax credit of $5000 to help cover out-of-pocket expenses related to 
each adoption, or a $6000 tax credit for the adoption of a ``special 
needs'' child.
  If the comments I've been hearing from families across the nation are 
any gauge, the credit has helped make adoption a reality for a lot of 
children. As more individuals explore the adoption option, they are 
finding the credit a small but significant cushion against the 
financial impact. Even so, I've received a number of constructive 
suggestions from families as to how the adoption tax credit could be 
improved, to make it more effective in promoting adoption in the United 
States.
  Furthermore, back in 1996 when we originally debated this matter, 
there were political and fiscal considerations that caused Congress to 
include a sunset provision for the adoption tax credit. Unless we act 
soon to extend this enormously helpful tool, it will expire.
  For all of those reasons, I am introducing the Hope for Children Act. 
It builds on the work done by our previous Congress, to improve and 
extend the adoption tax credit.
  Specifically, it would make the tax credit permanent, and adjust it 
for inflation. It would also exclude the credit from calculation of the 
alternative minimum tax. The full credit would be available for 
taxpayers with adjusted gross incomes under $150,000; those with 
adjusted gross incomes between $150,000 and $190,000 would be able to 
take a reduced credit. No credit would be available to those with 
adjusted gross incomes of more than $190,000.
  I should say at this point that I do not think this bill is the final 
word on the subject. I intend to work with interested groups and 
individuals on additional legislation that will promote adoption--
perhaps most important, that will do more to promote the adoption of 
children with special needs.
  There are so many children in the United States and the world who can 
only hope for the loving, permanent home that should be their 
birthright--I invite all Senators to join me in supporting the Hope for 
Children Act to help make their dreams a reality.
  Mr. President, I ask unanimous consent that a copy of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 341

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

[[Page 1713]]



     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Hope for Children Act''.

     SEC. 2. ADOPTION EXPENSES.

       (a) Increase in Amounts Allowed.--
       (1) Dollar amount of allowed expenses.--Paragraph (1) of 
     section 23(b) of the Internal Revenue Code of 1986 (relating 
     to dollar limitation) is amended by striking ``$5,000'' and 
     all that follows and inserting ``$10,000.''.
       (2) Phase-out limitation.--Clause (i) of section 
     23(b)(2)(A) of such Code (relating to income limitation) is 
     amended by striking ``$75,000'' and inserting ``$150,000''.
       (b) Repeal of Sunset on Children Without Special Needs.--
       (1) In general.--Paragraph (2) of section 23(d) of such 
     Code (relating to definition of eligible child) is amended to 
     read as follows:
       ``(2) Eligible child.--The term `eligible child' means any 
     individual who--
       ``(A) has not attained age 18, or
       ``(B) is physically or mentally incapable of caring for 
     himself.''.
       (2) Conforming amendment.--Subsection (d) of section 23 of 
     such Code (relating to definitions) is amended by striking 
     paragraph (3).
       (c) Adjustment of Dollar and Income Limitations For 
     Inflation.--Section 23 of such Code is amended by 
     redesignating subsection (h) as subsection (i) and by 
     inserting after subsection (g) the following new subsection:
       ``(h) Adjustments for Inflation.--In the case of a taxable 
     year beginning after December 31, 2000, each of the dollar 
     amounts in paragraphs (1) and (2)(A)(i) of subsection (b) 
     shall be increased by an amount equal to--
       ``(1) such dollar amount, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.''.
       (d) Limitation Based on Amount of Tax.--
       (1) In general.--Subsection (c) of section 23 of such Code 
     is amended by striking ``the limitation imposed'' and all 
     that follows through ``1400C)'' and inserting ``the 
     applicable tax limitation''.
       (2) Applicable tax limitation.--Subsection (d) of section 
     23 of such Code (as amended by subsection (b)) is further 
     amended adding at the end the following new paragraph:
       ``(3) Applicable tax limitation.--The term `applicable tax 
     limitation' means the sum of--
       ``(A) the taxpayer's regular tax liability for the taxable 
     year, reduced (but not below zero) by the sum of the credits 
     allowed by sections 21, 22, 24 (other than the amount of the 
     increase under subsection (d) thereof), 25, and 25A, and
       ``(B) the tax imposed by section 55 for such taxable 
     year.''.
       (3) Conforming amendments.--
       (A) Subsection (a) of section 26 of such Code (relating to 
     limitation based on amount of tax) is amended by inserting 
     ``(other than section 23)'' after ``allowed by this 
     subpart''.
       (B) Paragraph (1) of section 53(b) of such Code (relating 
     to minimum tax credit) is amended by inserting ``reduced by 
     the aggregate amount taken into account under section 
     23(d)(3)(B) for all such prior taxable years,'' after 
     ``1986,''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Mr. BOND (for himself, Mr. Burns, Ms. Snowe, Mr. Enzi, Mr. 
        Coverdell, Mr. Hagel, Mr. Kyl, Mr. Craig, Mr. Inhofe, Mr. 
        Helms, Ms. Collins, Mr. Specter, Mr. Jeffords, Mr. Roberts, and 
        Mr. Hutchinson):
  S. 343. A bill to amend the Internal Revenue Code of 1986 to allow a 
deduction for 100 percent of the health insurance costs of self-
employed individuals; to the Committee on Finance.


          self-employed health insurance fairness act of 1999

                                 ______
                                 
      By Mr. BOND (for himself, Mr. Nickles, Ms. Snowe, Mr. Coverdell, 
        Mr. Bennett, and Mr. Cochran):
  S. 344. A bill to amend the Internal Revenue Code of 1986 to provide 
a safe harbor for determining that certain individuals are not 
employees; to the Committee on Finance.


      independent contractor simplification and relief act of 1999

  Mr. BOND. Mr. President, small businesses today face enormous burdens 
when it comes to taxes. Each year they pay a growing portion of their 
revenues on income, employment, and excise taxes. Yet even before they 
write the tax check, they spend more than 5% of their revenues just to 
comply with the tax laws. These revenues are spent on accountants, 
bookkeepers, and lawyers to sort out the countless pages of tax laws, 
regulations, forms, instructions, rulings, and other guidance published 
by the IRS. In addition, small business owners must dedicate valuable 
time and energy on day-to-day recordkeeping and other compliance 
requirements, all of which keep them from doing what they do best--
running their business.
  As the Chairman of the Committee on Small Business, I have heard from 
small business owners in Missouri and across this country that they are 
more than willing to pay their fair share of taxes. But what they 
object to is paying high tax bills and vast amounts for professional 
tax assistance only to end up the victim of an unfair tax code.
  Mr. President, I rise today to introduce legislation that will 
eliminate two major sources of that unfairness and provide a level 
playing field for the millions of men and women who work exceedingly 
hard to make their small enterprises a success. These bills are common-
sense measures that respond to the calls from small businesses for tax 
fairness and simplicity.
  My first bill, the ``Self-Employed Health Insurance Fairness Act of 
1999,'' will end one of the most glaring inequities that has existed in 
our tax law--the deductibility of health-insurance costs for the self-
employed. For nearly five years, I have been working to see that the 
self-employed receive equal treatment when it comes to the 
deductibility of health insurance.
  During the 105th Congress, we made substantial progress. First, in 
the Taxpayer Relief Act of 1997, we broke through the long-standing cap 
on the deduction to provide 100% deductibility. Then, last Fall, we 
passed legislation that will speed up the date that self-employed 
persons can fully deduct their health-insurance costs to 2003. We also 
significantly increased the deductible amounts in the intervening years 
over the prior law. While I strongly supported these improvements, the 
self-employed still cannot wait four more years for 100% deductibility 
when their large corporate competitors have long been able to deduct 
such costs in full.
  With the self-employed able to deduct only 60% of their health-
insurance costs today, it comes as no surprise that nearly a quarter of 
the self-employed still do not have health insurance. In fact, five 
million Americans live in families headed by a self-employed individual 
and have no health insurance. And those families include 1.3 million 
children who lack adequate health-insurance coverage.
  Mr. President, it is time to finish the job once and for all in this 
Congress. My bill will increase the deductibility of health insurance 
for the self-employed to 100% beginning this year. A full deduction 
will make health insurance more affordable to the self-employed and 
help them and their families get the health insurance coverage that 
they need and deserve.
  The ``Self-Employed Health Insurance Fairness Act'' also corrects 
another inequity in the tax law affecting the self-employed who try to 
provide health insurance for themselves, their families, and their 
employees. Under current law, the self-employed lose all of the health-
insurance deduction if they are eligible to participate in another 
health-insurance plan--whether or not they actually participate.
  This provision affects self-employed individuals like Steve Hagan in 
my hometown of Mexico, Missouri. Mr. Hagan is a financial planner who 
runs his own small business. Although he has a group medical plan for 
his employees, Mr. Hagan cannot deduct the cost of covering himself or 
his family simply because his wife is eligible for health insurance 
through her employer. The inequity is clear. Why should he be able to 
deduct the insurance costs for his employees but not for himself and 
his family? What if the insurance available through his wife's employer 
does not meet the needs of their family?
  Besides being patently unfair, this is also an enormous trap for the 
unwary. Imagine the small business owner who learns that she can now 
deduct 60% of her health-insurance costs this year, and with the extra 
deduction, she can finally afford a group medical plan for herself and 
her employees. Then later

[[Page 1714]]

in the year, her husband gets a new job that offers health insurance. 
Suddenly, her self-employed health-insurance deduction is gone, and she 
is left with two choices. She can bear the entire cost of her family's 
coverage, or terminate the insurance coverage for all her employees. 
The tax code should not force small business owners into this kind of 
``no win'' situation when they try to provide insurance coverage for 
their employees and themselves.
  My bill eliminates this problem by clarifying that the self-employed 
health-insurance deduction is limited only if the self-employed person 
actually participates in a subsidized health insurance plan offered by 
a spouse's employer or through a second job. It's simply a matter of 
fairness, and a step we need to take now.
  The second bill that I introduce today is the ``Independent 
Contractor Simplification and Relief Act of 1999.'' This bill will 
provide clear rules and relief for entrepreneurs seeking to be treated 
as independent contractors and for businesses needing to use 
independent contractors. As the Chairman of the Small Business 
Committee, I have heard from countless small business owners who are 
caught in the environment of fear and confusion that now surrounds the 
classification of workers. This situation is stifling the 
entrepreneurial spirit of many small business owners who find that they 
do not have the flexibility to conduct their businesses in a manner 
that makes the best economic sense and that serves their personal and 
family goals.
  The root of this problem is found in the IRS' test for determining 
whether a worker is an independent contractor or an employee. Over the 
past three decades, the IRS has relied on a 20-factor test based on the 
common law to make this determination. On first blush, a 20-factor test 
sounds like a reasonable approach--if a taxpayer demonstrates a 
majority of the factors, he is an independent contractor. Not 
surprisingly, the IRS' test is not that simple. It is a complex set of 
extremely subjective criteria with no clear weight assigned to any of 
the factors. As a result, small business taxpayers are not able to 
predict which of the 20 factors will be most important to a particular 
IRS agent, and finding a certain number of these factors in any given 
case does not guarantee the outcome.
  To make matters worse, the IRS' determination inevitably occurs two 
or three years after the parties have determined in good faith that 
they have an independent-contractor relationship. And the consequences 
can be devastating. The business recipient of the services is forced to 
reclassify the independent contractor as an employee and must pay the 
payroll taxes the IRS says should have been collected in the prior 
years. Interest and penalties are also piled on. The result for many 
small businesses is a tax bill that bankrupts the company. But that's 
not the end of the story. The IRS then goes after the service provider, 
who is now classified as an employee, and disallows a portion of her 
business expenses--again resulting in additional taxes, interest and 
penalties.
  Mr. President, all of us in this body recognize that the IRS is 
charged with the duty of collecting Federal revenues and enforcing the 
tax laws. The problem in this case is that the IRS is using a procedure 
that is patently unfair and subjective. And the result is that 
businesses must spend thousands of dollars on lawyers and accountants 
to try to satisfy the IRS' procedures, but with no certainty that the 
conclusions will be respected. That's no way for businesses to operate 
in today's rapidly changing economy.
  For its part, the IRS has adopted a worker classification training 
manual, which according to the agency is an ``attempt to identify, 
simplify, and clarify the relevant facts that should be evaluated in 
order to accurately determine worker classification * * *.'' There can 
be no more compelling reason for immediate action on this issue. The 
IRS' training manual is more than 150 pages. If it takes that many 
pages to teach revenue agents how to ``simplify and clarify'' this 
small business tax issue, I think we can be sure how simple and clear 
it is going to seem to taxpayers who try to figure it out on their own.
  The ``Independent Contractor Simplification and Relief Act'' is based 
on the provisions of my Home-Based Business Fairness Act, which I 
introduced at the start of the 105th Congress. My bill removes the need 
for so many pages of instruction on the 20-factor test by establishing 
clear rules for classifying workers based on objective criteria. Under 
these criteria, if there is a written agreement between the parties, 
and if an individual demonstrates economic independence and 
independence with respect to the workplace, he will be treated as an 
independent contractor rather than an employee. And the service 
recipient will not be treated as an employer. In addition, individuals 
who perform services through their own corporation or limited liability 
company will also qualify as independent contractors as long as there 
is a written agreement and the individuals provide for their own 
benefits.
  The safe harbor is simple, straightforward, and final. To take 
advantage of it, payments above $600 per year to an individual service 
provider must be reported to the IRS, just as is required under current 
law. This will help ensure that taxes properly due to the Treasury will 
continue to be collected.
  Mr. President, the IRS contends that there are millions of 
independent contractors who should be classified as employees, which 
costs the Federal government billions of dollars a year. This assertion 
is plainly incorrect. Classification of a worker has no cost to the 
government. What costs the government are taxpayers who do not pay 
their taxes. My bill has three requirements that I believe will improve 
compliance among independent contractors using the new rules I propose. 
First, there must be a written agreement between the parties--this will 
put the independent contractor on notice at the beginning that he is 
responsible for his own tax payments. Second, the new rules will not 
apply if the service recipient does not comply with the reporting 
requirements and issue 1099s to individuals who perform services. 
Third, an independent contractor operating through his own corporation 
or limited liability company must file all required income and 
employment tax returns in order to be protected under the bill.
  In the last Congress, concerns were raised that permitting 
individuals who provide their services through their own corporation or 
limited liability company to qualify as independent contractors would 
lead to abusive situations at the expense of workers who should be 
treated as employees. To prevent this option from being abused, I have 
added language that limits the number of former employees that a 
service recipient may engage as independent contractors under the 
incorporation option. This limit will protect against misuse of the 
incorporation option while still allowing individuals to start their 
own businesses and have a former employer as one of their initial 
clients.
  Another major concern of many businesses and independent contractors 
is the issue of reclassification. My bill provides relief to these 
taxpayers when the IRS determines that a worker was misclassified. 
Under my bill, if the business and the independent contractor have a 
written agreement, if the applicable reporting requirements were met, 
and if there was a reasonable basis for the parties to believe that the 
worker is an independent contractor, then an IRS reclassification will 
only apply prospectively. This provision gives important peace of mind 
to small businesses that act in good faith by removing the 
unpredictable threat of retroactive reclassification and substantial 
interest and penalties.
  A final provision of this legislation, Mr. President, is the repeal 
of section 1706 of the 1986 Tax Reform Act. This section affects 
businesses that engage technical service providers, such as engineers, 
designers, drafters, computer programmers, and systems analysts. In 
certain cases, Section 1706 precludes these businesses from applying 
the reclassification protections under section 530 of the Revenue Act 
of 1978. When

[[Page 1715]]

section 1706 was enacted, its proponents argued that technical service 
workers were less compliant in paying their taxes. Later examination of 
this issue by the Treasury Department found that technical service 
workers are in fact more likely to pay their taxes than most other 
types of independent contractors. This revelation underscores the need 
to repeal section 1706 and level the playing field for individuals in 
these professions.
  In the last two Congresses, proposals to repeal section 1706 enjoyed 
wide bipartisan support. The bill I introduce today is designed to 
level the playing field for individuals in these professions by 
providing the businesses that engage them with the same protections 
that businesses using other types of independent contractors have 
enjoyed for more than 20 years.
  Mr. President, the bills I introduce today are common-sense measures 
that answer small business' urgent plea for fairness and simplicity in 
the tax law. As we work toward the day when the entire tax law is based 
on these principles, we can make a difference today by enacting these 
two bills. Entrepreneurs have waited too long--let's get the job done!
  Mr. President, I ask unanimous consent to include in the Record a 
copy of each bill and a description of its provisions.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                 S. 343

       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 ``Self-Employed Health 
     Insurance Fairness Act of 1999''.

     SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED 
                   INDIVIDUALS INCREASED.

       (a) In General.--Section 162(l)(1) of the Internal Revenue 
     Code of 1986 (relating to special rules for health insurance 
     costs of self-employed individuals) is amended to read as 
     follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the amount paid during the taxable year for 
     insurance which constitutes medical care for the taxpayer, 
     the taxpayer's spouse, and dependents.''
       (b) Clarification of Limitations on Other Coverage.--The 
     first sentence of section 162(l)(2)(B) of the Internal 
     Revenue Code of 1986 is amended to read as follows: 
     ``Paragraph (1) shall not apply to any taxpayer for any 
     calendar month for which the taxpayer participates in any 
     subsidized health plan maintained by any employer (other than 
     an employer described in section 401(c)(4)) of the taxpayer 
     or the spouse of the taxpayer.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                  ____


  Self-Employed Health Insurance Fairness Act of 1999--Description of 
                               Provisions

       The bill amends section 162(l)(1) of the Internal Revenue 
     Code to increase the deduction for health-insurance costs for 
     self-employed individuals to 100% beginning on January 1, 
     1999. Currently the self-employed can only deduct 60% percent 
     of these costs. The deduction is not scheduled to reach 100% 
     until 2003, under the provisions of the Omnibus Consolidated 
     and Emergency Supplemental Appropriations Act of 1998, which 
     was signed into law in October 1998. The bill is designed to 
     place self-employed individuals on an equal footing with 
     large businesses, which can currently deduct 100% of the 
     health-insurance costs for all of their employees.
       The bill also corrects a disparity under current law that 
     bars a self-employed individual from deducting any of his or 
     her health-insurance costs if the individual is eligible to 
     participate in another health-insurance plan. This provision 
     affects self-employed individuals who are eligible for, but 
     do not participate in, a health-insurance plan offered 
     through a second job or through a spouse's employer. That 
     insurance plan may not be adequate for the self-employed 
     business owner, and this provision prevents the self-employed 
     from deducting the costs of insurance policies that do meet 
     the specific needs of their families. In addition, this 
     provision provides a significant disincentive for self-
     employed business owners to provide group health insurance 
     for their employees. The bill ends this disparity by 
     clarifying that a self-employed person loses the deduction 
     only if he or she actually participates in another health-
     insurance plan.
                                  ____


                                 S. 344

       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 ``Independent Contractor 
     Simplification and Relief Act of 1999''.

     SEC. 2. SAFE HARBOR FOR DETERMINING THAT CERTAIN INDIVIDUALS 
                   ARE NOT EMPLOYEES.

       (a) In General.--Chapter 25 (relating to general provisions 
     relating to employment taxes) is amended by adding after 
     section 3510 the following new section:

     ``SEC. 3511. SAFE HARBOR FOR DETERMINING THAT CERTAIN 
                   INDIVIDUALS ARE NOT EMPLOYEES.

       ``(a) Safe Harbor.--
       ``(1) In general.--For purposes of this title, if the 
     requirements of subsections (b), (c), and (d), or the 
     requirements of subsections (d) and (e), are met with respect 
     to any service performed by any individual, then with respect 
     to such service--
       ``(A) the service provider shall not be treated as an 
     employee,
       ``(B) the service recipient shall not be treated as an 
     employer,
       ``(C) the payor shall not be treated as an employer, and
       ``(D) compensation paid or received for such service shall 
     not be treated as paid or received with respect to 
     employment.
       ``(2) Availability of safe harbor not to limit application 
     of other laws.--Nothing in this section shall be construed--
       ``(A) as limiting the ability of a service provider, 
     service recipient, or payor to apply other provisions of this 
     title, section 530 of the Revenue Act of 1978, or the common 
     law in determining whether an individual is not an employee, 
     or
       ``(B) as a prerequisite for the application of any 
     provision of law described in subparagraph (A).
       ``(b) Service Provider Requirements With Regard to the 
     Service Recipient.--For purposes of subsection (a), the 
     requirements of this subsection are met if the service 
     provider, in connection with performing the service--
       ``(1) has the ability to realize a profit or loss,
       ``(2) agrees to perform services for a particular amount of 
     time or to complete a specific result or task, and
       ``(3) either--
       ``(A) incurs unreimbursed expenses which are ordinary and 
     necessary to the service provider's industry and which 
     represent an amount equal to at least 2 percent of the 
     service provider's adjusted gross income attributable to 
     services performed pursuant to 1 or more contracts described 
     in subsection (d), or
       ``(B) has a significant investment in assets.
       ``(c) Additional Service Provider Requirements With Regard 
     to Others.--For the purposes of subsection (a), the 
     requirements of this subsection are met if the service 
     provider--
       ``(1) has a principal place of business,
       ``(2) does not primarily provide the service at a single 
     service recipient's facilities,
       ``(3) pays a fair market rent for use of the service 
     recipient's facilities, or
       ``(4) operates primarily from equipment not supplied by the 
     service recipient.
       ``(d) Written Document Requirements.--For purposes of 
     subsection (a), the requirements of this subsection are met 
     if the services performed by the service provider are 
     performed pursuant to a written contract between such service 
     provider and the service recipient, or the payor, and such 
     contract provides that the service provider will not be 
     treated as an employee with respect to such services for 
     Federal tax purposes and that the service provider is 
     responsible for the provider's own Federal, State, and local 
     income taxes, including self-employment taxes and any other 
     taxes.
       ``(e) Business Structure and Benefits Requirements.--For 
     purposes of subsection (a), the requirements of this 
     subsection are met if the service provider--
       ``(1) conducts business as a properly constituted 
     corporation or limited liability company under applicable 
     State laws, and
       ``(2) does not receive from the service recipient or payor 
     any benefits that are provided to employees of the service 
     recipient.
       ``(f) Special Rules.--For purposes of this section--
       ``(1) Failure to meet reporting requirements.--If for any 
     taxable year any service recipient or payor fails to meet the 
     applicable reporting requirements of section 6041(a) or 
     6041A(a) with respect to a service provider, then, unless the 
     failure is due to reasonable cause and not willful neglect, 
     the safe harbor provided by this section for determining 
     whether individuals are not employees shall not apply to such 
     service recipient or payor with respect to that service 
     provider.
       ``(2) Corporation and limited liability company service 
     providers.--
       ``(A) Returns required.--If, for any taxable year, any 
     corporation or limited liability company fails to file all 
     Federal income and employment tax returns required under this 
     title, unless the failure is due to reasonable cause and not 
     willful neglect, subsection (e) shall not apply to such 
     corporation or limited liability company.
       ``(B) Reliance by service recipient or payor.--If a service 
     recipient or a payor--

[[Page 1716]]

       ``(i) obtains a written statement from a service provider 
     which states that the service provider is a properly 
     constituted corporation or limited liability company, 
     provides the State (or in the case of a foreign entity, the 
     country), and year of, incorporation or formation, provides a 
     mailing address, and includes the service provider's employer 
     identification number, and
       ``(ii) makes all payments attributable to services 
     performed pursuant to 1 or more contracts described in 
     subsection (d) to such corporation or limited liability 
     company,
     then the requirements of subsection (e)(1) shall be deemed to 
     have been satisfied.
       ``(C) Availability of safe harbor.--
       ``(i) In general.--For purposes of this section, unless 
     otherwise established to the satisfaction of the Secretary, 
     the number of covered workers which are not treated as 
     employees by reason of subsection (e) for any calendar year 
     shall not exceed the threshold number for the calendar year.
       ``(ii) Threshold number.--For purposes of this paragraph, 
     the term `threshold number' means, for any calendar year, the 
     greater of (I) 10 covered workers, or (II) a number equal to 
     3 percent of covered workers.
       ``(iii) Covered worker.--For purposes of this paragraph, 
     the term `covered worker' means an individual for whom the 
     service recipient or payor paid employment taxes under 
     subtitle C in all 4 quarters of the preceding calendar year.
       ``(3) Burden of proof.--For purposes of subsection (a), 
     if--
       ``(A) a service provider, service recipient, or payor 
     establishes a prima facie case that it was reasonable not to 
     treat a service provider as an employee for purposes of this 
     section, and
       ``(B) the service provider, service recipient, or payor has 
     fully cooperated with reasonable requests from the Secretary 
     or his delegate,

     then the burden of proof with respect to such treatment shall 
     be on the Secretary.
       ``(4) Related entities.--If the service provider is 
     performing services through an entity owned in whole or in 
     part by such service provider, the references to service 
     provider in subsections (b) through (e) shall include such 
     entity if the written contract referred to in subsection (d) 
     is with such entity.
       ``(g) Determinations by the Secretary.--For purposes of 
     this title--
       ``(1) In general.--
       ``(A) Determinations with respect to a service recipient or 
     a payor.--A determination by the Secretary that a service 
     recipient or a payor should have treated a service provider 
     as an employee shall be effective no earlier than the notice 
     date if--
       ``(i) the service recipient or the payor entered into a 
     written contract satisfying the requirements of subsection 
     (d),
       ``(ii) the service recipient or the payor satisfied the 
     applicable reporting requirements of section 6041(a) or 
     6041A(a) for all taxable years covered by the contract 
     described in clause (i), and
       ``(iii) the service recipient or the payor demonstrates a 
     reasonable basis for determining that the service provider is 
     not an employee and that such determination was made in good 
     faith.
       ``(B) Determinations with respect to a service provider.--A 
     determination by the Secretary that a service provider should 
     have been treated as an employee shall be effective no 
     earlier than the notice date if--
       ``(i) the service provider entered into a contract 
     satisfying the requirements of subsection (d),
       ``(ii) the service provider satisfied the applicable 
     reporting requirements of sections 6012(a) and 6017 for all 
     taxable years covered by the contract described in clause 
     (i), and
       ``(iii) the service provider demonstrates a reasonable 
     basis for determining that the service provider is not an 
     employee and that such determination was made in good faith.
       ``(C) Reasonable cause exception.--The requirements of 
     subparagraph (A)(ii) or (B)(ii) shall be treated as being met 
     if the failure to satisfy the applicable reporting 
     requirements is due to reasonable cause and not willful 
     neglect.
       ``(2) Construction.--Nothing in this subsection shall be 
     construed as limiting any provision of law that provides an 
     opportunity for administrative or judicial review of a 
     determination by the Secretary.
       ``(3) Notice date.--For purposes of this subsection, the 
     notice date is the 30th day after the earlier of--
       ``(A) the date on which the first letter of proposed 
     deficiency that allows the service provider, the service 
     recipient, or the payor an opportunity for administrative 
     review in the Internal Revenue Service Office of Appeals is 
     sent, or
       ``(B) the date on which the deficiency notice under section 
     6212 is sent.
       ``(h) Definitions.--For the purposes of this section--
       ``(1) Service provider.--The term `service provider' means 
     any individual who performs a service for another person.
       ``(2) Service recipient.--Except as provided in paragraph 
     (4), the term `service recipient' means the person for whom 
     the service provider performs such service.
       ``(3) Payor.--Except as provided in paragraph (4), the term 
     `payor' means the person who pays the service provider for 
     the performance of such service in the event that the service 
     recipient does not pay the service provider.
       ``(4) Exceptions.--The terms `service recipient' and 
     `payor' do not include any entity in which the service 
     provider owns in excess of 5 percent of--
       ``(A) in the case of a corporation, the total combined 
     voting power of stock in the corporation, or
       ``(B) in the case of an entity other than a corporation, 
     the profits or beneficial interests in the entity.
       ``(5) In connection with performing the service.--The term 
     `in connection with performing the service' means in 
     connection or related to the operation of the service 
     provider's trade or business.
       ``(6) Principal place of business.--For purposes of 
     subsection (c), the term `principal place of business' has 
     the same meaning as under section 280A(c)(1) (as in effect 
     for taxable years beginning after December 31, 1998).
       ``(7) Fair market rent.--The term `fair market rent' means 
     a periodic, fixed minimum rental fee which is based on the 
     fair rental value of the facilities and is established 
     pursuant to a written contract with terms similar to those 
     offered to unrelated persons for facilities of similar type 
     and quality.''
       (b) Repeal of Section 530(d) of the Revenue Act of 1978.--
     Section 530(d) of the Revenue Act of 1978 (as added by 
     section 1706 of the Tax Reform Act of 1986) is repealed.
       (c) Clerical Amendment.--The table of sections for chapter 
     25 of the Internal Revenue Code of 1986 is amended by adding 
     at the end the following new item:

``Sec. 3511. Safe harbor for determining that certain individuals are 
              not employees.''

       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to services performed after the date of the enactment 
     of this Act.
       (2) Determinations by the secretary.--Section 3511(g) of 
     the Internal Revenue Code of 1986 (as added by subsection 
     (a)) shall apply to determinations after the date of the 
     enactment of this Act.
       (3) Section 530(d).--The amendment made by subsection (b) 
     shall apply to periods ending after the date of the enactment 
     of this Act.
                                  ____


     Independent Contractor Simplification and Relief Act of 1999--
                       Description of Provisions

       The bill addresses the worker-classification issue (e.g., 
     whether a worker is an employee or an independent contractor) 
     by creating a new section 3511 of the Internal Revenue Code. 
     The new section will provide straightforward rules for 
     classifying workers and provide relief from the IRS' 
     reclassification of an independent contractor in certain 
     circumstances. The bill is designed to provide certainty for 
     businesses that enter into independent-contractor 
     relationships and minimize the risk of huge tax bills for 
     back taxes, interest, and penalties if a worker is 
     misclassified after the parties have entered into an 
     independent-contractor relationship in good faith.


                 Clear Rules for Worker Classification

       Under the bill's new worker-classification rules, an 
     individual will be treated as an independent contractor and 
     the service recipient will not be treated as an employer if 
     either of two tests is met--the ``general test'' or the 
     ``incorporation test.''
       General Test: The general test requires that the 
     independent contractor demonstrate economic independence and 
     workplace independence and have a written contract with the 
     service recipient.
       Economic independence exists if the independent contractor 
     has the ability to realize a profit or loss and agrees to 
     perform services for a particular amount of time or to 
     complete a specific result or task. In addition, the 
     independent contractor must either incur unreimbursed 
     expenses that are consistent with industry practice and that 
     equal at least 2% of the independent contractor's adjusted 
     gross income from the performance of services during the 
     taxable year, or have a significant investment in the assets 
     of his or her business.
       Workplace independence exists if one of the following 
     applies: the independent contractor has a principal place of 
     business (including a ``home office'' as expanded by the 
     Taxpayer Relief Act of 1997); he or she performs services at 
     more than one service recipient's facilities; he or she pays 
     a fair-market rent for the use of the service recipient's 
     facilities; or the independent contractor uses his or her own 
     equipment.
       The written contract between the independent contractor and 
     the service recipient must provide that the independent 
     contractor will not be treated as an employee and is 
     responsible for his or her own taxes.
       Incorporation Test: Under this test, an individual will be 
     treated as an independent contractor if he or she conducts 
     business through a corporation or a limited liability 
     company. In addition, the independent contractor must be 
     responsible for his or her

[[Page 1717]]

     own benefits, instead of receiving benefits from the service 
     recipient. The independent contractor must also have a 
     written contract with the service provider stating that the 
     independent contractor will not be treated as an employee and 
     is responsible for his or her own taxes.
       To prevent the incorporation test from being abused, the 
     bill limits the number of former employees that a service 
     recipient may engage as independent contractors under this 
     test. The limitation is based on the number of people 
     employed by the service recipient in the preceding year and 
     is equal to the greater of 10 persons or 3% of the service 
     recipient's employees in the preceding year. For example, 
     Business X has 500 employees in 1998. In 1999 up to 15 
     employees (the greater of 3% of Business X's 1998 employees 
     or 10 individuals) could incorporate their own businesses and 
     still have Business X as one of their initial clients. This 
     limitation would not affect the number of incorporated 
     independent contractors who were not former employees of the 
     service recipient or independent contractors meeting the 
     general test.
       Additional Provisions: The new worker-classification rules 
     also apply to three-party situations in which the independent 
     contractor is paid by a third party, such as a payroll 
     company, rather than directly by the service recipient. The 
     new worker-classification rules, however, will not apply to a 
     service recipient or a third-party payor if they do not 
     comply with the existing reporting requirements and file 
     1099s for individuals who work as independent contractors. A 
     limited exception is provided for cases in which the failure 
     to file a 1099 is due to reasonable cause and not willful 
     neglect.
       New Worker-Classification Rules Do Not Replace Other 
     Options: In the event that the new worker-classification 
     rules do not apply, the bill makes clear that the independent 
     contractor or service recipient can still rely on the 20-
     factor common law test or other provisions of the Internal 
     Revenue Code applicable in determining whether an individual 
     is an independent contractor or employee. In addition, the 
     bill does not limit any relief to which a taxpayer may be 
     entitled under Section 530 of the Revenue Act of 1978. The 
     bill also makes clear that the new rules will not be 
     construed as a prerequisite for these other provisions of the 
     law.


                      Relief From Reclassification

       The bill provides relief from reclassification by the IRS 
     of an independent contractor as an employee. For many service 
     recipients who make a good-faith effort to classify the 
     worker correctly, this event can result in extensive 
     liability for back employment taxes, interest, and penalties.
       Relief Under the New Worker-Classification Rules: The bill 
     provides relief for cases in which a worker is treated as an 
     independent contractor under the new worker-classification 
     rules and the IRS later contends that the new rules do not 
     apply. In that case, the burden of proof will fall on the 
     IRS, rather than the taxpayer, to prove that the new worker-
     classification rules do not apply. To qualify for this relief 
     the taxpayer must demonstrate a credible argument that it was 
     reasonable to treat the service provider as an independent 
     contractor under the new rules, and the taxpayer must fully 
     cooperate with reasonable requests from the IRS.
       Protection Against Retroactive Reclassification: If the IRS 
     notifies a service recipient that an independent contractor 
     should have been classified as an employee (under the new or 
     old rules), the bill provides that the IRS' determination can 
     become effective only 30 days after the date that the IRS 
     sends the notification. To qualify for this provision, the 
     service recipient must show that:
       there was a written agreement between the parties;
       the service recipient satisfied the applicable reporting 
     requirements for all taxable years covered by the contract; 
     and
       there was a reasonable basis for determining that the 
     independent contractor was not an employee and the service 
     provider made the determination in good faith.
       The bill provides similar protection for independent 
     contractors who are notified by the IRS that they should have 
     been treated as an employee.
       The protection against retroactive reclassification is 
     intended to remove some of the uncertainty for businesses 
     contracting with independent contractors, especially those 
     who must use the IRS's 20-factor common law test. While the 
     bill would prevent the IRS from forcing a service recipient 
     to treat an independent contractor as an employee for past 
     years, the bill makes clear that a service recipient or an 
     independent contractor can still challenge the IRS's 
     prospective reclassification of an independent contractor 
     through administrative or judicial proceedings.


           Repeal of Section 1706 of the Revenue Act of 1978

       The bill repeals section 530(d) of the Revenue Act of 1978, 
     which was added by section 1706 of the Tax Reform Act of 
     1986. This provision precludes businesses that engage 
     technical service providers (e.g., engineers, designers, 
     drafters, computer programmers, systems analysts, and other 
     similarly qualified individuals) in certain cases from 
     applying the reclassification protections under section 530. 
     The bill is designed to level the playing field for 
     individuals in these professions by providing the businesses 
     that engage them with the same protections that businesses 
     using other types of independent contractors have enjoyed for 
     more than 20 years.


                            Effective Dates

       In general, the independent-contractor provisions of the 
     bill, including the new worker- classification rules, will be 
     effective for services performed after the date of enactment 
     of the bill. The protection against retroactive 
     reclassification will be effective for IRS determinations 
     after the date of enactment, and the repeal of section 530(d) 
     will be effective for periods ending after the date of 
     enactment of the bill.
                                 ______
                                 
      By Mr. ALLARD:
  S. 345. A bill to amend the Animal Welfare Act to remove the 
limitation that permits interstate movement of live birds, for the 
purpose of fighting, to States in which animal fighting is lawful; to 
the Committee on Agriculture, Nutrition, and Forestry.


                    amendment to animal welfare act

  Mr. ALLARD. Mr. President, today I am introducing a bill to amend the 
Animal Welfare Act to remove the limitation that permits interstate 
movement of live birds for the purpose of fighting to States in which 
animal fighting is lawful.
  Currently, the Animal Welfare Act makes it unlawful for any person to 
knowingly sponsor or exhibit an animal in any animal fighting venture 
to which the animal was moved in interstate or foreign commerce. This 
means that if an animal crosses state lines and then fights in a state 
where cockfighting is not legal, that is a crime. However, the law 
further states, ``the activities prohibited by such subsections shall 
be unlawful with respect to fighting ventures involving live birds only 
if the fight is to take place in a State where it would be in violation 
of the laws thereof.'' This means that the law applies to all animals 
involved in all types of fighting--except for birds being transported 
for cockfighting purposes to a state where cockfighting is still legal. 
Because of the loophole, law enforcement officers have a more difficult 
time prosecuting under their state cockfighting bans.
  As introduced this legislation will close the loophole on 
cockfighting, and prohibit interstate movement of birds for the purpose 
of fighting from states where cockfighting is illegal to states where 
cockfighting is legal. This legislation will clarify that possession of 
fighting birds in any of the 47 states would then be illegal, as 
shipping them out for cockfighting purposes would be illegal.
  I believe that my colleague from states where cockfighting is illegal 
will benefit from this change because it will make law enforcement 
easier. I also believe that my colleagues from states or territories 
where cockfighting is currently legal should not oppose this change as 
it merely confines cockfighting to within that state's borders.
                                 ______
                                 
      By Mrs. HUTCHISON (for herself, Mr. Graham, Mr. Voinovich, Mr. 
        Abraham, Mr. McConnell, Mr. McCain, Mr. Lott, Mr. Leahy, Mr. 
        Smith of Oregon, Mr. Gorton, Mrs. Murray, Mr. Allard, Mr. 
        Burns, Mr. Frist, Mr. Cochran, Mr. Craig, Mr. Bunning, Mr. Kyl, 
        Mr. Lugar, Mr. Inhofe, Mr. Hutchinson, Mr. Mack, Mrs. Lincoln, 
        Mr. Torricelli, Mr. Bayh, Mr. Murkowski, Mr. Gramm, and Mr. 
        Thompson):
  S. 346. A bill to amend title XIX of the Social Security Act to 
prohibit the recoupment of funds recovered by States from one or more 
tobacco manufacturers; to the Committee on Finance.


                  states rights protection act of 1999

  Mrs. HUTCHISON. Mr. President, I am pleased to introduce this bill, 
along with 27 other cosponsors. The prime one is Senator Bob Graham of 
Florida, who has worked very hard with me over the last year to make 
sure that the State tobacco settlements which our States have worked so 
hard to achieve will remain in control of the States because, in fact, 
the President's budget which was just released this week assumes that 
it will still seize

[[Page 1718]]

$18.9 billion of the State tobacco settlement funds for Medicaid 
recoupment. Mr. President, that is just not right, and the bill I am 
introducing with Senator Graham of Florida, Senator Gorton, and 26 
others, on a bipartisan basis, will keep that from happening.
  The bill is strongly supported by the National Governors' 
Association, the National Association of Attorneys General, the 
National Conference of State Legislators, and several other groups.
  I ask unanimous consent that letters of support from these groups be 
printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                               National Governors Association,

                                 Washington, DC, February 3, 1999.
     Hon. Kay Bailey Hutchison,
     U.S. Senate, Washington, DC.

     Hon. Bob Graham,
     U.S. Senate, Washington, DC.
       Dear Senators Hutchison and Graham: A major priority for 
     the nation's Governors during the 106th Congress is ensuring 
     that state tobacco settlement funds are protected from 
     unwarranted seizure by the federal government. The Governors 
     believe it is critical that access to full, unencumbered 
     recoupment protection be afforded to all states. We are 
     pleased that you have introduced legislation to accomplish 
     this goal. Your legislation would prohibit the federal 
     government from attempting to recover a staggering 57% of the 
     entire settlement amount.
       Our states' Attorneys General carefully crafted the tobacco 
     agreement to reflect only state costs. Medicaid costs were 
     not a major issue in negotiating the settlement. In fact, the 
     final agreement reached by the Attorneys General on November 
     23, 1998 does not mention Medicaid. Therefore, there is no 
     legitimate federal claim on the settlement.
       Without the states' leadership and years of commitment to 
     initiating state lawsuits, the nation would not have achieved 
     one of its major goals--a comprehensive settlement with the 
     tobacco industry. After bearing all of the risks and expenses 
     in the arduous negotiations and litigation necessary to have 
     proceeded with their lawsuit, states are now entitled to all 
     of the funds awarded to them in the tobacco settlement 
     agreement without federal seizure.
       We look forward to working with you and other Members of 
     Congress to enact this legislation and prevent federal 
     seizure of state tobacco settlement funds.
           Sincerely,
     Thomas R. Carper.
     Michael O. Leavitt.
                                  ____

                                            National Conference of


                                           State Legislatures,

                                 Washington, DC, February 1, 1999.
     Hon. Kay Bailey Hutchison,
     Russell Senate Office Building, Washington, DC.
       Dear Senator Hutchison: On behalf of the National 
     Conference of State Legislatures (NCSL), I write in support 
     of bipartisan legislation that Senator Bob Graham and you 
     will soon introduce to ensure that states retain all of their 
     tobacco settlement funds. NCSL has made this legislation its 
     top priority for 1999. NCSL is very appreciative of the 
     leadership you provided on this issue during the 105th 
     Congress. I am grateful for your willingness to lead the way 
     again in 1999. The nation's state legislators will work 
     steadfastly with you and all of your Senate colleagues to 
     ensure that this legislature is enacted.
       It is through the sole efforts of states that the historic 
     settlement of November 23, 1998 and four prior individual 
     state settlements were finalized. States initiated the suits 
     that led to the settlements without any assistance from the 
     federal government. States consumed their own resources and 
     accepted all of the risks with their suits. Additionally, the 
     November 23, 1998 agreement makes no mention of Medicaid, 
     which is the program cited by those who want to establish a 
     basis for seizing state tobacco settlement funds. It is clear 
     to me that the federal government has no claim to these 
     funds. I fully appreciate, however, the need for 
     clarification that federal legislation would provide.
       As you well know, states are no finalizing the settlement, 
     carrying out the terms of the accord and making final fiscal 
     determinations about how to most responsibly apply settlement 
     funds to public health and other needs. Threats of recoupment 
     and related uncertainties only compromise our ability to 
     progress with finalizing the settlement and working to reduce 
     youth smoking, abating youth access to tobacco products and 
     addressing the economic impact of anticipated reduced demand 
     for tobacco products. Enactment of your federal legislation 
     would eliminate these threats and permit states to move 
     forward.
       I look forward to working closely with you to a successful 
     and mutually acceptable resolution of this issue.
           Sincerely,
                                                         Dan Blue,
     President, North Carolina House of Representatives.
                                  ____

                                           National Association of


                                            Attorneys General,

                                 Washington, DC, February 1, 1999.
     Hon. Kay Bliley Hutchison,
     U.S. Senate, Washington, DC.
       Dear Senator Hutchison: Your support at the recent press 
     conference for protecting the state tobacco settlements from 
     seizure by the federal government was much appreciated. On 
     behalf of the Association, thank you for your leadership 
     early in the new session on this issue.
       Building on the strong bipartisan support evidenced on 
     January 21, we want to continue to work with you and your 
     colleagues on legislation that will ensure that the states 
     retain all of their tobacco settlement funds. We hope this 
     legislation will be enacted as early as possible in the 106th 
     Congress.
           Sincerely yours,
     Christine O. Gregoire,
       Attorney General of Washington.
     Betty Montgomery,
       Attorney General of Ohio.
                                  ____



                             National Association of Counties,

                                 Washington, DC, January 27, 1999.
     Hon. Kay Bailey Hutchison,
     Russell Building, Washington, DC.
       Dear Senator Hutchison: I am writing to let you know that 
     the National Association of Counties (NACo) strongly endorses 
     the bill to be introduced by you and Senator Bob Graham (D-
     FL) that would prevent the federal recoupment of states' 
     tobacco settlement funds. NACo is adamantly opposed to any 
     attempt by the federal government to go after these funds and 
     applauds the introduction of this straightforward, bipartisan 
     legislation.
       The $206 billion settlement agreed to on November 23, 1998 
     by the state Attorneys General and the major United States 
     tobacco companies settles more than 40 pending lawsuits. 
     These lawsuits, which were initiated by state and local 
     governments with no assistance, in any form, from the federal 
     government, were based on a variety of claims, including 
     consumer fraud, antitrust protections, conspiracy, and 
     racketeering. In addition, the state Attorneys General 
     negotiated the settlement to reflect only state costs and 
     damages. Therefore, the federal government's claim that these 
     settlement monies represent Medicaid funds and should be 
     returned to federal coffers is simply not an accurate 
     portrayal of the settlement agreement. The agreement does not 
     claim to or intend to recover Medicaid costs. Attempts by the 
     federal government to claim these funds would likely result 
     in lengthy and costly legal battles between the states and 
     the federal government and would not be a wise use of 
     government resources.
       NACo applauds your efforts and those of Senator Graham to 
     protect these funds. We will continue to work to prevent the 
     federal recoupment of the states' tobacco settlement monies, 
     and we support this legislation.
           Sincerely,
                                                   Betty Lou Ward,
     President.
                                  ____



                                    National League of Cities,

                                 Washington, DC, February 3, 1999.
     Hon. Kay Bailey Hutchison,
     U.S. Senate, Washington, DC.
       Dear Senator Hutchison: On behalf of 135,000 cities and 
     towns, I would like to express the National League of Cities' 
     support for the legislation you are introducing today along 
     with Senator Bob Graham that would prevent the federal 
     government from taking a portion of state tobacco settlement 
     revenues.
       If the federal government were able to take a portion of 
     state settlement funds, cities and towns would bear the brunt 
     of this loss. This could mean that local tobacco cessation 
     programs and teenage smoking prevention programs would not be 
     funded and indigent care costs would not be compensated. 
     Cities and towns are often the last means of defense in 
     covering health care costs, particularly indigent care costs.
       For example, California's cities and counties stand to 
     receive half of the state's share of the settlement. This 
     money will directly assist cities and towns in helping to pay 
     for health care programs and costs. Other local governments 
     are currently working with their state legislatures to 
     address uncompensated costs related to tobacco illnesses and 
     to address local health care needs with settlement funds.
       The National League of Cities adopted a resolution at the 
     December 1998 Congress of Cities in Kansas City, Missouri, 
     that addresses municipal interests in the tobacco settlement. 
     A provision in the resolution states that any revenues 
     received by states or municipalities from any settlement with 
     the tobacco industry should not be required to be paid to the 
     federal government for Medicaid/Medicare or any other 
     program.
       We support the legislation introduced today, and your 
     continued effort to protect the interest of our nation's 
     cities and towns.
           Sincerely,
                                              Clarence E. Anthony,
                           NLC President and Mayor, South Bay, FL.


[[Page 1719]]

  Mrs. HUTCHISON. Mr. President, 46 States reached a settlement last 
November which added them to the other States that already had settled 
with the tobacco companies, making every State in America now in a 
settlement with the tobacco companies. These States have not just 
chosen to put the money that is coming in from the tobacco settlement 
on Medicaid and health care issues. There are myriad State issues that 
this money is going to be used for. But that is in limbo today because 
the President has given notice that he is going to seize this money 
from them. So everything is going to be held in abeyance until we 
settle this issue once and for all.
  That is what our bill will do. There is no reason--no reason 
whatsoever--that we should take money from the Medicaid funds that go 
to the States which provide a safety net for the millions of low-income 
and disabled Americans who depend on Medicaid for their health care 
needs. We cannot allow that to happen, and we will not.
  I intend to work with the cosponsors of this bill to find the first 
available vehicle to attach it so that we can make sure that this money 
that our States have worked alone to achieve, with no help from the 
Federal Government, will remain in their sole jurisdiction; that they 
will be able to make the choices on what their States need and not have 
dictated to them by the Federal Government what they will spend this 
money for.
  Many States--I was talking to Senator Abraham from the State of 
Michigan, and they are going to create scholarship funds for low-income 
students in Michigan, a very worthy cause. Other States are going to be 
doing education to try to encourage teenagers not to smoke. We don't 
want to substitute our judgment for the judgment that the States are 
making for their best and most important priorities.
  So I am pleased to have the 28 cosponsors of this bill. I think we 
will pass it. I hope that we can do it quickly so that these States 
will have the freedom to spend this money on the much needed programs 
in those States.
  I am happy to yield to Senator Gorton.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, the federal government has done quite 
enough to impede states efforts to recover damages from and change the 
practices of tobacco manufacturers. Though they asked, the state 
Attorneys General received no help from the federal government in their 
litigation. When, despite this, the states in mid-1997 proposed to 
settle their claims for almost $400 billion and asked the 
Administration and Congress to codify the agreement, the federal 
government instead blew it up by spending the states' money, and then 
some, on this Administration's pet social projects. It was only through 
the ingenuity, hard work, and unwavering perseverance of people like 
Washington state Attorney General Christine Gregoire that states were 
able to take the tobacco manufacturers back to the table in late 1998 
and obtain a settlement agreement for $206 billion.
  Though it did none of the work, the Administration now wants to share 
in the reward. Using an old provision in the Social Security Act, a 
provision that I understand was intended to permit federal Medicaid 
recoupment in cases of fraud or over billing, the federal government is 
now claiming over 50% of the states' settlement money. To exact what it 
claims is its share, the Administration intends to withhold Medicaid 
payments, payments that go to the neediest residents of Washington and 
other states.
  This is no idle threat: three days ago, the President sent us a 
budget in which he spent $16 billion of the states' settlement money in 
the next five years. The President did indicate, however, that he would 
relinquish this claim to the money for one year if states agree to 
spend the money as he and other Washington, D.C. bureaucrats see fit. 
This is just wrong.
  The bill that we are introducing today rights this wrong. It allows 
states to keep the monies they fought for. No strings attached. The 
federal government has not earned this money, and does not know better 
than states how it should be spent. I urge my colleagues to join me and 
my friends from Texas and Florida in seeing that this bill is passed 
this session.
  Mrs. LINCOLN. Mr. President, I rise to join my colleagues in support 
of the ``States Rights Protection Act of 1999.'' I believe that states 
are entitled to retain the tobacco funds that were agreed upon under 
their settlement agreements.
  These funds result from an historic accord reached in November 1998 
between 46 states, U.S. Territories and commonwealths, the District of 
Columbia, and tobacco industry representatives. State Attorneys General 
worked diligently to initiate and negotiate a settlement with the 
tobacco industry. States are now in the midst of finalizing the 
settlement, carrying out the terms of the settlement agreement and 
making fiscal decisions about how to apply settlement funds to public 
health and other needs.
  Although the U.S. Department of Health and Human Services initially 
notified states in the fall of 1997 of its intention to recoup the 
federal match from funds states received through the suits, citing a 
provision in existing Medicaid law, it has suspended recoupment 
activities. For this reason, I join my Senate colleagues in introducing 
this legislation to prohibit the federal government from trying to 
recoup any funds from state governments recovered from tobacco 
companies as part of their tobacco settlement or from determining how 
these funds should be spent.
  I strongly believe that each state should have the right to determine 
where this money is needed and how it is best spent. In my own state of 
Arkansas, Governor Mike Huckabee has reached an agreement with the 
Speaker of the Arkansas House of Representatives, Bob Johnson, the 
President Pro Tempore of the Arkansas Senate, Jay Bradford, and the 
Arkansas Attorney General, Mark Pryor, regarding the use of this money 
solely for health-related purposes. Specifically, the settlement funds 
will be used to prevent smoking by young people, to treat tobacco 
related illnesses, and to establish a foundation to provide for 
continued funding of these programs even when the tobacco settlement 
money expires. I'm proud that my home state of Arkansas will use these 
funds towards such valuable programs.
  I support the Arkansas state government and all other state 
governments in retaining their tobacco settlement funds and exercising 
their authority to determine how the funds are spent.
  Mr. GRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Florida.


                         Privilege of the Floor

  Mr. GRAHAM. Mr. President, I ask unanimous consent that Mr. Matt 
Barry of our staff be given floor privileges for the remainder of the 
consideration of this issue during this session of the Senate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. Thank you Mr. President.
  Mr. President, I rise today along with Senator Hutchison and 21 
original cosponsors--Republicans and Democrats--to introduce 
legislation designed to prevent the federal government from seizing the 
State settlement proceeds negotiated with the tobacco industry.
  Just over 1 year has passed since the State of Florida received an 
ominous warning from the federal government which said in essence: 
``Prepare to hand over half of your money or we will be prepared to 
withhold your Medicaid funds.''
  This action was a slap in the face to States like Florida--a State 
which spent countless hours and millions of dollars preparing to wage 
war against the tobacco industry in court--with no guarantee of success 
and with no assistance from anyone--including the federal government. 
The State of Florida specifically asked the Federal Government to 
assist us, to join in a joint lawsuit. We the States will assume the 
responsibility of suing the tobacco industry for the Medicaid and other 
nonspecific medical program costs. The Federal Government will assume 
the

[[Page 1720]]

responsibility for Medicare, the Veterans Administration, and other 
Federal health program costs. What was the response to that request for 
joint action? ``Not interested.''
  In fact, only after it became clear that States were going to be 
successful in their lawsuits did the federal government become 
interested in the State settlements.
  And so the Health Care Financing Administration sent collection 
notices to States based on a twisted reading of an obscure provision in 
Medicaid law--section 1903(D) of the Social Security Act.
  Mr. President, I ask unanimous consent that a copy of a letter dated 
November 3, 1997, from Ms. Sally K. Richardson, Director, Center for 
Medicaid and State Operations to the State Medicaid director of each of 
the 50 States be printed in the Record immediately after my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRAHAM. Mr. President, the federal government is attempting to 
collect almost $19 billion over 5 years, and, presumably almost $100 
billion over the 25 year settlement agreement period, based on a little 
known provision in Medicaid which was never intended to apply to a 
lawsuit of this magnitude or character.
  The regulations interpreting the Statutory language of 1903(D) read 
as follows:

   Subpart F--Refunding of Federal Share of Medicaid Overpayments to 
                               Providers

       This Subpart Implements Section 1903(d)(2) (C) and (D) of 
     the Act, which provides that a State has 60 days from 
     discovery of an overpayment for Medicaid services to recover 
     or attempt to recover the overpayment from the provider.

  The regulation then goes on to define ``overpayment'': Overpayment 
means the amount paid by a Medicaid agency to a provider which is in 
excess of the amount that is allowable for services furnished under 
section 1902 of the act.
  Mr. President, applying the provisions of this statute which was 
designed to collect overpayments paid by a Medicaid State agency to a 
provider, to attempt to apply this provision to the State tobacco 
lawsuits is absurd. This provision was intended and has been used to 
apply to billing errors made by providers.
  As an example, if a State finds that a provider has overbilled 
Medicaid, the State collects the overpayment, then remits the 
commensurate share back to the federal government.
  Essentially, the federal government is stating that the revenues from 
the lawsuits should be interpreted as ``overpayments'' made to medical 
providers by state Medicaid agencies--that the services rendered by 
these providers to Medicaid beneficiaries should not have been rendered 
under the statute.
  This logic is twisted and absurd.
  The State lawsuits were not premised on a technical collections 
process--providers overbilling Medicaid. Rather, they were premised on 
the fact that the tobacco industry defrauded the taxpayer, violated the 
State civil racketeering statutes, and subjected the taxpayers to 
enormous smoking-related illness costs.
  Further, as an example, Mr. President, the suit of the State of Iowa, 
which was premised on Medicaid, was thrown out of court, but Iowa is 
still 1 of the 46 States which will receive their share of the proceeds 
under the nationwide settlement.
  How could the Federal Government lay any claim to Iowa's proceeds 
based on the overpayment provision in Medicaid since the court had 
specifically thrown out its suit based on Medicaid? The answer is, it 
cannot.
  The legislation that Senator Hutchison and my colleagues are 
introducing today is simple. It clarifies that the overpayment 
provision does not apply to either the comprehensive settlement agreed 
to in November of 1998, nor does it apply to any of the State 
settlements agreed to prior to the comprehensive settlement.
  Here is what the bill will do. It will prevent the Federal Government 
from stifling important bipartisan public health initiatives which will 
be paid for through the settlements.
  In my State of Florida, for instance, our former colleague and good 
friend, Democratic Governor Lawton Chiles, provided health insurance to 
over 250,000 previously uninsured poor children. Just 2 weeks ago, 
Florida's new Governor, Republican Jeb Bush, announced the 
establishment of a $2 billion endowment fund which will be named in 
honor of Governor Chiles. This fund will assure that the tobacco funds 
will be used exclusively for children's health, child welfare, and 
seniors' health programs.
  Mr. President, as you know, Florida is not unique. Other States will 
be just as innovative and be held to just as high standards of 
accountability by their citizens for the use of these tobacco 
settlement funds. It is important that States be given the green light 
to move forward on important public health initiatives and to do so as 
soon as possible. If we do not pass this legislation, funds that could 
otherwise be spent on improving America's health will be tied up in 
litigation between States and the Federal Government for the 
foreseeable future.
  So I urge my colleagues to join us in this effort, to support this 
legislation, and I urge that it be adopted by this Senate and by the 
Congress and signed by the President of the United States at the 
earliest possible date.

                               Exhibit 1

                                           Center for Medicaid and


                                             State Operations,

                                                 November 3, 1997.
       Dear State Medicaid Director: A number of States have 
     settled suits against one or more tobacco companies to recoup 
     costs incurred in treating tobacco-related illnesses. This 
     letter describes the proper accounting and reporting for 
     Federal Medicaid purposes of amounts received from such 
     settlements that are subject to Section 1903(d) of the Social 
     Security Act.
       As described in the statute, States must allocate from the 
     amount of any Medicaid-related expenditure recovery ``the 
     pro-rata share to which the United States (Federal 
     government) is equitably entitled.'' As with any recovery 
     related to a Medicaid expenditure, payments received should 
     be reported on the Quarterly Statement of Expenditures for 
     the Medicaid Assistance Program (HCFA-64) for the quarter in 
     which they are received. Specifically, these receipts should 
     be reported on the Form HCFA-64 Summary Sheet, Line 9E. This 
     line is reserved for special collections. The Federal share 
     should be calculated using the current Federal Medicaid 
     Assistance Percentage. Please note that settlement payments 
     represent a credit applicable to the Medicaid program whether 
     or not the monies are received directly by the State Medicaid 
     agency. States that have previously reported receipts from 
     tobacco litigation settlements must continue to report 
     settlement payments as they are received.
       State administrative costs incurred in pursuit of Medicaid 
     cost recoveries from tobacco firms qualify for the normal 50 
     percent Federal financial participation (FFP). They should be 
     reported on the Form HCFA-64.10, Line 14 (Other Financial 
     Participation).
       Only Medicaid-related expenditure recoveries are subject to 
     the Federal share requirement. To the extent that some non-
     Medicaid expenditures and/or recoveries were also included in 
     the underlying lawsuits, HCFA will accept a justifiable 
     allocation reflecting the Medicaid portion of the recovery, 
     as long as the State provides necessary documentation to 
     support a proposed allocation.
       Under current law, tobacco settlement recoveries must be 
     treated like any other Medicaid recoveries. We recognize that 
     Congress will consider the treatment of tobacco settlements 
     in the context of any comprehensive tobacco legislation next 
     year. Given the States' role in initiating tobacco lawsuits 
     and in financing Medicaid programs, States will, of course, 
     have an important voice in the development of such 
     legislation, including the allocation of any resulting 
     revenues. The Administration will work closely with States 
     during this legislative process as these issues are decided.
       If you would like to discuss the appropriate reporting of 
     recoveries with HCFA, please call David McNally of my staff 
     at (410) 786-3292 to arrange for a meeting or conversation. 
     We look forward to providing any assistance needed in meeting 
     a State's Medicaid obligation.
           Sincerely,
                                              Sally K. Richardson,
                                                         Director.

  Mr. McCONNELL. Mr. President, I rise today to join my esteemed 
colleagues--Senators Hutchison, Graham, Voinovich, Abraham, and 
others--in sponsoring legislation to protect the States' tobacco 
settlement funds from

[[Page 1721]]

the Clinton Administration's spurious recoupment claims.
  Members of the U.S. Senate will recall quite vividly that this 
chamber engaged in a lengthy, detailed debate on a national tobacco 
settlement bill last year. While those discussions proved inconclusive, 
the States--on their own--achieved much of what Congress and the White 
House identified as priorities through direct settlement agreements 
with the tobacco companies.
  As part of the comprehensive settlement with 46 states and the prior 
individual State agreements, the tobacco companies are required to take 
specific action to address public health concerns regarding teen 
smoking. First, they must fund a major anti-smoking advertising 
campaign to prevent youth smoking and to educate consumers about 
tobacco-related illnesses. Second, they must establish a charitable 
foundation to support the study of programs to reduce teen smoking and 
substance abuse. Third, the settlement prohibits tobacco advertising 
that may target youth, like the commercial use of cartoon characters 
like ``Joe Camel'' and outdoor advertising such as billboard, stadium 
and transit ads as well as tobacco sponsorship of sporting and cultural 
events. In addition, the States have plans to spend their tobacco 
settlement funds for advancing the public health and welfare.
  Much to the dismay of the nation's governors and state legislators, 
instead of receiving a commendation from the President for a job well 
done, they got a multi-billion dollar collection notice. Despite the 
fact that the States filed lawsuits asserting a number of non-Medicaid 
claims, the Clinton Administration argues that every state who agreed 
to the $206 billion settlement should fork over from 50 to 79 percent 
of their share to the federal government--including states like 
Kentucky who didn't even file a lawsuit but joined the settlement. As 
such, the President's FY 2000 budget states that the federal government 
has the right to withhold at least $16 billion Medicaid dollars from 
the States over the next five years.
  Simply put, Mr. President, this bogus claim will deny Kentucky's most 
needy citizens over $2.4 billion in Medicaid funds over the term of the 
settlement agreement. I cannot excuse the fundamental conflict created 
by an Administration that claims it is fighting for the health of our 
children while it gobbles up the money specifically designated for 
them. This effort to hold state Medicaid programs hostage in exchange 
for federal strings on how the States spend their own money is 
intolerable and unacceptable.
  Unlike the Administration, I believe all wisdom does not reside in 
Washington. It's clear to me that our state's elected officials are in 
a better position to determine Kentucky's needs than a federal 
bureaucrat sitting 600 miles away in Washington. I am proud to serve as 
an original sponsor to this legislation which makes clear that the 
federal government has no claim to the tobacco settlement funds 
attained by the States. I commend my fellow sponsors for their 
commitment to preserving common-sense in government, and urge my 
colleagues to approve this legislation expediently and without 
compromise.
  Mr. McCAIN. Mr. President, I am pleased to be a co-sponsor of the 
States' Rights Protection Act. This bill will ensure that the states 
retain the use of the settlement proceeds from the tobacco litigation 
settlement announced in November, 1998, as well as the prior 
settlements with Mississippi, Texas, Florida, and Minnesota. The bill 
will entitle the states to keep all of the money from the settlement, 
without federal recoupment of a Medicaid share.
  I believe this is the right thing to do for several reasons. First, 
and foremost, the settlement was of litigation initiated and pursued by 
the states. The President announced in his State of the Union address 
that the Department of Justice will be filing an action on behalf of 
the United States against the tobacco companies. This is the right way 
for federal claims to be addressed, rather than taking this hard-
fought, negotiated money from the states.
  Second, not all of the states raised Medicaid claims in their 
lawsuits. The courts dismissed the Medicaid claims in other cases. 
Thus, in some states, the federal government is not truly entitled to 
share in the settlement proceeds. Allowing recoupment from some of the 
states, but not all of the states, will lead to disparate and unfair 
results.
  Finally, federal and state governments alike share in the goal of 
addressing public health needs. It is not necessary that this goal only 
be accomplished through federally mandated programs. The states' 
settlement also includes funding for counter-advertising and cessation 
efforts. These efforts may be complemented by federal programs, but do 
not need to be duplicated simply to give the federal government an 
excuse to spend money. In addition, many states have other existing 
public health programs related to tobacco use or children's health on 
the books. The federal government does not need to attempt to duplicate 
those programs through federal mandates. Most importantly, I am 
confident that the state will spend their settlement money wisely and 
in the best interests of their citizens. These decisions are best 
reached through discussion and consensus reached at the state and local 
levels.
  I regret that Congress was unwilling to accept the opportunity 
presented to us with the 1997 proposed settlement agreement. 
Comprehensive legislation would have benefited the nation by addressing 
kids smoking and limiting the excessive attorney's fees paid in these 
cases. Nevertheless, I applaud the Attorneys General for reaching 
settlement of their litigation and for the public health advances they 
have made in the settlement agreement. They have ensured a win for 
every state, without years of litigation and varied results. They have 
ensured an end to Joe Camel on billboards throughout the country. They 
have established a mechanism to police advertising. They have achieved 
more in this joint settlement than any one state could have achieved 
alone with a court verdict.
  I thank my colleague, Senator Hutchison, for introducing this bill, 
and am pleased to join with so many other distinguished friends in 
sponsoring this important piece of states' rights legislation.
  Mr. LEAHY. Mr. President, I am pleased to join Senator Hutchison and 
Senator Graham and a bipartisan group of my colleagues to introduce 
legislation to prohibit the Federal government from recouping any part 
of the multi-state settlement between the tobacco industry and the 
State Attorneys General.
  To the surprise of many state officials, the Health Care Financing 
Administration has threatened to seek reimbursement for its share of 
Medicaid costs for treating tobacco-related diseases from the multi-
state tobacco settlement. In other words, the Federal government may 
want to take more than half of the total multi-state settlement based 
on the federal share of Medicaid, which is approximately 60 percent of 
total Medicaid costs.
  For my home State of Vermont, that means the Federal government may 
try to take more than $15 million annually out of Vermont's share of 
the settlement. Vermont Attorney General William Sorrell settled with 
the tobacco industry for more than $800 million to be distributed over 
the next 25 years. But now the Federal government may seek more than 
$400 million of Vermont's tobacco settlement for its own use.
  Washington State Attorney General Christine Gregoire, one of the lead 
attorneys general in the settlement negotiations with the tobacco 
industry, recently stated: ``These lawsuits were brought by the States 
based on violations by the industry of state laws. The settlement was 
won by the states without any assistance from Congress or the 
Administration. As far as we are concerned the States did all the work 
and are entitled to every dollar of their allocated share to invest in 
the future health care of their citizens.'' I could not agree more with 
General Gregoire.
  The States, not the Federal government, deserve the full amount of 
their

[[Page 1722]]

settlements because the States and their Attorneys General took the 
risks in bringing the novel lawsuits against Big Tobacco. Without the 
willingness of the State Attorneys General acting on behalf of the 
citizens of their states and taking significant financial and 
professional risks and pursuing these matters so diligently, we would 
not have any legal settlements by the tobacco industry. These State 
Attorneys General deserve our gratitude and our respect for their 
extraordinary efforts. I commend them all for their diligence on behalf 
of the public.
  When tobacco companies were fighting any and all lawsuits against 
them, the State Attorneys General pursued their legal challenges 
against great odds. Men and women whose lives were cut short by cancer 
and other adverse health consequences from tobacco deserved better 
treatment than the years of obstruction and denial by the tobacco 
industry. Only now as the internal documents are being disclosed and 
the legal tide is beginning to turn have tobacco companies decided to 
change their strategy and pursue settlements. The tobacco industry did 
not agreed to these settlements out of some new found sense of public 
duty. The truth is that giant tobacco corporations came to the 
bargaining table only after they realized that they might lose in 
court.
  In my home state, General Sorrell took the financial and legal risks 
in bringing suit against the tobacco industry on behalf of the people 
of Vermont. General Sorrell and his legal team put together a powerful 
case in support of the public health of all Vermonters. General Sorrell 
did this without any assistance from the Federal government. As a 
result, the people of Vermont deserve the full amount of their tobacco 
settlement.
  If the Federal government wants to recover its costs for tobacco-
related diseases, the appropriate avenue to do that is a Federal 
lawsuit. Indeed, President Clinton announced during the recent State Of 
The Union Address that the Department of Justice is planning litigation 
against the tobacco industry. I applaud the President and Attorney 
General Reno for pursuing legal action against the tobacco industry so 
that the Federal government may recoup its costs for tobacco-related 
diseases. That is the proper approach for the Federal government.
  The multi-state tobacco settlement provides a historic opportunity to 
improve the public health in Vermont and across the nation. I believe 
that the States, not the Federal government, are in the best position 
to determine their public health needs. Our bipartisan bill grants the 
States that flexibility by permitting each state to use its settlement 
payments in whatever way that state deems best.
  That is why the National Governors Association, National Association 
of Attorneys General, National Conference of State Legislatures, 
National Association of Counties, National League of Cities, and U.S. 
Conference of Mayors support our bipartisan legislation. In my home 
state, our bipartisan bill is supported by Governor Dean, Attorney 
General Sorrell, the Vermont Health Access Oversight Committee, and the 
Vermont Association of Hospitals and Health Systems.
  I want Governor Dean and the Vermont legislature to have the 
flexibility to use Vermont's settlement funds in whatever way they deem 
is best for the public health of Vermonters. It is only fair for the 
other 49 Governors and state legislatures to have that same flexibility 
to use their settlement funds in whatever way they deem is best for 
their citizens.
  In the final analysis, I trust the people of Vermont and the other 49 
States to determine how best to use their tobacco settlement funds. I 
look forward to working with my colleagues as Congress moves forward on 
legislation to ensure that the interests of Vermont and the other 
States are protected in the multi-state tobacco settlement.
  Mr. BAYH. Mr. President, I rise today as an original cosponsor of the 
State tobacco settlement protection bill, a bill to protect state 
tobacco settlement funds from seizure by the federal government. I want 
to thank Senators Hutchison and Graham for their leadership on this 
issue. I stand today for fiscal responsibility, local control and 
fairness. I stand today to protect our children's health, to assist 
those who have become addicted to tobacco.
  This is really about fairness. Is it fair for the federal government, 
having sat on the sidelines during this uphill battle against Big 
Tobacco, to come in after the fact and claim a large share of the 
victory? If nothing else, this proves the old adage that victory has 
many parents, while defeat is an orphan.
  I have said repeatedly that the federal government does not have all 
the answers. Much of what has gone right in this country in the last 
several years is a direct result of moving decisions and power out of 
this city and into small towns and communities. I came to Washington to 
stand up for what is right, to protect Indiana's values, and to speak 
up when the federal government oversteps its bounds.
  Does the federal government have a right to take more than 60% of 
Indiana's tobacco settlement to spend on federal priorities? Absolutely 
not. Indiana's share of the settlement is $4 billion over 25 years, but 
the federal government's claim could take two and a half billion away. 
While the President's budget acknowledges the difficulty in collecting 
this money in the coming fiscal year, I am disappointed they have laid 
claim to a substantial share of state settlement funds in their budget 
for use on federal discretionary programs in years to come. The 
fiscally responsible approach is to ensure this money is spent wisely 
at the local level, not to allow it to be dumped into the black pit of 
the federal bureaucracy in Washington.
  Indiana began this fight to protect our kids from the dangers of an 
addictive, life-threatening habit. The State fought a lonely battle, 
without any federal assistance and invested considerable resources in 
prosecuting this case.
  The Governor of Indiana, Frank O'Bannon, is in the planning stages 
for using this money to improve public health, promote teen smoking 
cessation programs and children's health care, the purposes originally 
outlined in the lawsuit. But with more than 60% of the funds at risk it 
is hard to sketch out a reliable plan.
  The confrontation between states and the federal government that 
would result from an attempt by the Health Care Financing 
Administration to take these state settlement funds would only hurt the 
people in each of our states. It would tie us up in needless court 
actions over who has the legal right to these funds. That is wasted 
time. While the courts decide what to do with the funds, we lose the 
opportunity to cover uninsured children, start anti-smoking campaigns 
and improve the lives of Hoosiers and the people in all our states.
   Mr. President, I hope all my colleagues become a part of this 
bipartisan coalition. I hope we can all--Democrats and Republicans, 
States and the federal government--work together to ensure these funds 
are used in the states to improve health, deter smoking and educate 
kids about the dangers of this addiction. I look forward to working to 
pass this very important legislation this year.
                                 ______
                                 
      By Mr. GRAMS:
  S. 347. A bill to redesignate the Boundary Waters Canoe Area 
Wilderness, Minnesota, as the ``Hubert H. Humphrey Boundary Waters 
Canoe Area Wilderness''; to the Committee on Energy and Natural 
Resources.


        hubert h. humphrey boundary waters canoe area wilderness

  Mr. GRAMS. Mr. President, I rise today to introduce legislation to 
rename the Boundary Waters Canoe Area Wilderness (BWCA) in Minnesota 
and in doing so, salute the father of our Nation's wilderness system, 
the late Senator from Minnesota and Vice President, Hubert H. Humphrey. 
My bill would redesignate the BWCA as ``The Hubert Humphrey Boundary 
Waters Canoe Area Wilderness.''
  Mr. President, my home state is known for a number of things uniquely 
Minnesotan. If you've seen the movie ``Grumpy Old Men'' you're aware of 
our love of ice fishing. If you've flown into

[[Page 1723]]

Minneapolis, you've seen the Mall of America. If you watched the 
national weather maps, you've seen our bonechilling winter 
temperatures. And our new Governor--well, we are proud to say that he 
is uniquely Minnesotan as well. But if you've ever visited one of our 
Nation's wilderness areas, you would not necessarily have realized that 
its creation was due in large part to another uniquely Minnesotan 
individual, Senator Hubert H. Humphrey.
  In the early 1960s, right here in these halls and in this Chamber, 
then-Senator Humphrey lead the charge in helping Congress recognize the 
wisdom of creating a wilderness preservation system in the United 
States. Senator Humphrey, as a member of the Senate Committee on 
Agriculture and Forestry, authored the 1964 Wilderness Preservation 
Act, and by doing so, created the BWCA. Many in our state feel that if 
it weren't for Senator Humphrey's tireless commitment, there would be 
no wilderness system and no BWCA. Senator Humphrey worked closely with 
the people of Northern Minnesota to win their trust and gain their 
acceptance of a federally designated wilderness area--one that would 
surely change the way they recreated and the way they lived. In fact, 
Senator Humphrey's legislation was very controversial and took several 
years to complete. Last year's passage of legislation to restore two 
motorized portages in the BWCA was consistent with both Senator 
Humphrey's vision for the BWCA and his promises to the people of 
northern Minnesota. Through his dedication and willingness to address 
the concerns of everyone, we now have a wilderness system that is the 
envy of the world.
  Through Senator Humphrey's hard work and dedication to the National 
Wilderness Preservation System, Americans today have countless 
protected wilderness areas throughout this country in which they can 
experience nature as it was 50, 75, or 100 years ago, knowing with 
certainty that these precious areas will be left intact for generations 
to come.
  Senator Humphrey's vision endures to this very day, and Minnesotans 
are proud to claim the BWCA, one of the nation's true national 
treasures, as our own. Boy Scouts wait every year for their trip into 
the Boundary Waters. Families know that every summer they can get away 
from their jobs, their studies, their cars and their phone, and enjoy 
at least a few days of peace and quiet. And elderly folks know that 
their favorite fishing hole is still a fishing hole and still 
accessible for them and their grandchildren.
  Like Paul Bunyan, lutefisk, and our State Fair, the Boundary Waters 
is something uniquely Minnesotan and uniquely identifiable as our own 
across the country. It is for that reason that I believe it should bear 
the name of the father of the Wilderness system and be redesignated, 
``The Hubert H. Humphrey Boundary Waters Canoe Area Wilderness.''
                                 ______
                                 
      By Mr. HAGEL (for himself and Mr. Reed):
  S. 349. A bill to allow depository institutions to offer negotiable 
order of withdrawal accounts to all businesses, to repeal the 
prohibition on the payment of interest on demand deposits, and for 
other purposes, to the Committee on Banking, Housing, and Urban 
Affairs.


                 the small business banking act of 1999

  Mr. HAGEL. Mr. President, I rise today to introduce the Small 
Business Banking Act of 1999. I am again joined in the effort by my 
distinguished colleague Senator Reed of Rhode Island, who is the 
principal cosponsor of this important legislation.
  We originally introduced this legislation during the last Congress. 
This legislation was incorporated into a more comprehensive financial 
regulatory relief bill that was unanimously reported out of the Senate 
Committee on Banking, Housing, and Urban Affairs. We fully expect it 
will be enacted into law during this Congress.
  Passage of this bill will remove one of the last vestiges of an 
obsolete interest rate control system. Abolishing the statutory 
requirement that prohibits incorporated businesses from owning interest 
bearing checking accounts will provide America's small business owners, 
farmers, and farm cooperatives with a funds management tool that is 
long overdue.
  Passage of this bill will ensure America's entrepreneurs can compete 
effectively with larger businesses. My experience as a businessman has 
shown me, firsthand, that it's extremely important for anyone trying to 
maximize profits to be able to invest funds wisely for maximum 
efficiencies. Let me quote from a December, 1997 letter I received from 
a constituent, Mary Jo Bousek. Mary Jo owns a commercial property 
company. She writes:

       I was very pleased to see that you sponsored a bill to 
     allow banks to pay interest on checking accounts for 
     partnerships and corporations. When we changed our rental 
     properties from a sole proprietorship to a Limited Liability 
     Company, we suddenly began losing about $1500 a year in 
     interest on our bank account. This seems totally unreasonable 
     and unfair.

  Mary Jo is right. It is unfair.
  During President Ronald Reagan's first term, one of his early actions 
was to abolish many provisions of the antiquated interest rate control 
system the banking system was required to use. With this change to the 
laws, Americans were finally able to earn interest on their checking 
accounts deposited in banks. Unfortunately, one aspect of the old 
system left untouched by the change in law was not allowing America's 
businesses to share in the good fortune.
  Complicating matters is the growing impact of nonbanking institutions 
that offer deposit-like money accounts to individuals and corporations 
alike. Large brokerage firms have long offered interest on deposit 
accounts they maintain for their customers. This places these firms at 
an advantage over community banks that can't offer their corporate 
customers interest on their checking accounts.
  While I support business innovation, I don't believe it's fair when 
any business gains a competitive edge over another due to government 
interference through overregulation. This is exactly the case we have 
with banking laws that stifle bankers, especially America's small 
community bankers, and give an edge to another segment of the financial 
community. The Small Business Banking Act of 1999 seeks to correct this 
imbalance and allow community banks to compete fairly with brokerage 
firms.
  I'm pleased to say our bill has the strong support of America's 
Community Bankers, the National Federation of Independent Businesses, 
the U.S. Chamber of Commerce, and the American Farm Bureau Federation. 
This bill has the support of many of the banks, thrifts, and small 
businesses in my home state of Nebraska. These important organizations 
represent a crosscurrent of the type of support Senator Reed and I have 
for our bill. Senator Reed and I also have the support of the Federal 
banking regulators. In their 1996 Joint Report, ``Streamlining of 
Regulatory Requirements'', the Board of Governors of the Federal 
Reserve System, the Federal Deposit Insurance Corporation, the Office 
of the Comptroller of the Currency, and the Office of Thrift 
Supervision, stated they believe the statutory prohibition against 
payment of interest on business checking accounts no longer serves a 
public purpose. I heartily agree.
  Mr. President, this is a straightforward bill that will do away with 
an unnecessary regulation that burdens American business. I urge my 
colleagues to support it.
  Mr. REED. Mr. President, I am pleased to join my colleague Senator 
Hagel in introducing the Small Business Banking Act of 1999, 
legislation that eliminates a Depression era federal law prohibiting 
banks from paying interest on commercial checking accounts. Last year, 
I cosponsored a similar bill with Senator Hagel that was incorporated 
into a financial institutions regulatory relief bill which passed the 
Banking Committee.
  The prohibition against the payment of interest on commercial 
accounts was originally part of a broad prohibition on the payment of 
interest on any deposit account. At the time of enactment in 1933, it 
was the popular view that payment of interest on deposits created an 
incentive for rural banks to

[[Page 1724]]

shift excess deposits to urban money center banks which made loans that 
fueled speculation. Moreover, it was believed that such transfers 
created liquidity crises in rural communities. However, a number of 
changes in the banking system since enactment of the prohibition have 
called into question its usefulness.
  First, with the passage of the Depository Institutions Deregulatory 
and Monetary Control Act of 1980, Congress allowed financial 
institutions to offer interest-bearing accounts to individuals--a 
change which has not adversely affected safety and soundness. Second, 
many banks have developed complex mechanisms called sweep accounts to 
circumvent the interest rate prohibition. Because of the costs 
associated with developing sweep accounts, large banks have become the 
primary offerors of these accounts. As a result, many smaller banks are 
at a competitive disadvantage with larger banks which can offer their 
commercial depositors interest-bearing accounts. Most importantly, the 
vast majority of small businesses cannot afford to utilize sweep 
accounts because the cost of opening these accounts is relatively high 
and most small businesses do not have a large enough deposit base to 
justify the administrative costs.
  In light of these developments, it has become clear that the 
prohibition on interest-bearing commercial accounts is nothing more 
than a relic of the Depression era that has effectively disadvantaged 
small businesses and small banks, and led large banks to dedicate 
significant resources to circumventing the prohibition. I am, 
therefore, pleased to cosponsor this legislation that will eliminate 
this prohibition and level the playing field for small banks and small 
business.
  Mr. President, as we move into a new millennium, I think it 
appropriate that we eliminate this vestige of the early twentieth 
century that is no longer useful and is indeed burdensome.
                                 ______
                                 
      By Mrs. HUTCHISON:
  S. 350. A bill to amend title 10, United States Code, to improve the 
health care benefits under the TRICARE program and otherwise improve 
that program, and for other purposes; to the Committee on Armed 
Services.


            the military health care improvement act of 1999

  Mrs. HUTCHISON. Mr. President, today I am introducing the Military 
Health Care Improvement Act of 1999. This bill is a first step to 
reform the military health care system known as TRICARE. We are trying 
to recruit and retain the best people for our Nation's military. To do 
this, we must pay them better, maintain good retirement benefits and 
improve the health care we provide them and their families.
  Mr. President, there is a growing perception among active duty 
military, their dependents and military retirees that the military 
health care benefit is no longer much of a benefit. We have not done a 
very good job of keeping the promise the Government made to military 
personnel: That in return for their service and sacrifices, the 
Government will provide health care to active-duty members and their 
families even after they retire. In the past 10 years, the military has 
downsized by over one-third, and the military health care system has 
downsized by one-third as well. While hospitals have been closed as a 
result of BRAC or downsized in the past decade, the number of personnel 
that rely on the military and the military health care system has 
remained constant. Today, our Armed Forces have more married service 
members with families than ever before. In addition, those who have 
served and are now retired were promised quality health care as well.
  In place of the promise, these individuals and families have been 
given, instead, a system called ``TRICARE.'' TRICARE is not health care 
coverage, but a health care delivery system that provides varying 
levels of benefits depending largely on where a member of the military 
or a retiree lives.
  Unfortunately, what we find is that the TRICARE program often 
provides spotty coverage. My offices and those offices of my colleagues 
in the Senate no doubt have received thousands of complaints regarding 
access to care, unpaid bills, inadequate providers and difficulties 
with claims.
  For their part, the doctors who participate in TRICARE complain about 
a host of administrative problems including delayed payments and a very 
cumbersome claims process. Many doctors have simply left the program, 
and in some locations, there are simply no providers at all in certain 
specialties. This is unacceptable.
  Mr. President, I am introducing this bill to improve the health care 
benefits under the TRICARE program by ensuring that the health care and 
dental coverage available under TRICARE is substantially similar to the 
health care coverage and dental care coverage available under the 
Federal Employees Health Benefits program. This bill will:
  Raise reimbursement levels for TRICARE, the military health-care 
delivery system, to attract and retain more participating doctors to 
the program.
  Expedite and reduce the costs of TRICARE claims processing, which has 
been a thorn in the side of both beneficiaries and providers.
  Require portability of benefits between regions. This would make it 
easier for military personnel and their families to receive health care 
benefits when they travel to different regions.
  Minimize the cumbersome pre-authorization requirements for access to 
care.
  Mr. President. This bill will help break down the bureaucracy that 
exists in the current system. There is no single solution to this 
problem, but we must begin now to ensure we honor our commitments. This 
is a critical issue to recruiting and retaining qualified people in the 
military--which is critical to the security of our country.
  I am pleased to be joined in this effort by Senators Allard and Hagel 
and look forward to working with my colleagues to keep the promise and 
improve the military health care system.
                                 ______
                                 
      By Mr. GRAMS (for himself, Mr. Johnson, Mr. Sessions, and Mr. 
        Bennett):
  S. 351. A bill to provide that certain Federal property shall be made 
available to States for State and local organization use before being 
made available to other entities, and for other purposes; to the 
Committee on the Judiciary.


               taxpayer oversight of surplus property act

  Mr. GRAMS. Mr. President, I rise today to introduce the Taxpayer 
Oversight of Surplus Property Act. I am pleased that Congressman John 
Peterson of Pennsylvania will soon introduce companion legislation in 
the House of Representatives.
  Among the many programs administered by hundreds of federal agencies, 
there are some initiatives that depend upon the active involvement of 
both the federal government and the states in order to ensure the 
wisest use of taxpayer dollars and meet the needs of the American 
people. One such effective partnership involves the distribution of 
federal surplus personal property to states and local organizations.
  In 1976, President Ford signed legislation which established the 
current system for the fair and equitable donation of federal surplus 
personal property. Personal property declared ``surplus'' consists of 
items other than land or real property, naval vessels, and records of 
the federal government. This includes office supplies, furniture, 
medical supplies, hardware, motor vehicles, boats, airplanes, and 
construction equipment.
  Under the federal personal property utilization and donation program, 
the General Services Administration is responsible for the transfer of 
federal surplus personal property to the states. Each state agency for 
surplus property receives the transfer of property and distributes 
these items to eligible recipients. Property that is not selected by 
the states is offered for sale to the general public. Importantly, the 
interests of the American taxpayers guide this entire process.
  Mr. President, there are close to 70,000 recipients of federal 
surplus property located throughout the United

[[Page 1725]]

States. Each day, cities, counties, Indian tribes, hospitals, schools, 
and public safety agencies are among the public and nonprofit 
organizations that look toward the state agencies for surplus property 
to help meet their needs.
  Last April, I had the opportunity to visit the Minnesota surplus 
property agency, where I was joined by the lieutenant governor, the 
executive director of the Minnesota Sheriffs Association, and the 
commissioner of the state Department of Corrections. While there, I 
quickly became more familiar with the success of the donation program 
throughout Minnesota. I am very confident that my Senate colleagues 
will find that the donation program has achieved a comparable level of 
success in each of their states.
  In fiscal year 1997, the Minnesota surplus property agency donated 
equipment and supplies with an original federal acquisition cost of 
$7.7 million to 1,700 eligible recipients, saving precious tax dollars 
if these items had been purchased new or on the open market. I was 
impressed to learn that 414 cities, 80 medical institutions, 19 
museums, 237 public schools, 110 county entities, 160 State agencies, 
and 353 townships are among the active participants in the donation 
program.
  Equally impressive is how effectively the state agencies for surplus 
property and the GSA have worked together to respond quickly and 
efficiently during times of natural disasters. Together they have 
successfully identified and transported sandbags, blankets, cots, 
tools, trucks and other items to disaster sites. I know that 
Minnesotans who suffered through the 1997 Midwest floods are gratified 
to have received over $3.7 million worth of federal surplus property to 
assist flood relief efforts during that horrible time.
  Quite simply, the donation program has provided taxpayers with the 
equipment, supplies and material used to educate our children, maintain 
roads and streets, keep utility rates reasonable, train the workers of 
tomorrow, protect families from crime, provide needed relief during 
natural disasters, and treat the health of our nation's sick and needy. 
In fact, the original acquisition value of property distributed through 
the state agencies for surplus property totaled over $1.5 billion 
between fiscal years 1995 through 1997.
  Because of the importance my constituents place upon the availability 
of this property, I am very concerned about current programs which 
limit the donation of property to the states. My concern is based in 
part upon comments expressed to me by constituents such as Mayor 
Richard Nelson of Warren, Minnesota.
  Mayor Nelson recently wrote,

       When we inquired about the shortage of heavy equipment we 
     were told that a large majority of that equipment is shipped 
     overseas to other countries for humanitarian aid. I feel that 
     our taxes paid for this equipment and it seems only fair that 
     we should have the first opportunity to benefit from it. 
     Being the mayor of a community that has suffered from four 
     floods within two years, I believe that we have unmet needs 
     in this country that need to be addressed before we can look 
     at any outside interests.

  Mr. President, Mayor Nelson's concerns go to the heart of the 
legislation that I am introducing today. I believe that the volume of 
distributed federal surplus property would increase if the intent of 
Congress when it passed the 1976 reforms was more closely followed.
  If Congress continues to allow surplus federal property to go abroad, 
or not make its way through proper channels to eligible recipients, 
taxpayers such as those in the community of Warren will stand to lose. 
As someone who has always worked to ensure the wisest possible use of 
taxpayer dollars, this gives me great concern. The legislation I am 
introducing will help to address these concerns through the following 
provisions.
  First, this measure would ensure that when distributing surplus 
federal personal property, domestic needs are met before we consider 
foreign interests. It would, however, grant the President the authority 
to make supplies available for humanitarian relief purposes before 
going to the states, in the case of emergencies or natural disasters.
  Under the Humanitarian Assistance Program (HAP), the Secretary of 
Defense is permitted to make nonlethal Department of Defense supplies 
available by the State Department to foreign countries as part of 
humanitarian relief activities. I was disturbed to learn that over $1 
billion worth of excess supplies was made available to the State 
Department between fiscal years 1987 through 1997 before GSA had been 
given an opportunity to review the property and make it available for 
donation to the states.
  Mr. President, I understand that some officials may argue that the 
Humanitarian Assistance Program is an important part of our nation's 
foreign assistance efforts. Many foreign countries and organizations 
clearly have benefited from nonlethal Department of Defense excess 
property finance by American taxpayers. Although I have serious 
concerns about this initiative, my legislation does not eliminate the 
Humanitarian Assistance Program.
  However, I believe we must prioritize the needs of disaster victims 
in Minnesota, rural hospitals in Arkansas, police departments in 
Washington state, school districts in Idaho, homeless assistance 
providers in Florida, and other communities and organizations which 
have invested their tax dollars in government property and the donation 
program. For these reasons, I oppose the continued priority status 
granted to foreign recipients under programs such as the Humanitarian 
Assistance Program.
  Second, my bill would amend the Foreign Assistance Act of 1961 to 
prohibit the transfer of Government-owned excess property to foreign 
countries or international organizations for environmental protection 
activities in foreign countries unless GSA determined that there is no 
federal or state use for the property.
  Third, this legislation would require GSA to report to Congress on 
the effectiveness of all statutes relating to the disposal and donation 
of personal property and recommend any changes that would further 
improve the Donation Program.
  Mr. President, my bill is based on the principle that eligible 
recipients should be able to maximize their tax dollars through 
expendable federal property that meets their needs. It takes an 
important step toward stopping publicly-owned property from being 
shipped abroad and given to other organizations before it is 
distributed through each state agency for surplus property.
  My legislation will fulfill the public's right to know how and where 
their tax dollars are being spent. In many ways, it will serve as the 
second phase of the reforms overwhelmingly passed by Congress in 1976, 
by preserving the active role of states in the handling and 
distribution of surplus federal property.
  Members of Congress and state and local officials all have an 
obligation to see that the government distributes this property fairly 
and equitably, ensuring accountability to the taxpayers. Too often, 
federal agencies forget that the owners of this property are the 
American people--the federal government is merely its public custodian.
  Mr. President, the best interests of America's taxpayers have always 
been at the top of my agenda. I look forward to improving Congressional 
oversight of government property and securing passage of this 
legislation during the 106th Congress.
                                 ______
                                 
      By Mr. THOMAS (for himself, Mr. Nickles, Mr. Craig, Mr. Helms, 
        Mr. Crapo, Mr. Grams, and Mr. Enzi):
  S. 352. A bill to amend the National Environmental Policy Act of 1969 
to require that Federal agencies consult with State agencies and county 
and local governments on environmental impact statements; to the 
Committee on Environment and Public Works.


          state and local government participation act of 1999

  Mr. THOMAS. Mr. President, I rise today, along with Senators Nickles, 
Craig, Helms, Crapo, Grams, and Enzi, to introduce the State and Local 
Government Participation Act of 1999 which would amend the National 
Environmental Policy Act (NEPA). This bill is designed to guarantee 
that federal agencies identify state, county and

[[Page 1726]]

local governments as cooperating agencies when fulfilling their 
environmental planning responsibilities under NEPA.
  NEPA was designed to ensure that the environmental impacts of a 
proposed federal action are considered and minimized by the federal 
agency taking that action. It was supposed to provide for adequate 
public participation in the decision making process on these federal 
activities and document an agency's final conclusions with respect to 
the proposed action.
  Although this sounds simple and quite reasonable, NEPA has become a 
real problem in Wyoming and many states throughout the nation. A 
statute that was supposed to provide for additional public input in the 
federal land management process has instead become an unworkable and 
cumbersome law. Instead of clarifying and expediting the public 
planning process on federal lands, NEPA now serves to delay action and 
shut-out local governments that depend on the proper use of these 
federal lands for their existence.
  The State and Local Government Participation Act is designed to 
provide for greater input from state and local governments in the NEPA 
process. This measure would simply guarantee that state, county and 
local agencies be identified as cooperating entities when preparing 
land management plans under NEPA. Although the law already provides for 
voluntary inclusion of state and local entities in the planning 
process, too often, the federal agencies choose to ignore local 
governments when preparing planning documents under NEPA. 
Unfortunately, many federal agencies have become so engrossed in 
examining every environmental aspect of a proposed action on federal 
land, they have forgotten to consult with the folks who actually live 
near and depend on these areas for their economic survival.
  Mr. President, states and local communities must be consulted and 
included when proposed actions are being taken on federal lands in 
their state. Too often, federal land managers are more concerned about 
the comments of environmental organizations located in Washington, D.C. 
or New York City than the people who actually live in the state where 
the proposed action will take place. This is wrong. The concerns, 
comments and input of state and local communities is vital for the 
proper management of federal lands in the West. The State and Local 
Government Participation Act of 1999 will begin to address this 
troubling problem and guarantee that local folks will be involved in 
proposed decision that will affect their lives.
  Mr. CRAIG. Mr. President, I join my colleagues today in introducing 
the State and Local Government Participation Act.
  This legislation would amend the National Environmental Policy Act 
(NEPA) to provide the opportunity for State, local, and county agencies 
to participate in land management decisions by identifying them as 
cooperating agencies in the NEPA process.
  NEPA was passed in 1969 to, among other things, ``declare a national 
policy which will encourage harmony between man and his environment.'' 
I support the intent of NEPA, to protect our public resources from 
environmental degradation. However, in the last twenty years, the NEPA 
process has become a very time consuming and cumbersome public process. 
In almost every instance, an Environmental Impact Statement or 
Environmental Assessment must be completed under NEPA before any action 
can take place on the public lands.
  My state, Idaho, is 63 percent federal land, and management of those 
lands is of vital importance, especially to the communities that are 
economically dependent on the public lands. In far too many instances, 
land management decisions are being made without allowing those most 
affected by a land management decision or in many cases, those most 
knowledgeable about the resource, to play a meaningful role in the NEPA 
process.
  In the Pacific Northwest, the Forest Service and the Bureau of Land 
Management are currently working on a comprehensive ecosystem 
management plan for the Columbia River Basin, the Interior Columbia 
Basin Ecosystem Management Plan (ICBEMP). This plan, in the form of a 
draft EIS, has been in the works for four years at an expense of more 
than $40 million. County governments and state officials in my state 
feel alienated by the process to date. The situation has gotten so bad 
that in last year's omnibus appropriations act, I worked to have report 
language encouraging the administration to include affected state and 
county governments in this process as cooperating agencies.
  I would submit that every western Senator has at least one horror 
story involving a public land managing agency that ran roughshod over 
the local government in the NEPA process. Rather than legislating that 
Federal agencies must work with the local governments on a case-by-case 
basis, this bill would provide the opportunity to fix a problem that 
has arisen with the original NEPA legislation.
  Mr. GRAMS. Mr. President, I rise today in support of the State and 
Local Government Participation Act of 1999. I would like to thank 
Senator Thomas for introducing this simple, but very important piece of 
legislation.
  As Senator Thomas said in his introductory remarks, this legislation 
would make state and county governments ``cooperating agencies'' in the 
National Environmental Policy Act process. For example, when the Forest 
Service decides to undertake a timber sale, it will have to by law 
consult and obtain the input of state and county governments during the 
NEPA process. Current law, however, only requires the federal 
government to consult with other federal agencies.
  The underlying concept of this legislation is something most people 
would assume already takes place. Average Americans assume that the 
federal government considers state and local governments partners in 
all land-use and environmental decisions. After all, it is an 
established fact that local citizens and officials can best meet local 
problems with local solutions. And in those matters, people expect the 
federal government to help out where needed and take the lead where 
appropriate. But average Americans, unfortunately, often aren't aware 
of the complete picture.
  Too often, the federal government adopts its ``I know best'' 
philosophy and ignores the input of local officials or even excludes 
them from the decision making process. One of the first things locally 
elected officials in the northern part of my state--an area which deals 
with the National Environmental Policy Act regularly--say to me when we 
sit down to talk is that the federal government doesn't care about 
their needs. They feel the federal government, be it the Forest 
Service, Park Service, or EPA, just doesn't seem to realize that 
counties are having a tough time making ends meet and providing basic 
services to its residents in an era of increased land-regulation and 
decreased logging, mining, and access. And when they show you the 
numbers and make their case, it is impossible to disagree with them.
  There are a number of counties in northern Minnesota which are 
predominantly federally owned. St. Louis County is 62 percent federally 
owned, Cook County is 82 percent federally owned, and Lake County is 92 
percent federally owned. They are home to the Superior National Forest 
and the Boundary Waters Canoe Area Wilderness. Not far away is 
Voyageurs National Park and not far from that is the Chippewa National 
Forest. Not surprisingly, they are often placed in the middle of many 
disputes over land-uses. They continue to see their PILT payments 
funded at barely 50 percent of authorized amounts. They continue to 
witness more and more restrictions on the use of lands within their 
counties and the Forest Services declining timber sales. And they 
continue to see their populations declining as a result of lost 
economic opportunities. They deserve to be heard when the federal 
government is going to take actions in their communities.
  Mr. President, it is clear that in the last half of this century 
power has shifted from our nation's cities and states to Washington, 
DC. No one disputes that. And while many of us would

[[Page 1727]]

like to see that shift back the other way, it may take some time to get 
it done. But what we should all be able to agree upon, is that locally 
elected officials should have a seat at the table and should be treated 
as equals and as partners by federal agencies. They know what is 
happening on their land and they know the people who will be impacted 
by changes in the law. They also know what the impact will be on a 
county or state budget. But most importantly, Mr. President, county and 
state officials are closer to the people. Their phone numbers are 
actually in the phone book and they aren't a long distance call away. 
They answer their door when someone comes knocking. And they aren't a 
bureaucrat hidden away in Washington, DC, making one size fits all 
policy decisions.
  As I stated earlier, I think those people deserve a role in the NEPA 
process and I think the American people would agree. I urge my 
colleagues to protect their state and local government's right to 
participate by supporting this important piece of legislation.
                                 ______
                                 

       By Mr. GRASSLEY (for himself, Mr. Kohl, and Mr. Thurmond):

  S. 353. A bill to provide for class action reform, and for other 
purposes; to the Committee on the Judiciary.


                 The Class Action Fairness Act of 1999

  Mr. GRASSLEY. Mr. President, I rise today to introduce, along with 
Senators Kohl and Thurmond, the Class Action Fairness Act of 1999, a 
bill that will help curb class action lawsuit abuse. Last year, Senator 
Kohl and I introduced the Class Action Fairness Act of 1998, S. 2083. 
That bill was marked up in the Administrative Oversight and the Courts 
Subcommittee on September 10, 1998, and we favorably voted out of 
subcommittee a substitute amendment to the bill. Unfortunately, this 
legislation was not considered further by the Senate because of the 
press of other legislative business scheduled before the full Judiciary 
Committee.
  We are now reintroducing the substitute amendment to last year's 
class action bill, with minor modifications, as the Class Action 
Fairness Act of 1999. This modest bill will go a long way toward ending 
class action lawsuit abuses where the plaintiffs receive very little 
and their lawyers receive a whole lot. This bill will preserve class 
action lawsuits as an important tool that brings representation to the 
unrepresented and result in important discrimination and consumer 
decisions.
  In October 1997, my Judiciary Subcommittee held a hearing on the 
problem of certain class action lawsuit settlements. I found one 
example of class action lawsuit abuse to be particularly disturbing. In 
an antitrust case settled in the Northern District of Illinois in 1993, 
the plaintiff class alleged that multiple domestic airlines 
participated in price-fixing, which resulted in plaintiffs paying more 
for airline tickets than they otherwise would have had to pay.
  In the settlement, all of the class plaintiffs were awarded a book of 
coupons which could be used toward the purchase of future airline 
tickets. These coupons varied in amount and number, based on how many 
plane tickets a particular plaintiff had purchased. The catch was that 
the plaintiff still had to pay for most of any new airline ticket out 
of his or her own pocket. This meant that only $10 worth of coupons 
could be used toward the purchase of a $100 ticket; up to $25 worth of 
coupons for a $250 ticket; up to $50 worth of coupons for a $500 
ticket, and so on. In addition, these coupons could not be used on 
certain blackout dates, which appeared to include all holidays and peak 
travel times.
  Interestingly enough, the attorneys did not get paid with these 
coupon books. Rather, the attorneys were paid cash--$16 million in 
cash. Now, if the coupons were good enough for their clients--the 
people that actually got ripped off--I wonder why those same coupons 
were not good enough for their lawyers.
  Another example of an egregious class action lawsuit settlement was 
highlighted at the subcommittee hearing. Mrs. Martha Preston was a 
member of the plaintiff class in the case Hoffman versus Banc Boston, 
where some plaintiffs received under $10 each in compensation for their 
injuries, yet were docked from $75 to $90 for attorneys' fees. This 
means that attorneys who were supposed to be representing these 
people's best interests, agreed to a settlement that cost some of the 
plaintiffs more money than they received in compensation for being 
wronged.
  These class action lawsuit abuses happen for a number of reasons. One 
reasons is that plaintiffs' lawyers negotiate their own fees as part of 
the settlement. This can result in distracting lawyers from focusing on 
their client's needs, and settling or refusing to settle based on the 
amount of their own compensation.
  During our hearing, evidence was presented that at least one group of 
plaintiffs' lawyers meets on a regular basis to discuss initiating 
class action lawsuits. They scan the Federal Register and other 
publications to get ideas for lawsuits, and only after they have 
identified a wrong, do they find clients for their lawsuits. Instead of 
having clients who complain of harms going to hire attorneys, these 
attorneys find the harms first and then recruit potential clients with 
the promise of compensation.
  On the other hand, the defendants do not always have clean hands. 
Plaintiffs' lawyers say that they are approached by lawyers from large 
corporations who urge them to find a class and sue the corporation. The 
corporations may use the class action lawsuit as a tool to limit their 
liability. Once a lawsuit is initiated and settled, no member of the 
class may sue based on that claim. In other words, if a corporation 
settle a class action lawsuit by paying all class members $10 as 
compensation for a faulty product, the plaintiffs can no longer sue for 
any harm caused by the faulty product. This is one way of buying 
immunity for liability.
  A Rand study on class action litigation stated that,

       It is generally agreed that fees drive plaintiffs' 
     attorney's filing behavior, that defendants' risk aversion in 
     the face of large aggregate exposures drives their settlement 
     behavior. . . . In other words, the problems with class 
     actions flow from incentives that are embedded in the process 
     itself.

  The Rand study also found that the number of class actions is rising 
significantly, with most of the increase concentrated in State courts. 
State courts often are used in nationwide class actions to the 
detriment of class members and sometimes defendants. In fact, State 
courts are more likely to certify class actions without adequately 
considering whether a class action would be fair to all class members. 
In addition, class lawyers sometimes manipulate pleadings to avoid 
removal of the lawsuit to the Federal courts, even to the extent that 
they minimize their client's potential claims. Class lawyers also 
sometimes defeat the complete diversity requirement by ensuring that at 
least one named class member is from the same State as a defendant, 
even if every other class member is from a different State.
  The Class Action Fairness Act of 1999 does a number of things. First, 
it requires that notice of proposed settlements in all class actions, 
as well as all class notices, must be in clear, easily understood 
English and must include all material settlement terms, including the 
amount and source of attorneys' fees. The notices most plaintiffs 
receive are written in small print and confusing legal jargon. In fact, 
a lawyer testified before my subcommittee that even he could not 
understand the notice he received as a plaintiff in a class action 
lawsuit. Since plaintiffs are giving up their right to sue, it is 
imperative that they understand what they are doing and the 
ramifications of their actions.
  Second, our bill requires that State attorneys general be notified of 
any proposed class settlement that would affect residents of their 
States. The notice would give a State attorney general the opportunity 
to object if the settlement terms are unfair.
  Third, our bill requires that attorneys' fees in class actions are to 
be based on a reasonable percentage of

[[Page 1728]]

damages actually paid to class members, the actual costs of complying 
with the terms of a settlement agreement, as well as any future 
financial benefits. In the alternative, the bill provides that, to the 
extent the law permits, fees may be based on a reasonable hourly 
(lodestar) rate. This provision would discourage settlements that give 
attorneys exorbitant fees based on hypothetical overvaluation of coupon 
settlements, yet allows for reasonable fees in all kinds of cases, 
including cases that primarily involve injunctive relief.
  Fourth, our bill allows more class action lawsuits to be removed from 
State court to Federal court, either by a defendant or an unnamed class 
member. A class action would qualify for Federal jurisdiction if the 
total damages exceed $75,000 and parties include citizens from multiple 
States. Currently, class lawyers can avoid removal if individual claims 
are for just less than $75,000--even if hundreds of millions of dollars 
in total are at stake--or if just one class member is from the same 
State as a defendant. However, the bill provides that cases remain in 
State court where the substantial majority of class and primary 
defendants are from the same State and that State's law would govern, 
or the primary defendants are States and a Federal court would be 
unable to order the relief requested.
  Fifth, our bill will reduce frivolous lawsuits by requiring that a 
violation of rule 11 of the Federal rules of civil procedure, which 
penalizes frivolous lawsuits, will require the imposition of sanctions. 
However, the nature and extent of sanctions will remain discretionary.
  We need class action reform badly. Both plaintiffs and defendants are 
calling for change in this area. The Class Action Fairness Act of 1999 
is not just procedural reform, it is substantive reform of our court 
system. This bill will remove the conflict of interest that lawyers 
face in class action lawsuits, and will ensure the fair settlement of 
these cases. This bill will preserve the process, but put a stop to the 
more egregious abuses. I urge all my colleagues to join Senators Kohl, 
Thurmond, and me and support this important piece of legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 353

       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 ``Class Action Fairness Act of 
     1999''.

     SEC. 2. NOTIFICATION REQUIREMENT OF CLASS ACTION 
                   CERTIFICATION OR SETTLEMENT.

       (a) In General.--Part V of title 28, United States Code, is 
     amended by inserting after chapter 113 the following new 
     chapter:

                      ``CHAPTER 114--CLASS ACTIONS

``Sec.
``1711. Definitions.
``1712. Application.
``1713. Notification of class action certifications and settlements.
``1714. Limitation on attorney's fees in class actions.

     ``Sec. 1711. Definitions

       ``In this chapter the term--
       ``(1) `class' means a group of persons that comprise 
     parties to a civil action brought by 1 or more representative 
     persons;
       ``(2) `class action' means a civil action filed pursuant to 
     rule 23 of the Federal Rules of Civil Procedure or similar 
     State rules of procedure authorizing an action to be brought 
     by 1 or more representative persons on behalf of a class;
       ``(3) `class certification order' means an order issued by 
     a court approving the treatment of a civil action as a class 
     action;
       ``(4) `class member' means a person that falls within the 
     definition of the class;
       ``(5) `class counsel' means the attorneys representing the 
     class in a class action;
       ``(6) `plaintiff class action' means a class action in 
     which class members are plaintiffs; and
       ``(7) `proposed settlement' means a settlement agreement 
     between or among the parties in a class action that is 
     subject to court approval before the settlement becomes 
     binding on the parties.

     ``Sec. 1712. Application

       ``This chapter shall apply to--
       ``(1) all plaintiff class actions filed in Federal court; 
     and
       ``(2) all plaintiff class actions filed in State court in 
     which--
       ``(A) any class member resides outside the State in which 
     the action is filed; and
       ``(B) the transaction or occurrence that gave rise to the 
     class action occurred in more than 1 State.

     ``Sec. 1713. Notification of class action certifications and 
       settlements

       ``(a) Not later than 10 days after a proposed settlement in 
     a class action is filed in court, class counsel shall serve 
     the State attorney general of each State in which a class 
     member resides and the Attorney General of the United States 
     as if such attorneys general and the Department of Justice 
     were parties in the class action with--
       ``(1) a copy of the complaint and any materials filed with 
     the complaint and any amended complaints (except such 
     materials shall not be required to be served if such 
     materials are made electronically available through the 
     Internet and such service includes notice of how to 
     electronically access such material);
       ``(2) notice of any scheduled judicial hearing in the class 
     action;
       ``(3) any proposed or final notification to class members 
     of--
       ``(A)(i) the members' rights to request exclusion from the 
     class action; or
       ``(ii) if no right to request exclusion exists, a statement 
     that no such right exists; and
       ``(B) a proposed settlement of a class action;
       ``(4) any proposed or final class action settlement;
       ``(5) any settlement or other agreement contemporaneously 
     made between class counsel and counsel for the defendants;
       ``(6) any final judgment or notice of dismissal;
       ``(7)(A) if feasible the names of class members who reside 
     in each State attorney general's respective State and the 
     estimated proportionate claim of such members to the entire 
     settlement; or
       ``(B) if the provision of information under subparagraph 
     (A) is not feasible, a reasonable estimate of the number of 
     class members residing in each attorney general's State and 
     the estimated proportionate claim of such members to the 
     entire settlement; and
       ``(8) any written judicial opinion relating to the 
     materials described under paragraphs (3) through (6).
       ``(b) A hearing to consider final approval of a proposed 
     settlement may not be held earlier than 120 days after the 
     date on which the State attorneys general and the Attorney 
     General of the United States are served notice under 
     subsection (a).
       ``(c) Any court with jurisdiction over a plaintiff class 
     action shall require that--
       ``(1) any written notice provided to the class through the 
     mail or publication in printed media contain a short summary 
     written in plain, easily understood language, describing--
       ``(A) the subject matter of the class action;
       ``(B) the legal consequences of being a member of the class 
     action;
       ``(C) the ability of a class member to seek removal of the 
     class action to Federal court if--
       ``(i) the action is filed in a State court; and
       ``(ii) Federal jurisdiction would apply to such action 
     under section 1332(d);
       ``(D) if the notice is informing class members of a 
     proposed settlement agreement--
       ``(i) the benefits that will accrue to the class due to the 
     settlement;
       ``(ii) the rights that class members will lose or waive 
     through the settlement;
       ``(iii) obligations that will be imposed on the defendants 
     by the settlement;
       ``(iv) the dollar amount of any attorney's fee class 
     counsel will be seeking, or if not possible, a good faith 
     estimate of the dollar amount of any attorney's fee class 
     counsel will be seeking; and
       ``(v) an explanation of how any attorney's fee will be 
     calculated and funded; and
       ``(E) any other material matter; and
       ``(2) any notice provided through television or radio to 
     inform the class members of the right of each member to be 
     excluded from a class action or a proposed settlement, if 
     such right exists, shall, in plain, easily understood 
     language--
       ``(A) describe the persons who may potentially become class 
     members in the class action; and
       ``(B) explain that the failure of a person falling within 
     the definition of the class to exercise such person's right 
     to be excluded from a class action will result in the 
     person's inclusion in the class action.
       ``(d) Compliance with this section shall not provide 
     immunity to any party from any legal action under Federal or 
     State law, including actions for malpractice or fraud.
       ``(e)(1) A class member may refuse to comply with and may 
     choose not to be bound by a settlement agreement or consent 
     decree in a class action if the class member resides in a 
     State where the State attorney general has not been provided 
     notice and materials under subsection (a).
       ``(2) The rights created by this subsection shall apply 
     only to class members or any person acting on a class 
     member's behalf, and shall not be construed to limit any 
     other

[[Page 1729]]

     rights affecting a class member's participation in the 
     settlement.
       ``(f) Nothing in this section shall be construed to impose 
     any obligations, duties, or responsibilities upon State 
     attorneys general or the Attorney General of the United 
     States.

     ``Sec. 1714. Limitation on attorney's fees in class actions

       ``(a) In any class action, the total attorney's fees and 
     expenses awarded by the court to counsel for the plaintiff 
     class may not exceed a reasonable percentage of the amount 
     of--
       ``(1) any damages and prejudgment interest actually paid to 
     the class;
       ``(2) any future financial benefits to the class based on 
     the cessation of alleged improper conduct by the defendants; 
     and
       ``(3) costs actually incurred by all defendants in 
     complying with the terms of an injunctive order or settlement 
     agreement.
       ``(b) Notwithstanding subsection (a), to the extent that 
     the law permits, the court may award attorney's fees and 
     expenses to counsel for the plaintiff class based on a 
     reasonable lodestar calculation.''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for part V of title 28, United States Code, is 
     amended by inserting after the item relating to chapter 113 
     the following:

``114. Class Actions............................................1711''.

     SEC. 3. DIVERSITY JURISDICTION FOR CLASS ACTIONS.

       Section 1332 of title 28, United States Code, is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following:
       ``(d)(1) In this subsection, the terms `class', `class 
     action', and `class certification order' have the meanings 
     given such terms under section 1711.
       ``(2) The district courts shall have original jurisdiction 
     of any civil action where the matter in controversy exceeds 
     the sum or value of $75,000, exclusive of interest and costs, 
     and is a class action in which--
       ``(A) any member of a class of plaintiffs is a citizen of a 
     State different from any defendant;
       ``(B) any member of a class of plaintiffs is a foreign 
     state or a citizen or subject of a foreign state and any 
     defendant is a citizen of a State; or
       ``(C) any member of a class of plaintiffs is a citizen of a 
     State and any defendant is a foreign state or a citizen or 
     subject of a foreign state.
       ``(3) The district court shall abstain from hearing a civil 
     action described under paragraph (2) if--
       ``(A)(i) the substantial majority of the members of the 
     proposed plaintiff class are citizens of a single State of 
     which the primary defendants are also citizens; and
       ``(ii) the claims asserted will be governed primarily by 
     the laws of that State; or
       ``(B) the primary defendants are States, State officials, 
     or other governmental entities against whom the district 
     court may be foreclosed from ordering relief.
       ``(4) In any class action, the claims of the individual 
     members of any class shall be aggregated to determine whether 
     the matter in controversy exceeds the sum or value of 
     $75,000, exclusive of interest and costs.
       ``(5) This subsection shall apply to any class action 
     before or after the entry of a class certification order by 
     the court.
       ``(6)(A) A district court shall dismiss, or, if after 
     removal, strike the class allegations and remand, any civil 
     action if--
       ``(i) the action is subject to the jurisdiction of the 
     court solely under this subsection; and
       ``(ii) the court determines the action may not proceed as a 
     class action based on a failure to satisfy the conditions of 
     rule 23 of the Federal Rules of Civil Procedure.
       ``(B) Nothing in subparagraph (A) shall prohibit plaintiffs 
     from filing an amended class action in Federal or State 
     court.
       ``(C) Upon dismissal or remand, the period of limitations 
     for any claim that was asserted in an action on behalf of any 
     named or unnamed member of any proposed class shall be deemed 
     tolled to the full extent provided under Federal law.
       ``(7) Paragraph (2) shall not apply to any class action, 
     regardless of which forum any such action may be filed in, 
     involving any claim relating to--
       ``(A) the internal affairs or governance of a corporation 
     or other form of entity or business association arising under 
     or by virtue of the statutory, common, or other laws of the 
     State in which such corporation, entity, or business 
     association is incorporated (in the case of a corporation) or 
     organized (in the case of any other entity); or
       ``(B) the rights, duties (including fiduciary duties), and 
     obligations relating to or created by or pursuant to any 
     security (as defined under section 2(a)(1) of the Securities 
     Act of 1933 or the rules and regulations adopted under such 
     Act).''.

     SEC. 4. REMOVAL OF CLASS ACTIONS TO FEDERAL COURT.

       (a) In General.--Chapter 89 of title 28, United States 
     Code, is amended by adding after section 1452 the following:

     ``Sec. 1453. Removal of class actions

       ``(a) In this section, the terms `class', `class action', 
     and `class member' have the meanings given such terms under 
     section 1711.
       ``(b) A class action may be removed to a district court of 
     the United States in accordance with this chapter, except 
     that such action may be removed--
       ``(1) by any defendant without the consent of all 
     defendants; or
       ``(2) by any plaintiff class member who is not a named or 
     representative class member without the consent of all 
     members of such class.
       ``(c) This section shall apply to any class action before 
     or after the entry of any order certifying a class.
       ``(d) The provisions of section 1446 relating to a 
     defendant removing a case shall apply to a plaintiff removing 
     a case under this section, except that in the application of 
     subsection (b) of such section the requirement relating to 
     the 30-day filing period shall be met if a plaintiff class 
     member files notice of removal within 30 days after receipt 
     by such class member, through service or otherwise, of the 
     initial written notice of the class action.
       ``(e) This section shall not apply to any class action, 
     regardless of which forum any such action may be filed in, 
     involving any claim relating to--
       ``(1) the internal affairs or governance of a corporation 
     or other form of entity or business association arising under 
     or by virtue of the statutory, common, or other laws of the 
     State in which such corporation, entity, or business 
     association is incorporated (in the case of a corporation) or 
     organized (in the case of any other entity); or
       ``(2) the rights, duties (including fiduciary duties), and 
     obligations relating to or created by or pursuant to any 
     security (as defined under section 2(a)(1) of the Securities 
     Act of 1933 or the rules and regulations adopted under such 
     Act).''.
       (b) Removal Limitation.--Section 1446(b) of title 28, 
     United States Code, is amended in the second sentence by 
     inserting ``(a)'' after ``section 1332''.
       (c) Technical and Conforming Amendments.--The table of 
     sections for chapter 89 of title 28, United States Code, is 
     amended by adding after the item relating to section 1452 the 
     following:

``1453. Removal of class actions.''.

     SEC. 5. REPRESENTATIONS AND SANCTIONS UNDER RULE 11 OF THE 
                   FEDERAL RULES OF CIVIL PROCEDURE.

       Rule 11(c) of the Federal Rules of Civil Procedure is 
     amended--
       (1) in the first sentence by striking ``may, subject to the 
     conditions stated below,'' and inserting ``shall'';
       (2) in paragraph (2) by striking the first and second 
     sentences and inserting ``A sanction imposed for violation of 
     this rule may consist of reasonable attorneys' fees and other 
     expenses incurred as a result of the violation, directives of 
     a nonmonetary nature, or an order to pay penalty into court 
     or to a party.''; and
       (3) in paragraph (2)(A) by inserting before the period ``, 
     although such sanctions may be awarded against a party's 
     attorneys''.

     SEC. 6. EFFECTIVE DATE.

       The amendments made by this Act shall apply to any civil 
     action commenced on or after the date of enactment of this 
     Act.

  Mr. KOHL. Mr. President, Senator Grassley and I today introduce the 
Class Action Fairness Act of 1999. This legislation addresses growing 
problems in class action litigation, particularly unfair and abusive 
settlements that shortchange class members while class lawyers line 
their pockets with high fees.
  Let me share with you just a few disturbing examples.
  First, one of my constituents, Martha Preston of Baraboo, Wisconsin, 
was an unnamed member of a class action lawsuit against her mortgage 
company that ended in a settlement. While at first she got $4 and 
change in compensation, a few months later her lawyers surreptitiously 
took $80--twenty times her compensation--from her escrow account to pay 
their fees. In total, her lawyers managed to pocket over $8 million in 
fees, but never explained that the class--not the defendant--would pay 
the attorneys' fees. Naturally outraged, she and others sued the class 
lawyers. Her lawyers turned around and sued her in Alabama--a state she 
had never visited--and demanded an unbelievable $25 million. So not 
only did she lose $75, she was forced to defend herself from a $25 
million lawsuit.
  Second, class lawyers and defendants often engineer settlements that 
leave plaintiffs with small discounts or coupons unlikely ever to be 
used. Meanwhile, class lawyers reap big fees based on unduly optimistic 
valuations. For example, in a settlement of a class action against 
major airlines, most plaintiffs received less than $80 in coupons while 
class attorneys received $14 million in fees based on a projection that 
the discounts were worth hundreds of

[[Page 1730]]

millions. In a suit over faulty computer monitors, class members got 
$13 coupons, while class lawyers pocketed $6 million. And in a class 
action against Nintendo, plaintiffs received $5 coupons, while 
attorneys took almost $2 million in fees.
  Third, competing federal and state class actions engage in a race to 
settlement, where the best interests of the class lose out. For 
example, in one state class action the class lawyers negotiated a small 
settlement precluding all other suits, and even agreed to settle 
federal claims that were not at issue in state court. Meanwhile, a 
federal court found that the federal claims could have been worth more 
than $1 billion, while accusing the state class lawyers of ``hostile 
representation'' that ``surpassed inadequacy and sank to the level of 
subversion'' and pursuit of self-interest in ``getting a fee'' that was 
``more in line with the interests of [defendants] than those of their 
clients.''
  Fourth, class actions are often filed in state courts that are more 
likely to give inadequate consideration to class certification and 
class settlements. On several occasions, a state court has certified a 
class action although federal courts rejected certification of the same 
case. And in several Alabama state courts, 38 out of 43 classes 
certified in a three-year period were certified on an ex parte basis, 
without notice and hearing. One Alabama judge acting ex parte certified 
11 class actions in 1997 alone. Comparably, only an estimated 38 class 
actions were certified in federal court that year (excluding suits 
against the U.S. and suits brought under federal law). This lack of 
close scrutiny appears to create a big incentive to file in state 
court, especially given the recent findings of a Rand study that class 
actions are increasingly concentrated in state courts.
  Fifth, in nationwide class actions filed in state court, class 
lawyers often manipulate the pleadings to avoid removal to federal 
court, even by minimizing the potential claims of class members. For 
example, state class actions often seek just over $74,000 in damages 
per plaintiff, and forsake punitive damage claims, to avoid the $75,000 
floor that qualifies for federal diversity jurisdiction. Or they defeat 
the federal requirement of complete diversity by naming one class 
member who is from the same state as a defendant, even if all other 
class members are from different states.
  Finally, out-of-state defendants are often hauled into state court to 
address nationwide class claims, although federal courts are a more 
appropriate and more efficient forum. For example, an Alabama court is 
now considering a class action--and could establish a national policy--
in a suit brought against the big three automakers on behalf of every 
American who bought a dual-equipped air bags over an eight-year period. 
The defendants failed in their attempt to remove to federal court based 
on an application of current diversity laws. And, unlike federal 
courts, states are unable to consolidate multiple class actions that 
involve the same underlying facts.
  These examples show that abuse of the class action system is not only 
possible, but real. And the incentives and realities of the current 
system are a big part of the problem.
  A class action is a lawsuit in which an attorney not only represents 
an individual plaintiff, but, in addition, seeks relief for all those 
individuals who suffered a similar injury. Prospective class members 
are usually sent notice about the class action, and are presumed to 
join it, unless they specifically ask to be left out. When these suits 
are settled, all class members are notified of the terms of the 
settlement and given the chance to object if they don't think the 
settlement is fair. A court must ultimately approve a settlement 
agreement.
  The vast majority of these suits are brought and settled fairly and 
in good faith. Unfortunately, the class action system does not 
adequately protect class members from the few unscrupulous lawyers who 
are more interested in big attorneys' fees than compensation for their 
clients, the victims. The primary problem is that the client in a class 
action is a diffuse group of thousands of individuals scattered across 
the country, which is incapable of exercising meaningful control over 
the litigation. As a result, while in theory the class lawyers must be 
responsive to their clients, the lawyers control all aspects of the 
litigation.
  Moreover, during a class action settlement, the amount of the 
attorney fee is negotiated between plaintiffs' lawyers and the 
defendants, just like other terms of the settlement. But in most cases 
the fees come at the expense of class members--the only party that does 
not have a seat at the bargaining table.
  In addition, defendants may use class action settlements to advance 
their own interests. Paying a small settlement generally precludes all 
future claims by class members. So defendants have ample motivation to 
give class lawyers the fees they want as the price for settling all 
future liabilities.
  As a result, it is easy to see how class members are left out in the 
cold. Although the judge is supposed to determine whether the 
settlement is fair before approving it, class lawyers and defendants 
``may even put one over on the court, a staged performance. The lawyers 
support the settlement to get fees; the defendants support it to evade 
liability; the court can't vindicate the class's rights because the 
friendly presentation means that it lacks essential information,'' 
Kamilewicz v. Bank of Boston Corp., 100 F.3d 1348, 1352 (Easterbrook, 
J., dissenting) (7th Cir. 1996).
  Although class members get settlement notices and have the 
opportunity to object, they rarely do so, especially if they have 
little at stake. Not only is it expensive to get representation, but 
also it can be extremely difficult to actually understand what the 
settlement really does. Settlements are often written in long, finely 
printed letters with incomprehensible legalese, which even well-trained 
attorneys are hard pressed to understand. And settlements often omit 
basic information like how much money will go toward attorneys' fees 
and where that money will come from. In Martha Preston's case, one 
prominent federal judge found that ``the notice not only didn't alert 
the absent class members to the pending loss but also pulled the wool 
over the state judge's eyes,'' id.
  We all know that class actions can result in significant and 
important benefits for class members and society, and that most class 
lawyers and most state courts are acting responsibly. Class actions 
have been used to desegregate racially divided schools, to obtain 
redress for victims of employment discrimination, and to compensate 
individuals exposed to toxic chemicals or defective products. Class 
actions increase access to our civil justice system because they enable 
people to pursuant claims collectively that would otherwise be too 
expensive to litigate.
  The difficulty in any effort to improve a basically good system is 
weeding out the abuses without causing undue damage. The legislation we 
propose attempts to do this. It does not limit anyone's ability to file 
or settle a class action. It seeks to address the problem in several 
ways. First, it requires that State attorneys general be notified about 
proposed class action settlements that would affect residents of their 
states. With notice, the attorneys general can intervene in cases where 
they think the settlements are unfair.
  Second, the legislation requires that class members be notified of a 
potential settlement in clear, easily understood English--not legal 
jargon.
  Third, it limits class attorneys' fees to a reasonable percentage of 
the actual damages received by plaintiffs or to reasonable hourly fees. 
This will deter class lawyers from using inflated values of coupon 
settlements to reap big fees. Some courts have already embraced this 
standard, which parallels the recent securities reform law.
  Fourth, it permits removal to federal court of certain class actions 
involving citizens of multiple states, at the request of unnamed class 
members or defendants. This provision eliminates gaming by class 
lawyers to keep cases in state court and, through consolidation of 
related cases in federal court,

[[Page 1731]]

helps prevent a race to settlement between competing class actions.
  Finally, it amends Rule 11 of the Federal Rules of Civil Procedures 
to require the imposition of sanctions for filing frivolous lawsuits, 
although the nature and extent of sanctions remains discretionary. This 
provision will deter the filing of frivolous class actions.
  Let me emphasize the limited scope of this legislation. We do not 
close the courthouse door to any class action. We do not require that 
State attorneys general do anything with the notice they receive. We do 
not deny reasonable fees for class lawyers. And we do not mandate that 
every class action be brought in federal court. Instead, we simply 
promote closer and fairer scrutiny of class actions and class 
settlements.
  These proposals have earned a broad range of support. Even Judge Paul 
Niemeyer, the Chair of the Judicial Conference's Advisory Committee on 
Civil Rules, who has studied class actions closely and testified before 
Congress on this issue, expressed his support for this ``modest'' 
measure, noting in particular that increasing federal jurisdiction over 
class actions will be a positive ``meaningful step.'' Last year, our 
bill passed the Judiciary Administrative Oversight and the Courts 
Subcommittee.
  Mr. President, right now, people across the country can be dragged 
into lawsuits unaware of their rights and unarmed on the legal 
battlefield. What our bill does is give regular people back their 
rights and representation. This measure may not stop all abuses, but it 
moves us forward. It will help ensure that good people like Martha 
Preston don't get ripped off.
  Mr. President, Senator Grassley and I believe this is a moderate 
approach to correct the worst abuses, while preserving the benefits of 
class actions. It is both pro-consumer and pro-defendant. We believe it 
will make a difference.
                                 ______
                                 
      By Mr. THOMAS (for himself, Mr. McCain, Mr. Kerry, Mr. Smith of 
        Oregon, and Mr. Robb):
  S. 354. A bill to authorize the extension of nondiscriminatory trade 
status to the products of Mongolia; to the Committee on Finance.


                  Mongolia Most-Favored-Nation Status

  Mr. THOMAS. Mr. President, I rise as chairman of the Subcommittee on 
East Asian and Pacific Affairs to introduce S. 354, a bill to authorize 
the extension of nondiscriminatory treatment--formerly known as ``most-
favored nation status''--to the products of Mongolia. I am pleased to 
be joined by Senator McCain, chairman of the Commerce Committee; 
Senator Kerry, the ranking minority member of my subcommittee; and 
Senator Robb and Senator Smith or Oregon as original cosponsors.
  Mongolia has undergone a series of remarkable and dramatic changes 
over the last few years. Sandwiched between the former Soviet Union and 
China, it was one of the first countries in the world to become 
communist after the Russian Revolution. After 70 years of communist 
rule, though, the Mongolian people have recently made great progress in 
establishing a democratic political system and creating a free-market 
economy. Since that time, there have been successive successful 
national and regional elections.
  Mongolia has demonstrated a strong desire to build a friendly and 
cooperative relationship with the United States on trade and related 
matters since its turn towards democracy. We concluded a bilateral 
trade treaty with that country in 1991, and a bilateral investment 
treaty in 1994. Mongolia has received nondiscriminatory trading status 
since 1991, and has been found to be in full compliance with the 
freedom of emigration requirements of Title IV of the Trade Act of 
1974. In additions, it has acceded to the Agreement Establishing of the 
World Trade Organization.
  Mr. President, Mongolia has clearly demonstrated that it is fully 
deserving of joining the ranks of those countries to which we extend 
nondiscriminatory trade status. The extension of that status would not 
only serve to commend the Mongolians on their impressive progress, but 
would also enable the U.S. to avail itself of all its rights under the 
WTO with respect to Mongolia.
  I have another, more parochial, reason for being interested in MFN 
status for Mongolia. Mongolia and my home state of Wyoming are sister 
states; a strong relationship between the two has developed over the 
last four years. Many of Mongolia's provincial governors have visited 
the state, and the two governments have established partnerships in 
education, agriculture, and livestock management. Like Wyoming, 
Mongolia is a high plateau with mountains on the northwest border, 
where many of the residents make their living by raising livestock. I 
am pleased to see the development of this mutually beneficial 
relationship, and am sure that the extension of nondiscriminatory trade 
status will serve to strengthen it further.
  Mr. President, I introduced an identical bill in the last Congress, 
but Congress adjourned sine die before the bill could be acted on by 
both houses. I was very appreciative that last year the distinguished 
chairman of the Finance Committee, Senator Roth, indicated his 
willingness to favorably consider the legislation early in this 
Congress, and look forward to working with him.
  Mr. President, I ask unanimous that the text of S. 354 be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 354

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

     SECTION 1. FINDINGS.

       Congress makes the following findings:
       (1) Mongolia has received nondiscriminatory trade treatment 
     since 1991 and has been found to be in full compliance with 
     the freedom of emigration requirements of title IV of the 
     Trade Act of 1974;
       (2) Mongolia has, since ending its nearly 70 years of 
     dependence on the former Union of Soviet Socialist Republics, 
     established a parliamentary democracy and a free-market 
     economic system;
       (3) Mongolia concluded a bilateral trade treaty with the 
     United States in 1991 and a bilateral investment treaty in 
     1994;
       (4) Mongolia has acceded to the Agreement Establishing the 
     World Trade Organization;
       (5) Mongolia has demonstrated a strong desire to build a 
     friendly and cooperative trade relationship with the United 
     States; and
       (6) The extension of nondiscriminatory trade status to the 
     products of Mongolia would enable the United States to avail 
     itself of all the rights available under the World Trade 
     Organization with respect to Mongolia.

     SEC. 2. TERMINATION OF APPLICATION OF TITLE IV OF THE TRADE 
                   ACT OF 1974 TO MONGOLIA.

       (a) Presidential Determinations and Extensions of 
     Nondiscriminatory Treatment.--Notwithstanding any provision 
     of title IV of the Trade Act of 1974 (19 U.S.C. 2431 et 
     seq.), the President may--
       (1) determine that such title should no longer apply to 
     Mongolia; and
       (2) after making a determination under paragraph (1) with 
     respect to Mongolia, proclaim the extension of 
     nondiscriminatory treatment to the products of that country.
       (b) Termination of Application of Title IV.--On or after 
     the effective date of the extension under subsection (a)(2) 
     of nondiscriminatory treatment to the products of Mongolia, 
     title IV of the Trade Act of 1974 shall cease to apply to 
     that country.

  Mr. McCAIN. Mr. President, today I am proud to cosponsor legislation 
with Senators Thomas, Robb, and Kerry to grant nondiscriminatory trade 
status to Mongolia. Passage of this legislation will play an important 
role in aiding Mongolia's transition to a democratic government and a 
market-oriented economy.
  There has been a stunning political transformation in Mongolia since 
it broke away from Communist rule in 1990. In the past seven years, 
there have been two presidential elections and three parliamentary 
elections. All of these have been open and democratic, and have not 
suffered from violence or fraud.
  The most important aspect of these elections is that they show the 
triumph of democracy and democratic forces. In 1996, the Mongolian 
Social Democratic Party (MSDP) and Mongolian National Democratic Party 
(MNDP) joined forces to win an unexpected victory in the parliamentary 
elections. By fulfilling its ``Contract

[[Page 1732]]

with the Mongolian Voter,'' this coalition is ensuring the 
establishment of a political system based on our cherished democratic 
principles. After a few months of uncertainty, the Mongolian government 
is now back on track and committed to continue its reforms. I am happy 
to say that the International Republican Institute is continuing to 
play a major role in showing these political parties how to establish a 
stable democratic government.
  This democratic transformation has established a firm human rights 
regime. The Mongolian Constitution allows freedom of speech, the press 
and expression. Separation of Church and state is recognized in this 
predominantly Buddhist nation as well as the right to worship or not 
worship. Full freedom of emigration is allowed, and Mongolia now is in 
full compliance with sections 402 and 409 of the Trade Act of 1974, 
also known as the Jackson-Vanik Amendment. An independent judiciary has 
been established to protect these rights from any future violation.
  Mongolia is also in the middle of an economic transformation. As part 
of the ``Contract with the Mongolian Voter,'' the democratic coalition 
of the MNDP and MSDP ran on promises to establish private property 
rights and encourage foreign investment. The Mongolian government is 
now steadily creating a market economy. A program has been set up to 
allow residents of government-owned high rise apartments to acquire 
ownership of their residence. In 1997, Mongolia joined the 
international trading system by joining the World Trade Organization 
and eliminating all tariffs, except on personal automobiles, alcoholic 
beverages, and tobacco. On January 1, 1999, the state-run press became 
privatized. The economic news also continues to be good. The 1997 GDP 
growth was 3.3%, and the inflation rate has dropped from 53.2% in 1996 
to 9.2% in June, 1998. The Mongolian government is now boldly moving to 
set the nation on a course to privatize large-scale enterprise and 
reform the state pension system.
  When I was in Mongolia in 1997, I saw the effects of this economic 
transformation firsthand. At a town hall meeting in Kharakhorum, the 
ancient capital of the Mongol Empire, I met a herdsman and asked him 
about the economic liberalization. First, I asked him how many sheep he 
had under Communism. He said none, because the Communists didn't allow 
private property. Then I asked him how many sheep he owned after 
privatization. He answered that he had three sheep then, which is not 
much in a country with 25 million sheep. So I asked him how many sheep 
he has now. He answered that he now has 90 goats, 60 sheep, 20 cows and 
6 horses. I asked him if that was considered successful. He replied 
that he was successful as were many herdsmen in this new economy. He 
then told me that he would never want to change the system back to what 
it was, because ``now Mongols have control over their own life and 
destiny.'' That is the new culture of a market Mongolian economy.
  There are many benefits to supporting Mongolian democracy and 
economic liberalization. In 1991, Secretary of State James Baker 
promised Mongolia that the United States would be Mongolia's ``third 
neighbor.'' We remain committed to that course of action to encourage 
Mongolia in its endeavors and promote it as an example of how nations 
can successfully convert from a Communist totalitarian state to a 
market democracy. The democratic Mongolia has already begun to promote 
peace and stability among its neighbors by becoming the world's first 
national nuclear-free zone. Furthermore, the United States will be able 
to count on the liberalized Mongolian economy as an important market 
for American goods and services.
  I hope that my colleagues here in the Senate will join me in passing 
this legislation to grant nondiscriminatory trade status to Mongolia to 
help it continue its successful democratic transformation and 
transition to a market economy.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself and Mr. Bingaman):
  S. 355. A bill to amend title 13, United States Code, to eliminate 
the provision that prevents sampling from being used in determining the 
population for purposes of the apportionment of Representatives in 
Congress among the several States; to the Committee on Government 
Affairs.


                a just apportionment for all states act

  Mr. MOYNIHAN. Mr. President, I rise today to introduce, along with my 
friend and colleague, Senator Bingaman, a bill to allow the use of 
sampling in determining the populations of the states for use in 
reapportionment. The Supreme Court has ruled that the 1976 amendments 
to the Census Act do not permit sampling in determining these 
populations. We believe sampling is vital to achieving the goal of the 
most accurate census possible, and to a fair and accurate 
redistricting.
  The Bureau of the Census proposes to count each census tract by mail 
and then by sending out enumerators until they have responses for 90 
percent of the addresses. The Bureau proposes to then use sampling to 
infer who lives at the remaining ten percent of addresses in each tract 
based on what they know of the 90 percent. This would provide a more 
accurate census than we get by repeatedly sending enumerators to hard-
to-count locations and would save $500 million or more in personnel 
costs.
  The Census plan is supported by the National Academy of Sciences' 
National Research Council, which was directed by Congress in 1992 to 
study ways to achieve the most accurate population count possible. The 
NRC report finds that the Bureau should ``make a good faith effort to 
count everyone, but then truncate physical enumeration after a 
reasonable effort to reach nonrespondents. The number and character of 
the remaining nonrespondents should then be estimated through 
sampling.''
  Mr. President, the taking of a census goes back centuries. I quote 
from the King James version of the Bible, chapter two of Luke: ``And it 
came to pass in those days that there went out a decree from Caesar 
Augustus that all the world should be taxed (or enrolled, according to 
the footnote) * * * And all went to be taxed, everyone into his own 
city.'' The early censuses were taken to enable the rule or ruling 
government to tax or raise an army.
  The first census for more sociological reasons was taken in 
Nuremberg, in 1449. So it was not a new idea to the Founding Fathers 
when they wrote it into the Constitution to facilitate fair taxation 
and accurate apportionment of the House of Representatives, the latter 
of which was the foundation of the Great Compromise that has served us 
well ever since.
  The Constitution says in Article I, Section 2:

       Representatives and direct Taxes shall be apportioned among 
     the several States which may be included within this Union, 
     according to their respective numbers, which shall be 
     determined by adding to the whole Number of free Persons, 
     including those bound to Service for a term of years, and 
     excluding Indians not taxed, three fifths of all other 
     persons. The actual enumeration shall be made within three 
     years of the first meeting of the Congress of the United 
     States, and within every subsequent term of ten years, in 
     such manner as they shall direct by law.

  Those who cite this as saying the Constitution requires an ``actual 
enumeration'' should consider whether the phrase is being taken out of 
context. The Supreme Court has not yet ruled on the constitutionality 
of sampling. Rather the Court has ruled on the census laws last amended 
in 1976.
  I also note that we have not taken an ``actual enumeration'' the way 
the Founding Fathers envisioned since 1960, after which enumerators 
going to every door were replaced with mail-in responses. The 
Constitution provides for a postal system, but did not direct that the 
census be taken by mail. Yet we do it that way. Why not sample if that 
is a further improvement?
  Sampling would go far toward correcting one of the most serious flaws 
in the census, the undercount. Statistical work in the 1940's 
demonstrated that we can estimate how many people the census misses. 
The estimate for 1940 was 5.4 percent of the population. After 
decreasing steadily to 1.2 percent in 1980, the 1990 undercount 
increased to 1.8 percent, or more than four million people.

[[Page 1733]]

  More significantly, the undercount is not distributed evenly. The 
differential undercount, as it is known, of minorities was 5.7 percent 
for Blacks, 5.0 percent for Hispanics, 2.3 percent for Asian-Pacific 
Islanders, and 4.5 percent for Native Americans, compared with 1.2 
percent for non-Hispanic whites. The difference between the black and 
non-black undercount was the largest since 1940. By disproportionately 
missing minorities, we deprive them of equal representation in Congress 
and of proportionate funding from Federal programs based on population. 
The Census Bureau estimates that the total undercount will reach 1.9 
percent in 2000 if the 1990 methods are used instead of sampling.
  Mr. President, I have some history with the undercount issue. In 1966 
when I became Director of the Joint Center for Urban Studies at MIT and 
Harvard, I asked Professor David Heer to work with me in planning a 
conference to publicize the non-white undercount in the 1960 census and 
to foster concern about the problems of obtaining a full enumeration, 
especially of the urban poor. I ask unanimous consent that my foreword 
to the report from that conference be printed in the Record, for it is, 
save for some small numerical changes, disturbingly still relevant. 
Sampling is the key to the problem and we must proceed with it so that 
we have one accurate census count for all purposes, all uses. I also 
ask unanimous consent that the text of the bill be printed in the 
Record and I hope my colleagues will support it.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                 S. 355

       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 ``A Just Apportionment for All 
     States Act''.

     SEC. 2. USE OF SAMPLING.

       Section 195 of title 13, United States Code, is amended by 
     striking ``Except for the determination of population for 
     purposes of apportionment of Representatives in Congress 
     among the several States, the'' and inserting ``The''.
                                  ____


                     Social Statistics and the City

                           (By David M. Heer)


                                FOREWORD

       At one point in the course of the 1950's John Kenneth 
     Galbraith observed that it is the statisticians, as much as 
     any single group, who shape public policy, for the simple 
     reason that societies never really become effectively 
     concerned with social problems until they learn to measure 
     them. An unassuming truth, perhaps, but a mighty one, and one 
     that did more than he may know to sustain morale in a number 
     of Washington bureaucracies (hateful word!) during a period 
     when the relevant cabinet officers had on their own reached 
     very much the same conclusion--and distrusted their charges 
     all the more in consequence. For it is one of the ironies of 
     American government that individuals and groups that have 
     been most resistant to liberal social change have quite 
     accurately perceived that social statistics are all too 
     readily transformed into political dynamite, whilst in a 
     curious way the reform temperament has tended to view the 
     whole statistical process as plodding, overcautious, and 
     somehow a brake on progress. (Why must every statistic be 
     accompanied by detailed notes about the size of the 
     ``standard error''?)
       The answer, of course, is that this is what must be done if 
     the fact is to be accurately stated, and ultimately accepted. 
     But, given this atmosphere of suspicion on the one hand and 
     impatience on the other, it is something of a wonder that the 
     statistical officers of the federal government have with such 
     fortitude and fairness remained faithful to a high 
     intellectual calling, and an even more demanding public 
     trust.
       There is no agency of which this is more true than the 
     Bureau of the Census, the first, still the most important, 
     information-gathering agency of the federal government. For 
     getting on, now, for two centuries, the Census has collected 
     and compiled the essential facts of the American experience. 
     Of late the ten-year cycle has begun to modulate somewhat, 
     and as more and more current reports have been forthcoming, 
     the Census has been quietly transforming itself into a 
     continuously flowing source of information about the American 
     people. In turn, American society has become more and more 
     dependent on it. It would be difficult to find an aspect of 
     public or private life not touched and somehow shaped by 
     Census information. And yet for all this, it is somehow 
     ignored. To declare that the Census is without friends would 
     be absurd. But partisans? When Census appropriations are cut, 
     who bleeds on Capitol Hill or in the Executive Office of the 
     President? The answer is almost everyone in general, and 
     therefore no one in particular. But the result, too often, is 
     the neglect, even the abuse, of an indispensable public 
     institution, which often of late has served better than it 
     has been served.
       The papers in this collection, as Professor Heer's 
     introduction explains, were presented at a conference held in 
     June 1976 with the avowed purpose of arousing a measure of 
     public concern about the difficulties encountered by the 
     Census in obtaining a full count of the urban poor, 
     especially perhaps the Negro poor. It became apparent, for 
     example, that in 1960 one fifth of nonwhite males aged 25-29 
     had in effect disappeared and had been left out of the Census 
     count altogether. Invisible men. Altogether, one tenth of the 
     nonwhite population had been ``missed.'' The ramifications of 
     this fact were considerable, and its implications will 
     suggest themselves immediately. It was hoped that a public 
     airing of the issue might lead to greater public support to 
     ensure that the Census would have the resources in 1970 to do 
     what is, after all, its fundamental job, that of counting all 
     the American people. As the reader will see, the scholarly 
     case for providing this support was made with considerable 
     energy and candor. But perhaps the most compelling argument 
     arose from a chance remark by a conference participant to the 
     effect that if the decennial census were not required by the 
     Constitution, the Bureau would doubtless never have survived 
     the economy drives of the nineteenth century. The thought 
     flashed: the full enumeration of the American population is 
     not simply an optional public service provided by government 
     for the use of sales managers, sociologists, and regional 
     planners. It is, rather, the constitutionally mandated 
     process whereby political representation in the Congress is 
     distributed as between different areas of the nation. It is a 
     matter not of convenience but of the highest seriousness, 
     affecting the very foundations of sovereignty. That being the 
     case, there is no lawful course but to provide the Bureau 
     with whatever resources are necessary to obtain a full 
     enumeration. Inasmuch as Negroes and other ``minorities'' are 
     concentrated in specific urban locations, to undercount 
     significantly the population in those areas is to deny 
     residents their rights under Article I, Section 3 of the 
     Constitution, as well, no doubt, as under Section 1 of the 
     Fourteenth Amendment. Given the further, more recent practice 
     of distributing federal, state, and local categorical aid on 
     the basis not only of the number but also social and economic 
     characteristics of local populations, the constitutional case 
     for full enumeration would seem to be further strengthened.
       A sound legal case? Others will judge; and possibly one day 
     the courts will decide. But of one thing the conference had 
     no doubt: the common-sense case is irrefutable. America needs 
     to count all its people. (And reciprocally, all its people 
     need to make themselves available to be counted.) But if the 
     legal case adds any strength to the common-sense argument, it 
     remains only to add that should either of the arguments bring 
     some improvement in the future, it will be but another 
     instance of the generosity of the Carnegie Corporation, which 
     provided funds for the conference and for this publication.

  Mr. BINGAMAN. Mr. President, I am pleased to speak in support of this 
important legislation being introduced today by my friend from New 
York, Senator Moynihan. This bill turns into law what we all recognize 
is the only practical way to count our citizens in the decennial 
census. There is no question--the science is unequivocal--sampling is 
the only way to assure an accurate census.
  Not only does sampling provide a better census, it costs less than 
all other alternative methods--as much as $3 billion less. What could 
be clearer? Sampling gives a better answer at a lower cost. This bill 
ought to pass the Senate unanimously.
  Mr. President, the Constitution says the census shall be conducted in 
a manner that Congress shall by law direct. The recent Supreme Court 
case found that under the current law sampling may be used for all 
aspects of the census except for the decision on how many 
representatives each state will have. In fact, current law says 
sampling shall be used for every other purpose of the census.
  My state now has three House members and that number isn't going to 
change after this census one way or the other. However, we now know New 
Mexico had the second highest undercount rate in the 1990 census--3.1 
percent, or nearly 50,000 New Mexicans were simply left out, including 
20,000 children. Among New Mexico's native American community, the 
undercount rate was an astounding 9 percent. This undercount is 
literally costing New Mexico millions of dollars every year.

[[Page 1734]]

  In Albuquerque, our largest city, 12,000 men, women, and children 
were left out. Nationwide, 4 million Americans were not accounted for.
  Mr. President, this massive undercount is unacceptable to New Mexico 
and should be unacceptable to every Senator, especially when the Census 
Bureau has a solution that is tried, tested, and reliable. I believe 
every citizen counts, and every citizen should be counted.
  Federal funding for education, transportation, crime prevention and 
other priorities is allocated to states based on population. The 
majority of people overlooked in the past census are poor, the very 
citizens we must assure are not being left out. If the existing 
undercount is repeated in future censuses, New Mexico will again be 
denied its fair share of critical federal funds.
  Under current law we can have a two-number census, one without 
sampling for apportionment and one with sampling for all other 
purposes. I can appreciate why some people don't want a two-number 
census. The country would be better served with only a single-number 
census as long as it's the best number the Census Bureau can come up 
with. However, some in Congress would use the appropriations process to 
stymie the census.
  Mr. President, the census is done only once per decade, it is too 
important to decide this issue as part of the annual appropriation 
process. This bill will assure that the Census Bureau has available the 
very best tools for this important task. Science-based sampling is the 
only way to give America the quality we demand in our census. It is 
inconceivable to me that anyone would support a second-rate census.
  I am pleased to support this bill, and I hope the Senate will take 
prompt action on it. I also urge the House to move forward quickly to 
pass this important legislation. I thank Mr. Moynihan for his efforts.
                                 ______
                                 
      By Mr. KYL (for himself and Mr. McCain):
  S. 356. A bill to authorize the Secretary of the Interior to convey 
certain works, facilities, and titles of the Gila Project, and 
designated lands within or adjacent to the Gila Project, to the 
Wellton-Mohawk Irrigation and Drainage District, and for other 
purposes; to the Committee on Energy and Natural Resources.


                    wellton-mohawk project transfer

  Mr. KYL. Mr. President, I rise today to introduce a bill to transfer 
title to the Wellton-Mohawk Irrigation and Drainage District in Yuma, 
Arizona from the Federal government to the project beneficiaries. If 
you think this sounds like deja vu, you would be correct--it is. In May 
of 1998, during the 105th Congress, I introduced the same bill. The 
version I introduce today is the same version that passed the Senate at 
the end of last Congress. The bill was approved by all the relevant 
House and Senate Committees, passed by the Senate, included in a 
package of similar bills in the House, but, for reasons that I have not 
been able to determine, never managed to get signed into law. And this 
particular project transfer was one Regional Director Bob Johnson 
called ``low hanging fruit.'' In a meeting in my office, he assured me 
that the Wellton-Mohawk project was a ``perfect example'' of the kind 
of project that should transfer under the administration's 1995 
Framework for Transfer. So this is exactly the kind of project the 
Department of the Interior should transfer project title from the 
Department to the project beneficiaries.
  Mr. President, I would like to thank Senator John McCain for 
cosponsoring this bill with me and I ask unanimous consent that the 
text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 356

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
       Sec. 1. Short Title.--This Act may be referred to as the 
     ``Wellton-Mohawk Transfer Act''.
       Sec. 2. Transfer.--The Secretary of the Interior 
     (``Secretary'') is authorized to carry out the terms of the 
     Memorandum of Agreement No. 8-AA-34-WAO14 (``Agreement'') 
     dated July 10, 1998 between the Secretary and the Wellton-
     Mohawk Irrigation and Drainage District (``District'') 
     providing for the transfer of works, facilities, and lands to 
     the District, including conveyance of Acquired Lands, Public 
     Lands, and Withdrawn Lands, as defined in the Agreement.
       Sec. 3. Water and Power Contracts.--Notwithstanding the 
     transfer, the Secretary and the Secretary of Energy shall 
     provide for and deliver Colorado River water and Parker-Davis 
     Project Priority Use Power to the District in accordance with 
     the terms of existing contracts with the District, including 
     any amendments or supplements thereto or extensions thereof 
     and as provided under section 2 of the Agreement.
       Sec. 4. Savings.--Nothing in this Act shall affect any 
     obligations under the Colorado River Basin Salinity Control 
     Act (P.L. 93-320, 42 U.S.C. 1571).
       Sec. 5. Report.--If transfer of works, facilities, and 
     lands pursuant to the Agreement has not occurred by July 1, 
     2000, the Secretary shall report on the status of the 
     transfer as provided in section 5 of the Agreement.
       Sec. 6. Authorization.--There are authorized to be 
     appropriated such sums as may be necessary to carry out the 
     provisions of this Act.
                                 ______
                                 
      By Mr. GRAMS:
  S. 357. A bill to amend the Federal Crop Insurance Act to establish a 
pilot program in certain States to provide improved crop insurance 
options for producers; to the Committee on Agriculture, Nutrition, and 
Forestry.


                   federal crop insurance reform act

                                 ______
                                 
      By Mr. GRAMS:
  S. 358. A bill to freeze Federal discretionary spending at fiscal 
year 2000 levels, to extend the discretionary budget caps until the 
year 2010, and to require a two-thirds vote of the Senate to breach 
caps; to the Committee on the Budget and the Committee on Governmental 
Affairs, jointly, pursuant to the order of August 4, 1977 with 
instructions that if one Committee reports, the other Committee have 
thirty days to report or be discharged.


                       budget reform legislation

                                 ______
                                 
      By Mr. GRAMS (for himself and Mr. Crapo):
  S. 359. A bill to establish procedures to provide for a taxpayer 
protection lock-box and related downward adjustment of discretionary 
spending limits, to provide for additional deficit reduction with funds 
resulting from the stimulative effect of revenue reductions, and to 
provide for the retirement security of current and future retirees 
through reforms of the Old Age Survivor and Disability Insurance Act; 
to the Committee on the Budget and the Committee on Governmental 
Affairs, jointly, pursuant to the order of August 4, 1977, with 
instructions that if one Committee reports, the other Committee have 
thirty days to report or be discharged.


                taxpayer protection lock-box legislation

  Mr. GRAMS. Mr. President, I have a number of bills I want to 
introduce today. I want to start out by talking a little bit about the 
three bills dealing with budget reform, and then also an important bill 
leading to crop insurance reform.
  Mr. President, I rise today to introduce these bills that would 
reform the Federal budget process, strengthen fiscal discipline and 
restore Government accountability to ensure that taxpayers are fully 
represented in Washington.
  I commend Leader Lott and Chairman Domenici for including budget 
process reform as one of the top five priorities in the 106th Congress. 
I believe this should be our immediate priority as we prepare to make 
our budget process work better.
  Mr. President, the Federal budget process has become a reckless game 
in which the team roster is limited to a handful of Washington 
politicians and technocrats while the taxpayers are relegated to the 
sidelines.
  This has not only weakened the nation's fiscal discipline but also 
undermined the system of checks and balances established by the 
Constitution.
  The most recent example of this abusive process was the 1998 Omnibus 
Appropriation legislation. The bill included $520 billion in funding 
for many essential Government programs, representing 8 out of Congress' 
13 annual appropriations bills.

[[Page 1735]]

  But the entire negotiations were exclusive, arbitrary, and conducted 
behind closed doors by only a few congressional leaders and White House 
staff.
  Few Members of the Congress had any idea what was in the bill but 
were asked to approve it, without debate, without adequate review, 
without amendments, and without roll call votes.
  As a result, Washington broke the spending caps mandated in last 
year's Balanced Budget Act by spending more than $21 billion of the 
surplus for so-called ``emergency'' purposes.
  Budget negotiators magically invented a new smoke and mirrors budget 
term--``forward funding'' which shifted $9.3 billion into future 
budgets. Long-criticized ``backdoor spending'' thrived: for example, 
lawmakers sneaked $1 billion to fund programs to achieve initiatives 
under the Kyoto treaty. The White House has not sent up the Treaty and 
the Congress has many reservations about it.
  Without any policy consideration, hundreds of millions of taxpayer 
dollars went to fund such pork programs as, amazingly, caffeinated 
chewing gum research.
  The budget process is seriously flawed. Twenty-five years ago, 
Congress tried to change its budget practices and get spending under 
control by passing the Congressional Budget Act. Yet, over these 25 
years, our national debt has grown from $540 billion to $5.6 trillion.
  Spending is at an all-time high, and so are taxes. The budget process 
has become so complicated that most lawmakers have a hard time 
understanding it. Of course, that hasn't stopped the proliferation of 
budget gimmicks to circumvent the intent of the Congress.
  Before the situation explodes completely, Congress must immediately 
reform the budget process to ensure the integrity of our budget and 
appropriations process. We can begin in the 106th Congress by taking a 
few simple steps.
  The first step is to ensure our government's continued operation 
without any interruption. Last week, I introduced important legislation 
that would continue funding for the Government at the prior year's 
level when Congress and the President fail to complete appropriations 
legislation.
  Mr. President, we all still have a fresh memory of the 1995 Federal 
Government shutdown, the longest one in history, which caused financial 
damage and inconvenience to millions of Americans when the President 
refused to support a Balanced Budget Act and tax relief for Americans.
  However, the most serious damage done by the 27-day shutdown was that 
it shook the American people's confidence in their Government and in 
their elected officials.
  I am concerned that President Clinton would use this technique again 
to force Congress into spending more money. I believe we can do better 
for the taxpayers and believe my legislation, the Good Government bill, 
will help to do that.
  In May of 1997, I first proposed this as a stand-alone vote in an 
effort to pass the flood relief bill for Northern Minnesota. The Senate 
Democratic leader agreed and supported my proposal. I was able to 
obtain a commitment from the Senate leadership of both parties to 
pursue the legislation separately in the near future.
  Last summer, I sought to offer it as an amendment to an 
appropriations bill. This amendment, originally sponsored by Senator 
McCain, would have created an automatic procedure for a CR at the end 
of each fiscal year. Unfortunately, my efforts were not successful.
  If I had succeeded, we would not have had to go through the debacle 
last year's omnibus spending bill.
  Mr. President, we all have different philosophies and policies on 
budget priorities, and of course we will not always agree.
  But there are essential functions and services of the Federal 
Government we must continue to fund regardless of our differences in 
budget priorities. Program funding must be based on merits, not on 
political leverage.
  This legislation would continue funding for the Federal Government at 
100 percent of the previous year's level when Congress and the 
President fail to complete appropriations legislation at the end of any 
fiscal year.
  The virtue of this legislation is that it would allow us to debate 
issues concerning spending policy and the merits of budget priorities 
while we continue to keep essential Government functions operating. The 
American taxpayer will no longer be held hostage to a Government 
shutdown.
  Mr. President, there are still plenty of uncertainties involved in 
our budget and appropriations process, particularly this year. We must 
ensure that this good-government contingency plan is adopted to keep 
the Government up and running in the event a budget agreement is not 
reached.
  Another step we must take is to control our emergency spending. 
Emergency spending is spending over the budget allotment and is 
supposed to cover true emergencies, such as natural disaster relief.
  Instead, Congress and the Administration have used this as an 
opportunity to bust the budget for a lot of spending that is not 
emergency related at all. Most of this spending can be planned within 
our budget limits. Even natural disasters happen regularly--why not put 
something in our budget to pay for them?
  That is why I am introducing the ``Emergency Spending Control Act'' 
today as well. This legislation would require the President to submit a 
line item in his budget for natural disaster relief funding. The 
funding levels for this line item would be based on the average 
spending of the last five years on natural disaster relief.
  The amount in this line item would not be subject to the current 
spending caps. The funding of this budget line item must be used 
exclusively for natural disaster relief--any use for non-natural 
disasters is strictly prohibited.
  Mr. President, as a Senator whose State has been previously 
devastated by the 1997 flood of the Red and Minnesota Rivers, 
tornadoes, snow, ice and other natural disasters, I know how important 
enacting this legislation is not only for Minnesotans, but for all 
Americans.
  Fortunately, city mayors, the State of Minnesota, and the Federal 
Emergency Management Agency acted quickly in the Red River Valley, and 
the rebuilding process moved relatively fast.
  Local governments continue to work closely with my office and with 
State and Federal agencies to answer the many questions that still 
arise as people seek to rebuild their homes, their businesses, and the 
rest of their lives.
  We owe it to these Minnesotans and other Americans who have been 
faced with a natural disaster to require the President to submit a line 
item in his budget for natural disaster relief funding.
  Local and State officials should not be required to come to 
Washington and lobby for funding every time that a natural disaster 
occurs. We should not have to consider and pass separate ``emergency'' 
legislation which becomes a magnet for other so-called emergency 
spending. Disasters occur every year, we should budget for them.
  Mr. President, the second to the last bill I am introducing today is 
a bill to enforce and expand the statutory spending caps. Spending 
limits are a good tool to control spending--if the President and 
lawmakers stick to them. But since the establishment of statutory 
spending limits, Washington has repeatedly broken them.
  Washington set forth new spending caps in 1990 after it failed to 
meet its deficit reduction targets. In 1993, President Clinton broke 
the statutory spending caps for his new spending increases and created 
new caps.
  But in 1997, the President could not live within his own spending 
caps, and he broke them again. Last year, President Clinton proposed 
over $22 billion of so-called ``emergency spending'' in the omnibus 
spending legislation and again broke the caps.
  Again and again, Washington lowers the fiscal bar and then jumps over 
it at the expense of the American taxpayers.
  This is wrong. Mr. President. If we commit to living within the 
statutory

[[Page 1736]]

spending caps, we must stick to it. We must use every tool available to 
enforce these spending limits.
  My legislation will help Congress to enforce its fiscal discipline by 
creating a new budget point of order to allow Congress to exceed 
spending limits only if two-thirds of its members vote to do so.
  In addition, my bill would extend the limits beyond the year 2000. 
Doing so will ensure that spending increases won't grow faster than the 
income growth of working Americans.
  There are many other budget process reforms I support as well, 
promoted by other Senators. One I would like to highlight is the 
biennial budget, which is proposed by our distinguished colleague, 
Senator Domenici. Biennial budgeting will allow us to examine our 
fiscal discipline as well as providing valuable time for our oversight 
responsibilities.
  If the Congress adopts each of these changes, it will ensure a budget 
process that serves the best interests of the nation, allows careful 
policy and spending deliberation, and strengthens our political 
institution of government through representation as established by the 
Constitution.
  Mr. President, finally I want to take a few minutes to introduce a 
bill which takes an important step toward improving the nation's 
federal crop insurance program--and that is a bill that I have 
introduced, the ``Crop Insurance Reform Act.''
  Last year, we witnessed devastating circumstances come together to 
create a crisis atmosphere for many of our nation's farmers. I know 
that in my own state of Minnesota, multiple years of wet weather and 
crop disease--especially scab--coupled with rising production costs and 
plummeting commodity prices have devastated family farms in record 
numbers.
  With the increased opportunities that accompany Freedom to Farm come 
increased risks. We've seen this first hand.
  Freedom to Farm can work, but a necessary component of it, as I have 
argued repeatedly, is an adequate crop insurance program. This 
component has been missing so far. One of the promises made during 
debate of the 1996 Farm Bill was that Congress would address the need 
for better crop insurance.
  We must not let another growing season pass without having instituted 
a new, effective crop insurance program.
  This overhaul is a major undertaking, and instituting a program of 
comprehensive reform should be and is now a legislative priority.
  In fact, the President has included a number of ideas for reforming 
the federal crop insurance program in his recent budget proposal. Most 
importantly, the President has suggested increasing the federal 
subsidies on crop insurance premiums and eliminating disparities in 
subsidy rates. Essentially, this is similar to legislation I introduced 
last year and am introducing again today. Unfortunately, while the 
President claims to support crop insurance reform, he has failed to 
identify any money in his budget to fund it. However, now that he has 
recognized the urgency of the situation, I hope we can work together to 
accomplish meaningful reform.
  Furthermore, we must resume the debate now so that we can have the 
best system in place in time, and that we can do it in time for the 
year 2000 crops. The bill I am introducing today is a first step. It is 
the result of months of work from my Minnesota Crop Insurance Work 
Group.
  The Work Group consists of various commodity groups, farm 
organizations, rural lenders, and agriculture economists. We have also 
worked closely with USDA's Farm Service and Risk Management Agencies. 
But it was my primary intention to assemble a committee of farmers and 
lenders--people who know the situation and have seen the problems 
firsthand.
  The Crop Insurance Reform Act is designed to address the coverage 
decision a farmer must make at the initial stages of purchasing crop 
insurance. Producers have been telling us that they need better 
coverage, but that it is currently too expensive.
  My bill will allow more options for producers to choose from when 
making risk-management decisions. It essentially provides farmers with 
an enhanced coverage product at a more affordable price.
  Currently, producer premium subsidies range from nearly 42 percent at 
the 100 percent price election for 65 percent coverage, to only 13 
percent at the 100 percent price election for 85 percent coverage. 
Although the Risk Management Agency has recently provided better 
product options, the relatively low subsidy levels at the higher ends 
of coverage make them cost prohibitive.
  My bill will put in place a flat subsidy level of 31 percent across 
the 100 percent price election and at all levels of coverage.
  This will adjust the producer premiums to make better coverage more 
affordable, thereby removing the incentive from purchasing lesser-grade 
coverage. The Crop Insurance Reform Act puts the focus of the coverage 
decision on what really matters: and that is the type of coverage which 
would be needed in the event of a disaster or loss, rather than simply 
making the decision based upon up-front costs.
  When farmers are armed with the necessary risk management tools, I 
believe everybody will save. The government saves in ad hoc disaster 
payments, arguably the most expensive way to address any kind of 
financial crisis. But more importantly, the family farmer saves.
  This bill is part of a continued effort to reform Federal Crop 
Insurance.
  Over the next few months, I will continue to work with my Crop 
Insurance Work Group, and my colleagues, Senators Lugar and Roberts, to 
craft a comprehensive program which directly benefits producers and 
also will be here to protect the taxpayers.
  Mr. GRAMS. Mr. President, the second bill I am introducing with my 
good friend, Senator Crapo of Idaho, is lockbox legislation.
  Before being elected to the Senate in 1998, Mike Crapo led the fight 
to enact the Lock Box legislation in the House of Representatives. His 
version of the Lock Box legislation was passed by the House of 
Representatives on four different occasions, both as a free standing 
bill and as an amendment. I am pleased to have Senator Crapo as a 
partner on this legislation in the Senate.
  Mr. President, our short-term fiscal situation has improved greatly 
due to the continued growth of our economy. It is reported that we may 
end up with a unified budget surplus of over $80 billion this year and 
a $4.5 trillion surplus in the next 15 years.
  Of course, tax dollars are always considered ``free money'' by the 
big spenders here in Washington, and the thought of all that new ``free 
surplus money'' is creating a feeding frenzy on Capitol Hill.
  If we don't lock away this increased revenue for the taxpayers, the 
government will spend every penny of it. Despite the rhetoric about 
reserving it all for Social Security, Washington has already spent $30 
billion of last year's budget surplus.
  We need a lockbox to dedicate any increased revenue in the future and 
return it to the taxpayers as tax relief, debt reduction, and Social 
Security reform.
  Since the unexpected revenue has come directly from working 
Americans, I believe it is only fair to return it to them. The tax 
burden on the American people is still historically high. It's sound 
policy to use our non-Social Security surplus to lower the tax burden 
and allow families to keep a little more of their hard-earned money.
  Over the past 30 years, as I mentioned, we have amassed a $5.6 
trillion national debt thanks to Washington's culture of spending. A 
newborn child today will bear over $20,000 of that debt the moment he 
or she comes into the world. Each year, we sink more than $250 billion 
into the black hole of interest payments, which could be better spent 
fighting crime, maintaining roads and bridges, and equipping the 
military. It's sound policy to use part of any surpluses to begin 
paying down the national debt and reducing the financial burden on the 
next generations.
  The budget surpluses also give us a great opportunity to address our 
other

[[Page 1737]]

long-term financial imbalances. Federal unfunded liabilities could 
eventually top $20 trillion, bankrupting our government if no real 
reform occurs.
  It's vitally important that we use the entire Social Security surplus 
exclusively for Social Security, and we should even use a portion of 
the non-Social Security surplus to finance Social Security reforms.
  If we don't lock in the surplus, Washington will spend all of it to 
expand the government. That's what they are doing now. Last month 
alone, President Clinton proposed 41 new programs. The spending 
increases he outlined could reach $300 billion a year, the highest 
increase proposed by any President in our history.
  Mr. President, we must never, never, never repeat the mistake we made 
in 1997 and 1998, and allow Washington take a huge bite into the 
taxpayers' money. We must do everything we can to ensure we reserve any 
increased revenue for Social Security, tax relief and debt reduction.
                                 ______
                                 
      By Mr. LAUTENBERG (for himself and Mr. Torricelli):
  S. 362. A bill to authorize appropriations for the Coastal Heritage 
Trail Route in New Jersey, and for other purposes; to the Committee on 
Energy and Natural Resources.


 LEGISLATION TO REAUTHORIZE THE NEW JERSEY COASTAL HERITAGE TRAIL ROUTE

  Mr. LAUTENBERG. Mr. President, today I am introducing legislation to 
reauthorize the New Jersey Coastal Heritage Trail Route so that we can 
allow the National Park Service, together with its partners, to 
complete its work in bringing recognition to New Jersey's rich coastal 
history. I am pleased to be joined by Senator Torricelli in sponsoring 
this legislation.
  The Coastal Heritage Trail Route was first authorized in 1988 through 
legislation sponsored by former Senator Bill Bradley and myself. This 
legislation authorized the Secretary of the Interior to design a 
vehicular route that would enable the public to enjoy the nationally 
significant natural and cultural sites along the New Jersey coastline. 
Thanks to the work of the National Park Service, the Coastal Heritage 
Trail Route will, at completion, have five theme trails to allow for 
the self-discovery of topics ranging from maritime history to wildlife 
migration. These five vehicular discovery trails will travel along the 
coast of New Jersey, through eight different counties, by way of the 
Garden State Parkway and State Highway 49.
  The first theme trail completed is the Maritime History trail. The 
purpose of this trail is to explore the coastal trade, defense of the 
nation, and fishing and ship building industries. The second trail is 
the Coastal Habitats trail. This trail enables visitors to learn about 
the special natural resources of the New Jersey coast and the plants, 
animals and especially birds that live there. The recently opened 
Wildlife Migrations trail, allows individuals to explore the special 
places that migrating species depend on along New Jersey's coast. A 
fourth trail is the Historic Settlements trail. When completed, this 
trail will bring the historic communities whose economies were based on 
local natural resources to life. The final tour, Relaxation and 
Inspiration, will depict how people have traditionally used their 
leisure time, at places such as religious retreats and historic 
boardwalks.
  The project, which was originally conceived and designed to recognize 
the importance of New Jersey's coastal areas in our nation's history, 
has grown into a rich partnership between the federal government, state 
and local governments, and private individuals. This partnership 
demonstrates a commitment among many levels of government and the 
private sector to bringing history to life.
  Mr. President, the New Jersey Coastal Heritage Trail Route is clearly 
one of the National Park Service's success stories. Legislation to 
renew authorization for the trail enacted in 1994 appropriately called 
upon the Park Service to match 50 percent of its federal funding with 
non-federal funds. I am pleased to report that the Service has gone 
well beyond that matching requirement. Since 1994, appropriations for 
the Trail Route totaled $1.8 million. During that same period, the Park 
Service has raised $2.8 million in matching funds.
  However, the work is not yet finished. Even though the Park Service 
has been able to meet the funding requirements, at this time, only the 
first three trails have been completed. The Park Service plans call for 
completing the two remaining trails, and adding three new visitor 
centers and interpretive materials to aid school children as they learn 
about New Jersey's history. Our bill would make this possible by 
increasing the authorization level for the trail to $4 million, and 
extend the authorization to the Year 2004, which would give the Park 
Service the additional time it needs to complete the Trail Route.
  The Coastal Heritage Trail Route brings national recognition and 
stature to many of New Jersey's special places, and helps to contribute 
to New Jersey's number two industry, tourism. Most importantly, the 
Trail Route provides residents and visitors with an opportunity to 
explore New Jersey's natural and cultural history and develop an 
appreciation for its importance. But what should happen if we don't 
reauthorize the funds for this program? Among other effects, New Jersey 
residents and visitors to our state will have lost valuable educational 
opportunities. Much of the $2 million in grants that the project has 
successfully generated will have been lost. And there would be a severe 
impact on tourism if the five themes are not fully developed.
  Mr. President, I just wanted to take a moment to commend Senator 
Murkowski, the Chairman of the Senate Energy and Natural Resources 
Committee and Senator Thomas, the Chairman of the Subcommittee on 
National Parks, Historic Preservation, and Recreation. They and the 
members of their staff worked hard in the last Congress to mark up this 
legislation and report it favorably to the full Senate. Although this 
bill was approved overwhelmingly by my colleagues in the Senate in the 
last Congress, the House of Representatives did not vote on this 
legislation prior to adjournment, and thus we must begin again. I have 
every confidence that this important legislation will pass both houses 
of Congress in a timely fashion during this session. Just today, the 
House Resources Committee reported out the House version of this bill, 
H.R. 171, introduced by Rep. Frank A. LoBiondo.
  The completion of the Coastal Heritage Trail Route is an important 
priority for New Jersey. The trail system will provide a sense of 
history, not solely for the residents of New Jersey, but for its 
visitors as well. By repealing the sunset provision on the original 
act, and increasing the authorization, the National Park Service will 
be allowed to complete the project that deserves to be finished.
  I ask unanimous consent that copy of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 362

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

     SECTION 1. AUTHORIZATION OF APPROPRIATIONS.

       Section 6 of Public Law 100-515 (16 U.S.C. 1244 note) is 
     amended--
       (1) in subsection (b)(1), by striking ``$1,000,000'' and 
     inserting ``$4,000,000''; and
       (2) in subsection (c), by striking ``five'' and inserting 
     ``10''.
                                 ______
                                 
      By Mr. DOMENICI:
  S. 363. A bill to establish a program for training residents of low-
income rural areas for, and employing the residents in, new 
telecommunications industry jobs located in rural areas, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.


    THE RURAL EMPLOYMENT IN TELECOMMUNICATIONS INDUSTRY ACT OF 1999

  Mr. DOMENICI. Mr. President, I rise today with great pleasure to 
introduce ``The Rural Employment in Telecommunications Industry Act of 
1999.''
  The introduction of this Bill marks a historic opportunity for rural 
communities to create jobs within the telecommunications industry. The 
Bill establishes a program to train residents

[[Page 1738]]

of low income rural areas for employment in telecommunications industry 
jobs located in those same rural areas.
  As many of my colleagues know, I have an initiative called ``rural 
payday'' and I believe this Bill is yet another step in creating jobs 
for our rural areas. All too often a rural area is characterized by a 
high number of low income residents and a high unemployment rate.
  Moreover, our rural areas are often dependent upon a small number of 
employers or a single industry for employment opportunities. 
Consequently, when there is a plant closing, a downturn in the economy, 
or a slowdown in the area's industry the already present problems are 
only compounded.
  Mr. President, I would also like to take a moment and talk about New 
Mexico.
  While New Mexico may be the 5th largest state by size with its 
beautiful mountains, desert, and Great Plains and vibrant cities such 
as Albuquerque, Santa Fe, and Las Cruces it is also a very rural state. 
The Northwest and Southeast portions of the state are closely tied to 
the fortunes of the oil and gas industry. Additionally, a community can 
be dealt a severe blow with the closing or downsizing of an employer or 
manufacturing plant.
  I would also like to mention that communities like Clovis and Roswell 
are already taking steps to lay the foundation for creating jobs 
through the Call Center Industry. Just recently in Clovis, over a 1,000 
people participated in a Career Expo that focused on attracting Call 
Center companies to the area.
  As I stated before, all too often rural areas do not possess the 
resources of more metropolitan areas and can be devastated by a single 
event or downturn in the economy. The Bill I am introducing today will 
allow communities, like those I just mentioned, to apply for Federal 
aid to assist them in taking the next step in attracting 
telecommunications jobs.
  The Bill will allow the Secretary of Labor to establish a program to 
promote rural employment in the telecommunications industry by 
providing grants to states with low income rural areas. The program 
will be a win win proposition for all involved because employers 
choosing to participate in the project by bringing jobs to the rural 
area will be assured of a highly skilled workforce.
  The program will provide residents with intensive services to train 
them for the new jobs in the telecommunications industry. The intensive 
services will include customized training and appropriate remedial 
training, support services and placement of the individual in one of 
the new jobs created by the program.
  And that is what this bill is about, providing people with the tools 
needed to succeed. With these steps we are embarking on the road of 
providing our rural areas throughout our nation with a vehicle to 
create jobs. We are creating opportunities and an environment where our 
citizens can succeed and our communities can be vibrant.
                                 ______
                                 
      By Mr. BOND (for himself, Mr. Kerry, and Mr. Lieberman):
  S. 364. A bill to improve certain loan programs of the Small Business 
Administration, and for other purposes; to the Committee on Small 
Business.


           small business investment improvement act of 1999

  Mr. BOND. Mr. President, I rise today to introduce the Small Business 
Investment Improvement Act of 1999. I am pleased to announce that two 
of my colleagues from the Committee on Small Business, Senator Kerry 
and Senator Lieberman, have joined as principal cosponsors. This is an 
important bill for one simple reason: it makes more investment capital 
available to small businesses that are seeking to grow and hire new 
employees.
  In 1958, Congress created the SBIC Program to assist small business 
owners obtain investment capital. Forty years later, small businesses 
continue to experience difficulty in obtaining investment capital from 
banks and traditional investment sources. Although investment capital 
is readily available to large businesses from traditional Wall Street 
investment firms, small businesses seeking investments in the range of 
$500,000-$2.5 million have to look elsewhere. SBICs are frequently the 
only sources of investment capital for growing small businesses.
  In 1992 and 1996, the Committee on Small Business worked closely with 
the Small Business Administration to correct earlier deficiencies in 
the law in order to ensure the future of the program. Today, the SBIC 
Program is expanding rapidly in an effort to meet the growing demands 
of small business owners for debt and equity investment capital.
  Last year, the Committee on Small Business approved a bill similar to 
the bill being introduced today. Today's bill includes two technical 
changes in the SBIC program. The first change removes a requirement 
that at least 50 percent of the annual program level of the approved 
participating securities under the SBIC Program be reserved for funding 
with SBICs having private capital of not more than $20 million. The 
requirement has become obsolete following SBA's imposition of its 
leverage commitment process and Congressional approval for SBA to issue 
five-year commitments for SBIC leverage.
  The second technical change requires SBA to issue SBIC guarantees and 
trust certificates at periodic intervals of not less than 12 months. 
The current requirement is six months. This change will give maximum 
flexibility for SBA and the SBIC industry to negotiate the placement of 
certificates that fund leverage and obtain the lowest possible interest 
rate.
  The Small Business Investment Improvement Act of 1999 clarifies the 
rules for the determination of an eligible small business or small 
enterprise that is not required to pay Federal income tax at the 
corporate level, but that is required to pass income through to its 
shareholders or partners by using a specified formula to compute its 
after-tax income. This provision is intended to permit ``pass through'' 
enterprises to be treated the same as enterprises that pay Federal 
taxes for purposes of SBA size standard determinations.
  The bill would also make a relatively small change in the operation 
of the program. This change, however, would help smaller, small 
businesses to be more attractive to investors. SBICs would be permitted 
to accept royalty payments contingent on future performance from 
companies in which they invest as a form of equity return for their 
investment.
  SBA already permits SBICs to receive warrants from small businesses, 
which give the investing SBIC the right to acquire a portion of the 
equity of the small business. By pledging royalties or warrants, the 
small business is able to reduce the interest that would otherwise be 
payable by the small business to the SBIC. Importantly, the royalty 
feature provides the smaller, small business with an incentive to 
attract SBIC investments when the return may otherwise be insufficient 
to attract venture capital.
  Lastly, the bill increases the program authorization levels to fund 
Participating Securities. In Fiscal Year 1999, the authorization level 
would increase from $800 million to $1.2 billion; in Fiscal Year 2000, 
it would increase from $900 million to $1.5 billion. The two increases 
have become necessary as the demand in the SBIC program was growing at 
a rapid rate. Higher authorization levels are necessary if the SBIC 
Program is going to meet the demand for investment capital from the 
small business community.
  Mr. President, this is a sound legislative proposal, which has the 
support of many of my colleagues on the Committee on Small Business. It 
is my hope we will be able to conduct a committee markup of this bill 
in the near future.
  I ask unanimous consent that the full text of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 364

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Investment 
     Improvement Act of 1999''.

[[Page 1739]]



     SEC. 2. SBIC PROGRAM.

       (a) In General.--Section 308(i)(2) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 687(i)(2)) is amended by 
     adding at the end the following: ``In this paragraph, the 
     term `interest' includes only the maximum mandatory sum, 
     expressed in dollars or as a percentage rate, that is payable 
     with respect to the business loan amount received by the 
     small business concern, and does not include the value, if 
     any, of contingent obligations, including warrants, royalty, 
     or conversion rights, granting the small business investment 
     company an ownership interest in the equity or increased 
     future revenue of the small business concern receiving the 
     business loan.''.
       (b) Funding Levels.--Section 20 of the Small Business Act 
     (15 U.S.C. 631 note) is amended--
       (1) in subsection (d)(1)(C)(i), by striking 
     ``$800,000,000'' and inserting ``$1,200,000,000''; and
       (2) in subsection (e)(1)(C)(i), by striking 
     ``$900,000,000'' and inserting ``$1,500,000,000''.
       (c) Definitions.--
       (1) Small business concern.--Section 103(5) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 662(5)) is 
     amended--
       (A) by redesignating subparagraphs (A) through (C) as 
     clauses (i) through (iii), and indenting appropriately;
       (B) in clause (iii), as redesignated, by adding ``and'' at 
     the end;
       (C) by striking ``purposes of this Act, an investment'' and 
     inserting the following: ``purposes of this Act--
       ``(A) an investment''; and
       (D) by adding at the end the following:
       ``(B) in determining whether a business concern satisfies 
     net income standards established pursuant to section 3(a)(2) 
     of the Small Business Act, if the business concern is not 
     required by law to pay Federal income taxes at the enterprise 
     level, but is required to pass income through to the 
     shareholders, partners, beneficiaries, or other equitable 
     owners of the business concern, the net income of the 
     business concern shall be determined by allowing a deduction 
     in an amount equal to the sum of--
       ``(i) if the business concern is not required by law to pay 
     State (and local, if any) income taxes at the enterprise 
     level, the net income (determined without regard to this 
     subparagraph), multiplied by the marginal State income tax 
     rate (or by the combined State and local income tax rates, as 
     applicable) that would have applied if the business concern 
     were a corporation; and
       ``(ii) the net income (so determined) less any deduction 
     for State (and local) income taxes calculated under clause 
     (i), multiplied by the marginal Federal income tax rate that 
     would have applied if the business concern were a 
     corporation;''.
       (2) Smaller enterprise.--Section 103(12)(A)(ii) of the 
     Small Business Investment Act of 1958 (15 U.S.C. 
     662(12)(A)(ii)) is amended by inserting before the semicolon 
     at the end the following: ``except that, for purposes of this 
     clause, if the business concern is not required by law to pay 
     Federal income taxes at the enterprise level, but is required 
     to pass income through to the shareholders, partners, 
     beneficiaries, or other equitable owners of the business 
     concern, the net income of the business concern shall be 
     determined by allowing a deduction in an amount equal to the 
     sum of--

       ``(I) if the business concern is not required by law to pay 
     State (and local, if any) income taxes at the enterprise 
     level, the net income (determined without regard to this 
     clause), multiplied by the marginal State income tax rate (or 
     by the combined State and local income tax rates, as 
     applicable) that would have applied if the business concern 
     were a corporation; and
       ``(II) the net income (so determined) less any deduction 
     for State (and local) income taxes calculated under subclause 
     (I), multiplied by the marginal Federal income tax rate that 
     would have applied if the business concern were a 
     corporation''.

       (d) Technical Corrections.--
       (1) Repeal.--Section 303(g) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 683(g)) is amended by 
     striking paragraph (13).
       (2) Issuance of guarantees and trust certificates.--Section 
     320 of the Small Business Investment Act of 1958 (15 U.S.C. 
     687m) is amended by striking ``6'' and inserting ``12''.
       (3) Elimination of table of contents.--Section 101 of the 
     Small Business Investment Act of 1958 (15 U.S.C. 661 note) is 
     amended to read as follows:

     ``SEC. 101. SHORT TITLE.

       ``This Act may be cited as the `Small Business Investment 
     Act of 1958'.''.

  Mr. KERRY. Mr. President, today I join Chairman Bond in support of 
the Small Business Investment Company Technical Corrections Act.
  The Small Business Investment Company (SBIC) program is vital to our 
fastest growing small companies that have capital needs exceeding the 
caps on SBA's loan programs, but are not large enough to be attractive 
to traditional venture capital investors. The demand is clear: Last 
year, participating securities in the SBIC program invested $360 
million in 495 financings. In Massachusetts, where there is an 
impressive community of fast-growing companies, particularly in the hi-
tech industry, there were 140 SBIC financings, worth $145.4 million.
  This legislation sets out to make five technical changes. They range 
from improving the incentive for SBIC's to loan money to small 
companies to structuring a fairer formula for determining whether 
companies of the same revenue size can qualify for SBIC financing. One 
of the most important changes will increase the authorized levels for 
participating securities.
  The Participating Securities component of the SBIC program invests 
principally in the equities of new or expanding businesses. To leverage 
the private capital of participating securities and better serve these 
fast-growing businesses, I supported Senator Lieberman's amendment to 
H.R. 3412 during the last Congress, which would have raised the 
authorization level for participating securities from $800 million to 
$1 billion in fiscal year 1999 and from $900 million to $1.2 billion in 
fiscal year 2000. This bill passed the Senate Small Business Committee 
and the full Senate by unanimous consent, but unfortunately, the House 
was unable to act on it before the 105th Congress ended.
  Since that amendment was introduced, we have seen that the need is 
even greater than those levels. The Administration anticipates faster 
growth in the SBIC program because of both its increasing popularity 
and the increase in additional personnel at the Small Business 
Administration to its SBIC licensing unit. In fiscal years 1997 and 
1998, SBA licensed approximately 30 new SBIC's per year. With more 
staff devoted to the licensing unit, SBA projects that it will license 
more than double that amount in fiscal year 1999. Accordingly, Senator 
Bond's Act would increase the authorization level to $1.2 billion in 
FY99 and to $1.5 billion in FY2000.
  Mr. President, I am pleased to cosponsor this legislation and I 
applaud the work of my colleagues on the Senate Small Business 
Committee, Chairman Bond and Senator Lieberman.
                                 ______
                                 
      By Mr. GORTON (for himself and Mrs. Murray):
  S. 365. A bill to amend title XIX of the Social Security Act, to 
allow States to use the funds available under the State children's 
health insurance program for an enhanced matching rate for coverage of 
additional children under the Medicaid program; to the Committee on 
Finance.


                      children's health equity act

  Mr. GORTON. Mr. President. In 1997, Congress and the President agreed 
to provide $48 billion over the next 10 years as an incentive to states 
to provide health care coverage to uninsured, low-income children. To 
receive this money, states must expand eligibility levels to children 
living in families with incomes up to 200% of the federal poverty 
level.
  Washington State has a strong record of ensuring that its low-income 
kids have access to health care. Five years ago, my state decided to do 
what Congress and the President have just last year required other 
states to do. In 1994, Washington expanded its child Medicaid 
eligibility level to 200% of the federal poverty level (FPL) all the 
way through to the age of 18.
  During the negotiations of the 1997 Balanced Budget Act (BBA), 
Congress and the Administration recognized that certain states were 
already undertaking Medicaid expansions up to or above 200 percent of 
FPL, and that they would be allowed to use the new SCHIP funds. 
Unfortunately, this provision was limited to those states that enacted 
expansions on or after March 31, 1997 and disallowed Washington from 
accessing the $230 million in SCHIP funds it had been allocated through 
2002. As a result, Washington State cannot use its SCHIP allotment to 
cover the 90,000 children currently eligible, but not covered for 
health care at or below 200 percent of poverty. Exacerbating this 
inequity is the fact that many states have begun accessing their SCHIP 
allotments to cover kids at poverty levels far below Washington's 
current or past eligibility levels.

[[Page 1740]]

  The bill I am introducing today, along with Senator Murray, corrects 
this technicality and is a top priority for the Washington State 
delegation in the 106th Congress. Congresswoman Dunn has introduced a 
companion measure in the House of Representatives that is cosponsored 
by the entire Washington delegation.
  This bipartisan, bicameral initiative represents a thoughtful, 
carefully-crafted response to the unintended consequences of SCHIP and 
brings much needed assistance to children currently at risk. Rather 
than simply changing the effective date included in the BBA, this 
initiative includes strong maintenance of effort language as well as 
incentives for our state to find those 90,000 uninsured kids because we 
feel strongly that they receive the health coverage for which they are 
eligible.
  This bill does not take money from other states nor does it provide 
additional federal subsidies for children the state is now covering, it 
simply allows Washington to continue to do the good work they have 
already started by focusing on new, uninsured children at low income 
levels first.
                                 ______
                                 
      By Mr. COCHRAN (for himself, Mr. Moynihan, and Mr. Frist):
  S.J. Res. 8. A joint resolution providing for the reappointment of 
Wesley S. Williams, Jr., as a citizen regent of the Board of Regents of 
the Smithsonian Institution; to the Committee on Rules and 
Administration.
                                 ______
                                 
      By Mr. COCHRAN (for himself, Mr. Moynihan, and Mr. Frist):
  S.J. Res. 9. A joint resolution providing for the reappointment of 
Dr. Hanna H. Gray as a citizen regent of the Board of Regents of the 
Smithsonian Institution; to the Committee on Rules and Administration.
                                 ______
                                 
      By Mr. COCHRAN (for himself, Mr. Moynihan, and Mr. Frist):
  S.J. Res. 10. A joint resolution providing for the reappointment of 
Barber B. Conable, Jr., as a citizen regent of the Board of Regents of 
the Smithsonian Institution; to the Committee on Rules and 
Administration.


     board of regents of the smithsonian institution reappointments

  Mr. COCHRAN. Mr. President, today I am introducing three Senate Joint 
Resolutions reappointing citizen regents of the Board of Regents of the 
Smithsonian Institution. I am pleased that my fellow Smithsonian 
Institution Regents, Senators Moynihan and Frist are cosponsors.
  At its meeting on January 25, 1999, the Smithsonian Institution Board 
of Regents recommended the following distinguished individuals for 
reappointment to six year terms effective April 12, 1999: Barber B. 
Conable, Jr. of New York; Dr. Hanna H. Gray of Illinois; and Mr. Wesley 
S. Williams, Jr. of the District of Columbia.
  I ask unanimous consent that copies of their biographies be included 
in the Record.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                        Wesley S. Williams, Jr.

       Wesley S. Williams, Jr., of Washington, D.C., has been 
     associated with the law firm of Covington & Burling since 
     1970 and a partner since 1975. He was previously legal 
     counsel to the Senate Committee on the District of Columbia, 
     a teaching fellow at Columbia University Law School, and 
     Special Counsel to the District of Columbia Council. He is 
     currently active on many corporate and non-profit boards and 
     has participated in the Smithsonian Luncheon Group. He was 
     appointed to the Board of Regents in April 1993, chairs its 
     Investment Policy Committee, and serves on the Regents' 
     Executive Committee, Nominating Committee, Committee on 
     Policy, Programs, and Planning, and ad hoc Committee on 
     Business. He also served on the Regents' Search Committee for 
     a New Secretary, and he is a member of the Commission of the 
     National Museum of American Art.
                                  ____


                           Hanna Holborn Gray

The Harry Pratt Judson Distinguished Service Professor of History, The 
                         University of Chicago

       Hanna H. Gray was President of the University of Chicago 
     from July 1, 1978 through June 30, 1993, and is now President 
     Emeritus.
       Mrs. Gray is a historian with special interests in the 
     history of humanism, political and historical thought, and 
     politics in the Renaissance and the Reformation. She taught 
     history at the University of Chicago from 1961 to 1972 and is 
     now the Harry Pratt Judson Distinguished Service Professor of 
     History in the University of Chicago's Department of History.
       She was born on October 25, 1930, in Heidelberg, Germany. 
     She received her B.A. degree from Bryn Mawr in 1950 and her 
     Ph.D. in history from Harvard University in 1957. From 1950 
     to 1951, she was a Fulbright Scholar at Oxford University.
       She was an instructor at Bryn Mawr College in 1953-54 and 
     taught at Harvard from 1955 to 1960, returning as a Visiting 
     Lecturer in 1963-64. In 1961, she became a member of the 
     University of Chicago's faculty as Assistant Professor of 
     History, becoming Associate Professor in 1964.
       Mrs. Gray was appointed Dean of the College of Arts and 
     Sciences and Professor of History at Northwestern University 
     in 1972. In 1974, she was elected Provost of Yale University 
     with an appointment as Professor of History. From 1977 to 
     1978, she also served as Acting President of Yale.
       She has been a Fellow of the Newberry Library, a Fellow of 
     the Center of Behavioral Sciences, a Visiting Scholar at that 
     center, a Visiting Professor at the University of California 
     at Berkeley, and a Visiting Scholar for Phi Beta Kappa. She 
     is also an Honorary Fellow of St. Anne's College, Oxford.
       Mrs. Gray is a member of the Renaissance Society of 
     America. She is a fellow of the American Academy of Arts and 
     Sciences and a member of the American Philosophical Society, 
     the National Academy of Education, and the Council on Foreign 
     Relations of New York. She holds honorary degrees from a 
     number of colleges and universities, including Oxford, Yale, 
     Brown, Columbia, Princeton, Duke, Harvard, and the 
     Universities of Michigan and Toronto, and The University of 
     Chicago.
       She is chairman of the boards of the Andrew W. Mellon 
     Foundation and the Howard Hughes Medical Institute, serves on 
     the boards of Harvard University and the Marlboro School of 
     Music, and is a Regent of the Smithsonian Institution.
       In addition, Mrs. Gray is a member of the boards of 
     directors of J.P. Morgan & Company, the Cummins Engine 
     Company, and Ameritech.
       Mrs. Gray was one of twelve distinguished foreign-born 
     Amrericans to receive a Medal of Liberty award from President 
     Reagan at ceremonies marking the rekindling of the Statue of 
     Liberty's lamp in 1986. In 1991, she received the 
     Presidential Medal of Freedom, the nation's highest civilian 
     award, from President Bush. She received the Charles Frankel 
     Prize from the National Endowment of the Humanities and the 
     Jefferson Medal from the American Philosophical Society in 
     1993. In 1996, Mrs. Gray received the University of Chicago's 
     Quantrell Award for Excellence in Undergraduate Teaching. In 
     1997, she received the M. Carey Thomas Award from Bryn Mawr 
     College.
       Her husband, Charles M. Gray, is Professor Emeritus in the 
     Department of History at the University of Chicago.
                                  ____


                         Barber B. Conable, Jr.

       Barber Conable retired on August 31, 1991, from a five-year 
     term as President of The World Bank Group, headquartered in 
     Washington, D.C. The World Bank promotes economic growth and 
     an equitable distribution of the benefits of that growth to 
     improve the quality of life for people in developing 
     countries.
       Mr. Conable was a Member of the House of Representatives 
     from 1965-1985. In Congress, he served 18 years on the House 
     Ways and Means Committee, the last eight years as its Ranking 
     Minority Member. He served in various capacities for 14 years 
     in the House Republican Leadership, including Chairman of the 
     Republican Policy Committee and the Republican Research 
     Committee. During his congressional service, he also was a 
     member of the Joint Economic Committee and the House Budget 
     and Ethics committees.
       Following Mr. Conable's retirement from Congress, he served 
     on the Boards of four multinational corporations and the 
     Board of the New York Stock Exchange. He also was active in 
     foundation, museum, and nonprofit work, and was a 
     Distinguished Professor at the University of Rochester.
       Currently Mr. Conable serves on the Board of Directors of 
     Corning, Inc., Pfizer, Inc., the American International 
     Group, Inc., and the First Empire State Corporation. In 
     addition, he is a Trustee of Cornell University and of the 
     National Museum of the American Indian of the Smithsonian 
     Institution. He has chaired the Museum's development 
     committee since October, 1990 and is a member of its 
     International Founders Council, the volunteer committee for 
     the National Campaign to raise funds for construction of the 
     Museum on the Mall.
       Mr. Conable is a native of Warsaw, New York and graduated 
     from Cornell University and Cornell Law School. He was a 
     Marine in World War II and the Korean War.
       Mr. and Mrs. Conable are parents of three daughters and a 
     son. They reside in Alexander, New York.

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