[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Pages 30877-30879]
[From the U.S. Government Publishing Office, www.gpo.gov]



       CHURCH PLAN PARITY AND ENTANGLEMENT PREVENTION ACT OF 1999

  Ms. COLLINS. Mr. President, I ask unanimous consent the health 
committee be discharged from further consideration of S. 1309 and that 
the Senate proceed to its immediate consideration.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1309) to amend title I of the Employee 
     Retirement Income Security Act of 1974 to provide for the 
     preemption of State law in certain cases relating to certain 
     church plans.

  There being no objection, the Senate proceeded to consider the bill.


                           Amendment No. 2788

            (Purpose: To provide for a complete substitute)

  Ms. COLLINS. Mr. President, there is a substitute amendment at the 
desk submitted by Senators Sessions and Jeffords. I ask for its 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Maine [Ms. Collins] for Mr. Sessions, for 
     himself, and Mr. Jeffords, proposes an amendment numbered 
     2788.

  The amendment is as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. PURPOSE.

       The purpose of this Act is only to clarify the application 
     to a church plan that is a welfare plan of State insurance 
     laws that require or solely relate to licensing, solvency, 
     insolvency, or the status of such plan as a single employer 
     plan.

     SEC. 2. CLARIFICATION OF CHURCH WELFARE PLAN STATUS UNDER 
                   STATE INSURANCE LAW.

       (a) In General.--For purposes of determining the status of 
     a church plan that is a welfare plan under provisions of a 
     State insurance law described in subsection (b), such a 
     church plan (and any trust under such plan) shall be deemed 
     to be a plan sponsored by a single employer that reimburses 
     costs from general church assets, or purchases insurance 
     coverage with general church assets, or both.
       (b) State Insurance Law.--A State insurance law described 
     in this subsection is a law that--

[[Page 30878]]

       (1) requires a church plan, or an organization described in 
     section 414(e)(3)(A) of the Internal Revenue Code of 1986 and 
     section 3(33)(C)(i) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(33)(C)(i)) to the extent 
     that it is administering or funding such a plan, to be 
     licensed; or
       (2) relates solely to the solvency or insolvency of a 
     church plan (including participation in State guaranty funds 
     and associations).
       (c) Definitions.--For purposes of this section:
       (1) Church plan.--The term ``church plan'' has the meaning 
     given such term by section 414(e) of the Internal Revenue 
     Code of 1986 and section 3(33) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1002(33)).
       (2) Reimburses costs from general church assets.--The term 
     ``reimburses costs from general church assets'' means 
     engaging in an activity that is not the spreading of risk 
     solely for the purposes of the provisions of State insurance 
     laws described in subsection (b).
       (3) Welfare plan.--The term ``welfare plan''--
       (A) means any church plan to the extent that such plan 
     provides medical, surgical, or hospital care or benefits, or 
     benefits in the event of sickness, accident, disability, 
     death or unemployment, or vacation benefits, apprenticeship 
     or other training programs, or day care centers, scholarship 
     funds, or prepaid legal services; and
       (B) does not include any entity, such as a health insurance 
     issuer described in section 9832(b)(2) of the Internal 
     Revenue Code of 1986 or a health maintenance organization 
     described in section 9832(b)(3) of such Code, or any other 
     organization that does business with the church plan or 
     organization sponsoring or maintaining such a plan.
       (d) Enforcement Authority.--Notwithstanding any other 
     provision of this section, for purposes of enforcing 
     provisions of State insurance laws that apply to a church 
     plan that is a welfare plan, the church plan shall be subject 
     to State enforcement as if the church plan were an insurer 
     licensed by the State.
       (e) Application of Section.--Except as provided in 
     subsection (d), the application of this section is limited to 
     determining the status of a church plan that is a welfare 
     plan under the provisions of State insurance laws described 
     in subsection (b). This section shall not otherwise be 
     construed to recharacterize the status, or modify or affect 
     the rights, of any plan participant or beneficiary, including 
     participants or beneficiaries who make plan contributions.

  Ms. COLLINS. I ask unanimous consent that the amendment be agreed to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 2788) was agreed to.
  Ms. COLLINS. Mr. President, I ask unanimous consent the bill be read 
the third time and passed, as amended, the motion to reconsider be laid 
upon the table and any statements be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 1309), as amended, was read the third time and passed, 
as follows:

                                S. 1309

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

     SECTION 1. PURPOSE.

       The purpose of this Act is only to clarify the application 
     to a church plan that is a welfare plan of State insurance 
     laws that require or solely relate to licensing, solvency, 
     insolvency, or the status of such plan as a single employer 
     plan.

     SEC. 2. CLARIFICATION OF CHURCH WELFARE PLAN STATUS UNDER 
                   STATE INSURANCE LAW.

       (a) In General.--For purposes of determining the status of 
     a church plan that is a welfare plan under provisions of a 
     State insurance law described in subsection (b), such a 
     church plan (and any trust under such plan) shall be deemed 
     to be a plan sponsored by a single employer that reimburses 
     costs from general church assets, or purchases insurance 
     coverage with general church assets, or both.
       (b) State Insurance Law.--A State insurance law described 
     in this subsection is a law that--
       (1) requires a church plan, or an organization described in 
     section 414(e)(3)(A) of the Internal Revenue Code of 1986 and 
     section 3(33)(C)(i) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(33)(C)(i)) to the extent 
     that it is administering or funding such a plan, to be 
     licensed; or
       (2) relates solely to the solvency or insolvency of a 
     church plan (including participation in State guaranty funds 
     and associations).
       (c) Definitions.--For purposes of this section:
       (1) Church plan.--The term ``church plan'' has the meaning 
     given such term by section 414(e) of the Internal Revenue 
     Code of 1986 and section 3(33) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1002(33)).
       (2) Reimburses costs from general church assets.--The term 
     ``reimburses costs from general church assets'' means 
     engaging in an activity that is not the spreading of risk 
     solely for the purposes of the provisions of State insurance 
     laws described in subsection (b).
       (3) Welfare plan.--The term ``welfare plan''--
       (A) means any church plan to the extent that such plan 
     provides medical, surgical, or hospital care or benefits, or 
     benefits in the event of sickness, accident, disability, 
     death or unemployment, or vacation benefits, apprenticeship 
     or other training programs, or day care centers, scholarship 
     funds, or prepaid legal services; and
       (B) does not include any entity, such as a health insurance 
     issuer described in section 9832(b)(2) of the Internal 
     Revenue Code of 1986 or a health maintenance organization 
     described in section 9832(b)(3) of such Code, or any other 
     organization that does business with the church plan or 
     organization sponsoring or maintaining such a plan.
       (d) Enforcement Authority.--Notwithstanding any other 
     provision of this section, for purposes of enforcing 
     provisions of State insurance laws that apply to a church 
     plan that is a welfare plan, the church plan shall be subject 
     to State enforcement as if the church plan were an insurer 
     licensed by the State.
       (e) Application of Section.--Except as provided in 
     subsection (d), the application of this section is limited to 
     determining the status of a church plan that is a welfare 
     plan under the provisions of State insurance laws described 
     in subsection (b). This section shall not otherwise be 
     construed to recharacterize the status, or modify or affect 
     the rights, of any plan participant or beneficiary, including 
     participants or beneficiaries who make plan contributions.

  Mr. LEAHY. Mr. President, the Senate is today passing an important 
bill, S. 1257, the Hatch-Leahy-Schumer ``Digital Theft Deterrence and 
Copyright Damages Improvement Act of 1999.'' This legislation should 
help our copyright industries, which in turn helps both those who are 
employed in those industries and those who enjoy the wealth of consumer 
products, including books, magazines, movies, and computer software, 
that makes the vibrant culture of this country the envy of the world. 
This legislation has already traveled an unnecessarily bumpy road to 
get to this stage, and it is my hope that it will be sent promptly to 
the President's desk.
  On July 1, 1999, the Senate passed four intellectual property bills 
which Senator Hatch and I had joined in introducing and which the 
Judiciary Committee had unanimously reported. Each of these bills (S. 
1257, which we consider today; S. 1258, the Patent Fee Integrity and 
Innovation Protection Act; S. 1259, the Trademark Amendments Act; and 
S. 1260, the Copyright Act Technical Corrections Act) make important 
improvements to our intellectual property laws, and I congratulate 
Senator Hatch for his leadership in moving these bills promptly through 
the Committee.
  Three of those four bills then passed the House without amendment and 
were signed by the President on August 5, 1999. The House sent back to 
the Senate S. 1257, the Digital Theft Deterrence and Copyright Damages 
Improvement Act, with two modifications which I will describe below.
  I have long been concerned about reducing the levels of software 
piracy in this country and around the world. The theft of digital 
copyrighted works and, in particular, of software, results in lost jobs 
to American workers, lost taxes to Federal and State governments, and 
lost revenue to American companies. A recent report released by the 
Business Software Alliance estimates that worldwide theft of 
copyrighted software in 1998 amounted to nearly $11 billion. According 
to the report, if this ``pirated software has instead been legally 
purchased, the industry would have been able to employ 32,700 more 
people. In 2008, if software piracy remains at its current rate, 52,700 
jobs will be lost in the core software industry.'' This theft also 
reflects losses of $991 million in tax revenue in the United States.
  These statistics about the harm done to our economy by the theft of 
copyrighted software alone, prompted me to introduce the ``Criminal 
Copyright Improvement Act'' in both the 104th and

[[Page 30879]]

105th Congresses, and to work for passage of this legislation, which 
was finally enacted as the ``No Electronic Theft Act of 1997,'' Pub. L. 
105-147. The current rates of software piracy show that we need to do 
better to combat this theft, both with enforcement of our current 
copyright laws and with strengthened copyright laws to deter potential 
infringes.
  The Hatch-Leahy-Schumer ``Digital Theft Deterrence and Copyright 
Damages Improvement Act'' would help provide additional deterrence by 
amending the Copyright Act, 17 U.S.C. Sec. 504(c), to increase the 
amounts of statutory damages recoverable for copyright infringements. 
These amounts were last increased in 1988 when the United States 
acceded to the Berne Convention. Specifically, the bill would increase 
the cap on statutory damages by 50 percent, raising the minimum from 
$500 to $750 and raising the maximum from $20,000 to $30,000. In 
addition, the bill would raise from $100,000 to $150,000 the amount of 
statutory damages for willful infringements.
  Courts determining the amount of statutory damages in any given case 
would have discretion to impose damages within these statutory ranges 
at just and appropriate levels, depending on the harm caused, ill-
gotten profits obtained and the gravity of the offense. The bill 
preserves provisions of the current law allowing the court to reduce 
the award of statutory damages to as little as $200 in cases of 
innocent infringement and requiring the court to remit damages in 
certain cases involving nonprofit educational institutions, libraries, 
archives, or public broadcasting entities.
  Finally, the bill provides authority for the Sentencing Commission 
expeditiously to fulfill its responsibilities under the No Electronic 
Theft Act, which directed the Commission to ensure that the guidelines 
provide for consideration of the retail value and quantity of the items 
with respect to which the intellectual property offense was committed. 
Since the time that this law became effective, the Sentencing 
Commission has not had a full slate of Commissioners serving. In fact, 
we have had no Commissioners since October, 1998. This situation was 
corrected last week with the confirmation of seven new Commissioners.
  As I noted, the House amended the version of S. 1257 that the Senate 
passed in July in two ways. First, the original House version of this 
legislation, H.R. 1761, contained a new proposed enhanced penalty for 
infringers who engage in a repeated pattern of infringement, but 
without any scienter requirement. I shared the concerns raised by the 
Copyright Office that this provision, absent a willfulness scienter 
requirement, would permit imposition of the enhanced penalty even 
against person who negligently, albeit repeatedly, engaged in acts of 
infringement. Consequently, the Hatch-Leahy-Schumer bill, S. 1257, that 
we sent to the House in July avoided casting such a wide net, which 
could chill legitimate fair uses of copyrighted works. Instead, the 
bill we sent to the House would have created a new tier of statutory 
damages allowing a court to award damages in the amount of $250,000 per 
infringed work where the infringement is part of a willful and repeated 
pattern or practice of infringement. The entire ``pattern and 
practice'' provision, which originated in the House, has been removed 
from the version of S. 1257 sent back to the Senate.
  Second, the original House version of this legislation provided a 
direction to the Sentencing Commission to amend the guidelines to 
provide an enhancement based upon the retail price of the legitimate 
items that are infringed and the quantity of the infringing items. I 
was concerned that this direction would require the Commission and, 
ultimately, sentencing judges to treat similarly a wide variety of 
infringement crimes, no matter the type and magnitude of harm. This was 
a problem we avoided in the carefully crafted Sentencing Commission 
directive originally passed as part of the No Electronic Theft Act. 
Consequently, the version of S. 1257 passed by the Senate in July did 
not include the directive to the Sentencing Commission. The House then 
returned S. 1257 with the same problematic directive to the Sentencing 
Commission.
  I appreciate that my House colleagues and interested stakeholders 
have worked over the past months to address my concerns over the 
breadth of the proposed directive to the Sentencing Commission, and to 
find a better definition of the categories of cases in which it would 
be appropriate to compute the applicable sentencing guideline based 
upon the retail value of the infringed upon item. A better solution 
than the one contained in the No Electronic Theft Act remains elusive, 
however.
  For example, one recent proposal seeks to add to S. 1257 a direction 
to the Sentencing Commission to enhance the guideline offense level for 
copyright and trademark infringements based upon the retail price of 
the legitimate products multiplied by the quantity of the infringing 
products, except where ``the infringing products are substantially 
inferior to the infringed upon products and there is substantial price 
disparity between the legitimate products and the infringing 
products.'' This proposed direction appears to be under-inclusive since 
it would not allow a guideline enhancement in cases where fake goods 
are passed off as the real item to unsuspecting consumers, even though 
this is clearly a situation in which the Commission may decide to 
provide an enhancement.
  In view of the fact that the full Sentencing Commission has not had 
an opportunity for the past two years to consider and implement the 
original direction in the No Electronic Theft Act, passing a new and 
flawed directive appears to be both unnecessary and unwise. This is 
particularly the case since the new Commissioners have already 
indicated a willingness to consider this issue promptly. In response to 
questions posed at their confirmation hearings, each of the nominated 
Sentencing Commissioners indicated that they would make this issue a 
priority. For example, Judge William Sessions of the District of 
Vermont specifically noted that:

       If confirmed, our first task must be to address Congress' 
     longstanding directives, including implementation of the 
     guidelines pursuant to the NET Act. Congress directed the 
     Sentencing Commission to fashion guidelines under the NET Act 
     that are sufficiently severe to deter such criminal activity. 
     I personally favor addressing penalties under this statute 
     expeditiously.

  I fully concur in the judgment of Chairman Hatch that the Sentencing 
Commission directive provision added by the House and to send, again, 
S. 1257 to the House for action.
  This bill represents an improvement in current copyright law, and I 
hope that it will soon be sent to the President for enactment.

                          ____________________