[Congressional Record (Bound Edition), Volume 145 (1999), Part 3]
[Senate]
[Pages 4025-4041]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BREAUX (for himself and Mr. Mack):
  S. 572. A bill to prohibit the Secretary of the Treasury from issuing 
regulations dealing with hybrid transactions; to the Committee on 
Finance.


                   SUBPART F OF INTERNAL REVENUE CODE

  Mr. BREAUX. Mr. President, today Mr. Mack and I are again introducing 
legislation to place a permanent moratorium on the Department of the 
Treasury's authority to finalize any proposed regulations issued 
pursuant to Notice 98-35, dealing with the treatment of hybrid branch 
transactions under subpart F of the Internal Revenue Code. Our bill 
also prohibits Treasury from issuing new regulations relating to the 
tax treatment of hybrid transactions under subpart F and requires the 
Secretary to conduct a study of the tax treatment of hybrid 
transactions and to provide a written report to the Senate Committee on 
Finance and the House Committee on Ways and Means.
  By way of background, the United States generally subjects U.S. 
citizens and corporations to current taxation on their worldwide 
income. Two important devices mitigate or eliminate double taxation of 
income earned from foreign sources. First, bilateral income tax 
treaties with many countries exempt American taxpayers from paying 
foreign taxes on certain types of income (e.g. interest) and impose 
reduced rates of tax on other types (e.g. dividends and royalties). 
Second, U.S. taxpayers receive a credit against U.S. taxes for foreign 
taxes paid on foreign source income. To reiterate, these devices have 
been part of our international tax rules for decades and are aimed at 
preventing U.S. businesses from being taxed twice on the same income. 
The policy of currently taxing U.S. citizens on their worldwide income 
is in direct contrast with the regimes employed by most of our foreign 
trading competitors. Generally they tax their citizens and domestic 
corporations only on the income earned within their borders (the so-
called ``water's edge'' approach).
  Foreign corporations generally are also not subject to U.S. tax on 
income earned outside the United States, even if the foreign 
corporation is controlled by a U.S. parent. Thus, U.S. tax on income 
earned by foreign subsidiaries of U.S. companies--that is, from foreign 
operations conducted through a controlled foreign corporation (CFC)--is 
generally deferred until dividends paid by the CFC are received by its 
U.S. parent. This policy is referred to as ``tax deferral.''
  In 1961, President John F. Kennedy proposed eliminating tax deferral 
with respect to the earnings of U.S.-controlled foreign subsidiaries. 
The proposal provided that U.S. corporations would be currently taxable 
on their share of the earnings of CFCs, except in the case of 
investments in certain ``less developed countries.'' The business 
community strongly opposed the proposal, arguing that in order for U.S. 
multinational companies to be able to compete effectively in global 
markets, their CFCs should be subject only to the same taxes to which 
their foreign competitors were subject.
  In the Revenue Act of 1962, Congress rejected the President's 
proposal to completely eliminate tax deferral, recognizing that to do 
so would place U.S. companies operating in overseas markets at a 
significant disadvantage vis-a-vis their foreign competitors. Instead, 
Congress opted to adopt a policy regime designed to end deferral only 
with respect to income earned from so-called ``tax haven'' operations. 
This regime, known as ``subpart F,'' generally is aimed at currently 
taxing foreign source income that is easily moveable from one taxing 
jurisdiction to another and that is subject to low rates of foreign 
tax.
  Thus, the subpart F provisions of the Internal Revenue Code (found in 
sections 951-964) have always reflected a balancing of two competing 
policy objectives: capital export neutrality (i.e. neutrality of 
taxation as between domestic and foreign operations) and capital import 
neutrality (i.e. neutrality of taxation as between CFCs and their 
foreign competitors). While these competing principles continue to form 
the foundation of subpart F today, recent actions by the Department of 
the Treasury threaten to upset this long-standing balance.
  On January 16, 1998, the Department of the Treasury announced in 
Notice 98-11 its intention to issue regulations to prevent the use of 
hybrid branches ``to circumvent the purposes of subpart F.'' The hybrid 
branch arrangements identified in Notice 98-11 involved entities 
characterized for U.S. tax purposes as part of a controlled foreign 
corporation, but characterized for purposes of the tax law of the 
country in which the CFC was incorporated as a separate entity. The 
Notice indicated that the creation of such hybrid branches was 
facilitated by the entity classification rules contained in section 
301.7701-I through -3 of the Income Tax Regulations (the ``check the 
box'' regulations).
  Notice 98-11 acknowledged that U.S. international tax policy seeks to 
balance the objectives of capital export neutrality with the objective 
of allowing U.S. businesses to compete on a level playing field with 
foreign competitors. In the view of the Treasury and IRS, however, the 
hybrid transactions attacked in the Notice ``upset that balance.'' 
Treasury indicated that the regulations to be issued generally would 
apply to hybrid branch arrangements entered into or substantially 
modified after January 16, 1998, and would provide that certain 
payments to and from foreign hybrid branches of CFCs would be treated 
as generating subpart F income to U.S. shareholders in situations in 
which subpart F would not otherwise apply to a hybrid branch as a 
separate entity. This represented a significant expansion of subpart F, 
by regulation rather than through legislation.

[[Page 4026]]

  Shortly after Notice 98-11 was issued, the Administration released 
its Fiscal Year 1999 budget proposals which, among other things, 
included a provision requesting Congress to statutorily grant broad 
regulatory authority to the Treasury Secretary to prescribe regulations 
clarifying the tax consequences of hybrid transactions in cases in 
which the intended results are inconsistent with the purposes of U.S. 
tax law. . . . While the explanation accompanying the budget proposal 
argued that this grant of authority as applied to many cases ``merely 
makes the Secretary's current general regulatory authority more 
specific, and directs the Secretary to promulgate regulations pursuant 
to such authority,'' the explanation conceded that in other cases, 
``the Secretary's authority may be questioned and should be 
clarified.''
  Notice 98-11 and the accompanying budget proposal generated 
widespread concerns in the Congress and the business community that the 
Treasury was undertaking a major new initiative in the international 
tax arena that would undermine the ability of U.S. multinationals to 
compete in international markets. For example, House Ways and Means 
Committee Chairman Bill Archer wrote to Treasury Secretary Rubin on 
March 20, 1998 requesting that ``Notice 98-11 be withdrawn and that no 
regulations in this area be issued or allowed to take effect until 
Congress has an appropriate opportunity, to consider these matters in 
the normal legislative process.'' The Ranking Democrat on the 
Committee, Charles Rangel, wrote to Secretary Rubin expressing strong 
concerns about the Treasury's increasing propensity to ``legislate 
through the regulatory process as evidenced by Notice 98-11.''
  Despite these concerns, on March 23, 1998, the Treasury department 
issued two sets of proposed and temporary regulations, the first 
relating to the treatment of hybrid branch arrangements under subpart 
F, and the second relating to the treatment of a CFC's distributive 
share of partnership income. As Notice 98-11 had promised, the 
regulations provided that certain payments between a controlled foreign 
corporation and a hybrid branch would be recharacterized as subpart F 
income if the payments reduce the payer's foreign taxes.
  The week after the temporary and proposed regulations were issued, 
the Senate Finance Committee considered H.R. 2676, the Internal Revenue 
Service Restructuring and Reform Act of 1998. A provision was included 
in the bill prohibiting the Treasury and IRS from implementing 
temporary or final regulations with respect to Notice 98-11 prior to 
six months after the date of enactment of H.R. 2676. The Senate bill 
also included language expressing the ``sense of the Senate'' that 
``the Department of the Treasury and the Internal Revenue Service 
should withdraw Notice 98-11 and the regulations issued thereunder, and 
that the Congress, and not the Department of the Treasury or the 
Internal Revenue Service, should determine the international tax policy 
issues relating to the treatment of hybrid transactions under subpart F 
provisions of the Code.''
  Opposition to Notice 98-11 and the temporary and proposed regulations 
continued to mount. On April 23, 1998, 33 Members of the House Ways and 
Means Committee wrote to Secretary Rubin expressing concern about the 
Treasury's decision to move forward and issue regulations pursuant to 
Notice 98-11 without an appropriate opportunity for Congress to 
consider this issue in the normal legislative process, urging Treasury 
to withdraw the regulations.
  In the face of these and other pressures from the Congress and the 
business community, on June 19, 1998, the Treasury Department announced 
in Notice 98-35 that it was withdrawing Notice 98-11 and the related 
temporary, and proposed regulations. According to Notice 98-35, 
Treasury intends to issue a new set of proposed regulations to be 
effective in general for payments made under hybrid branch arrangements 
on or after June 19, 1998. These regulations, however, will not be 
finalized before January 1, 2000, in order to permit both the Congress 
and Treasury Department the opportunity to further study the issues 
that were raised following the publication of Notice 98-11 earlier this 
year.
  While we applaud the Treasury's decision to withdraw Notice 98-11 and 
the temporary regulations, we believe that additional legislative 
action is needed to prevent the Treasury from finalizing the 
forthcoming regulations until Congress considers the issues involved. 
We believe that only the Congress has the authority to achieve a 
permanent resolution of this issue. Notice 98-35, like its predecessor, 
Notice 98-11 continues to suffer from a fatal flaw; it is the 
prerogative of Congress, and not the Executive Branch, to pass laws 
establishing the nation's fundamental tax policies. Simply put, Notice 
98-35 adds restrictions to the subpart F regime that are not supported 
by the Code's clear statutory language, and there has been no express 
delegation of regulatory authority to the Treasury that relates 
specifically to the issues presented in the Notice.
  More importantly, we question the policy objectives to be achieved by 
Notice 98-35 and the accompanying proposed regulations. We do not 
understand the rationale for penalizing U.S. multinational companies 
for employing normal tax planning strategies that reduce foreign (as 
opposed to U.S.) income taxes. Moreover, Notice 98-35 is contrary to 
recent Congressional efforts to simplify the international tax 
provisions of the Code. For example, the Congress reduced complexity 
and ridded the code of a perverse incentive for U.S. companies to 
invest overseas by repealing the Section 956A tax on excess passive 
earnings in 1996. Again in 1997, the Congress repealed the application 
of the Passive Foreign Investment Company regime to U.S. shareholders 
of controlled foreign corporations because of the complexity involved 
in applying both regimes, in addition to enacting a host of other 
foreign tax simplifications. The Senate Finance Committee will hold a 
hearing on March 11, 1999 to further investigate the reforms needed in 
the international tax arena that not only reduce complexity, but also 
encourage U.S. global economic competition. I fully expect Notice 98-35 
to be discussed at this hearing.
  In order for Congress to gain a better understanding of the Treasury 
Department's position on this matter, our bill would require the 
Treasury to conduct a thorough study of the tax treatment of hybrid 
transactions under subpart F and to provide a report to the Senate 
Committee on Finance and House Committee on Ways and Means on this 
issue.
  If the forthcoming regulations are permitted to be finalized by the 
Treasury, U.S. multinational businesses will be placed at a competitive 
disadvantage vis-a-vis foreign companies who remain free to employ 
strategies to reduce the foreign taxes they pay. Clearly, such a result 
should be permitted to take effect only if Congress, after having an 
opportunity to fully consider all of the tax and economic issues 
involved, agrees that the arguments advanced by the Treasury are 
compelling and determines that additional statutory changes to subpart 
F are necessary and appropriate.
  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. 572

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

     SECTION 1. HYBRID TRANSACTIONS UNDER SUBPART F.

       (a) Prohibition on Regulations.--The Secretary of the 
     Treasury (or his delegate)--
       (1) shall not issue temporary or final regulations relating 
     to the treatment of hybrid transactions under subpart F of 
     part III of subchapter N of chapter 1 of the Internal Revenue 
     Code of 1986 pursuant to Internal Revenue Service Notice 98-
     35 or any other regulations reaching the same or similar 
     result as such notice,
       (2) shall retroactively withdraw any regulations described 
     in paragraph (1) which were issued after the date of such 
     notice and before the date of the enactment of this Act, and
       (3) shall not modify or withdraw sections 301.7701-1 
     through 301.7701-3 of the Treasury

[[Page 4027]]

     Regulations (relating to the classification of certain 
     business entities) in a manner which alters the treatment of 
     hybrid transactions under such subpart F.
       (b) Study and Report.--The Secretary of the Treasury (or 
     his delegate) shall study the tax treatment of hybrid 
     transactions under such subpart F and submit a report to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate. The Secretary 
     shall hold at least one public hearing to receive comments 
     from any interested party prior to submitting such report.

  Mr. MACK. Mr. President, today Senator Breaux and I introduce a bill 
reaffirming that the lawmaking power is the province of the Congress, 
not the executive branch. Our bill prohibits the Treasury Department 
from issuing regulations that would impose taxes on U.S. companies 
merely because one of their subsidiaries pays money to itself.
  As a general rule, U.S. corporations pay U.S. corporate income tax on 
the earnings of their foreign subsidiaries only when those earnings are 
actually distributed to the U.S. parent companies. An exception to this 
general rule is contained in subpart F of the Internal Revenue Code, 
which accelerates the income tax liability of U.S. parent companies 
under certain circumstances. The Treasury Department has announced, in 
Notice 98-35, an intention to issue regulations that will accelerate 
income tax liability for U.S. companies--not based on the specific 
circumstances enumerated in subpart F, but instead on a new 
``interpretation'' of the ``policies'' that Treasury infers from that 
36-year-old provision. This action crosses the line between 
administering the laws and making the laws, and cannot be allowed by 
Congress.
  Notice 98-35 concerns so-called ``hybrid arrangements.'' These 
involve business entities that are considered separate corporations for 
foreign tax purposes, but are viewed as one company with a branch 
office for U.S. purposes. U.S. companies organize their subsidiaries in 
this manner to reduce the amount of foreign taxes they owe. 
Transactions between a subsidiary and its branch have no impact on U.S. 
taxable income of the parent, as its subsidiary is merely paying money 
to itself. But the Treasury Department intends to impose a tax on the 
U.S. parent to penalize it for reducing the foreign taxes it owes.
  This effort is wrong for several reasons. First, the Treasury 
Department possesses only the power to issue regulations to administer 
the laws passed by Congress. New rules based on Congressional purpose 
are known as laws, and under the Constitution laws are made by 
Congress.
  Second, the Treasury Department is elevating one policy underlying 
subpart F--taxing domestic and foreign operations in the same manner--
over the other policy of maintaining the competitiveness of U.S. 
companies in foreign markets. This proposed tax would put U.S.-owned 
subsidiaries at a competitive disadvantage.
  Finally, the Treasury Department should not impose a tax on U.S. 
companies to force these companies to reorganize in a way that 
increases the taxes they owe to foreign countries. The Treasury 
Department is not the tax collector for other nations. And by raising 
the foreign tax bills of U.S. companies, the Treasury Department is 
also increasing the size of foreign tax credits and thereby reducing 
U.S. tax revenues.
  The Treasury Department is not only making policy that it has no 
right to make, it is also making bad policy. Our bill places a 
moratorium on this lawmaking. It also directs the Treasury Secretary to 
study these issues and submit a report to the tax-writing committees of 
Congress. Many people and organizations, including the Treasury 
Department, desire changes in the tax laws. But only Congress has the 
power to make these changes, and this is a power we intend to keep.
                                 ______
                                 
      By Mr. LEAHY (for himself, Mr. Kennedy, Mr. Daschle, and Mr. 
        Dorgan):
  S. 573. A bill to provide individuals with access to health 
information of which they are a subject, ensure personal privacy with 
respect to health-care-related information, impose criminal and civil 
penalties for unauthorized use of protected health information, to 
provide for the strong enforcement of these rights, and to protect 
States' rights; to the Committee on Health, Education, Labor, and 
Pensions.


              Medical Information Privacy and Security Act

  Mr. LEAHY. Mr. President, today, I am pleased to be joined by 
Senators Kennedy, Daschle and Dorgan in introducing the Medical 
Information Privacy and Security Act (MIPSA). I am also pleased that a 
companion bill will be introduced in the House by Congressman Edward 
Markey.
  The Millennium Bug is not the only computer-related problem Congress 
confronts this year. We face the deadline that Congress set for itself 
of August 21, 1999, to solve the multitude of privacy glitches in the 
handling of our medical records.
  At a time when some states are selling driving license photos and 
information, when our leading computer chip and software companies have 
built secret identifiers into their products to trace our every move in 
cyberspace without our consent, it is time for Congress to wake up to 
the privacy rights and expectations of all Americans before it is too 
late.
  The trouble is this: If you have a medical record, you have a medical 
privacy problem.
  A guiding principle in drafting this legislation has been that the 
movement to a more integrated system of health care in our country will 
only continue to be supported by the American people if they are 
assured that the personal privacy of their health care information is 
protected. In fact, without the confidence that one's personal privacy 
will be protected, many will be discouraged from seeking medical help.
  Most of us envision that our medical records are held in a manila 
file folder under the watchful care of our health care provider. If 
this is what you are picturing, you are sorely mistaken. Increased 
computerization of medical records and other health information is 
fueling both the supply and demand for our personal information. I do 
not want advancing technology to lead to a loss of personal privacy, 
and I do not want the fear that confidentiality is being compromised to 
deter people from seeking medical treatment or to stifle technological 
or scientific development.
  The traditional right of confidentiality between a health care 
provider and a patient is at risk. This erosion may reduce the 
willingness of patients to confide in physicians and other 
practitioners and may inhibit patients from seeking care.
  Unlike some, I believe that computerization can assure more privacy 
to individuals than the current system, if MIPSA is enacted. But if we 
do not act the increased potential for embarrassment and harassment is 
tremendous.
  The ability to compile, store and cross reference personal health 
information has made our intimate health history a valuable commodity. 
In 1996 alone, the health care industry spent an estimated $10 to $15 
billion on information technology.
  This data can be very useful for quality assurance, and to provide 
more cost effective health care. But I doubt that the American public 
would agree with a Fortune magazine article which lauded a health 
insurer that poked through the individual medical records of clients to 
figure out who may be depressed and could benefit from the use of the 
anti-depressant Prozac. Are we now encouraging the replacement of sound 
clinical judgment of doctors with health insurance clerks who look at 
records to determine whether you are not really suffering from a 
physical illness, but a mental illness?
  Just a few days ago The Wall Street Journal wrote about a company 
that is ``seeking the mother lode in health `data mining.' '' This 
company wants to get medical data on millions of Americans to sell to 
any buyer. Currently there are no laws constraining the creation of 
large data bases filled with sensitive personally identifiable 
information on any of us. Our information is like gold to these ``data 
miners.''
  If this battle is between American families who want some privacy and

[[Page 4028]]

big business buying access to their personal medical records, I will 
stand with American families every time.
  Last year, an article in the Washington Post described the story of a 
woman whose prescription purchases were tracked electronically by a 
pharmacy benefits management company two states away, hired by her 
employer. With every swipe of her prescription-drug card she saved 50% 
on her prescriptions. At the same time, however, without her knowledge 
her sensitive health information was being compiled. Her doctor was 
soon informed that she would be enrolled in a ``depression program,'' 
watched for continued use of anti-depression medications, and be 
targeted for ``educational'' material on depression. All of this was 
done at the behest of her employer who had unfettered access to all of 
her personal health information.
  This woman was not suffering from a depression-related illness; her 
doctor prescribed the medication to help her sleep. This woman had no 
idea that by signing up for her managed care plan she was signing up to 
have her personal health information disclosed to individuals she had 
never even met.
  Employer access to personal health information of their workers is a 
real problem. A recent University of Illinois study found that 35 
percent of all Fortune 500 companies regularly review health 
information before making hiring decisions. On-work-site health care 
providers have testified before Congress that they are routinely 
pressured for employee health information and must comply or lose their 
jobs.
  What MIPSA makes clear is that there must be a ``fire wall'' between 
those within a company involved in providing health services and 
benefits, and other managers. The goal of privacy legislation is to be 
the first line of defense, so that individuals are not put in the 
situation of possibly being discriminated against. Our bill complements 
other laws and proposed legislation that bar discrimination based on 
health status.
  We must not let privacy slide to the point that the only way for a 
person to ensure confidentiality is to avoid seeking medical treatment.
  The simple fact is that many patients will not agree to participate 
in health research or to be tested if they fear the information that is 
revealed in the course of the research could be released, bringing them 
harm. In genetic testing studies at the National Institutes of Health, 
thirty-two percent of eligible people who were offered a test for 
breast cancer risk declined to take it, citing concerns about loss of 
privacy and the potential for discrimination in health insurance.
  The bill we are introducing today, the Medical Information Privacy 
and Security Act, would be the first comprehensive federal health 
privacy law.
  Our bill is broad in scope: It applies to medical records in whatever 
form--paper or electronic. It applies to each release of medical 
information, including re-releases. It comprehensively covers entities 
other than just health care providers and payers, such as life 
insurance companies, employers and marketers and others who may have 
access to sensitive personal health data.
  It gives individuals the right to inspect, copy and supplement their 
protected health information.
  It allows individuals to require the segregation of portions of their 
medical records, such as mental health records, from broad viewing by 
individuals who are not directly involved in their care.
  It gives individuals a civil right of action against anyone who 
misuses their personally identifiable health information. It 
establishes criminal and civil penalties that can be invoked if 
individually identifiable health information is knowingly or 
negligently misused.
  It creates a set of rules and norms to govern the disclosure of 
personal health information and narrows the sharing of personal details 
within the health care system to the minimum necessary to provide care, 
allow for payment and to facilitate effective oversight. Special 
allowances are made for situations such as emergency medical care and 
public health requirements.
  We have been very careful to balance the right to privacy with the 
needs of providers and health care plans, who can use medical 
information to improve the care of patients. MIPSA does not force 
patients to sign a blanket authorization allowing their information to 
go to anyone for any purpose in order to receive care. Unfortunately, 
individuals now have no choice but to sign away their rights if they 
want any health care treatment at all.
  MIPSA changes the authorization procedure by requiring that 
providers, health plans and hospitals clearly lay out to patients how 
their protected health information will be used, who will have access 
to their protected health information, and for what purpose. If anyone 
wants to use or disclose personally identifiable health information for 
a purpose that is not directly related to their treatment or billing, 
the patient has that right to say no without losing the ability to 
receive needed health care.
  It also takes special care to make sure that important medical 
research continues. MIPSA extends the protective practices currently 
followed by the National Institutes of Health (NIH) to all health 
research efforts--whether publicly or privately funded.
  It establishes a clear and enforceable right of privacy for all 
personally identifiable medical information including information 
regarding the results of genetic tests.
  We have tried to accommodate legitimate oversight concerns so that we 
do not create unnecessary impediments to health care fraud 
investigations. Effective health care oversight is essential if our 
health care system is to function and fulfill its intended goals. 
Otherwise, we risk establishing a publicly sanctioned playground for 
the unscrupulous. Health care is too important a public investment to 
be the subject of undetected fraud or abuse.
  It prohibits law enforcement agents from searching through medical 
records without a warrant. It does not limit law enforcement agents in 
gaining information while in hot pursuit of a suspect.
  We also require anyone who maintains your medical information to have 
strong safeguards in place. And MIPSA offers strong enforcement 
provisions and remedies for the misuse of medical information.
  It sets up a national office of health information privacy to aid 
consumers in learning about their rights and about how they can seek 
recourse for violations of their rights.
  Most importantly, our bill does not preempt any federal or state law 
or regulation that offers stronger privacy safeguards. We propose a 
floor rather than a ceiling, achieving two goals:
  First, a strong federal privacy law will eliminate much of the 
current patchwork of state laws governing the exchange of medical 
information, and will replace the patchwork with strong, clear 
standards that will apply to everyone.
  Second, MIPSA makes room for the many possible future threats to 
medical privacy that we may not even anticipate today. As medical and 
information technology moves forward into the next century we must 
maintain the public's right to seek stronger medical privacy laws 
closer to home.
  The elements of MIPSA are essential to any strong medical privacy 
effort.
  I am encouraged that a variety of public policy and health 
professional organizations, across the political spectrum, are 
signaling their intentions to step forward to join forces with 
consumers during this debate.
  We have 164 days to implement a strong federal medical privacy law. 
With the clock ticking toward the August deadline, let us act sooner 
rather than later.
  Mr. KENNEDY. Mr. President, we are here today to propose legislation 
to protect the privacy of personal medical information in our rapidly 
changing health care system. Today, video rental records have greater 
protection than sensitive medical information. Last month, we learned 
that the University of Michigan Medical Center posted information from 
thousands of patient records on the Internet, without any

[[Page 4029]]

password protection or other safeguards. In many other cases, 
individual patients have been harmed by improper release of their 
private medical records.
  The legislation that Senator Daschle, Senator Leahy, Congressman 
Markey, and I are introducing today--the Medical Information Privacy 
and Security Act--puts patients first, while allowing for legitimate 
uses of medical information to improve health care.
  Congress recognized the need to act to protect the privacy of medical 
information when we passed the Kassebaum-Kennedy Act in 1996. That 
legislation contained a provision requiring Congress to pass 
legislation on the issue by August of this year. If the deadline is not 
met, the Administration has the power to act by regulation.
  The measure we are introducing ensures strong protections nationwide. 
It also allows individual states to take additional action. Stronger 
state laws are not pre-empted.
  The goal of these protections is to safeguard the confidential 
relationship between patients and physicians. Patients concerned about 
their privacy are less likely to disclose important information to 
their physicians. A recent survey by the California HealthCare 
Foundation found that one in six adults has taken steps to protect 
their personal medical information, such as providing inaccurate 
information in their medical history, or asking physicians not to 
include certain information in their medical records.
  Our legislation recognizes the fundamental right of patients to limit 
disclosure of personally-identifiable medical information. We have 
balanced that right with the needs of providers and health care plans 
to use medical information to improve patient care. Our proposal does 
not force patients to sign a blanket authorization in order to receive 
care. Instead, it contains a flexible framework that can be modified to 
fit different situations.
  Medical research is essential for progress against disease. But it is 
also essential for patients to have confidence that research is 
beneficial, not an invasion of privacy. In genetic testing studies at 
the National Institutes of Health, 32 percent of eligible people who 
were offered a test for breast cancer declined to take it, because of 
concerns about loss of privacy and the potential for discrimination in 
health insurance.
  Currently, most federal health research is governed by the ``Common 
Rule'', which includes evaluations by Institutional Review Boards in 
order to protect patients involved in the research. Our proposed 
legislation strengthens the privacy provisions in the ``Common Rule,'' 
and extends those protections to all health research.
  These issues are important, and I am optimistic that Congress will 
act in time to meet the August deadline. We have a responsibility to 
enact strong protections for privacy in all aspects of health care, and 
now is the time to act.
                                 ______
                                 
      By Mr. CLELAND (for himself and Mr. Coverdell):
  S. 575. A bill to redesignate the National School Lunch Act as the 
``Richard B. Russell National School Lunch Act''; to the Committee on 
Agriculture, Nutrition, and Forestry.


              richard b. russell national school lunch act

  Mr. CLELAND. Mr. President, I rise today to introduce a bill to 
rename the National School Lunch Act after Senator Richard Russell. I 
am pleased to have Senator Coverdell as a original co-sponsor.
  Having met Senator Russell over 30 years ago when I was an intern on 
Capitol Hill, I gained a deep respect and reverence for the ``Senator 
from Georgia'' Richard B. Russell. Since being elected to the Senate 
over two years ago, I have been looking for a way to appropriately 
honor and express my appreciation for the contributions of Senator 
Russell. Honestly, I, like many others, usually associate Senator 
Russell with military issues and the work he did to provide our nation 
with a strong national defense. However, in researching his history in 
the Senate, I noticed that, time and again, Senator Russell stated that 
he viewed his proudest achievement in the Senate as the School Lunch 
Act.
  On February 26, 1946, speaking on the Senate floor, Senator Russell 
noted that the School Lunch Program, ``has been one of the most helpful 
ones which has been inaugurated and promises to contribute more to the 
cause of public education in these United States than has any other 
policy which has been adopted since the creation of free public 
schools.'' Strong words, not only about the school lunch program, but 
about Senator Russell's commitment to the same.
  Starting the first grade in 1947, I, like some of you, have always 
considered myself to be a true product of the national school lunch 
program. The program has been woven into the fabric of the American 
family. Today, the National School Lunch Program operates in more than 
95,000 public and nonprofit private schools and residential child care 
institutions throughout the country, providing nutritionally balanced, 
low-cost or free lunches to more than 26 million children each school 
day. The knowledge that every one of our children is ensured a healthy 
and affordable meal every school day provides us all with a great deal 
of comfort and satisfaction. The program is available in almost 99 
percent of all public schools, and in many private schools as well. 
About 92 percent of all students nationwide have access to meals 
through the National School Lunch Program. As cited in several studies, 
a well fed child is more likely to do better in school and is less 
likely to misbehave--both highly desirable outcomes.
  Senator Russell was a tireless champion for establishing a program to 
deliver a healthy meal to our nation's schoolchildren. Senator Russell 
began his campaign to make school feeding programs available in the mid 
1930's by utilizing Section 32 funds of the Act of August 24, 1935. As 
Chairman of the Subcommittee on Agricultural Appropriations, Senator 
Russell exerted a great deal of influence and was a vigilant advocate 
of directing the Section 32 food surpluses towards school feeding 
programs. In the early 1940's, Senator Russell introduced several bills 
authorizing a national school lunch program. And, after several 
unsuccessful attempts, Senator Russell sponsored and pushed through the 
National School Lunch Act in 1946.
  Senator Russell's strong commitment to domestic agriculture 
production strengthened his support for the school feeding programs. In 
fact, Senator Russell's commitment to a strong national defense may 
have also played a role in his support for the program. As you know, 
Senator Russell served as a member, and later Chairman, of the Senate 
Armed Services Committee. During World War II and in post war hearings 
before the Armed Services Committee, testimony was provided by General 
Hershey and Surgeon General Parran and others indicating that a large 
percentage of men rejected from military service had diet-related 
health problems. This revelation resulted in the recognition by many 
that the school lunch program is a matter of national security.
  As stated in a report I received from the Congressional Research 
Service, ``Senator Russell played a key role in the creation and 
formation of the national school lunch program. The historical record 
of Senator Russell's actions on behalf of this program in the 1930's 
and 1940's give him a strong claim to being regarded as the ``father'' 
of the national school lunch program, and make a strong case for 
renaming the 1946 Act after him.'' There have most certainly been 
several other members from the House and Senate, both past and present, 
who have played an irreplaceable role in developing and championing the 
cause of the school lunch program and I believe that all of these 
members should be commended for their dedication. This proposal is not 
meant to diminish the contribution of countless others, but simply to 
recognize that Senator Russell played a primary role in the passage of 
the National School Lunch Act. I am convinced that no other member was 
as significant as Senator Russell in seeing the National School Lunch 
Act enacted into law. I am pleased to have received

[[Page 4030]]

the strong endorsement of the Georgia School Food Service Association 
in their Resolution of support on January 23, 1999.
  Considering Senator Russell's vital role in making the school lunch 
program a reality and the passion he expressed for being its author, I 
believe that by renaming the School Lunch Act in his honor, we can 
fittingly memorialize his contribution, as well as call renewed 
attention to this vital national program. I ask for my colleagues 
support.
  Mr. President, I ask unanimous consent that the text, a letter of 
support, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

   Georgia School Food Service Association Resolution in Support of 
   Senator Max Cleland's Proposal to Memorialize Senator Richard B. 
                                Russell

       Whereas, The Georgia School Food Service Association 
     (GSFSA) has learned that Senator Max Cleland wishes to 
     sponsor legislation to permanently associate the name of 
     Senator Richard B. Russell with and to memorialize the 
     contribution that he made to the establishment of the 
     National School Lunch Act by naming The National School Lunch 
     Act of 1946 (NSLA), the Richard B. Russell National School 
     Lunch Act, and
       Whereas, Senator Richard B. Russell has been known as ``the 
     father of the school lunch act'' as documented in a 1973 
     publication, ``Education in the States,'' published by The 
     National Education Association in cooperation with The Chief 
     State School Officers, and
       Whereas, a review of the 1945-46 Congressional debates 
     leading up to the passage of the Act in May 1946 and signing 
     by President Harry Truman on June 4, 1946 reflects the 
     leadership role of Senator Russell as author of the bill that 
     finally was approved by the Congress, and
       Whereas, Senator Russell's success in getting the 
     legislation passed was greatly enhanced by the outstanding 
     bi-partisan support in the Senate by Senator George D. Aiken, 
     Vermont and Senator Allen J. Ellender, Louisiana and in 
     collaboration with The House of Representatives under the 
     committee leadership of Congressman Flannagan of Virginia, 
     and
       Whereas, with the passage of time the names of NSLA 
     pioneers are faded from memory and we believe there should be 
     an appropriate memorial established to perpetuate the memory 
     of the contribution made by the visionary Richard B. Russell 
     for the program.
       Whereas, the year 2000 will mark the 55th Anniversary of 
     The National School Lunch Act and GSFSA joins with Senator 
     Max Cleland in believing that the time is right for the name 
     of Richard B. Russell to be memorialized and permanently 
     attached to The National School Lunch Act, and
       Whereas, the vision of this program defined by Senator 
     Russell and articulated in The NSLA, Section 1 Policy, to 
     ``safeguard the health and well-being of all children . . . 
     by supporting the establishment of programs and promoting the 
     consumption of nutritious agricultural commodities'' laid the 
     foundation as a nutrition program for all children, and
       Whereas, this vision enacted into legislation in 1946 has 
     provided the framework for the growth of Child Nutrition 
     Programs, which began as a single meal, and has been expanded 
     many times by many Congressional sessions promoted by the 
     leaders in Congress to a year round, all day program serving 
     breakfast, lunch, after school supplements, summer food 
     service, and the child and adult care food program, and
       Whereas, the leadership and commitment of Senator Richard 
     B. Russell as Chairman of the US Senate Committee on 
     Agriculture and Forestry in close collaboration with a bi-
     partisan group in the Senate and a collaborative relationship 
     with the US House of Representatives, persisted through 10 
     years of year-to-year appropriations for the program and two 
     long years of debate and resulted in the enactment of 
     permanent legislation that established an infrastructure for 
     the school lunch program and a framework for all child 
     nutrition programs, and
       Whereas, his leadership for the program did not stop at 
     that point as he had a major role in having the school lunch 
     program designated as an educational program in the states as 
     many state agencies were vying to have administration of the 
     program, and
       Whereas his leadership continued into the 1960's during his 
     final years in the US Senate when he was Chair of the Armed 
     Services Committee, and he provided leadership to have the 
     apportionment formula changed to allocate money to the states 
     on the number of meals served rather than on state enrollment 
     of children,


    the georgia school food service association therefore recommends

       That the General Assembly of Georgia be requested to adopt 
     this resolution in support of Senator Cleland's proposal to 
     have the National School Lunch Act of 1946 renamed the 
     Richard B. Russell National School Lunch Act, and
       The American School Food Service Association be requested 
     to provide support for Senator Cleland's proposal for 
     permanently associating Senator Russell's name with the NSLA, 
     which would be an appropriate memorial to his leadership in 
     authoring legislation that established the foundation for a 
     program that has been successful for more than half-a-
     century, and,
       The GSFSA expresses its appreciation to Senator Max Cleland 
     for recognizing the importance of memorializing Senator 
     Russell as ``the father of the school lunch program'' by 
     attaching his name to the Act, and pledges its support to 
     Senator Cleland in having his proposal turned into reality, 
     and finally,
       That copies of this resolution be provided all members of 
     the Georgia Congressional delegation as a means of seeking 
     their support for honoring an outstanding statesman from 
     Georgia who has been memorialized in many ways, including 
     having a Senate Office Building named in his honor, but has 
     never been publicly honored for the ``piece of legislation 
     that he often claimed to be his proudest work'' that of the 
     passage of the NSLA, as it served all children, the education 
     program and the agriculture programs of the nation. ``this 
     program has been one of the most helpful ones which has been 
     inaugurated and promises to contribute more to the cause of 
     public education in these United States than has any other 
     policy which has been adopted since the creation of free 
     public schools.''--Richard B. Russell, Feb. 26, 1946. The 
     Congressional Record
           Approved by,
                                                        Joan Kidd,
                                                 President, GSFSA.
                                 ______
                                 
      By Mr. HATCH:
  S. 577. A bill to provide for injunctive relief in Federal district 
court to enforce State laws relating to the interstate transportation 
of intoxicating liquors; to the Committee on the Judiciary.


               The Twenty-First Amendment Enforcement Act

  Mr. HATCH. Mr. President, today I am proud to introduce the Twenty-
First Amendment Enforcement Act. This legislation will provide a 
mechanism enabling States to more effectively enforce their laws 
regulating the interstate shipment of alcoholic beverages.
  Interstate shipments of alcohol directly to consumers are increasing 
exponentially. Unfortunately, along with that growing commerce, 
problems associated with that trade are also growing. While I certainly 
believe that interstate commerce should be encouraged, and while I do 
not want small businesses stifled by unnecessary or overly burdensome 
and complex regulations, I do not subscribe to the notion that 
purveyors of alcohol are free to avoid State laws which are consistent 
with the power bestowed upon them by the Twenty-First Amendment.
  All States, including the State of Utah, need to be sure that the 
liquor that is brought into their State is labelled properly and 
subject to certain quality control standards. States need to protect 
their citizens from consumer fraud and have a claim to the tax revenue 
generated by the sale of such goods. And of the utmost importance, 
States need to ensure that minors are not provided with unfettered 
access to alcohol. Unfortunately, indiscriminate direct sales of 
alcohol have opened a sophisticated generation of minors to the perils 
of alcohol abuse.
  I can tell you that my home State of Utah, which has some of the 
strictest controls in the nation on the distribution of alcohol, is not 
immune from the dangers of direct sales. A recent story which ran on 
KUTV in Salt Lake City showed how a thirteen year old was able to 
purchase beer over the internet and have it shipped directly to her 
home--no questions asked. If a thirteen year old is capable of ordering 
beer and having it delivered by merely borrowing her brother's credit 
card and making a few clicks with her mouse, there is something very 
wrong with the level of control that is being exercised over these 
sales. Of course the Utah case is not an isolated example. Stings set 
up by authorities in New York and Maryland have also shown how easy it 
is for minors to obtain alcohol.
  Debate over the control of alcoholic beverages has been raging for as 
long as this country has existed. Prior to 1933, every time individuals 
or legislative bodies engaged in efforts to control the flow and 
consumption of alcohol, whether by moral persuasion, legislation or 
Constitutional Prohibition,

[[Page 4031]]

others were equally determined to repeal, circumvent or ignore those 
barriers. However, the Twenty-First Amendment did, for a time, create 
an ordered system for the distribution of alcohol.
  The Twenty-First Amendment was ratified in 1933. That amendment ceded 
to the States the right to regulate the importation and transportation 
of alcoholic beverages across their borders. By virtue of that grant of 
authority, each State created its own unique regulatory scheme to 
control the flow of alcohol. Some set up State stores to effectuate 
control of the shipment into, and dissemination of alcohol within, 
their State. Others refrained from direct control of the product, but 
set up other systems designed to monitor the shipments and ensure 
compliance with its laws. But whatever the type of State system 
enacted, the purpose was much the same: to protect its citizens and 
ensure that its laws were obeyed.
  Although not perfect, the systems set up by the States worked 
reasonably well for many years. However, modern technology has opened 
the door for abuse and created the need for further governmental action 
to address those abuses. No longer must a State prosecute just an 
errant neighborhood retailer for selling to a minor--now, the ones 
selling to minors and others in violation of a State's regulatory laws 
are a continent away. A small winery can create its own web page and 
accept orders over the internet; a large retailer can advertise 
nationally in the New York Times and accept orders over the phone; an 
ad can be placed in a magazine with a national circulation offering 
sales through an 800 number.
  Let me emphasize that there are many companies engaged in the direct 
interstate shipment of alcohol who do not violate State laws. In fact, 
many of these concerns look beyond their own interests and make 
diligent efforts to disseminate information to others to ensure that 
State laws are understood and complied with by all within the 
interstate industry.
  I should also note that I am certainly sympathetic to the small 
wineries and specialty micro-breweries who feel that the requirement 
that they operate through a three tier system (producer-wholesaler-
retailer) which does not embrace them may, in effect, shut them out of 
the marketplace. They make the argument that if wholesalers do not 
carry their product, they have no other avenue to the consumer other 
than through direct sales. However, if there is a problem with the 
system, we need to fix the system, not break the laws.
  Federal law already prohibits the interstate shipment of alcohol in 
violation of State law. Unfortunately that general prohibition lacks 
any enforcement mechanism. The legislation I am introducing simply 
provides that mechanism by permitting the Attorney General of a State, 
who has reasonable cause to believe that his or her State laws 
regulating the importation and transportation of alcohol are being 
violated, to be permitted to file an action in federal court for an 
injunction to stop those illegal shipments.
  This bill is balanced to ensure due process and fairness to both the 
State bringing the action and the company or individual alleged to have 
violated the State's laws. The bill:
  1. Permits the chief law enforcement officer of a State to seek an 
injunction in federal court to prevent the violation of its laws 
regulating the importation or transportation of alcohol;
  2. Allows for venue for the suit where the defendant resides and 
where the violations occur;
  3. Does not require the posting of a bond by the requesting party;
  4. Does not permit an injunction without notice to the opposing 
party;
  5. Requires that any injunction be specific as to the parties, the 
conduct and the rationale underlying that injunction;
  6. Allows for quick consideration of the application for an 
injunction and conserves court resources by avoiding redundant 
proceedings;
  7. Mandates a bench trial; and
  8. Does not preclude other remedies allowed by law.
  Some will argue that State courts are capable of handling this issue. 
Unfortunately, States have had mixed success in enforcing their laws 
through State court actions. Companies and individuals have raised 
jurisdictional, procedural and legal defenses that have stalled those 
efforts, and that continue to hamper effective enforcement. It is, in 
part, because of those inconsistent rulings, that federal leadership is 
needed in this area.
  Moreover, the scope and limitations of a State's ability to 
effectively enact laws under the Twenty-First Amendment are essentially 
federal questions that need to be decided by a federal court, and 
perhaps ultimately, by the Supreme Court. Only through such rulings can 
both the States and companies seeking to conduct interstate shipments 
be assured of consistency in interpretation and enforcement of the 
laws.
  The introduction of a bill is just the beginning of the legislative 
process. It is my hope that, working together, we can reach an 
agreement on how best to balance legitimate commercial interests with 
the Constitutional rights of the States as ceded to them by the Twenty-
First Amendment.
  I ask unanimous consent that a copy of the legislation be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 577

       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 ``Twenty-First Amendment 
     Enforcement Act''.

     SEC. 2. SHIPMENT OF INTOXICATING LIQUOR INTO STATE IN 
                   VIOLATION OF STATE LAW.

       The Act entitled ``An Act divesting intoxicating liquors of 
     their interstate character in certain cases'', approved March 
     1, 1913 (commonly known as the ``Webb-Kenyon Act'') (27 
     U.S.C. 122) is amended by adding at the end the following:

     ``SEC. 2. INJUNCTIVE RELIEF IN FEDERAL DISTRICT COURT.

       ``(a) Definitions.--In this section--
       ``(1) the term `attorney general' means the attorney 
     general or other chief law enforcement officer of a State, or 
     the designee thereof;
       ``(2) the term `intoxicating liquor' means any spirituous, 
     vinous, malted, fermented, or other intoxicating liquor of 
     any kind;
       ``(2) the term `person' means any individual and any 
     partnership, corporation, company, firm, society, 
     association, joint stock company, trust, or other entity 
     capable of holding a legal or beneficial interest in 
     property, but does not include a State or agency thereof; and
       ``(3) the term `State' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, or any territory or possession of the United States.
       ``(b) Action By State Attorney General.--If the attorney 
     general of a State has reasonable cause to believe that a 
     person is engaged in, is about to engage in, or has engaged 
     in, any act that would constitute a violation of a State law 
     regulating the importation or transportation of any 
     intoxicating liquor, the attorney general may bring a civil 
     action in accordance with this section for injunctive relief 
     (including a preliminary or permanent injunction or other 
     order) against the person, as the attorney general determines 
     to be necessary to--
       ``(1) restrain the person from engaging, or continuing to 
     engage, in the violation; and
       ``(2) enforce compliance with the State law.
       ``(c) Federal Jurisdiction.--
       ``(1) In general.--The district courts of the United States 
     shall have jurisdiction over any action brought under this 
     section.
       ``(2) Venue.--An action under this section may be brought 
     only in accordance with section 1391 of title 28, United 
     States Code.
       ``(d) Requirements For Injunctions and Orders.--
       ``(1) In general.--In any action brought under this 
     section, upon a proper showing by the attorney general of the 
     State, the court shall issue a preliminary or permanent 
     injunction or other order without requiring the posting of a 
     bond.
       ``(2) Notice.--No preliminary or permanent injunction or 
     other order may be issued under paragraph (1) without notice 
     to the adverse party.
       ``(3) Form and scope of order.--Any preliminary or 
     permanent injunction or other order entered in an action 
     brought under this section shall--
       ``(A) set forth the reasons for the issuance of the order;
       ``(B) be specific in terms;
       ``(C) describe in reasonable detail, and not by reference 
     to the complaint or other document, the act or acts to be 
     restrained; and
       ``(D) be binding only upon--
       ``(i) the parties to the action and the officers, agents, 
     employees, and attorneys of those parties; and
       ``(ii) persons in active cooperation or participation with 
     the parties to the action who

[[Page 4032]]

     receive actual notice of the order by personal service or 
     otherwise.
       ``(e) Consolidation of Hearing With Trial on Merits.--
       ``(1) In general.--Before or after the commencement of a 
     hearing on an application for a preliminary or permanent 
     injunction or other order under this section, the court may 
     order the trial of the action on the merits to be advanced 
     and consolidated with the hearing on the application.
       ``(2) Admissibility of evidence.--If the court does not 
     order the consolidation of a trial on the merits with a 
     hearing on an application described in paragraph (1), any 
     evidence received upon an application for a preliminary or 
     permanent injunction or other order that would be admissible 
     at the trial on the merits shall become part of the record of 
     the trial and shall not be required to be received again at 
     the trial.
       ``(f) No right to trial by jury.--An action brought under 
     this section shall be tried before the court.
       ``(g) Additional remedies.--
       ``(1) In general.--A remedy under this section is in 
     addition to any other remedies provided by law.
       ``(2) State court proceedings.--Nothing in this section may 
     be construed to prohibit an authorized State official from 
     proceeding in State court on the basis of an alleged 
     violation of any State law.''.
                                 ______
                                 
      By Mr. JEFFORDS (for himself and Mr. Dodd).
  S. 578. A bill to ensure confidentiality with respect to medical 
records and health care-related information, and for other purposes; to 
the Committee on Health, Education, Labor, and Pensions.


     the health care personal information nondisclosure act of 1998

  Mr. DODD. Mr. President. I am pleased to join the Chairman of the 
Health, Education, Labor and Pensions Committee, Senator Jeffords, in 
introducing the Health Care Personal Information Nondisclosure (PIN) 
Act of 1999. This legislation is designed to offer Americans the peace 
of mind that comes with knowing that their most personal and private 
medical information is protected from misuse and exploitation.
  Medicine has changed dramatically since the time Norman Rockwell 
painted the scene of a doctor examining his young patient's doll. The 
flow of medical information is no longer confined to doctor-patient 
conversations and hospital charts. Recent technological advances have 
introduced more efficient methods of organizing data that allow 
information to be shared instantaneously--helping to contain costs--and 
even save lives.
  But in the view of many Americans, the widespread sharing of medical 
records without appropriate safeguards, even in the pursuit of 
admirable goals, creates a staggering potential for abuse.
  In fact, concerns that medical information is not being adequately 
protected from misuse has led some patients to avoid full disclosure of 
mental health or other sensitive conditions to their physicians and to 
unnecessarily forego opportunities for treatment--in effect negating 
the benefits of the new technology.
  The Health Care PIN Act offers the privacy protections that the 
public demands. This legislation sets clear guidelines for the use and 
disclosure of medical information by health care providers, 
researchers, insurers, employers and others. The Health Care PIN Act 
provides individuals with control over their most personal information, 
yet promotes the efficient exchange of health data for the purposes of 
treatment, payment, research and oversight. To ensure the 
accountability of entities and individuals with access to personal 
medical information, the legislation impose stiff penalties for 
unauthorized disclosures.
  Just as you lock your doors to protect your home, this measure can 
act as deadbolt against those who would exploit your medical privacy.
  This legislation represents common-sense middle ground in the range 
of proposals that have been offered both this and the previous 
Congress. I look forward to working with Senator Jeffords, as well as 
with Senators Bennett, Leahy, and Kennedy, who have contributed so much 
to this debate, to move forward quickly to enact comprehensive, 
bipartisan legislation.
                                 ______
                                 
      By Mr. SPECTER:
  S. 581. A bill to protect the Paoli and Brandywine Battlefields in 
Pennsylvania, to authorize a Valley Forge Museum of the American 
Revolution at Valley Forge National Historical Park, and for other 
purposes; to the Committee on Energy and Natural Resources.


            pennsylvania battlefields protection act of 1999

  Mr. SPECTER. Mr. President, I have sought recognition today to 
introduce the Pennsylvania Battlefields Protection Act, legislation 
which will protect two important Revolutionary War sites in 
Pennsylvania and authorize the construction and operation of a new 
museum and visitor center dedicated to the American Revolution at 
Valley Forge National Historical Park. Representative Curt Weldon has 
introduced similar legislation in the House, with the remaining twenty 
Members of the Pennsylvania House delegation joining him in this 
effort.
  The first part of this legislation authorizes $3 million for the 
acquisition of the 472-acre area generally known as the Meetinghouse 
Road Corridor, where the largest engagement of the American Revolution, 
the Battle of Brandywine, took place from September 10-11, 1777. During 
the 1777 British campaign to capture Philadelphia, British General 
William Howe defeated but proved unable to demoralize General George 
Washington's Continental Army of 12,500 men at the Battle of 
Brandywine.
  While George Washington's and the Marquis de Lafayette's headquarters 
are preserved as part of the Brandywine Battlefield Park, the area 
where the actual fighting took place is not. The land is privately held 
and is in immediate danger of being sold and developed. The battlefield 
was declared a National Historic Landmark in 1961, and local officials, 
preservation groups, and the Commonwealth of Pennsylvania have been 
working together to protect the battlefield. This legislation will 
provide half of the $6 million needed to purchase the land from willing 
buyers, with the remaining $3 million to be raised from non-federal 
sources on a dollar for dollar basis. As with all aspects of this 
legislation, I have worked closely with the National Park Service, and 
they are supportive of federal assistance to protect this important 
Revolutionary War site.
  This legislation will also protect the Paoli Battlefield, in Malvern, 
Pennsylvania, where at least fifty-three Americans were killed. Shortly 
after the Battle of Brandywine, General Washington ordered General 
``Mad'' Anthony Wayne and 2,000 of his men to move to the rear and 
contain the British army. The British learned of General Wayne's move 
and attacked and bayoneted Wayne's men on September 20, 1777 in what 
has infamously become known as the Paoli massacre.
  While the Senate passed legislation which I introduced late in the 
105th Congress to authorize the addition of the Paoli Battlefield site 
to Valley Forge National Historical Park, at that time the bill did not 
enjoy the support of the National Park Service and eventually died in 
the House of Representatives. I have worked with Congressman Weldon on 
this legislation, and we believe that the federal government should 
provide assistance to acquire the 40-acre Paoli Battlefield, an 
unprotected Revolutionary War site that is privately owned by the 
Malvern Preparatory School. The School intends to sell the land in 
order to strengthen its endowment, but officials have agreed to give 
the community a first chance to purchase the land for historical 
preservation purposes. Thus, the Paoli Battlefield will become open to 
residential or commercial development if $2.5 million is not raised by 
September 1999 to purchase the land. This bill envisions a combination 
of public and private financing to purchase the battlefield by 
authorizing a purchase price of $2.5 million with not less than $1 
million in nonfederal funds. After much consultation with the National 
Park Service, I am now informed that they are supportive of this 
approach to protecting Paoli Battlefield.
  The bill also authorizes the Secretary of the Interior to enter into 
a cooperative agreement with the Borough of Malvern, which has agreed 
to

[[Page 4033]]

manage the 45-acre Paoli Battlefield site in perpetuity. A similar 
provision authorizes the Secretary of Interior to enter into a 
cooperative agreement with the Commonwealth of Pennsylvania or the 
Brandywine Conservancy to manage the Meetinghouse Road Corridor area of 
the Brandywine Battlefield. Moreover, the bill directs the Secretary of 
Interior to undertake a resource study of Paoli and Brandywine 
Battlefields to identify the full range of their resources and historic 
themes and alternatives for National Park Service involvement at these 
two sites.
  Finally, the last section of the bill authorizes the Secretary of 
Interior to enter into an agreement with the private, non-profit Valley 
Forge Historical Society to construct and operate a museum and visitor 
center within the boundaries of Valley Forge National Historical Park. 
After the Battles of Brandywine, the Clouds, Paoli, Germantown, and 
Whitemarsh, the Continental Army made Valley Forge its camp from 
December 19, 1777 to June 19, 1778, when it emerged as a new, better 
equipped, and well trained American army. Currently, there is no museum 
in the United States dedicated to the American Revolution. I believe it 
is important that Congress provide the authorization to bring this 
worthwhile project to fruition, which will not only tell the story of 
the Philadelphia campaign, but the story of the entire American 
Revolution as well.
  This museum will combine the holdings of the Valley Forge National 
Historical Park and the Valley Forge Historical Society, making it the 
largest collection of Revolutionary War era artifacts in the world. The 
Valley Forge Historical Society, established in 1918, has a long 
history of service to the park, and has amassed one of the best 
collections of artifacts, art, books, and documents relating to the 
1777-1778 encampment of the Continental Army at Valley Forge, the 
American Revolution, and the American colonial era. Their collection is 
currently housed in a facility that is inadequate to properly maintain, 
preserve, and display the Society's ever-growing collection. 
Construction of a new facility will rectify this situation.
  This project is supported by local officials, and a new facility is 
part of the Valley Forge National Historical Park's General Management 
Plan, which has identified inadequacies in the park's current visitor 
center and calls for the development of a new or significantly 
renovated museum and visitor center. The museum will educate an 
estimated 500,000 visitors a year about the critical events surrounding 
the birth of our nation.
  This legislation authorizes the Valley Forge Historical Society to 
operate the museum in cooperation with the Secretary of Interior. This 
project will directly support the historical, educational, and 
interpretive activities and needs of Valley Forge National Historical 
Park and the Valley Forge Historical Society while combining two 
outstanding museum collections.
  Mr. President, too many important historical sites, especially 
Revolutionary War battlefields, have already been lost to residential 
and commercial development. The 105th Congress made a commitment to 
protecting battlefield sites. I have been pleased to support these 
efforts as well as the successful effort to obtain funding in the FY99 
Interior and Related Agencies Appropriations bill to begin conducting 
the Revolutionary War and War of 1812 Historic Preservation Study. I 
hope the 106th Congress will continue that commitment by protecting the 
Brandywine and Paoli Battlefields. In addition, this legislation holds 
enormous potential for all Americans to learn about our country's rich 
history by establishing a new visitor center and museum at Valley Forge 
National Historical Park, which will then be better able to tell the 
story of the American Revolution. I therefore urge my colleagues to 
support this bill.
                                 ______
                                 
      By Mr. SPECTER (for himself and Mr. Santorum):
  S. 582. A bill to authorize the Secretary of the Interior to enter 
into an agreement for the construction and operation of the Gateway 
Visitor Center at Independence National Historical Park; to the 
Committee on Energy and Natural Resources.


            gateway visitor center authorization act of 1999

  Mr. SPECTER. Mr. President, I have sought recognition today to 
reintroduce legislation to authorize the operation of the Gateway 
Visitor Center in Independence National Historical Park in 
Philadelphia, Pennsylvania. Similar legislation has already been 
introduced in the House of Representatives by Representatives Robert 
Borski, Curt Weldon, and Robert Brady.
  As many of my colleagues are aware, Independence National Historical 
Park is one of the National Park Service's crown jewels, home to the 
Liberty Bell and Independence Hall and the birthplace of the 
Constitution and the Declaration of Independence. In the Spring of 
1997, the Final General Management Plan for Independence Park was 
released, which spells out the vision for the Park for the next fifteen 
years. The first block of Independence Mall will contain a new home for 
the Liberty Bell, the second block the Gateway Visitor Center, and the 
third block the National Constitution Center. The revitalization of 
Independence Mall is well underway, but legislation is needed to fully 
implement the General Management Plan with regards to the Gateway 
Visitor Center.
  The National Park Service is aware that this type of site-specific 
legislation is necessary for the Gateway Visitor Center. I have worked 
closely with the National Park Service and the Gateway Visitor Center 
Corporation in developing this legislation, and the National Park 
Service expressed its full support for this legislation during hearings 
held in the 105th Congress.
  I would note that the $24 million needed to construct the Gateway 
Visitor Center has already been committed, with the City of 
Philadelphia contributing $5 million, the Commonwealth of Pennsylvania 
$10 million, and various Foundations $15 million, of which $6 million 
will fund an endowment. The legislation I am introducing today merely 
provides the authorization for the operation of the Center. The Gateway 
Visitor Center will be financially self-sustaining, with only a modest 
contribution coming from the National Park Service for operations and 
maintenance.
  While the Gateway Visitor Center will provide the traditional 
services to visitors to the Park, the Center will also provide some 
services which are somewhat beyond the scope of existing National Park 
Service legislation. In addition to its role as the Park's primary 
visitor center, providing visitor orientation to the Park, the city, 
and the region as a whole, the Gateway Visitor Center will be permitted 
to charge fees, conduct events, and sell merchandise, tickets, and food 
to visitors to the Center. These activities will allow the Gateway 
Visitor Center to meet its parkwide, citywide and regional missions 
while defraying the operating and management expenses of the Center.
  The current visitor center in Independence National Historical Park 
is poorly located, making it underutilized and inconvenient to the 
millions of people who visit the Park each year. The Gateway Visitor 
Center will serve far more people than ever possible with the current 
facility by providing information, interpretation, facilities, and 
services to visitors to the Park, its surrounding historic areas, the 
City of Philadelphia, and the region in order to assist visitors in 
their enjoyment of the historical, cultural, educational, and 
recreational resources of the area. The Gateway Visitor Center will be 
a major asset for the Park and critical to the central management goal 
addressed in the General Management Plan of creating an outstanding 
visitor experience. The Gateway Visitor Center holds enormous potential 
for Independence National Historical Park and the greater Philadelphia 
region as a whole, and I therefore urge my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. CHAFEE (by request):
  S. 583. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act to authorize programs for pre-disaster 
mitigation, to

[[Page 4034]]

streamline the administration of disaster relief, to control the 
Federal costs of disaster assistance, and for other purposes; to the 
Committee on Environment and Public Works.


                    disaster mitigation act of 1999

  Mr. CHAFEE. Mr. President, today, at the administration's request, I 
am introducing the Disaster Mitigation Act of 1999. This bill is 
designed to promote pre-disaster mitigation and streamline the 
operations of the Federal Emergency Management Agency (FEMA).
  Last year, the Senate Committee on Environment and Public Works, 
which has oversight over FEMA, considered S. 2361, legislation authored 
by Senators Inhofe and Graham that was based in part on the 
administration's 1997 proposal. While S. 2361 was reported by the 
committee, it was not considered by the Senate before it adjourned last 
November.
  I believe it makes sense for Congress and FEMA to pay attention to 
pre-disaster mitigation efforts--i.e., the steps that can be taken 
before a disaster strikes. It also makes sense for us to ensure that 
FEMA's operations are streamlined so that the administering of disaster 
relief proceeds as smoothly and efficiently as possible. Taking these 
steps not only would be easier on the budget, but also would help 
prevent needless human suffering.
  It is my hope that working with the administration, we will be able 
to craft legislation that will accomplish our goals. I look forward to 
working with my colleagues and administration officials toward that 
end.
  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. 583

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Disaster 
     Mitigation Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Robert T. Stafford Disaster Relief and 
              Emergency Assistance Act.

                 TITLE I--PREDISASTER HAZARD MITIGATION

Sec. 101. Findings and purpose.
Sec. 102. Pre-Disaster Hazard Mitigation.
Sec. 103. Maximum contribution for mitigation costs.
Sec. 104. Conforming amendment.

       TITLE II--DISASTER PREPAREDNESS AND MITIGATION ASSISTANCE

Sec. 201. Insurance.
Sec. 202. Management costs.
Sec. 203. Assistance to repair, restore, reconstruct, or replace 
              damaged facilities.
Sec. 204. Federal assistance to households.
Sec. 205. Repeals.

                        TITLE III--MISCELLANEOUS

Sec. 301. Technical correction of short title.
Sec. 302. Definitions.

     SEC. 2. AMENDMENTS TO THE ROBERT T. STAFFORD DISASTER RELIEF 
                   AND EMERGENCY ASSISTANCE ACT.

       Except as otherwise specifically provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision of 
     law, the reference shall be considered to be made to a 
     section or other provision of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

                TITLE I--PREDISASTER HAZARDS MITIGATION

     SEC. 101. FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds that--
       (1) natural disasters, including earthquakes, tsunamis, 
     tornadoes, hurricanes and flooding, cause great danger to 
     human life and to property throughout the United States.
       (2) greater emphasis needs to be placed on identifying and 
     assessing the risks to State and local communities and on 
     implementing adequate measures to reduce losses from such 
     disasters, and to ensure that communities' critical public 
     infrastructure and facilities will continue to function after 
     a disaster.
       (3) expenditures for post-disaster assistance are 
     increasing without commensurate reductions in the likelihood 
     of future losses from such natural disasters;
       (4) high priority in the expenditure of Federal funds under 
     this Act should be given to mitigate hazards for existing and 
     new construction at the local level;
       (5) with a unified effort of economic incentives, awareness 
     and education, technical assistance, and demonstrated Federal 
     support, States and local communities can form effective 
     community-based partnerships for hazard mitigation purposes, 
     implement effective hazards mitigation measures that reduce 
     the existing disaster potential, ensure continued 
     functionality of communities' critical public infrastructure, 
     leverage additional non-Federal resources into their disaster 
     resistance goals, and make commitments to long-term 
     mitigation efforts in new and existing construction.
       (b) Purpose.--It is the purpose of this Act to establish a 
     national disaster mitigation program that--
       (1) reduces the loss of life and property, human suffering, 
     economic disruption and disaster assistance costs resulting 
     from natural hazards, and
       (2) provides a source of pre-disaster mitigation funding 
     that will assist states and local governments in implementing 
     effective mitigation measures that are designed to ensure the 
     continued functionality of their critical facilities and 
     public infrastructure after a natural disaster.

     SEC. 102. PRE-DISASTER HAZARD MITIGATION.

       (a) Title II of the Act is amended by adding new section 
     203 as follows:

     ``SEC. 203. PRE-DISASTER HAZARD MITIGATION.

       ``(a) General Authority.--The Director may establish a 
     program of technical and financial assistance to states and 
     local governments that implement predisaster mitigation 
     measures in order to reduce injuries and loss of life and 
     damage and destruction of property including damage to their 
     critical public infrastructure and facilities.
       ``(b) Approval by Director.--If the Director finds that a 
     state or local government has identified all natural hazards 
     in its jurisdiction and has demonstrated its ability to form 
     effective public/private disaster mitigation partnerships, he 
     may provide financial assistance to the State or local 
     government for such purposes from the fund established under 
     subsection (d) of this section.
       ``(c) Purpose of Grants.--(1) The financial assistance 
     shall be used principally by states and local governments to 
     implement the predisaster hazard mitigation measures 
     contained in proposals approved by the Director. Funding may 
     also be used to support effective public/private 
     partnerships, to ensure that new community growth and 
     construction is disaster resistant, and to improve the 
     assessment of a community's natural hazards vulnerabilities 
     or to set a community's mitigation priorities.
       ``(2) The Director shall take into account the following 
     when establishing priorities for pre-disaster mitigation 
     grants:
       ``(A) The level and nature of the risks to be mitigated;
       ``(B) Grantee commitment to reduce damages from future 
     disasters;
       ``(C) commitment by the State and local government to 
     support ongoing non-Federal support for the mitigation 
     measures to be undertaken.
       ``(d) National Pre-Disaster Mitigation Fund.--To carry out 
     the pre-disaster mitigation program authorized in subsection 
     (a), the Director may establish in the United States Treasury 
     a National Predisaster Mitigation Fund (``Fund''), which 
     shall be available without fiscal year limitation for grants 
     to States and local governments under subsection (b) of this 
     section.
       ``(e) Funds for the Account.--The Fund shall be credited 
     with:
       ``(1) Funds appropriated by the Congress for the purposes 
     of this section, which funds shall be available until 
     expended; and
       ``(2) sums available from bequests, gifts, or donations of 
     service, money, or property, real, personal, or mixed, 
     tangible, or intangible, given for purposes of pre-disaster 
     mitigation.
       ``(f) Federal Share.--Subject to the provisions of 
     subsections (g) and (h) of this section, grants from the Fund 
     shall be not more than 75 percent of the total costs of the 
     mitigation proposal(s) approved by the Director.
       ``(g) Limit on Grants.--No grants shall be made in excess 
     of the money available in the Fund.
       ``(h) Rules Governing the Account.--The Director shall 
     publish rules to carry out the provisions of this section.
       ``(b) Effective Date.--Subsection (a) of this section shall 
     take effect on the date of enactment of the Disaster 
     Mitigation Act of 1999.

     SEC. 103. MAXIMUM CONTRIBUTION FOR MITIGATION COSTS.

       ``(a) In General.--Section 404(a) of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 
     5170c(a)) is amended in the last sentence by striking ``15 
     percent'' and inserting ``20 percent''.
       ``(b) Applicability.--The amendment made by subsection (a) 
     shall apply to each major disaster declared under the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5121 et seq.) after the date of enactment of this Act.

     SEC. 104. CONFORMING AMENDMENT.

       Title II of the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5131 et seq.) is amended 
     by striking the title heading and inserting the following:

[[Page 4035]]



     ``TITLE II--DISASTER PREPAREDNESS AND MITIGATION ASSISTANCE''.

       TITLE II--DISASTER PREPAREDNESS AND MITIGATION ASSISTANCE

     SEC. 201. INSURANCE.

       Section 311(a)(2) of the Robert T. Stafford Disaster Relief 
     and Emergency Assistance Act (42 U.S.C. 5154(a)(2)) is 
     amended--
       (a) by inserting ``(A)'' before the sentence; and
       (b) adding paragraph (B) to the subsection as follows:
       ``(B) The President shall publish rules to require States, 
     communities or other applicants to protect property through 
     self-insurance or adequate mitigation measures if the 
     appropriate State insurance commissioner makes the 
     certification provided in paragraph (A) and the President 
     determines that the property is not adequately protected 
     against natural or other disasters.''

     SEC. 202. MANAGEMENT COSTS.

       (a) In General.--Title III of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5141 
     et seq.) is amended by adding a new Section 322 as follows:

     ``SEC. 322. MANAGEMENT COSTS.

       ``(a) Definition of Management Cost.--The term `management 
     cost', as used in this section, includes any indirect cost, 
     administrative expense, and any other expense not directly 
     chargeable to a specific project under a major disaster, 
     emergency, or emergency preparedness activity or measure.
       ``(b) Management Cost Rates.--Notwithstanding any other 
     provision of law (including any administrative rule or 
     guidance), the President shall establish management cost 
     rates for grantees and subgrantees that shall be used to 
     determine contributions under this Act for management costs.
       ``(c) Review.--The President shall review the management 
     cost rates established under subsection (b) not later than 3 
     years after the date of establishment of the rates and 
     periodically thereafter.
       ``(d) Regulations.--The President shall promulgate 
     regulations to define appropriate costs to be included in 
     management costs under this section.''.
       (b) Applicability.--Section 322 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (as added by 
     subsection (a)) shall apply as follows:
       (1) In general.--Subsections (a), (b), and (d) of section 
     322 of that Act shall apply to each major disaster declared 
     under that Act on or after the date of enactment of this Act. 
     Until the date on which the President establishes the 
     management cost rates under that subsection, section 406(f) 
     of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5172(f)) shall be used for 
     establishing the rates.
       (2) Review; Other Expenses.--Section 322(c) of that Act 
     shall apply to each major disaster declared under that Act on 
     or after the date on which the President establishes the 
     management cost rates under that section.

     SEC. 203. ASSISTANCE TO REPAIR, RESTORE, RECONSTRUCT, OR 
                   REPLACE DAMAGED FACILITIES.

       (a) Minimum Federal Share.--Section 406(b) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5172(b)) is amended to read as follows:
       ``(b)(1) Except as provided in paragraph (2) of this 
     subsection, the Federal share of assistance under this 
     section shall be not less than 75 percent of the eligible 
     cost of repair, restoration, reconstruction, or replacement 
     carried out under this section.
       ``(2) The President shall publish rules to reduce the 
     Federal share of assistance under this section for the 
     repair, restoration, reconstruction, or replacement of any 
     eligible public or private nonprofit facility that has 
     previously received significant disaster assistance under 
     this Act on multiple occasions.''
       (b) Contributions and Federal Share.--Section 406 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5172) is amended by striking subsection (e) 
     and inserting new subsection (e) to read as follows:
       ``(e) Eligible Cost.--
       ``(1) Determination.--
       ``(A) In general.--For the purposes of this section, the 
     President shall estimate the eligible cost of repairing, 
     restoring, reconstructing, or replacing a public facility or 
     private nonprofit facility--
       ``(i) on the basis of the design of the facility as the 
     facility existed immediately before the major disaster; and
       ``(ii) in conformity with current applicable codes, 
     specifications, and standards (including floodplain 
     management and hazard mitigation criteria required by the 
     President or under the Coastal Barrier Resources Act (16 
     U.S.C. 3501 et seq.)).
       ``(B) Cost Estimation Procedures.--Subject to paragraph 
     (2), the President shall use the cost estimation procedures 
     developed under paragraph (3) to make the estimate under 
     subparagraph (A).
       ``(2) Modification of Eligible Cost.--If the actual cost of 
     repairing, restoring, reconstructing, or replacing a facility 
     under this section is more than 120 percent or less than 80 
     percent of the cost estimated under paragraph (1), the 
     President may determine that the eligible cost shall be the 
     actual cost of the repair, restoration, reconstruction, or 
     replacement.
       ``(3) Expert Panel.--Not later than 18 months after the 
     date of enactment of this paragraph, the President, acting 
     through the Director of the Federal Emergency Management 
     Agency, shall establish an expert panel, which shall include 
     representatives from the construction industry, to develop 
     procedures for estimating the cost of repairing, restoring, 
     reconstructing, or replacing a facility consistent with 
     industry practices.
       ``(4) Special rule.--In any case in which the facility 
     being repaired, restored, reconstructed, or replaced under 
     this section was under construction on the date of the major 
     disaster, the cost of repairing, restoring, reconstructing, 
     or replacing the facility shall include, for the purposes of 
     this section, only those costs that, under the contract for 
     the construction, are the owner's responsibility and not the 
     contractor's responsibility.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of enactment of this Act, 
     except that paragraph (1) of section 406(e) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (as 
     amended by paragraph (1)) shall take effect on the date on 
     which the procedures developed under paragraph (3) of that 
     section take effect.

     SEC. 204. FEDERAL ASSISTANCE TO HOUSEHOLDS.

       (a) In General.--Section 408 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174) 
     is amended to read as follows:

     ``SEC. 408. FEDERAL ASSISTANCE TO HOUSEHOLDS.

       ``(a) General Authority.--In accordance with this section, 
     the President, in consultation and coordination with the 
     Governor of an affected State, may provide financial 
     assistance, and, if necessary, direct services, to disaster 
     victims who--
       ``(1) as a direct result of a major disaster have necessary 
     expenses and serious needs; and
       ``(2) are unable to meet the necessary expenses and serious 
     needs through other means, including insurance proceeds or 
     loan or other financial assistance from the Small Business 
     Administration or another Federal agency. Inability to meet 
     necessary expenses and serious needs through loan or other 
     financial assistance from the Small Business Administration 
     or another Federal agency shall not apply to temporary 
     housing or rental assistance under subsection (c)(2) or to 
     permanent housing construction under subsection (c)(4) of 
     this section.
       ``(b) Housing Assistance.--
       ``(1) Eligibility.--The President may provide financial or 
     other assistance under this section to household to respond 
     to the disaster-related housing needs of households that are 
     displaced from their predisaster primary residences or whose 
     predisaster primary residences are rendered uninhabitable as 
     a result of damage caused by a major disaster.
       ``(2) Determination of appropriate types of assistance.--
     The President shall determine appropriate types of housing 
     assistance to be provided to disaster victims under this 
     section based on considerations of cost effectiveness, 
     convenience to disaster victims, and such other factors as 
     the President considers to be appropriate. One or more types 
     of housing assistance may be made available, based on the 
     suitability and availability of the types of assistance, to 
     meet the needs of disaster victims in a particular disaster 
     situation.
       ``(c) Types of Housing Assistance.--
       ``(1) Federal assistance under this subjection shall 
     continue no longer than 18 months after the date of the major 
     disaster declaration by the President, unless the President 
     determines that it is in the public interest to extend such 
     18-month period.
       ``(2) Temporary housing.--
       ``(A) Financial assistance.--
       ``(i) In General.--The President may provide financial 
     assistance under this section to households to rent alternate 
     housing accommodations, existing rental units, manufactured 
     housing, recreational vehicles, or other readily fabricated 
     dwellings.
       ``(ii) Amount.--The amount of assistance under clause (i) 
     shall be based on the sum of--
       ``(I) the fair market rent for the accommodation being 
     provided; and
       ``(II) the cost of any transportation, utility hookups, or 
     unit installation not being directly provided by the 
     President.
       ``(B) Direct assistance.--
       ``(i) In General.--The President may directly provide under 
     this section housing units, acquired by purchase or lease, to 
     households who, because of a lack of available housing 
     resources, would be unable to make use of the assistance 
     provided under subparagraph (A).
       ``(ii) Collection of rental charges.--After the expiration 
     of the 18-month period referred to in paragraph (c)(1), the 
     President may charge fair market rent for the accommodation 
     being furnished.
       ``(3) Repairs.--
       ``(A) In general.--The President may provide financial 
     assistance for the repair of owner-occupied primary 
     residences, utilities, and residential infrastructure (such 
     as private access routes) damaged by a major disaster to a 
     habitable or functioning condition.

[[Page 4036]]

       ``(B) Emergency repairs.--To be eligible to receive 
     assistance under subparagraph (A), a recipient shall not be 
     required to demonstrate that the recipient is unable to meet 
     the need for the assistance through other means, except 
     insurance proceeds, if the assistance--
       ``(i) is used for emergency repairs to make a private 
     primary residence habitable; and
       ``(ii) does not exceed $5,000, as adjusted annually to 
     reflect changes in the Consumer Price Index for Urban 
     Consumers as reported by the Bureau of Labor Statistics of 
     the Department of Labor.
       ``(4) Permanent housing construction.--The President may 
     provide financial assistance or direct assistance under this 
     section to households to construct permanent housing in 
     insular areas outside the continental United States and in 
     other remote locations in cases in which--
       ``(A) no alternative housing resources are available; and
       ``(B) the types of temporary housing assistance described 
     in paragraph (c)(1) are unavailable, infeasible, or not cost 
     effective.
       ``(d) Terms and Conditions Relating to Housing 
     Assistance.--
       ``(1) Sites.--
       ``(A) In general.--Any readily fabricated dwelling provided 
     under this section shall, whenever practicable, be located on 
     a site that--
       ``(i) is provided by the State or local government; and
       ``(ii) is complete with utilities provided by the State or 
     local government, by the owner of the site, or by the 
     occupant who was displaced by the major disaster.
       ``(B) Sites provided by the president.--Readily fabricated 
     dwellings may be located on sites provided by the President 
     if the President determines that the sites would be more 
     economical or accessible.
       ``(2) Disposal of units.--
       ``(A) Sale To Occupants.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, a temporary housing unit purchased under this section by 
     the President for the purpose of housing disaster victims may 
     be sold directly to the household who is occupying the unit 
     if the household needs permanent housing.
       ``(ii) Sales price.--Sales of temporary housing units under 
     this clause shall be accomplished at prices that are fair and 
     equitable.
       ``(iii) Deposit of proceeds.--Notwithstanding any other 
     provision of law, the proceeds of a sale under clause (i) 
     shall be deposited into the appropriate Disaster Relief Fund 
     account.
       ``(iv) Use of gsa services.--The President may use the 
     services of the General Services Administration to accomplish 
     a sale under clause (i).
       ``(B) Other methods of disposal.--
       ``(i) Sale.--If not disposed of under subparagraph (A), a 
     temporary housing unit purchased by the President for the 
     purpose of housing disaster victims may be resold.
       ``(ii) Disposal to governments and voluntary 
     organizations.--A temporary housing unit described in clause 
     (i) may be sold, transferred, donated, or otherwise made 
     available directly to a State or other governmental entity or 
     to a voluntary organization for the sole purpose of providing 
     temporary housing to disaster victims in major disasters and 
     emergencies if, as a condition of the sale, transfer, 
     donation, or other making available, the State, other 
     governmental agency, or voluntary organizations agrees--
       ``(I) to comply with the nondiscrimination provisions of 
     section 308; and
       ``(II) to obtain and maintain hazard and flood insurance on 
     the housing unit.
       ``(e) Financial Assistance To Address Other Needs.--
       ``(1) Medical, dental, and funeral expenses.--The 
     President, in consultation and coordination with the Governor 
     of the affected State, may provide financial assistance under 
     this section to a household adversely affected by a major 
     disaster to meet disaster-related medical, dental, and 
     funeral expenses.
       ``(2) Personal property, transportation, and other 
     expenses.--The President, in consultation and coordination 
     with the Governor of the affected State, may provide 
     financial assistance under this section to a household 
     described in paragraph (1) to address personal property, 
     transportation, and other necessary expenses or serious needs 
     resulting from the major disaster.
       ``(f) State Role.--The President shall provide for the 
     substantial and ongoing involvement of the affected State in 
     administering assistance under this section.
       ``(g) Maximum Amount of Assistance.--The maximum amount of 
     financial assistance that a household may receive under this 
     section with respect to a single major disaster shall be 
     $25,000, as adjusted annually to reflect changes in the 
     Consumer Price Index for all Urban Consumers published by the 
     Department of Labor.
       ``(h) Issuance of Regulations.--The President shall issue 
     rules and regulations to carry out the program established by 
     this section, including criteria, standards, and procedures 
     for determining eligibility for assistance.''.
       (b) Conforming Amendment.--Section 502(a)(6) of the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5192(a)(6)) is amended by striking ``temporary 
     housing''.
       (c) Repeal of Individual and Family Grant Programs.--
     Section 411 of the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5178) is repealed.
       (d) Effective Date.--The amendments made by this section 
     take effect 18 months after the date of enactment of this 
     Act.

     SEC. 205. REPEALS.

       (a) Associated Expenses.--Subject to the provisions of 
     section 202(b)(2) of this Act, section 406(f) of the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5172(f)) is repealed.
       (b) Community Disaster Loans.--Section 417 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5184) is repealed.
       (c) Simplified Procedure.--Section 422 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5189) is repealed.
                                  ____


                           Sectional Analysis

       Sec. 1 Short title; table of contents. Section 1 
     establishes the short title of the bill as the ``Disaster 
     Mitigation Act of 1999.''
       Sec. 2. Amendments to the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act. This section states that 
     unless otherwise specified, any amendment or repeal of a 
     section or provision shall be considered to be made to the 
     Stafford Act.


                 title i--predisaster hazard mitigation

       Sec. 101. Findings and purpose. Adopts the findings and 
     statement of purpose found in S. 2361, 105th Congress. 
     Section 101 describes four findings of Congress: (1) greater 
     emphasis needs to be placed on hazard identification and 
     hazard mitigation, (2) expenditures for disaster assistance 
     are increasing without evidence of potential reduction of 
     future losses, (3) a high priority should be placed on the 
     implementation or predisaster mitigation activities, and (4) 
     a unified effort will be successful in reducing future losses 
     from natural disasters.
       These findings signal the importance of commitments by 
     States and local communities to long-term disaster mitigation 
     efforts (including developing appropriate construction 
     standards, practices and materials) for new and existing 
     structures. Such commitments can help reduce the rise of 
     future damage to life and property and ensure that critical 
     facilities and public infrastructure will function after a 
     disaster strikes.
       Sec. 102. Pre-Disaster Hazard Mitigation. Section 102 
     creates a new Section 203 in the Stafford Act that authorizes 
     the Director to establish a program for States, local 
     governments, and other entities for carrying out predisaster 
     mitigation activities that exhibit long-term, cost-effective 
     benefits and substantially reduce the risk of future damage 
     from major disasters. For the purposes of this section, the 
     term ``entities'' refers to governmental entities of the 
     State or local government, regional planning organizations, 
     governmental units organized along watershed or other 
     planning foci, or tribal governments.
       In selecting a site, the Director must consider the 
     likelihood of damage resulting from a natural disaster; the 
     identification of cost effective mitigation activities with 
     meaningful outcomes; the consistency with State mitigation 
     programs; the opportunity to maximize net benefits to 
     society; the ability of a State or local government or entity 
     to fund mitigation activities; private sector interest; and 
     other criteria established in coordination with State and 
     local governments. The Director must take into account the 
     level and nature of risks to be mitigated, grantee commitment 
     to reduce damages from future disasters, and commitment by 
     the State or local government to support ongoing non-Federal 
     support for the mitigation measures to be undertaken when 
     establishing priorities for pre-disaster mitigation grants.
       With regard to mitigation activities, this section requires 
     the President and the States to consult on a list of those 
     activities that are appropriate, and delegates decisions 
     regarding selections from the list to local governments.
       States receiving financial assistance under this section 
     may use the assistance to fund activities to disseminate 
     information about cost-effective mitigation technologies. 
     Certain construction standards, practices, and materials have 
     been proven effective in mitigating the risks or impacts of 
     actual natural disasters. Public awareness of these 
     technologies can allow communities to make informed decisions 
     that can substantially reduce the risk of future damage, 
     hardship or suffering from a major disaster.
       Sec. 103. Maximum contribution for mitigation costs. 
     Section 103 amends Section 404(a) of the Stafford Act by 
     changing maximum hazard mitigation contributions from 15% to 
     20% of aggregate amount of grants. The changes made by this 
     section are applicable to all major disasters declared after 
     January 1, 1999.
       Sec. 104. Conforming amendment. This section amends to the 
     heading of Title II to read ``Title II--Disaster Preparedness 
     and Mitigation Assistance''.


       TITLE II--DISASTER PREPAREDNESS AND MITIGATION ASSISTANCE.

       Sec. 201. Insurance. Section 201 amends Sec. 311(a)(2) of 
     the Stafford Act to authorize the

[[Page 4037]]

     President to require by regulation that States, communities 
     or other applicants protect property through self-insurance 
     or adequate mitigation measures if the State's insurance 
     commissioner certifies that insurance is not reasonably 
     available. Under current law if the State insurance 
     commissioner certifies that insurance is not reasonably 
     available, an applicant need not take any further action to 
     insure or mitigate the property against future damage. This 
     provision authorizes the President to require further action 
     to reduce future potential damage to the affected property.
       Sec. 202. Management costs. Section 203 adds a new Section 
     322 to the Stafford Act. It provides a definition for 
     management costs and directs the President to establish 
     management cost reimbursement rates, subject to periodic 
     review, for grantees and subgrantees receiving assistance 
     under the Act. Appropriate costs are to be established by 
     Federal regulation. The current reimbursement system will 
     remain in effect for disasters declared before the new rates 
     are established.
       Sec. 203. Assistance to repair, restore, reconstruct, or 
     replace damaged facilities. Section 203 amends and 
     reorganizes the section of the Stafford Act (Section 406) 
     that provides authority to the President to make 
     contributions to a State, local government, or person for the 
     repair, restoration, or replacement of public facilities or 
     private nonprofit facilities. As amended, this section 
     establishes a minimum Federal share of 75 percent of the cost 
     of such activities. Section 203 would also amend Section 206 
     to authorize reduction in Federal disaster assistance for 
     facilities which had received disaster assistance in the past 
     and for which insurance had not been maintained since receipt 
     of the disaster assistance.
       This section also sets new rules for cost estimates by 
     allowing the cost of repairs in situations where the actual 
     cost is above 120 percent or below 80 percent of the 
     estimated cost to be reconsidered. In addition, it directs 
     the President to establish an expert panel for development of 
     procedures for cost estimations.
       Sec. 204. Federal assistance to households. Section 204(a) 
     amends Section 408 of the Stafford Act to combine the Housing 
     and Individual and Family Grant (IFG) Programs. As amended, 
     this section establishes the type of assistance available for 
     housing, repairs, and construction, and caps total assistance 
     per individual or household under the combined program at 
     $25,000 per major disaster. It authorizes the President to 
     assist individuals by replacing their homes under certain 
     conditions or allowing them to rent alternate housing 
     accommodations, and by providing financial assistance for 
     medical, dental, funeral, personal property, and 
     transportation expenses. The President is to issue 
     regulations to determine eligibility for assistance.
       Section 204(b) deletes the term ``temporary housing'' from 
     Sec. 502(a)(6) of the Stafford Act. Section 502 specifies and 
     limits the emergency assistance that the President may 
     provide when he declares an emergency under the Act. 
     Paragraph (a)(6) states that he may provide ``temporary 
     housing assistance'' under Sec. 408 of the Act. This 
     amendment would give the President authority to provide 
     assistance under Sec. 408, which would encompass both housing 
     and assistance to individuals and households in the 
     consolidated section.
       Sec. 204(c) repeals the Individual and Family Grant 
     programs, which under this legislation are consolidated with 
     the Temporary Housing program.
       Sec. 205. Repeals. Section 205 repeals Section 406(f) and 
     Section 417 of the Stafford Act (providing for Associated 
     Expenses and for Community Disaster Loans), as well as 
     Section 422 (regarding simplified procedure), in order to 
     conform with the amendment made under Section 202(d) of the 
     bill.
                                  ____


                       Ramseyer/Cordon Comparison

    Materials deleted within bold brackets [  ], new text in italic.

     SEC. 101. FINDINGS AND PURPOSE.

       (d) Findings.--The Congress finds that--
       (1) natural disasters, including earthquakes, tsunamis, 
     tornadoes, hurricanes and flooding, cause great danger to 
     human life and to property throughout the United States.
       (2) greater emphasis needs to be placed on identifying and 
     assessing the risks to State and local communities and on 
     implementing adequate measures to reduce losses from such 
     disasters, and to ensure that communities' critical public 
     infrastructure and facilities will continue to function after 
     a disaster.
       (3) expenditures for post-disaster assistance are 
     increasing without commensurate reductions in the likelihood 
     of future losses from such natural disasters;
       (4) high priority in the expenditure of Federal funds under 
     this Act should be given to mitigate hazards for existing and 
     new construction at the local level;
       (5) with a unified effort of economic incentives, awareness 
     and education, technical assistance, and demonstrated Federal 
     support, States and local communities can form effective 
     community-based partnerships for hazard mitigation purposes, 
     implement effective hazards mitigation measures that reduce 
     the existing disaster potential, ensure continued 
     functionality of communities' critical public infrastructure, 
     leverage additional non-Federal resources into their disaster 
     resistance goals, and make commitments to long-term 
     mitigation efforts in new and existing construction.
       (b) Purpose.--It is the purpose of this Act to establish a 
     national disaster mitigation program that--
       (1) reduces the loss of life and property, human suffering, 
     economic disruption and disaster assistance costs resulting 
     from natural hazards, and
       (2) provides a source of pre-disaster mitigation funding 
     that will assist states and local governments in implementing 
     effective mitigation measures that are designed to ensure the 
     continued functionality of their critical facilities and 
     public infrastructure after a natural disaster.

     SEC. 102. PRE-DISASTER HAZARD MITIGATION.

     42 U.S.C. SEC. 203. PRE-DISASTER HAZARD MITIGATION.

       (a) General Authority.--The Director may establish a 
     program of technical and financial assistance to states and 
     local governments that implement predisaster mitigation 
     measures in order to reduce injuries and loss of life and 
     damage and destruction of property including damage to their 
     critical public infrastructure and facilities.
       (b) Approval by Director.--If the Director finds that a 
     state or local government has identified all natural disaster 
     hazards in its jurisdiction and has demonstrated its ability 
     to form effective public/private disaster mitigation 
     partnerships, he may make grants to the State or local 
     government for such purposes from the fund established under 
     subsection (d) of this section.
       ``(c) Purpose of Grants.--(1) The financial assistance 
     shall be used principally by states and local governments to 
     implement the predisaster hazard mitigation measures 
     contained in proposals approved by the Director. Funding may 
     also be used to support effective public/private 
     partnerships, to ensure that new community growth and 
     construction is disaster resistant, and to improve the 
     assessment of a community's natural hazards vulnerabilities 
     or to set a community's mitigation priorities.
       ``(2) The Director shall take into account the following 
     when establishing priorities for pre-disaster mitigation 
     grants:
       ``(A) the level and nature of the risks to be mitigated;
       ``(B) Grantee commitment to reduce damages from future 
     disasters;
       ``(C) commitment by the State or local government to 
     support ongoing non-Federal support for the mitigation 
     measures to be undertaken.
       (d) National Pre-Disaster Mitigation Fund.--To carry out 
     the pre-disaster mitigation program authorized in subsection 
     (a), the Director shall establish in the United States 
     Treasury a National Predisaster Mitigation Fund (``Fund''), 
     which shall be an account separate from any other accounts or 
     funds, and which shall be available without fiscal year 
     limitation for grants to States and local governments under 
     subsection (b) of this section.
       (e) Funds for the Account.--The Fund shall be credited 
     with:
       (1) funds appropriated by the Congress for the purposes of 
     this section which funds shall be available until expended; 
     and
       (2) sums available from bequests, gifts, or donations of 
     service, money, or property, real, personal, or mixed, 
     tangible, or intangible, given for purposes of pre-disaster 
     mitigation.
       (f) Federal Share.--Subject to the provisions of 
     subsections (g) and (h) of this section, grants from the Fund 
     shall be not more than 75 percent of the total cost of the 
     mitigation proposal(s) approved by the Director.
       (g) Limit on Grants.--No grants shall be made in excess of 
     the money available in the Fund.
       3(h) Rules Governing the Account.--The Director shall 
     publish rules to carry out the provisions of this section.

     SEC. 103. MAXIMUM CONTRIBUTION FOR MITIGATION COSTS.

     42 U.S.C. SEC. 404. HAZARD MITIGATION.

       (a) In General.--
       The President may contribute up to 75 percent of the cost 
     of hazard mitigation measures which the President has 
     determined are cost-effective and which substantially reduce 
     the risk of future damage, hardship, loss, or suffering in 
     any area affected by a major disaster. Such measures shall be 
     identified following the evaluation of natural hazards under 
     section 5176 of this title and shall be subject to approval 
     by the President. The total of contributions under this 
     section for a major disaster shall not exceed [15] 20 percent 
     of the estimated aggregate amount of grants to be made (less 
     any associated administrative costs) under this chapter with 
     respect to the major disaster.

     SEC. 201. INSURANCE.

     42 U.S.C. SEC. 311. INSURANCE.

       (a) Applicants for Replacement of Damaged Facilities.--

                           *   *   *   *   *

       (2) Determination.--
       (A) In making a determination with respect to availability, 
     adequacy, and necessity under paragraph (1), the President 
     shall not require greater types and extent of insurance than 
     are certified to him as reasonable by the appropriate State 
     insurance commissioner responsible for regulation of such 
     insurance.
       (B) The President shall publish rules to require States, 
     communities or other applicants to protect property through 
     self-insurance or adequate mitigation measures if the 
     appropriate

[[Page 4038]]

     State insurance commissioner makes the certification provided 
     in paragraph (A) and the President determines that the 
     property is not adequately protected against natural or other 
     disasters.

     SEC. 202. MANAGEMENT COSTS

     SEC. 322. MANAGEMENT COSTS.

       (a) Definition of Management Cost.--The term `management 
     cost', as used in this section, includes any indirect cost, 
     administrative expense, and any other expense not directly 
     chargeable to a specific project under a major disaster, 
     emergency, or emergency preparedness activity or measure.
       (b) Management Cost Rates.--Notwithstanding any other 
     provision of law (including any administrative rule or 
     guidance), the President shall establish management cost 
     rates for grantees and subgrantees that shall be used to 
     determine contributions under this Act for management costs.
       (C) Review.--The President shall review the management cost 
     rates established under subsection (b) not later than 3 years 
     after the date of establishment of the rates and periodically 
     thereafter.
       (d) Regulations.--The President shall promulgate 
     regulations to define appropriate costs to be included in 
     management costs under this section.

     SEC. 203. ASSISTANCE TO REPAIR, RESTORE, RECONSTRUCT, OR 
                   REPLACE DAMAGED FACILITIES

     42 U.S.C. SEC. 406. REPAIR, RESTORATION, AND REPLACEMENT OF 
                   DAMAGED FACILITIES

       (a) Minimum Federal Share.--
       [Sec. 406] (b) Minimum Federal Share.--
       [The Federal share of assistance under this section shall 
     be not less than--
       (1) 75 percent of the net eligible cost of repair, 
     restoration, reconstruction, or replacement carried out under 
     this section;
       (2) 100 percent of associated expenses described in 
     subsections (f)(1) and (f)(2); and
       (3) 75 percent of associated expenses described in 
     subsections (f)(3), (f)(4), and (f)(5).]
       (1) Except as provided in paragraph (2) of this subsection, 
     the Federal share of assistance under this section shall be 
     not less than 75 percent of the eligible cost of repair, 
     restoration, reconstruction, or replacement carried out under 
     this section.
       (2) The President shall publish rules to reduce the Federal 
     share of assistance under this section for the repair, 
     restoration, reconstruction, or replacement of any eligible 
     public or private nonprofit facility that has previously 
     received significant disaster assistance under this Act on 
     multiple occasions.
       (B) Contributions and Federal Share
       [(e) Net Eligible Cost.--
       [(1) General rule.--
       [For purposes of this section, the cost of repairing, 
     restoring, reconstructing, or replacing a public facility or 
     private nonprofit facility on the basis of the design of such 
     facility as it existed immediately prior to the major 
     disaster and in conformity with current applicable codes, 
     specifications, and standards (including floodplain 
     management and hazard mitigation criteria required by the 
     President or by the Coastal Barrier Resources Act (16 U.S.C. 
     3501 et seq.)) shall, at a minimum, be treated as the net 
     eligible cost of such repair, restoration, reconstruction, or 
     replacement.
       [(2) Special rule
       [In any case in which the facility being repaired, 
     restored, reconstructed, or replaced under this section was 
     under construction on the date of the major disaster, the 
     cost of repairing, restoring, reconstructing, or replacing 
     such facility shall include, for purposes of this section, 
     only those costs which, under the contract for such 
     construction, are the owner's responsibility and not the 
     contractor's responsibility.
       [Sec. 406] (e) Eligible cost.--
       (1) Determination--
       (A) In general.--For the purposes of this section, the 
     President shall estimate the eligible cost of repairing, 
     restoring, reconstructing, or replacing a public facility or 
     private nonprofit facility--
       (i) on the basis of the design of the facility as the 
     facility existed immediately before the major disaster; and
       (ii) in conformity with current applicable codes, 
     specifications, and standards (including floodplain 
     management and hazard mitigation criteria required by the 
     President or under the Coastal Barrier Resources Act (16 
     U.S.C. 3501 et seq.)).
       (B) Cost estimation procedures.--Subject to paragraph (2), 
     the President shall use the cost estimation procedures 
     developed under paragraph (3) to make the estimate under 
     subparagraph (A).
       (2) Modification of eligible cost.--If the actual cost of 
     repairing, restoring, reconstructing, or replacing a facility 
     under this section is more than 120 percent or less than 80 
     percent of the cost estimated under paragraph (1), the 
     President may determine that the eligible cost shall be the 
     actual cost of the repair, restoration, reconstruction, or 
     replacement.
       (3) Expert panel.--Not later than 18 months after the date 
     of enactment of this paragraph, the President, acting through 
     the Director of the Federal Emergency Management Agency, 
     shall establish an expert panel, which shall include 
     representatives from the construction industry, to develop 
     procedures for estimating the cost of repairing, restoring, 
     reconstructing, or replacing a facility consistent with 
     industry practices.
       (4) Special rule.--In any case in which the facility being 
     repaired, restored, reconstructed, or replaced under this 
     section was under construction on the date of the major 
     disaster, the cost of repairing, restoring, reconstructing, 
     or replacing the facility shall include, for the purposes of 
     this section, only those costs that, under the contract for 
     the construction, are the owner's responsibility and not the 
     contractor's responsibility.

     SEC. 204. FEDERAL ASSISTANCE TO HOUSEHOLDS

     42 U.S.C. [SEC. 408. TEMPORARY HOUSING ASSISTANCE

       [(a) Provision of Temporary Housing--
       [(1) In general--
       [The President may--
       [(A) provide, by purchase or lease, temporary housing 
     (including unoccupied habitable dwellings), suitable rental 
     housing, mobile homes, or other readily fabricated dwellings 
     to persons who, as a result of a major disaster, require 
     temporary housing; and
       [(B) reimburse State and local governments in accordance 
     with paragraph (4) for the cost of sites provided under 
     paragraph (2).
       [(2) Mobile home site--
       [(A) In general--
       [Any mobile home or other readily fabricated dwelling 
     provided under this section shall whenever possible be 
     located on a site which--
       [(i) is provided by the State or local government; and
       [(ii) has utilities provided by the State or local 
     government, by the owner of the site, or by the occupant who 
     was displaced by the major disaster.
       [(B) Other sites--
       [Mobile homes and other readily fabricated dwellings may be 
     located on sites provided by the President if the President 
     determines that such sites would be more economical or 
     accessible than sites described in subparagraph (A).
       [(3) Period--
       [Federal financial and operational assistance under this 
     section shall continue for not longer than 18 months after 
     the date of the major disaster declaration by the President, 
     unless the President determines that due to extraordinary 
     circumstances it would be in the public interest to extend 
     such 18-month period.
       [(4) Federal share--
       [The Federal share of assistance under this section shall 
     be 100 percent; except that the Federal share of assistance 
     under this section for construction and site development 
     costs (including installation of utilities) at a mobile home 
     group site shall be 75 percent of the eligible cost of such 
     assistance. The State or local government receiving 
     assistance under this section shall pay any cost which is not 
     paid for from the Federal share.
       [(b) Temporary Mortgage and Rental Payments.--
       [The President is authorized to provide assistance on a 
     temporary basis in the form of mortgage or rental payments to 
     or on behalf of individuals and families who, as a result of 
     financial hardship caused by a major disaster, have received 
     written notice of dispossession or eviction from a residence 
     by reason of a foreclosure of any mortgage or lien, 
     cancellation of any contract of sale, or termination of any 
     lease, entered into prior to such disaster. Such assistance 
     shall be provided for the duration of the period of financial 
     hardship but not to exceed 18 months.
       [(c) In Lieu Expenditures.--
       [In lieu of providing other types of temporary housing 
     after a major disaster, the President is authorized to make 
     expenditures for the purpose of repairing or restoring to a 
     habitable condition owner-occupied private residential 
     structures made uninhabitable by a major disaster which are 
     capable of being restored quickly to a habitable condition.
       [(d) Transfer of Temporary Housing--
       [(1) Direct sale to occupants--
       [Notwithstanding any other provision of law, any temporary 
     housing acquired by purchase may be sold directly to 
     individuals and families who are occupants of temporary 
     housing at prices that are fair and equitable, as determined 
     by the President.
       [(2) Transfers to states, local governments, and voluntary 
     organizations--
       [The President may sell or otherwise make available 
     temporary housing units directly to States, other 
     governmental entities, and voluntary organizations. The 
     President shall impose as a condition of transfer under this 
     paragraph a covenant to comply with the provisions of section 
     308 requiring nondiscrimination in occupancy of such 
     temporary housing units. Such disposition shall be limited to 
     units purchased under the provisions of subsection (a) and to 
     the purposes of providing temporary housing for disaster 
     victims in major disasters or emergencies.
       [(e) Notification--
       [(1) In general--
       [Each person who applies for assistance under this section 
     shall be notified regarding the type and amount of any 
     assistance for which such person qualifies. Whenever 
     practicable, such notice shall be provided within 7 days 
     after the date of submission of such application.
       [(2) Information--
       [Notification under this subsection shall provide 
     information regarding--
       [(A) all forms of such assistance available;

[[Page 4039]]

       [(B) any specific criteria which must be met to qualify for 
     each type of assistance that is available;
       [(C) any limitations which apply to each type of 
     assistance; and
       [(D) the address and telephone number of offices 
     responsible for responding to--
       [(i) appeals of determinations of eligibility for 
     assistance; and
       [(ii) requests for changes in the type or amount of 
     assistance provided.
       [(f) Location--
       [In providing assistance under this section, consideration 
     shall be given to the location of and travel time to--
       [(1) the applicant's home and place of business;
       [(2) schools which the applicant or members of the 
     applicant's family who reside with the applicant attend; and
       [(3) crops of livestock which the applicant tends in the 
     course of any involvement in farming which provides 25 
     percent or more of the applicant's annual income.]

     SEC. 408. FEDERAL ASSISTANCE TO HOUSEHOLDS.

       (a) General Authority.--In accordance with this section, 
     the President, in consultation and coordination with the 
     Governor of an affected State, may provide financial 
     assistance, and, if necessary, direct services, to disaster 
     victims who--
       (1) as a direct result of a major disaster have necessary 
     expenses and serious needs; and
       (2) are unable to meet the necessary expenses and serious 
     needs through other means, including insurance proceeds or 
     loan or other financial assistance from the Small Business 
     Administration or another Federal agency. Inability to meet 
     necessary expenses and serious needs through loan or other 
     financial assistance from the Small Business Administration 
     or another Federal agency shall not apply to temporary 
     housing or rental assistance under subsection (c)(2) or to 
     permanent housing construction under subsection (c)(4) of 
     this section.
       (b) Housing Assistance--
       (1) Eligibility.--The President may provide financial or 
     other assistance under this section to households to respond 
     to the disaster-related housing needs of households that are 
     displaced from their predisaster primary residence or whose 
     predisaster primary residence are rendered uninhabitable as a 
     result of damage caused by a major disaster.
       (2) Determination of Appropriate Types of Assistance.--The 
     President shall determine appropriate types of housing 
     assistance to be provided to disaster victims under this 
     section based on consideration of cost effectiveness, 
     convenience to disaster victims, and such other factors as 
     the President considers to be appropriate. One or more types 
     of housing assistance may be made available, based on the 
     suitability and availability of the types of assistance, to 
     meet the needs of disaster victims in a particular disaster 
     situation.
       (c) Types of Housing Assistance--
       (1) Federal assistance under this subsection shall continue 
     no longer than 18 months after the date of the major disaster 
     declaration by the President, unless the President determines 
     that it is in the public interest to extend such 18-month 
     period.
       (2) Temporary Housing--
       (A) Financial Assistance--
       (i)--In general.--The President may provide financial 
     assistance under this section to households to rent alternate 
     housing accommodations, existing rental units, manufactured 
     housing, recreational vehicles, or other readily fabricated 
     dwellings.
       (ii) Amount.--The amount of assistance under clause (i) 
     shall be based on the sum of--
       (I) the fair market rent for the accommodation being 
     provided; and
       (II) the cost of any transportation, utility hookups, or 
     unit installation not being directly provided by the 
     President.
       (B) Direct Assistance.--
       (i) In General.--The President may direct provide under 
     this section housing units; acquired by purchase or lease, to 
     households who, because of a lack of available housing 
     resources, would be unable to make use of the assistance 
     provided under subparagraph (A).
       (ii) Collection of Rental Charges.--After the expiration of 
     the 18-month period referred to in clause (ii), the President 
     may charge fair market rent for the accommodation being 
     provided.
       (3) Repairs.--
       (A) In general.--The President may provide financial 
     assistance for the repair of owner-occupied primary 
     residents, utilities, and residential infrastructure (such as 
     private access routes) damaged by a major disaster to a 
     habitable or functioning condition.
       (B) Emergency Repairs.--To be eligible to receive 
     assistance under subparagraph (A), a recipient shall not be 
     required to demonstrate that the recipient is unable to meet 
     the need for the assistance through other means, except 
     insurance proceeds, if the assistance--
       ``(i) is used for emergency repairs to make a private 
     primary residence habitable; and
       ``(ii) does not exceed $5,000, as adjusted annually to 
     reflect changes in the Consumer Price Index for Urban 
     Consumers as reported by the Bureau of Labor Statistics of 
     the Department of Labor.
       ``(4) Permanent Housing Construction.--The President may 
     provide financial assistance or direct assistance under this 
     section to households to construct permanent housing in 
     insular areas outside the continental United States and in 
     other remote locations in cases in which--
       ``(A) no alternative housing resources are available; and
       ``(B) the types of temporary housing assistance described 
     in paragraph (c)(l) are unavailable, infeasible, or not cost 
     effective.
       ``(d) Terms and Conditions Relating to Housing Assistance--
       ``(l) Sites--
       ``(A) In General.--Any readily fabricated dwelling provided 
     under this section shall, whenever practicable, be located on 
     a site that--
       ``(i) is provided by the State or local government; and
       ``(ii) is complete with utilities provided by the State or 
     local government, by the owner of the site, or by the 
     occupant who was displaced by the major disaster.
       ``(B) Sites Provided by the President.--Readily fabricated 
     dwellings may be located on sites provided by the President 
     if the President determines that the sites would be more 
     economical or accessible.
       ``(2) Disposal of Units--
       ``(A) Sale to occupants--
       ``(i) In general.--Notwithstanding any other provision of 
     law, a temporary housing unit purchased under this section by 
     the President for the purpose of housing disaster victims may 
     be sold directly to the household who is occupying the unit 
     if the household needs permanent housing.
       ``(ii) Sales price.--Sales of temporary housing units under 
     clause shall be accomplished at prices that are fair and 
     equitable.
       ``(iii) Deposit of proceeds.--Notwithstanding any other 
     provision of law, the proceeds of a sale under clause (i) 
     shall be deposited into the appropriate Disaster Relief Fund 
     account.
       ``(iv) Use of GSA services.--The President may use the 
     services of the General Services Administration to accomplish 
     a sale under clause (i).
       ``(B) Other Methods of Disposal--
       ``(i) Sale.--If not disposed of under subparagraph (A), a 
     temporary housing unit purchased by the President for the 
     purpose of housing disaster victims may be resold.
       ``(ii) Disposal To Governments and Voluntary 
     Organizations.--A temporary housing unit described in clause 
     (i) may be sold, transferred, donated, or otherwise made 
     available directly to a State or other governmental entity or 
     to a voluntary organization for the sole purpose of providing 
     temporary housing to disaster victims in major disasters and 
     emergencies if, as a condition of the sale, transfer, 
     donation, or other making available, the State, other 
     governmental agency, or voluntary organization agrees--
       ``(I) to comply with the nondiscrimination provisions of 
     section 308; and
       ``(II) to obtain the maintain hazard and flood insurance on 
     the housing unit.
       ``(e) Financial Assistance to Address Other Needs--
       ``(l) Medical, Dental, and Funeral Expenses.--The 
     President, in consultation and coordination with the Governor 
     of the affected State, may provide financial assistance under 
     this section to a household adversely affected by a major 
     disaster to meet disaster-related medical, dental, and 
     funeral expenses.
       ``(2) Personal Property, Transportation, and Other 
     Expenses.--The President, in consultation and coordination 
     with the governor of the affected State, may provide 
     financial assistance under this section to a household 
     described in paragraph (l) to address personal property, 
     transportation, and other necessary expenses or serious needs 
     resulting from the major disaster.
       (f) State Role.--The President shall provide for the 
     substantial and ongoing involvement of the affected State in 
     administering assistance under this section.
       (g) Maximum Amount of Assistance.--The maximum amount of 
     financial assistance that a household may receive under this 
     section with respect to a single major disaster shall be 
     $25,000, as adjusted annually to reflect changes in the 
     Consumer Price Index for all Urban Consumers published by the 
     Department of Labor.
       (h) Issuance of Regulations.--The President shall issue 
     rules and regulations to carry out the program established by 
     this section, including criteria, standards, and procedures 
     for determining eligibility for assistance.

     SEC. 204(B). CONFORMING AMENDMENT.

     SEC. 502. FEDERAL EMERGENCY ASSISTANCE.

       (a) Specified.--
       In any emergency, the President may--

                           *   *   *   *   *

       (6) provide [temporary housing] assistance in accordance 
     with section 408 [42 U.S.C. Sec. 5174]; and

     SEC. 204(C). REPEAL OF INDIVIDUAL AND FAMILY GRANT PROGRAMS.

     42 U.S.C. [SEC. 411. INDIVIDUAL AND FAMILY GRANT PROGRAMS.

       [(a) In General.--
       The President is authorized to make a grant to a State for 
     the purpose of making grants to individuals or families 
     adversely affected by a major disaster for meeting disaster-
     related necessary expenses or serious needs of such 
     individuals or families in those cases where such individuals 
     or families are unable to meet such expenses or needs through 
     assistance under other provisions of this Act or through 
     other means.
       [(b) Cost Sharing.--
       (1) Federal share.--
       The Federal share of a grant to an individual or a family 
     under this section shall be equal to 75 percent of the actual 
     cost incurred.

[[Page 4040]]

       (2) State contribution.--
       The Federal share of a grant under this section shall be 
     paid only on condition that the remaining 25 percent of the 
     cost is paid to an individual or family from funds made 
     available by a State.
       [(c) Regulations.--
       [The President shall promulgate regulations to carry out 
     this section and such regulations shall include national 
     criteria, standards, and procedures for the determination of 
     eligibility for grants and the administration of grants under 
     this section.
       [(d) Administrative Expenses.--
       A State may expend not to exceed 5 percent of any grant 
     made by the President to it under subsection (a) for expenses 
     of administering grants to individuals and families under 
     this section.
       [(e) Administration Through Governor.--
       The Governor of a State shall administer the grant program 
     authorized by this section in the State.
       [(f) Limit on Grants to Individual.--
       No individual or family shall receive grants under this 
     section aggregating more than $10,000 with respect to any 
     single major disaster. Such $10,000 limit shall annually be 
     adjusted to reflect changes in the Consumer Price Index for 
     All Urban Consumers published by the Department of Labor.]

     SEC. 205. REPEALS.

     SEC. 205(A). ASSOCIATED EXPENSES.

       [(f) Associated Expenses.--
       For purposes of this section, associated expenses include 
     the following:
       [(1) Necessary costs.--
       Necessary costs of requesting, obtaining, and administering 
     Federal assistance based on a percentage of assistance 
     provided as follows:
       (A) For an applicant whose net eligible costs equal less 
     than $100,000, 3 percent of such net eligible costs,
       (B) For an applicant whose net eligible costs equal 
     $100,000 or more but less than $1,000,000, $3,000 plus 2 
     percent of such net eligible costs in excess of $100,000.
       (C) For an applicant whose net eligible costs equal 
     $1,000,000 or more but less than $5,000,000, $21,000 plus 1 
     percent of such net eligible costs in excess of $1,000,000.
       (D) For an applicant whose net eligible costs equal 
     $5,000,000 or more, $61,000 plus \1/2\ percent of such net 
     eligible costs in excess of $5,000,000.
       [(2) Extraordinary costs--
       Extraordinary costs incurred by a State for preparation of 
     damage survey reports, final inspection reports, project 
     applications, final audits, and related field inspections by 
     State employees, including overtime pay and per diem and 
     travel expenses of such employees, but not including pay for 
     regular time of such employees, based on the total amount of 
     assistance provided under sections 5170b, 5170c, 5172, 5173, 
     5192, 5193 of this title in such State in connection with the 
     major disaster as follows:
       (A) If such total amount is less than $100,000, 3 percent 
     of such total amount,
       (B) If such total amount is $100,000 or more but less than 
     $1,000,000, $3,000 plus 2 percent of such total amount net 
     eligible cost in excess of $100,000,
       (C) If such total amount is $1,000,000 or more but less 
     than $5,000,000, $21,000 plus 1 percent of such total amount 
     net eligible cost in excess of $1,000,000,
       (D) If such total amount is $5,000,000 or more, $61,000 
     plus \1/2\ percent of such total amount net eligible cost in 
     excess of $5,000,000.
       [(3) Costs of National Guard--
       The costs of mobilizing and employing the National Guard 
     for performance of eligible work.
       [(4) Costs of prison labor--
       The costs of using prison labor to perform eligible work, 
     including wages actually paid, transportation to a worksite, 
     and extraordinary costs of guards, food, and lodging.
       [(5) Other labor costs--
       Base and overtime wages for an applicant's employees and 
     extra hires performing eligible work plus fringe benefits on 
     such wages to the extent that such benefits were being paid 
     before the disaster]

     SEC. 205(B) COMMUNITY DISASTER LOANS.

     42 U.S.C. [SEC. 417. COMMUNITY DISASTER LOANS.

       [(a) The President is authorized to make loans to any local 
     government which may suffer a substantial loss of tax and 
     other revenues as a result of a major disaster, and has 
     demonstrated a need for financial assistance in order to 
     perform its governmental functions. The amount of any such 
     loan shall be based on need, and shall not exceed 25 per 
     centum of the annual operating budget of that local 
     government for the fiscal year in which the major disaster 
     occurs. Repayment of all or any part of such loan to the 
     extent that revenues of the local government during the three 
     full fiscal year period following the major disaster are 
     insufficient to meet the operating budget of the local 
     government, including additional disaster-related expenses of 
     a municipal operation character shall be canceled.
       [(b) Any loans made under this section shall not reduce or 
     otherwise affect any grants or other assistance under this 
     Act.]

     SEC. 205(C) SIMPLIED PROCEDURE.

       [(Sec. 422. SIMPLIFIED PROCEDURE.
       [If the Federal estimate of the cost of--
       (1) repairing, restoring, reconstructing, or replacing 
     under section 406 any damaged or destroyed public facility or 
     private nonprofit facility,
       (2) emergency assistance under section 403 or 502, or
       (3) debris removed under section 407,

     is less than $35,000, the President (on application of the 
     State or local government or the owner or operator of the 
     private nonprofit facility) may make the contribution to such 
     State or local government or owner or operator under section 
     403, 406, 407, or 502, as the case may be, on the basis of 
     such Federal estimate. Such $35,000 amount shall be adjusted 
     annually to reflect changes in the Consumer Price Index for 
     All Urban Consumers published by the Department of Labor.]
                                 ______
                                 
      By Mr. KENNEDY (for himself and Mr. Lautenberg):
  S. 584. A bill to amend title XIX of the Social Security Act to 
permit the Secretary of Health and Human Services to waive recoupment 
under the medicaid program of certain tobacco-related funds received by 
a State if a State uses a portion of such funds for tobacco use 
prevention and health care and early learning programs; to the 
Committee on Finance.


  Children's Smoking Prevention, Health, and Early Learning Trust Fund

  Mr. KENNEDY. Mr. President, today I am introducing legislation which 
will insure that the federal share of the state Medicaid settlements 
negotiated with the tobacco industry is used by the states to prevent 
youth smoking, to improve health care, and to promote child 
development. Fifty-seven cents of every Medicaid dollar spent by the 
states comes from the federal government. The cost of Medicaid 
expenditures to treat people suffering from smoking-induced disease was 
at the core of state lawsuits against the tobacco industry. While the 
federal government could legally demand that the states reimburse 
Washington from their settlements, I believe the states should be 
allowed to keep one hundred percent of the money. However, the federal 
share should be used by the states for programs that will advance the 
goals of protecting children and enhancing public health which were at 
the heart of the litigation and are consistent with the purposes of 
Medicaid. That would be an eminently fair and reasonable compromise of 
this contentious issue.
  While there were a variety of claims made by the states against the 
tobacco industry, the Medicaid dollars used to treat tobacco-related 
illness constituted by far the largest claim monetarily, and it formed 
the basis for the national settlement. As part of that settlement, 
every state released the tobacco companies from federal Medicaid 
liability, as well as state Medicaid liability. Medicaid expenditures 
heavily influenced the distribution formula used to divide the national 
settlement amongst the states. In light of these undeniable facts, the 
dollars obtained by the states from their settlements cannot now be 
divorced from Medicaid. States are free to use the state share of their 
recoveries in any way they choose. However, Congress has a vital 
interest in how the federal share will be used.
  My legislation would require states to use half of the amount of 
money they receive from the tobacco industry each year (the federal 
share) to protect children and improve public health. At least thirty-
five percent of the federal share would be spent on programs to deter 
youth smoking and to help smokers overcome their addiction. This would 
include a broad range of tobacco control initiatives, including school 
and community based tobacco use prevention programs, counter-
advertising to discourage smoking, cessation programs, and enforcement 
of the ban on sale to minors. Three thousand children start smoking 
every day, and one thousand of them will die prematurely as a result of 
tobacco-induced disease. Prevention of youth smoking should be, without 
question, our highest priority for the use of these funds. The state 
settlements provide the resources to dissuade millions of teenagers 
from smoking, to break the cycle of addiction and early death. We must 
seize that opportunity.
  The remainder of the federal share would be available for states to 
use to fund health care and early learning initiatives which they 
select. States can

[[Page 4041]]

either use the additional resources to supplement existing programs in 
these areas, or to fund creative new state initiatives to improve 
public health and promote child development.
  Smoking has long been America's foremost preventable cause of disease 
and early death. It has consumed an enormous amount of the nation's 
health care resources. Finally, resources taken from the tobacco 
companies would be used to improve the nation's health. A state could, 
for example, use a portion of this money to help senior citizens pay 
for prescription drugs, or to provide expanded health care services to 
the uninsured. Funds could be used to support community health centers, 
to reduce public health risks, or to make health insurance more 
affordable.
  For years, the tobacco companies callously targeted children as 
future smokers. The financial success of the entire industry was based 
upon addicting kids when they were too young to appreciate the health 
risks of smoking. It is particularly appropriate that resources taken 
from this malignant industry be used to give our children a better 
start in life. States could use a portion of these funds to improve 
early learning opportunities for young children, or to expand child 
care services, or for other child development initiatives.
  Congress has a compelling interest in how the federal share of these 
dollars is used. They are Medicaid dollars. They should not be used for 
road repair or building maintenance. They should be used by the states 
to create a healthier future for all our citizens, and particularly for 
our children.

                          ____________________