[Congressional Record (Bound Edition), Volume 145 (1999), Part 7]
[Senate]
[Pages 9288-9303]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. MACK (for himself, Mr. Graham, Mr. Santorum, Mr. Sarbanes, 
        Mr. Chafee, Mr. Bryan, Mr. Murkowski, Mr. Breaux, Mr. Jeffords, 
        Mr. Kerrey, Mr. Coverdell, Mr. Robb, Mr. Craig, Mr. Conrad, Mr. 
        Shelby, Mr. Rockefeller, Mr. Allard, Mr. Dodd, Mr. Grams, Mr. 
        Johnson, Mr. Hagel, Mr. Schumer, Mr. Crapo, Mr. Lieberman, Mr. 
        Helms, Mr. Edwards, Mr. Abraham, Mrs. Lincoln, Mr. Sessions, 
        Mrs. Boxer, Mr. Hutchinson, Mrs. Feinstein, Mr. Lugar, Mr. 
        Wellstone, Ms. Snowe, Mr. Torricelli, Mr. Specter, Mr. Dorgan, 
        Mrs. Hutchison, Mr. Hollings, Mr. Thomas, Mr. Daschle, Mr. 
        Lautenberg, Mr. Kerry, and Mrs. Murray):
  S. 1017. A bill to amend the Internal Revenue Code of 1986 to 
increase the State ceiling on the low-income housing credit; to the 
Committee on Finance.


               Affordable Housing Opportunity Act of 1999

  Mr. MACK. Mr. President, I rise today to introduce the Affordable 
Housing Opportunity Act of 1999. My colleague from my home state, Bob 
Graham, my colleague from Pennsylvania, Senator Santorum, and 42 other 
members of the Senate join me as original cosponsors of this effort to 
make sure that the Low Income Housing Tax Credit is not undercut by the 
effects of inflation.
  The Low Income Housing Tax Credit is one federal housing program that 
works. It works to produce affordable rental housing by allowing states 
to distribute tax credits to those who invest in apartments for low 
income families. It works because it is decentralized, it is market-
oriented, and it relies on the private sector.
  The Low Income Housing Tax Credit works because it is based on sound 
economics. This is in stark contrast to the alternative government 
approach to the problem of a scarcity of privately owned, affordable 
housing units, the approach of rent control. Under rent control, owners 
are restricted in the price they can charge for their apartments. Since 
this dramatically reduces the return on their investment in housing, 
potential owners of rental units take their money elsewhere. The 
result, confirmed in a study of rent control in California in the early 
1990s, is that rent control actually reduces the number of rental units 
available for low income families.
  There is a better way. The Low Income Housing Tax Credit is that way. 
Under this program, tax credits are allocated by states and their 
localities to investors in low income housing. In return for agreeing 
to charge low rents for the units produced, the investors receive a tax 
credit that makes up for the financial risk of the investment. Instead 
of mandating low rents, the program provides an incentive for property 
owners to charge low rents.
  And, as Adam Smith would have predicted, this incentive does the job. 
Since 1987, state agencies have allocated over $3 billion in Housing 
Credits to help finance nearly one million apartments for low income 
families, including 70,000 apartments in 1997. In my own state of 
Florida, the Credit is responsible for helping finance over 52,000 
apartments for low income families, including 3,300 apartments in 1997. 
The demand for Housing Credits nationwide currently outstrips supply by 
more than three to one.
  Despite the success of the Housing Credit in meeting affordable 
rental housing needs, the apartments it helps finance can barely keep 
pace with the nearly 100,000 low cost apartments which are demolished, 
abandoned, or converted to market rents each year.

[[Page 9289]]

This is because the credit has been set at an annual amount of $1.25 
per resident of each state, since its creation in 1986. To make up for 
the loss in value of the credit due to inflation, we propose to 
increase this amount to $1.75 per resident and to index the amount for 
future inflation. It has been estimated that this will increase the 
stock of critically needed low income apartments by 27,000 each year.
  There has long existed in this body a dedication to affordable 
housing, an interest that knows no party lines. One of the major, early 
proponents of federally supported affordable housing was Senator Robert 
A. Taft of Ohio, known in his day as Mr. Republican, whose monument 
chimes regularly just a few hundred yards from here. With this strong, 
bipartisan pedigree, I have no hesitation in asking my colleagues on 
both sides of the aisle to join me to enact this proposal--which is 
similar to one contained in the President's budget and is supported by 
the nation's governors and mayors and the affordable housing 
community--to ensure the continued vitality of a program that works.
  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. 1017

       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 ``Affordable Housing 
     Opportunity Act of 1999''.

     SEC. 2. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING 
                   CREDIT.

       (a) In General.--Clause (i) of section 42(h)(3)(C) of the 
     Internal Revenue Code of 1986 (relating to State housing 
     credit ceiling) is amended by striking ``$1.25'' and 
     inserting ``$1.75''.
       (b) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of section 42(h) of such Code 
     (relating to housing credit dollar amount for agencies) is 
     amended by adding at the end the following new subparagraph:
       ``(H) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2000, the dollar amount contained in subparagraph (C)(i) 
     shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1999' for `calendar year 1992' in subparagraph 
     (B) thereof.

       ``(ii) Rounding.--If any increase under clause (i) is not a 
     multiple of 5 cents, such increase shall be rounded to the 
     next lowest multiple of 5 cents.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 1999.

  Mr. GRAHAM. Mr. President, I rise today with my good friend and 
colleague, Senator Mack to introduce the Affordable Housing Opportunity 
Act of 1999. This legislation would raise the annual limit on state 
authority to allocate low-income housing tax credits from $1.25 to 
$1.75 per capita, and to index the cap to inflation.
  Since its creation in the Tax Reform Act of 1986, the low income 
housing tax credit program has been a tremendous success that has 
generated nearly a million units of housing for low and moderate income 
families. In my home state of Florida the tax credit has produced over 
52,000 affordable rental units, valued at over $2.2 billion, including 
3,300 apartments in 1997.
  This housing tax credit is a valuable incentive for developers to 
build and rehabilitate low-income housing. It encourages the 
construction and renovation of low income housing by reducing the tax 
liability placed on developers of affordable homes. The credit is based 
on the costs of development as well as the percentage of units devoted 
to low-income families.
  The low income housing tax credit not only helps developers but also 
benefits families. Those families that get up and go to work every day 
to earn their rent and mortgage payments, the low income housing tax 
credit provides families with an important stake in maintaining self-
sufficiency. By supporting this credit we make the American dream more 
available to all Americans.
  This credit has succeeded as a catalyst in bringing new sources of 
funding to low income housing development. This is particularly 
important at a time when decreasing appropriations for federally-
assisted housing and the elimination of other tax incentives for rental 
housing production have only grown. While this success is gratifying, 
we should not take for granted the continued growth of this program.
  Under the current formula used to fund this program, each state is 
located $1.25 multiplied by the State's population. Unlike other 
provisions of the Tax Code, this formula has not been adjusted since 
the credit was created in 1986. During the same period, inflation has 
eroded the credit's purchasing power by nearly 45 percent, as measured 
by the Consumer Price Index. This cap is strangling state capacity to 
meet the pressing low income housing needs.
  By increasing the cap on this credit to $1.75, we will free the 12 
year cap on housing credit from it current limitations, as requested by 
our Nation's governors, and we will liberate states' capacity to help 
millions of Americans who still have no decent, safe, affordable place 
to live.
  A brief look at the history of the housing credit provides ample 
evidence of why we need our legislation. Nationwide, demand for housing 
credits outstrips supply by a ratio of three to one. In 1998, states 
received applications requesting more than 1.2 billion in housing 
credits--far surpassing the $365 million in the credit authority 
available to allocate that year. This trend coupled with the fact that 
every year nearly 100,000 low cost apartments are demolished, 
abandoned, or converted to market rate use makes clear the need for 
this legislation. Increasing the cap as I propose would allow states to 
finance approximately 27,000 more critically needed low income 
apartments each year using the housing credit.
  In the last Congress, sixty seven Senators cosponsored this 
legislation, including nearly two-thirds of the Finance Committee, 
raising the low income housing tax credit to $1.75 and indexing it for 
inflation. Nearly 70 percent of the House Ways and Means Committee and 
a total of 299 House Members cosponsored legislation proposing the same 
increase.
  That indicates just how much support this program has in the 
Congress. Also, the Administration, the nation's governors and mayors, 
other state and local government groups, and the affordable housing 
community strongly support this increase. I am confident with all this 
support that this measure will finally pass this year. I urge all my 
colleagues to embrace this important legislation.
                                 ______
                                 
      By Mr. EDWARDS:
  S. 1018. A bill to provide for the appointment of additional Federal 
district judges in the State of North Carolina, and for other purposes; 
to the Committee on the Judiciary.


                 Justice for Western North Carolina Act

  Mr. EDWARDS. Mr. President, I rise to introduce the Justice for 
Western North Carolina Act--legislation that will create an additional 
permanent district court judgeship and an additional temporary district 
court judgeship in the Western District of North Carolina.
  The Western District of North Carolina is one of the most overworked 
districts in the United States. And it is strained almost to the 
breaking point. The statistics tell the tale: its judges have the 
heaviest caseload of all the district courts in the Fourth Circuit. 
That means of all the district court judges working in Maryland, 
Virginia, West Virginia, North Carolina, and South Carolina--no other 
judges have a more crushing workload. Indeed, they deal with a caseload 
almost twice that recommended for any federal judge. The nonpartisan 
Judicial Conference of the United States, the principal policymaking 
body for the federal court system, believes that no judge should handle 
more than 430 weighted case filings. Well, the judges in the Western 
District have a weighted filing per judge of 703.
  The people of western North Carolina feel the impact of this burden. 
Criminal felony cases take longer to deal with in western North 
Carolina than

[[Page 9290]]

any other district in the country but two. And businesses have to wait 
almost two years to have their lawsuits heard before a jury. Business 
disputes, Social Security claims, civil rights disputes--all of them 
are needlessly delayed when we in the Senate fail to fulfill our 
responsibility to ensure the prompt administration of justice.
  Three able Western District Court judges are doing their utmost to 
deal with this deluge. But they need our help. And we have failed to 
address the need sooner. It has been more than twenty years since 
Congress authorized the Western District's third judgeship. In 1978, 
there were 775 raw case filings. Last year, there were more than 7,000. 
It is folly to think that three judges should be able to handle the 
nearly tenfold increase in case filings in the Western District.
  Nor is there any relief from a growing caseload in sight. North 
Carolina is in the midst of a population boom. Since the 1990 census, 
the state's population grew by 12%. The Charlotte metropolitan area, 
which is in the western district of North Carolina, grew by 19 percent 
since 1990, making it the tenth fastest growing region in the country 
during this period. This growth in population, business, and industry 
translates into more commercial, corporate, and criminal law cases.
  Mr. President, more than any other justice system in the world, ours 
provides fair and equal administration of justice. We put this at risk 
when we do not have enough judges. When judges are overworked, they may 
be unable to give each case the attention it deserves. The maxim that 
``justice delayed is justice denied'' is absolutely true. Slow justice 
does not just affect the litigants. With commercial cases involving 
major corporations, it can also hurt employees and consumers, as well. 
Moreover, we cheapen the Constitution when we fail to authorize the 
resources necessary for the federal judiciary--one of the three, 
coequal branches of government--to adequately serve society. Congress 
must respect the principle of an independent federal judiciary by 
ensuring that federal judges are not so consumed by the backlog of 
cases that they are not able to give the cases that come before them 
the attention they deserve.
  The legislation I propose puts into effect the recent recommendation 
made by the Judicial Conference. The Judicial Conference works to 
ensure that the federal judiciary delivers equal justice under law. On 
March 16 of this year, it recommended that we add one permanent and one 
temporary judgeship in the Western District of North Carolina. The 
Chief Justice serves as the presiding officer of the nonpartisan 
Judicial Conference. The membership of the Conference includes the 
chief judges of the 13 courts of appeals, a district judge from each of 
the 12 geographic circuits, and the chief judge of the Court of 
International Trade.
  No one, at least no one I know, disagrees that the Western District 
is overworked. But some people have proposed the misguided solution of 
eliminating a judgeship from the Eastern District of North Carolina and 
transferring it to the Western District. I think that eliminating a 
judge from the Eastern District would be a real mistake, as big a 
mistake as not creating new judgeships in the Western District. The 
proposal is simply robbing Peter to pay Paul.
  Eliminating a judgeship from the Eastern District would leave it in 
the same painful position that the Western District is in now. Last 
year, the Eastern District had 2056 weighted filings, or 514 for each 
of its four judgeships, easily above the national average of 484. 
Taking away a judgeship from the Eastern District would result in a 
weighted caseload per judge of 685. Transferring a judgeship from the 
Eastern to the Western District would do no more than switch the 
problem from the west to the east.
  I am also very concerned about the effect this elimination would have 
on Raleigh and the many people and companies who are based there and 
depend on the federal judiciary. For the last twenty years, at least 
one Eastern District judgeship has been filled by a judge presiding in 
Raleigh. Today, however, the three active judges in the Eastern 
District reside in Elizabeth City, Greenville, and Wilmington, and most 
of the Eastern District's court sessions are held in those cities. It 
is important that those areas have judges, but it is also important 
that there be a judge in Raleigh. If we transfer the unfilled judgeship 
to the west, we will do serious harm to our state capital.
  Raleigh is the home of the main offices of the U.S. Attorney, the 
Federal Public Defender for the Eastern District, the Clerk of Court, 
the United States Probation Office, the Federal Bureau of Investigation 
for the Eastern District, and the North Carolina Department of Justice. 
In addition, many private lawyers who handle civil and criminal cases 
in the Eastern District come from Raleigh. Finally, the Raleigh 
metropolitan area, which has more than one million people, is the fifth 
fastest growing urban area in the nation--swelling by 26 percent since 
1990. Eliminating a judgeship based in Raleigh would create unnecessary 
obstacles to the pursuit of fair administration of justice in that 
city.
  Mr. President, the marble facade on the Supreme Court building says, 
``Equal Justice Under Law.'' We in the Congress must not jeopardize 
this principle by failing to provide the judiciary the resources it 
needs to do its work. Therefore, I urge your support of the Justice for 
Western North Carolina Act.
  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. 1018

       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 ``Justice for Western North 
     Carolina Act of 1999''.

     SEC. 2. DISTRICT JUDGES FOR THE NORTH CAROLINA DISTRICT 
                   COURTS.

       (a) In General.--The President shall appoint, by and with 
     the advice and consent of the Senate, 1 additional district 
     judge for the western district of North Carolina.
       (b) Temporary Judgeship.--
       (1) In general.--The President shall appoint, by and with 
     the advice and consent of the Senate, 1 additional district 
     judge for the western district of North Carolina.
       (2) First vacancy not filled.--The first vacancy in the 
     office of district judge in the western district of North 
     Carolina, occurring 7 years or more after the confirmation 
     date of the judge named to fill a temporary judgeship created 
     by this subsection, shall not be filled.
       (c) Tables.--In order that the table contained in section 
     133 of title 28, United States Code, will reflect the changes 
     in the total number of permanent district judgeships 
     authorized as a result of subsection (a) of this section, the 
     item relating to North Carolina in such table is amended to 
     read as follows:

``North Carolina:                                                  

  Eastern........................................................4 ....

  Middle.........................................................4 ....

  Western.....................................................4.''.....

     SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to carry out the provisions of this Act, including 
     such sums as may be necessary to provide appropriate space 
     and facilities for the judicial positions created by this 
     Act.
                                 ______
                                 
      By Mr. GRASSLEY:
  S. 1019. A bill for the relief of Regine Beatie Edwards; to the 
Committee on the Judiciary.


                       Private Relief Legislation

 Mr. GRASSLEY. Mr. President, today I am introducing 
legislation to allow Regine Beatie Edwards, an 18 year old German-born 
legal resident of the United States, to realize her lifelong dream of 
becoming a United States citizen.
  Miss Edwards is the adopted daughter of Mr. Stan Edwards, a U.S. 
citizen who married Regine's mother while engaged in military service 
in Germany. Regine moved to the United States with her mother on 
October 16th, 1994. In 1997, Mr. Edwards contacted the INS on several 
occasions, attempting to obtain the proper form to apply for Regine's 
naturalization. The INS sent Mr. Edwards form N-643, Application for 
Certificate in Behalf of an Adopted Child. The INS informed Mr. Edwards 
that the adoption had to be completed by the time Regine turned 18. The 
adoption was completed on January

[[Page 9291]]

13th, 1997, when Regine was 16\1/2\ years of age. Mr. Edwards delivered 
Regine's application to the INS office in Omaha, Nebraska on March 27, 
1998.
  The INS reported in January of 1998 that the application was to be 
denied since the adoption of Ms. Edwards had not been completed prior 
to her 16th birthday, and therefore form N-643 was the incorrect form 
for application. Previously, the INS had told Mr. Edwards that the 
adoption need only be completed by Regine's 18th birthday. The INS then 
refunded to Mr. Edwards the application fee and informed him that, 
because of her age, Regine met only three of four qualifications to 
apply for citizenship. Had the INS told the Edwards that Regine needed 
to be adopted by the age of 16 in order to qualify for citizenship, the 
Edwards would have expedited the adoption process, and Regine would be 
closer to her dream of citizenship.
  This bill, passed during the last Congress by the Senate but not 
acted on by the House, would reclassify Regine as a child pursuant to 
section 101(b)(1) of the Immigration and Naturalization Act, thereby 
allowing the processing of her citizenship application.
  Regine has stated that it has always been a goal of hers to live in 
the United States, and to become a citizen of, as she puts it, ``a land 
of freedom and individual opportunity to seek out your dreams and 
realize them.'' It would be tragic if we were to let a simple mistake 
on the part of the INS prevent such a promising young woman from 
becoming a U.S. citizen. I urge my fellow colleagues to support Regine 
by allowing her to make her dream of U.S. citizenship a 
reality.
                                 ______
                                 
      By Mr. GRASSLEY (for himself and Mr. Feingold):
  S. 1020. A bill to amend chapter 1 of title 9, United States Code, to 
provide for greater fairness in the arbitration process relating to 
motor vehicle franchise contracts.


       Motor Vehicle Franchise Contract Arbitration fairness Act

 Mr. GRASSLEY. Mr. President, today, along with my colleague 
from Wisconsin, Senator Feingold, I am introducing the Motor Vehicle 
Franchise Contract Arbitration Fairness Act.
  Over the years, I have been in the forefront of promoting alternative 
dispute resolution (ADR) mechanisms to encourage alternatives to 
litigation when disputes arise. Such legislation includes the permanent 
use of ADR by federal agencies. Last year we also passed legislation to 
authorize federal court-annexed arbitration. These statutes are based, 
in part, on the premise that arbitration should be voluntary rather 
than mandatory.
  While arbitration often serves an important function as an efficient 
alternative to court some trade offs must be considered by both 
parties, such as limited judicial review and less formal procedures 
regarding discovery and rules of evidence. When mandatory binding 
arbitration is forced upon a party, for example when it is placed in a 
boiler-plate agreement, it deprives the weaker party the opportunity to 
elect any other forum. As a proponent of arbitration I believe it is 
critical to ensure that the selection of arbitration is voluntary and 
fair.
  Unequal bargaining power exists in contracts between automobile and 
truck dealers and their manufacturers. The manufacturer drafts the 
contract and presents it to dealers with no opportunity to negotiate. 
Increasingly these manufacturers are including compulsory binding 
arbitration in their agreements, and dealers are finding themselves 
with no choice but to accept it. If they refuse to sign the contract 
they have no franchise. This clause then binds the dealer to 
arbitration as the exclusive procedure for resolving any dispute. The 
purpose of arbitration is to reduce costly, time-consuming litigation, 
not to force a party to an adhesion contract to waive access to 
judicial or administrative forums for the pursuit of rights under state 
law.
  I am extremely concerned with this industry practice that conditions 
the granting or keeping of motor vehicle franchises on the acceptance 
of mandatory and binding arbitration. While several states have enacted 
statutes to protect weaker parties in ``take it or leave it'' contracts 
and attempted to prevent this type of inequitable practice, these state 
laws have been held to conflict with the Federal Arbitration Act (FAA).
  In 1925, when the FAA was enacted to make arbitration agreements 
enforceable in federal courts, it did not expressly provide for 
preemption of state law. Nor is there any legislative history to 
indicate Congress intended to occupy the entire field of arbitration. 
However, in 1984 the Supreme Court interpreted the FAA to preempt state 
law in Southland Corporation versus Keating. Thus, state laws that 
protect weaker parties from being forced to accept arbitration and to 
waive state rights (such as Iowa's law prohibiting manufacturers from 
requiring dealers to submit to mandatory binding arbitration) are 
preempted by the FAA.
  With mandatory binding arbitration agreements becoming increasingly 
common in motor vehicle franchise agreements, now is the time to 
eliminate the ambiguity in the FAA statute. The purpose of the 
legislation Senator Feingold and I are introducing is to ensure that in 
disputes between manufacturers and dealers, both parties must 
voluntarily elect binding arbitration. This approach would continue to 
recognize arbitration as a valuable alternative to court--but would 
provide an option to pursue other forums such as administrative bodies 
that have been established in a majority of states, including Iowa, to 
handle dealer/manufacturer disputes.
  This legislation will go a long way toward ensuring that parties will 
not be forced into binding arbitration and thereby lose important 
statutory rights. I am confident that given its many advantages 
arbitration will often be elected. But it is essential for public 
policy reasons and basic fairness that both parties to this type of 
contract have the freedom to make their own decisions based on the 
circumstances of the case.
  I urge my colleagues to join Senator Feingold and myself in 
supporting this legislation to address this unfair franchise 
practice.
 Mr. FEINGOLD. Mr. President, I rise today to introduce, with 
my distinguished colleague from Iowa, Senator Grassley, the ``Motor 
Vehicle Franchise Contract Arbitration Fairness Act of 1999.''
  While alternative methods of dispute resolution such as arbitration 
can serve a useful purpose in resolving disputes between parties, I am 
extremely concerned by the increasing trend of stronger parties to a 
contract forcing weaker parties to waive their rights and agree to 
arbitrate any future disputes that may arise. Earlier this Congress, I 
introduced S. 121, the Civil Rights Procedures Protection Act, to amend 
certain civil rights statutes to prevent the involuntary imposition of 
arbitration to claims that arise from unlawful employment 
discrimination and sexual harassment.
  It has come to my attention that the automobile and truck 
manufacturers, which often present dealers with ``take it or leave it'' 
contracts, are increasingly including mandatory and binding arbitration 
clauses as a condition of entering into or maintaining an auto or truck 
franchise. This practice forces dealers to submit their disputes with 
manufacturers to arbitration. As a result, dealers are required to 
waive access to judicial or administrative forums, substantive contract 
rights, and statutorily provided protection. In short, this practice 
clearly violates the dealers' fundamental due process rights and runs 
directly counter to basic principles of fairness.
  Franchise agreements for auto and truck dealerships are typically not 
negotiable between the manufacturer and the dealer. The dealer accepts 
the terms offered by the manufacturer, or it loses the dealership. 
Plain and simple. Dealers, therefore, have been forced to rely on the 
states to pass laws designed to balance the manufacturers' far greater 
bargaining power and to safeguard the rights of dealers. The first 
state automobile statute was enacted in my home state of Wisconsin in 
1937 to protect citizens from injury caused when a manufacturer or 
distributor induced a Wisconsin citizen to

[[Page 9292]]

invest considerable sums of money in dealership facilities, and then 
canceled the dealership without cause. Since then, all states except 
Alaska have enacted substantive law to balance the enormous bargaining 
power enjoyed by manufacturers over dealers and to safeguard small 
business dealers from unfair automobile and truck manufacturer 
practices.
  A little known fact is that under the Federal Arbitration Act (FAA), 
arbitrators are not required to apply the particular federal or state 
law that would be applied by a court. That enables the stronger party--
in this case the auto or truck manufacturer--to use arbitration to 
circumvent laws specifically enacted to regulate the dealer/
manufacturer relationship. Not only is the circumvention of these laws 
inequitable, it also eliminates the deterrent to prohibited acts that 
state law provides.
  The majority of states have created their own alternative dispute 
resolution mechanisms and forums with access to auto industry expertise 
that provide inexpensive, efficient, and non-judicial resolution of 
disputes. For example, in Wisconsin mandatory mediation is required 
before the start of an administrative hearing or court action. 
Arbitration is also an option if both parties agree. These state 
dispute resolution forums, with years of experience and precedent, are 
greatly responsible for the small number of manufacture-dealer 
lawsuits. When mandatory binding arbitration is included in dealer 
agreements, these specific state laws and forums established to resolve 
auto dealer and manufacturer disputes are effectively rendered null and 
void with respect to dealer agreements.
  Besides losing the protection of federal and state law and the 
ability to use state forums, there are numerous reasons why a dealer 
may not want to agree to binding arbitration. Arbitration lacks some of 
the important safeguards and due process offered by administrative 
procedures and the judicial system: (1) arbitration lacks the formal 
court supervised discovery process often necessary to learn facts and 
gain documents; (2) an arbitrator need not follow the rules of 
evidence; (3) arbitrators generally have no obligation to provide 
factual or legal discussion of the decision in a written opinion: and 
(4) arbitration often does not allow for judicial review.
  The most troubling problem with this sort of mandatory binding 
arbitration is the absence of judicial review. Take for instance a 
dispute over a dealership termination. To that dealer--that small 
business person--this decision is of commercial life or death 
importance. Even under this scenario, the dealer would not have 
recourse to substantive judicial review of the arbitrators' ruling. Let 
me be very clear on this point; in most circumstances an arbitration 
award cannot be vacated, even if the arbitration panel disregarded 
state law that likely would have produced a different result.
  The use of mandatory binding arbitration is increasing in many 
industries, but nowhere is it growing more steadily than the auto/truck 
industry. Currently, at least 11 auto and truck manufacturers require 
some form of such arbitration in their dealer contracts.
  In recognition of this problem, many states have enacted laws to 
prohibit the inclusion of mandatory binding arbitration clauses in 
certain agreements. The Supreme Court, however, held in Southland Corp. 
v. Keating, 104 S. Ct. 852 (1984), that the FAA by implication preempts 
these state laws. This has the effect of nullifying many state 
arbitration laws that were designed to protect weaker parties in 
unequal bargaining positions from involuntarily signing away their 
rights.
  The legislative history of the FAA indicates that Congress never 
intended to have the Act used by a stronger party to force a weaker 
party into binding arbitration. Congress certainly did not intend the 
FAA to be used as a tool to coerce parties to relinquish important 
protections and rights that would have been afforded them by the 
judicial system. Unfortunately, this is precisely the current 
situation.
  Although contract law is generally the province of the states, the 
Supreme Court's decision in Southland Corp. has in effect made any 
state action on this issue moot. Therefore, along with Senator 
Grassley, I am introducing this bill today to ensure that dealers are 
not coerced into waiving their rights. Our bill, the Motor Vehicle 
Franchise Contract Arbitration Fairness Act of 1999 would simply 
provide that each party to an auto or truck franchise contract would 
have the choice to select arbitration. The bill would not prohibit 
arbitration. On the contrary, the bill would encourage arbitration by 
making it a fair choice that both parties to a franchise contract may 
willingly and knowingly select. In short, this bill would ensure that 
the decision to arbitrate is truly voluntary and that the rights and 
remedies provided for by our judicial system are not waived under 
coercion.
  In effect, if small business owners today want to obtain or keep 
their auto or truck franchise, they may be able to do so only by 
relinquishing their statutory rights and foreclosing the opportunity to 
use the courts or administrative forums. Mr. President, I cannot say 
this more strongly--this is unacceptable; this is wrong. It is at great 
odds with our tradition of fair play. I therefore urge my colleagues to 
join in this bipartisan effort to put an end to this invidious 
practice.
                                 ______
                                 
      By Mr. KOHL:
  S. 1021. A bill to provide for the settlement of claims of the 
Menominee Indian Tribe of Wisconsin; to the Committee on the Judiciary.


                 MENOMINEE TRIBAL FAIRNESS ACT OF 1999

  Mr. KOHL. Mr. President, today I am introducing bipartisan 
legislation that would give a Congressional ``stamp of approval'' to a 
settlement for which the Menominee Indian Tribe of Wisconsin has long 
awaited--a settlement that, in my opinion and in the opinion of the 
Federal Court that approved it last year, is long overdue.
  Specifically, this bill--the ``Menominee Tribal Fairness Act of 
1999''--would enforce a settlement owed to the Menominee Tribe by the 
Federal government, whose termination of the Tribe's federal trust 
status resulted in enormous damage to the Menominee from 1954 to 1973. 
Six years ago, Congress passed a congressional reference that ordered 
the U.S. Claims Court to report back regarding what damages, if any, 
were owed the Tribe. Last year, the Court approved a $32 million 
settlement, and now that we have settled the merits of the case, we 
simply need congressional approval to conclude this 45-year-old matter 
once and for all. Let me tell you why this legislation is crucially 
needed.
  When Congress passed the Menominee Termination Act of June 13, 1954, 
it ended the Tribe's federal trust status, effective in 1961. As a 
result of termination, the Menominee Tribe plunged into years of severe 
impoverishment and community turmoil. Indeed, according to a 1965 BIA 
study of conditions on the former reservation, the economic and social 
effects were disastrous. Unemployment was 26 percent, compared to 
Wisconsin's 5 percent rate. The school dropout rate was 75 percent, and 
the per capita income was less than one-third of the state average. The 
local hospital, which was built with tribal funds, was shut down 
because it could not meet state standards, effectively eliminating 
local health care services which in turn increased mortality rates.
  Twelve years after termination, Congress recognized the economic and 
social devastation this Act had caused for the Tribe by passing the 
Menominee Restoration Act of 1973, which reinstated the Tribe's federal 
trust status. Clearly, though, BIA mismanagement and termination 
threatened to devastate the Tribe for generations to come, and the 
Tribe subsequently sought relief for its recuperation.
  The Menominee Tribe took this matter to the courts, and though it 
obtained favorable trial court judgments on the merits of its claims, 
the Tribe encountered a series of technical roadblocks that prevented 
it from ever really having its case heard.
  The Tribe then came to Congress for help. But it was not until 1993 
that Congress passed my proposal to settle

[[Page 9293]]

this matter by sending it to the Court of Claims and ordering the court 
to report back what damages the Tribe was owed.
  After extensive negotiation, the Federal government and the Menominee 
Tribe agreed upon a settlement of the Tribe's claims for a sum of 
$32,052,547. The Claims Court, on August 12, 1998, reported back to 
Congress, concluding that the Tribe has stated legitimate claims and 
endorsing this settlement.
  Now, to compensate the Tribe for damages and implement the decision 
of the Court of Claims, we must pass this legislation that authorizes 
the payment of this agreed-to settlement. And the money does not have 
to be appropriated--it will simply be taken from a Treasury Department 
``judgment fund'' account.
  Mr. President, the congressional reference procedure is designed so 
that the court may examine claims against the United States based on 
negligence or fault, or based on less than fair and honorable dealings, 
regardless of ``technical'' defenses that the United States may 
otherwise assert, especially the statute of limitations.
  In other words, it is to be used for precisely the types of 
circumstances surrounding the Menominee Tribe. The tribe and its 
members suffered grievous economic loss through legislative termination 
of its rights and from BIA mismanagement of its resources. Indeed, the 
Federal governments' actions brought the Menominee Tribe to the brink 
of economic, social, and cultural disaster. In 1973, the tribe was 
restored to Federal recognition and tribal status by action of the 
Congress. But the Tribe has yet to be compensated for the damages it 
suffered.
  Mr. President, I urge my colleagues to approve the Court's ruling, 
support this bill, and settle this case once and for all. And don't 
take my word for it--this measure has been endorsed by the Chairman of 
the Indian Affairs Committee, Ben Nighthorse Campbell, and 
Representative Mark Green, who represents the district where the 
Menominee reservation is located.
  I ask unanimous consent that the full texts of my bill, the U.S. 
Court of Federal Claims Report of the Review Panel, Court Order, and 
Stipulation for Recommendation of Settlement, along with Chairman 
Campbell's letter of support for this measure, be printed in the 
Record.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                                S. 1021

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

     SECTION 1. PAYMENT.

       The Secretary of the Treasury shall pay to the Menominee 
     Indian Tribe of Wisconsin, out of any funds in the Treasury 
     of the United States not otherwise appropriated, $32,052,547 
     for damages sustained by the Menominee Indian Tribe of 
     Wisconsin by reason of--
       (1) the enactment and implementation of the Act entitled 
     ``An Act to provide for a per capita distribution of 
     Menominee tribal funds and authorize the withdrawal of the 
     Menominee Tribe from Federal jurisdiction'', approved June 
     17, 1954 (68 Stat. 250 et seq., chapter 303); and
       (2) the mismanagement by the United States of assets of the 
     Menominee Indian Tribe held in trust by the United States 
     before April 30, 1961, the effective date of termination of 
     Federal supervision of the Menominee Indian Tribe of 
     Wisconsin.

     SEC. 2. EFFECT OF PAYMENT.

       Payment of the amount referred to in section 1 shall be in 
     full satisfaction of any claims that the Menominee Indian 
     Tribe of Wisconsin may have against the United States with 
     respect to the damages referred to in that section.

     SEC. 3. REQUIREMENTS FOR PAYMENT.

       The payment to the Menominee Indian Tribe of Wisconsin 
     under section 1 shall--
       (1) have the status of a judgment of the United States 
     Court of Federal Claims for the purposes of the Indian Tribal 
     Judgment Funds Use or Distribution Act (25 U.S.C. 1401 et 
     seq.); and
       (2) be made in accordance with the requirements of that Act 
     on the condition that after payment of attorneys fees and 
     expenses of litigation, of the remaining amount--
       (A) not less than 30 percent shall be distributed on a per 
     capita basis; and
       (B) not more than 70 percent shall be set aside and 
     programmed to serve tribal needs, including--
       (i) educational, economic development, and health care 
     programs; and
       (ii) such other programs as the circumstances of the 
     Menominee Indian Tribe of Wisconsin may justify.
                                  ____


  [In the United States Court of Federal Claims, No. 93-649X (Filed: 
                           August 12, 1998)]

 Menominee Indian Tribe of Wisconsin, plaintiff, v. the United States, 
                               defendant


                       report of the review panel

       Pending before the review panel in this congressional 
     reference is the order of the hearing officer of August 11, 
     1998, adopting the stipulated settlement of the parties. The 
     parties have agreed to resolve this matter without further 
     litigation. The hearing officer carefully reviewed the basis 
     of the settlement and satisfied himself that it was well 
     grounded in fact and law. The parties have waived by 
     stipulation the normal period for filing exceptions to the 
     report.
       This panel hereby affirms and adopts the order of the 
     hearing officer in its entirety. After reviewing the order of 
     August 11, 1998, it is the judgment of this panel that the 
     stipulated agreement between the parties is a just and 
     equitable resolution of the lengthy dispute that it resolves. 
     It is the view of the panel that there is a basis in law and 
     in equity to support the payment to the Tribe of the 
     settlement amount and that such payment would not constitute 
     a gratuity.
       Accordingly, the review panel recommends that Congress 
     adopt legislation paying to the Menominee Tribe of Wisconsin 
     $32,052,547 in settlement of the claims embraced in this 
     congressional reference.
       Because the parties have waived the normal period for 
     requesting reconsideration, the Clerk is directed promptly to 
     forward this order and supporting materials to Congress.
       Done this twelfth day of August, 1998.
     Robert H. Hodges, Jr.,
       Presiding Officer.
     Moody R. Tidwell,
       Panel Member.
     Bohdan A. Futey,
       Panel Member.
                                  ____


  [In the United States Court of Federal Claims, No. 93-649X (Filed: 
                           August 11, 1998)

 Menominee Indian Tribe of Wisconsin, plaintiff, v. the United States, 
                               defendant

       Charles A. Hobbs, with whom were Jerry C. Straus, Frances 
     L. Horn, Marsha Kostura Schmidt, and Joseph H. Webster, all 
     of Washington, D.C. for plaintiff.
       James Brookshire, with whom was Glen R. Goodsell, U.S. 
     Department of Justice, General Litigation Section, 
     Environment & Natural Resources Division, Washington, D.C., 
     for defendant.


                                 order

       On August 6, 1993, Senate Resolution 137 referred to the 
     Court of Federal Claims a proposed bill, S. 1335, for the 
     relief of the Menominee Indian Tribe of Wisconsin, and 
     requested the Chief Judge to proceed in accordance with the 
     provisions of 28 U.S.C. Sec. Sec. 1492 and 2509 regarding 
     congressional references. The Resolution requested that the 
     court ``report back to the Senate . . . providing such 
     findings of fact and conclusions that are sufficient to 
     inform the Congress of the nature, extent, and character of 
     the damages referred to in such bill as a legal or equitable 
     claim against the United States or a gratuity, and the 
     amount, if any, legally or equitably due from the United 
     States to the Menominee Indian Tribe of Wisconsin by reason 
     of such damages.''
       The proposed bill if enacted would authorize the payment, 
     ``out of any money in the Treasury of the United States not 
     otherwise appropriated,'' of ``a sum equal to the damages 
     sustained by the Menominee Tribe of Wisconsin by reason of 
     ``(a) the enactment and implementation of the Act of June 17, 
     1954 (68 Stat. 250), as amended, and (b) the mismanagement by 
     the United States of the Menominee assets held in trust by 
     the United States prior to April 30, 1961, the effective date 
     of Termination of Federal supervision of the Menominee Indian 
     Tribe of Wisconsin.''
       The Menominee Tribe filed with this court a complaint 
     alleging injury and damages that arose from the enactment and 
     implementation of the Menominee Termination Act, as well as 
     for various acts of mismanagement by the Bureau of Indian 
     Affairs (BIA) during the period to Termination, 1951-1961. 
     Specific claims alleged were: Count (I) Congressional Breach 
     of Trust (``Basic'' claim); (II) Forest Mismanagement; (III) 
     Mill Mismanagement; (IV) Loss of Tax Exemption; (V) Loss of 
     Hospital; (VI) Highway Rights-of-Way; (VII) Power Lines; 
     (VIII) Public Water and Sewage Systems; (IX) Mismanagement of 
     Tribal Funds (Accounting); (X) Loss of Government Programs; 
     (XI) Imposition of Bond Debt; and (XII) Loss of Tribal 
     Property.
       This case has a long history before this court. Many of the 
     claims at issue in this congressional reference were 
     litigated previously before the U.S. Court of Claims in the 
     case of Menominee Tribe of Indians v. United States, Nos. 
     134-67-A through -I, originally filed in April 1967. The case 
     concerned breach of trust and taking claims related to the 
     Termination of the Menominee Tribe and certain claims for 
     mismanagement of tribal assets during the period prior to 
     Termination (1951-1961). It has been the subject of

[[Page 9294]]

     seven trial court decisions and four decisions before the 
     appellate court. Manominee Tribe v. United States, 607 F.2d 
     1335 (Ct. CL. 1979) (congressional breach of trust or 
     ``Basic'' claim); Menominee Tribe v. United States, 223 Ct. 
     Cl. 632 (1980) (tax exemption statute of limitations); 
     Menominee Tribe v. United States, 726 F.2d 712 (Fed. Cir. 
     1983) (deed restrictions); Menominee Tribe v. United States, 
     726 F.2d 718 (Fed. Cir. 1984) (forest mismanagement). All of 
     the dockets were ultimately dismissed in 1984, seventeen 
     years after they were filed, on statute-of-limitations and 
     jurisdictional grounds.
       Relying on the substantial record developed in that earlier 
     case as well as on substantial supplemental evidence in the 
     current case, the parties in the present congressional 
     reference filed briefs with the court on the issue of 
     liability as to the first three counts of the Tribe's 
     complaint, as well as on the issue of whether there was good 
     cause for removing the bar of the statute of limitations. In 
     an opinion dated October 30, 1997, this hearing officer held 
     that the claims for Congressional Breach of Trust and forest 
     Mismanagement were not equitable claims for which damages 
     could be recommended; rather, payment of damages for these 
     claims would constitute a gratuity. See Menominee Indian 
     Tribe v. United States, 39 Fed. Cl. 441, 460-62 (1997). This 
     hearing officer held as to the Mill Mismanagement claim that 
     the issues presented were grounded in equity, but reserved to 
     a later time a decision on the merits and damages, if any, as 
     to each of the particular acts of mill mismanagement alleged 
     by the Tribe. See id. at 471. Finally, the hearing officer 
     held that there was good cause to remove the bar of the 
     statute of limitations, which had barred some of the claims 
     in the earlier case. See id. The Tribe has stated in the 
     stipulation filed by the parties its disagreement with the 
     hearing officer's holdings on the merits of Count I and II 
     and its intention, if the case were not settled, to appeal 
     the ruling to the review panel. The United States has 
     reserved the right to challenge the hearing officer's good-
     cause ruling.
       After those decisions were rendered, the parties entered 
     into settlement discussions and on August 11, 1998, the 
     parties filed with the hearing officer for approval a 
     stipulated settlement agreement, attached hereto, asking the 
     hearing officer to report to Congress that it has approved 
     the stipulation and recommends that Congress adopt it.
       The parties have stipulated that the reference overall 
     includes proper equitable claims appropriate for settlement, 
     and though each side contests certain aspects of the case and 
     aspects of the decisions rendered by this hearing officer, 
     the parties have agreed that the case overall is appropriate 
     for compromise and settlement.
       The stipulation of the parties, attached hereto, details 
     the claims and the damage award sought by the Tribe in this 
     reference for the twelve claims. The Tribe claims a total 
     value of $141 million on all of its claims. Although the 
     government does not concur in the Tribe's assessment of the 
     individual claims, it has negotiated terms of a settlement 
     with the Tribe that the parties believe to be fair, just, and 
     equitable. Although the parties did not agree on a settlement 
     value to each claim in the case, the parties have stipulated, 
     in compromise and settlement of the reference overall, that 
     the Menominee Tribe should be compensated in the amount of 
     $32,052,547 in total for its claims as a whole.
       In issuing its opinion in 1997 with respect to the first 
     three counts, this hearing officer read all the findings and 
     conclusions of the prior litigation, as well as the appellate 
     opinions. In addition the hearing officer read all the expert 
     reports, irrespective of whether they were directed solely to 
     issues raised in the first three counts, and reviewed 
     virtually all the remaining documentary and testimonial 
     evidence. Because the settlement agreement encompasses not 
     only the three claims that were the subject of the prior 
     opinion, however, but also the remaining claims that have not 
     yet been heard on the merits in the present case, as well as 
     other claims that could have been alleged in the reference, 
     the hearing officer considered additional documentary 
     evidence and citations to the record as well as other 
     information to satisfy himself that the reference overall 
     includes claims equitable in nature. This evidence includes 
     documentary exhibits and an expert report bearing on the 
     Tribe's claim for mismanagement of funds. The government 
     reviewed this evidence as well and provided to the hearing 
     officer its position as to the claims.
       Upon careful review of the evidence and consideration of 
     the legal issues, and without withdrawing my 1997 opinion, I 
     am satisfied that the reference overall includes substantial 
     equitable claims appropriate for settlement. I have reviewed 
     the evidence in support of the remaining nine counts, as well 
     as the evidence supporting the damages assertions, and 
     believe that there is ample basis in the record to support a 
     settlement on the grounds that these counts embrace equitable 
     claims that could be the subject of an affirmative 
     recommendation by the hearing officer. I also am satisfied 
     that the amount of the settlement proposed is in line with my 
     assessment of a potential recovery, particularly when 
     recognizing that the tribe does not concede the correctness 
     of the 1997 opinion with respect to counts I and II. Further, 
     while recognizing that the United States disagrees, I 
     conclude that, based on my prior good-cause ruling in this 
     matter, there is a proper basis to find that the bar of the 
     statute of limitations, to the extent applicable, should be 
     removed.
       Based on the facts presented in the stipulation, and the 
     evidence that the hearing officer has independently reviewed 
     after consideration of the legal issues, the hearing officer 
     hereby reports that:
       a. The reference overall states equitable claims against 
     the United States as set forth in the bill referred to this 
     court.
       b. The amount agreed by the parties to be equitably due the 
     Menominee Indian Tribe in full settlement of the aforesaid 
     equitable claims, namely $32,052,547, appears fair and 
     reasonable to the hearing officer, and the hearing officer 
     recommends that Congress appropriate this amount to the 
     Tribe.
       c. there is good cause to remove the bar of the statute of 
     limitations to the extent it applies to any of the claims.
       d. The parties have stipulated that they waive the right 
     they would otherwise have under RCFC appendix D, paragraph 
     nine, to a thirty-day period in which to accept or reject 
     this recommendation. They have stipulated to its 
     acceptability. They have also stipulated, in the event that 
     the review panel accepts this recommendation, to waive the 
     right to reconsideration under RCFC appendix D, paragraph 
     eleven.
                                                 Eric G. Bruggink,
     Hearing Officer.
                                  ____


[Congressional Reference to the United States Court of Federal Claims, 
         Congressional Reference No. 93-649X (Judge Bruggink)]

  Menominee Indian Tribe of Wisconsin, plaintiff, v. United States of 
                           America, defendant


              stipulation for recommendation of settlement

       1. On August 6, 1993, the Senate enacted Resolution 137 
     which referred to this court a proposed bill, S. 1335, for 
     the relief of the Menominee Indian Tribe of Wisconsin, and 
     requested the Chief Judge to proceed in accordance with the 
     provisions of 28 U.S.C. Sec. Sec. 1492 and 2509 regarding 
     Congressional References. The Resolution requested that the 
     court ``report back to the Senate . . . providing such 
     findings of fact and conclusions that are sufficient to 
     inform the Congress of the nature, extent, and character of 
     the damages referred to in such bill as a legal or equitable 
     claim against the United States or a gratuity, and the 
     amount, if any, legally or equitably due from the United 
     Stats to the Menominee Indian Tribe of Wisconsin by reason of 
     such damages.''
       2. The proposed bill, S. 1335, sets forth the claims 
     Congress requested the court to consider as follows:
       ``Section 1. The Secretary of the Treasury is authorized 
     and directed to pay to the Menominee Indian Tribe of 
     Wisconsin, out of any money in the Treasury of the United 
     States not otherwise appropriated, a sum equal to the damages 
     sustained by the Menominee Indian Tribe of Wisconsin by 
     reason of--
       ``(a) the enactment and implementation of the Act of June 
     17, 1954 (68 Stat. 250), as amended, and
       ``(b) the mismanagement by the United States of the 
     Menominee assets held in trust by the United States prior to 
     April 30, 1961, the effective date of termination of Federal 
     supervision of the Menominee Indian Tribe of Wisconsin.
       ``Section 2. Payment of the sum referred to in section 1 
     shall be in full satisfaction of any claims that the 
     Menominee Indian Tribe of Wisconsin may have against the 
     United States with respect to the damages referred to in such 
     section.''
       3. Many of the claims at issue in this Congressional 
     Reference were litigated previously before the United States 
     Court of Claims in the case of Menominee Tribe of Indians v. 
     United States, Dkt. Nos. 134-67 A through I, originally filed 
     in 1967. That case concerned breach of trust and taking 
     claims related to the Termination of the Menominee Tribe and 
     certain claims for mismanagement of tribal assets prior to 
     Termination. It was the subject of seven trial court 
     decisions and four decisions before the appellate court. All 
     of the dockets were ultimately dismissed in 1984, seventeen 
     years after they were filed, on statute of limitations and 
     jurisdictional grounds; none were dismissed on the merits. 
     The Congressional Reference asks this court to make a 
     recommendation under the principles applicable in 
     Congressional Reference cases as to whether the claims are 
     legal or equitable or a gratuity.
       4. The Tribe has alleged twelve claims in this 
     Congressional Reference as follows:
       (I) Congressional Breach of Trust.--The Tribe claims that 
     the United States breached its trust duty to the Tribe by 
     enacting and implementing the Termination Act of June 17 
     1954, which terminated federal supervision over the Menominee 
     Tribe. The nature of the alleged wrong was that the Tribe was 
     not

[[Page 9295]]

     prepared for Termination and that, though Congress has the 
     power to terminate a Tribe, it cannot without breaching its 
     trust responsibilities terminate the Tribe prematurely or in 
     a manner that would result in unreasonable harm to the Tribe. 
     The Tribe claims this was the circumstance in 1954 when the 
     Termination Act was enacted and later in 1961 when the 
     Termination Act was implemented. It is alleged that after the 
     Termination Act was implemented, the economy on the 
     reservation collapsed, and tribal members suffered from 
     poverty, serious lack of health care and education, 
     disruption of tribal institutions and customary ways of 
     making a living, causing severe economic and psychological 
     hardship, so that the once thriving Menominee reservation 
     became a pocket of poverty and despair. In the Tribe's view, 
     the loss of tribal status left tribal members disenfranchised 
     and shorn of their tribal identity and culture.
       The Tribe's federal trust status was later restored in 
     1973. In enacting the Restoration Act, 25 U.S.C. Sec. 903, 
     members of the enacting Congress repudiated the policy of 
     Termination as applied to the Menominee as a ``mistake'', a 
     ``failure'' and ``an experiment that has had tragic and 
     disheartening results.'' 119 Cong. Rec. 34308 (Oct. 16. 1973) 
     (statements of Rep. Froehlich, Nelson and Kastenmeier). 
     President Nixon also stated that ``This policy of forced 
     Termination is wrong . . .  .'' 6 Pres. Doc. 894 (1970), 
     reprinted in, 116 Cong. Rec. S23258-23262 (July 8, 1970).
       In the original ``Basic'' proceeding the trial court held 
     that the United States had breached its trust duties to the 
     Tribe by terminating it. However,on appeal, the Court of 
     Claims held that the court had no jurisdiction to determine 
     if an act of Congress was a wrong subject to judicial remedy. 
     Menominee Tribe v. United States. 607 F.2d 1335 (Ct. Cl. 
     1979). Following the reasoning of the Court of Claims, the 
     hearing officer in this Congressional Reference has also held 
     that even though ``the decision to end the Government's 
     relationship with the Tribe when it did was a serious mistake 
     of judgment,'' acts of Congress cannot serve as a source of a 
     wrong even as an equitable claim in a Congressional Reference 
     context.
       Whether this conclusion has been, and remains, correct is a 
     subject of contention between the parties. In any event, the 
     Tribe has the right to seek review of this decision by the 
     Review Panel when it becomes final. The Government agrees 
     with the hearing officer's ruling. Despite their differing 
     positions, the parties nevertheless agree the claim is 
     appropriate for inclusion in an overall compromise and 
     settlement of all the Reference claims. The Tribe's valuation 
     of this claim is $60 million.
       (II) Forest Mismanagement.--This is a claim for beach of 
     trust in the mismanagement of the Menominee Tribe's valuable 
     forest between 1951 and 1961, prior to Termination. The claim 
     springs from the alleged failure of the BIA to seek an 
     amendment to the congressionally imposed but (according to 
     the Tribe) outdated statutory cutting limit which seriously 
     impaired the ability of the agency to properly manage the 
     forest. In the original case the trial court found the BIA 
     had breached its trust duty and awarded damages in the amount 
     of $7.2 million. The decision was overturned when the Federal 
     Circuit ruled the claim was barred by the statute of 
     limitations. Menominee Tribe v. United States, 726 F.2d 718 
     (Fed. Cir. 1984).
       In the Congressional Reference action, this claim was 
     briefed before the hearing officer, who held that the claim 
     could not be an equitable one because the Tribe was actually 
     challenging an act of Congress. As such the claim was 
     dismissed for reasons similar to those set forth under Count 
     I--i.e., an act of Congress may not constitute a wrong, even 
     for an ``equitable'' claim. The Tribe strenuously disagrees 
     with that assessment because it believes the wrongdoer was 
     the BIA for not warning Congress of the damage being done by 
     the outmoded cutting limit. The Tribe has the right to review 
     of this decision by the Review Panel when it becomes final. 
     The Government disagrees with the Tribes's legal and factual 
     basis for this claim. Despite their differing positions, the 
     parties nevertheless agree the claim is appropriate for 
     inclusion in an overall compromise and settlement of all the 
     Reference claims. The Tribe's valuation of the Forest claim 
     is $6.6 million.
       (III) Mill Mismanagement.--This claim is for breach of 
     trust in the mismanagement of the Menominee Mill between 1951 
     and 1961. In the Tribe's view, the Mill and Forest were the 
     heart of the economy on the Reservation. The claim focuses on 
     the BIA's alleged failure to make repairs and to maintain the 
     Mill, as well as update the equipment to make it efficient 
     and safe. The claim is made up of 13 subclaims which deal 
     with specific acts of mill mismanagement. In the original 
     case, the trial court awarded $5.5 million in damages, but 
     the claim was later dismissed by stipulation based on the 
     Federal Circuit's ruling on statute of limitations in the 
     forest mismanagement case.
       In this Congressional Reference, the hearing officer ruled 
     that the claim is an equitable claim but has reserved 
     judgment as to liability and damages on each of the 13 
     subclaims to a later proceeding. The hearing officer also 
     ruled that there is reason to remove the statute of 
     limitations bar. The Government disputes this and has the 
     right to seek review of both rulings. Despite their differing 
     positions, the parties nevertheless agree the claim is 
     appropriate for inclusion in an overall compromise and 
     settlement of all the Reference claims. The Tribe's valuation 
     of this claim is $5.9 million.
       (IV) Tax Exemption Taking.--This claim alleges the taking 
     of the Tribe's tax exemption with the passage of the 
     Termination Act. The Tribe claims that, at the time of 
     Termination, it held a valuable property right in its tax 
     immunity. According to the Tribe, this immunity from taxes 
     was based on (a) the Tribe's political status as a sovereign 
     entity; (b) the related doctrine that a state has no 
     jurisdiction over a tribe; and (c) the Tribe's treaty-
     guaranteed right that its land would ``be held as Indian 
     lands are held,'' and hence implied tax exemption. Treaty of 
     1854, 10 Stat. 1065, Art. 2. The Tribe alleges that this 
     immunity from taxation is a property right protected by the 
     Fifth Amendment. See Choate v. Trappe, 224 U.S. 665 (1912).
       When the Termination Act was passed, it envisioned 
     specifically subjecting the assets and income of the Tribe's 
     successor corporation (Menominee Enterprise, Inc. or MEI) to 
     federal and state taxation. 25 U.S.C. Sec. Sec. 898, 899. 
     While Congress has the power to take away the Tribe's 
     immunity from tax, the Tribe contends that immunity is a 
     valuable property right and that the Tribe is 
     constitutionally entitled to just compensation for its taking 
     (Choate v. Trappe, supra).
       In the original case the taking claim was subject to trial 
     and briefing but was ultimately dismissed on statute of 
     limitations grounds. Menominee Tribe v. United States, 223 
     Ct. Cl. 632 (1980). The Tribe maintains that, as a taking 
     claim, the claim is an equitable one and that there is a 
     substantial argument that the statute of limitations should 
     be removed. The United States does not concur in the Tribe's 
     assessment of this claim. The hearing officer has not heard 
     this claim. The Tribe's valuation of this claim is 
     $12,675,910 including principal and interest.
       (v) Hospital Breach of Trust.--The Tribe claims that the 
     BIA breached its trust duty in managing tribal funds which 
     were negligently spent by the BIA in remodeling the Tribe's 
     hospital. The Tribe alleges that the BIA was required to 
     ensure that any renovations to the hospital be in the best 
     interest of the Tribe. In the Tribe's view, this necessarily 
     included bringing the hospital up to state standards when the 
     BIA knew that the hospital would become subject to state laws 
     upon Termination. The Tribe alleges that the BIA failed in 
     this duty by spending hundreds of thousands of dollars of 
     tribal money on major renovations to the Tribe's hospital, 
     though it knew that the renovations would be inadequate under 
     State codes to allow the hospital to continue operating after 
     Termination. Further, according to the Tribe, the BIA failed 
     to remedy these problems in the months before Termination 
     despite the BIA's actual knowledge that the hospital could 
     not be licensed due to numerous violations of State codes. 
     Allegedly as a result, the hospital was forced to close and 
     the tribal money spent on renovations was wasted.
       The Tribe alleges that such conduct is a clear violation of 
     the BIA's trust duty to manage tribal funds prudently and is 
     a proper basis for an equitable claim. The original court 
     proceeding did not address this claim directly and it was 
     dismissed by stipulation along with the other unadjudicated 
     claims, in the wake of the unfavorable rulings on the Basic 
     and Forest claims in 1979 and 1984. The Tribe contends that 
     the Court of Claims did however recognize, in dicta, this 
     claim as a potential breach of trust claim. 607 F.2d 1335, 
     1346-47. The hearing officer has not heard this claim. The 
     United States does not concur in the Tribe's assessment of 
     the facts or law underlying this claim. Despite their 
     differing positions, the parties nevertheless agree the claim 
     is appropriate for inclusion in an overall compromise and 
     settlement of all the Reference claims. The Tribe's valuation 
     of this claim is $3,952,307 including principal and lost 
     interest.
       (VI) Road Right-of-Way Taking.--Under the Treaty of 1854, 
     the United States held, in trust for the Menominee Tribe, fee 
     title to all land within the Menominee Reservation. The State 
     of Wisconsin built two highways and smaller roads throughout 
     the reservation in the early 1920's. As the 1961 Termination 
     date approached, the State requested and the BIA agreed that 
     the roads on the reservation be brought up to State standards 
     and transferred to the State, and to the future Menominee 
     Town and County. On April 26, 1961, the United States 
     transferred by quitclaim deed for $1.00, a right-of-way over 
     the existing road system on the Reservation as well as 
     additional acreage for the widening of the roads as requested 
     by the State. The Secretary allegedly obtained no 
     compensation for the transfer of the easement or the timber 
     located on the additional right-of-way, nor did the Secretary 
     reserve to the Tribe the right to log that timber.
       The Tribe claims that this transfer was a taking under the 
     Fifth Amendment. In the original claim, the trial judge found 
     the transfers were a taking but reserved damages to a later 
     date. The claim was subsequently dismissed by stipulation. As 
     a taking claim, the Tribe maintains that the

[[Page 9296]]

     claim constitutes an equitable claim within the context of 
     the Congressional Reference. The United States does not 
     concur in the Tribe's assessment of this claim. Despite their 
     different positions, the parties nevertheless agree the claim 
     is appropriate for inclusion in an overall compromise and 
     settlement of all the Reference claims. The hearing officer 
     has not heard this claim. The Tribe's valuation of this claim 
     is $1,664,996 including principal and interest.
       (VII) Power Contract and Right-of-Way Breach of Trust.--
     This claim is properly considered included as one of the 
     subclaims in the Mill Mismanagement (count III) count and 
     damages are included in that total figure.
       (VIII) Water and Sewer Breach of Trust.--This is a claim 
     that BIA failed to ensure that adequate water and sewer 
     facilities were in place on the Reservation between the 
     period 1951 and 1961. In the original claim, the trial judge 
     found the BIA had breached its fiduciary duty to maintain 
     properly and to upgrade these facilities but reserved damages 
     to a later time. The government disagrees with that ruling. 
     Despite their differing positions, the parties nevertheless 
     agree the claim is appropriate for inclusion in an overall 
     compromise and settlement of all the Reference claims. The 
     hearing officer has not yet heard this claim. The Tribe 
     examined the claim in the context of the current case and 
     decided to drop the claim.
       (IX) Mismanagement of Funds Breach of Trust.--This is a 
     breach of trust claim for the improper expenditure of tribal 
     trust funds by the BIA between 1951 and 1961 and the loss of 
     interest on the money removed from the trust funds. The Tribe 
     claims there were four types of improper expenditure, and 
     asserts the following arguments in support of its position:
       (1) The BIA used tribal funds to pay for the BIA's own 
     agency administrative expenses. Since administrative expenses 
     are considered to be for the benefit of and therefore the 
     responsibility of the Government, use of tribal funds for 
     these expenses was a breach of the Secretary's trust duty to 
     manage the Tribe's funds as a trustee would. Sioux Tribe v.  
     United States, 105 Ct.Cl. 725 (1946). Moreover, by expending 
     these funds, the Tribe lost interest it would otherwise have 
     earned.
       (2) Tribal funds were also used to pay for law and order 
     expenses on the reservation. These expenses are also the 
     responsibility of the Government and not the tribe, and are 
     also not allowed. Blackfeet Tribe v.  United States, 32 Ind. 
     Cl. Comm. 65 (1973); Red Lake Band v.  United States, 17 
     Ct.Cl. 362 (1989).
       (3) Tribal funds were used for the expenses of the tribal 
     council in administering Termination. Since Termination was 
     for the benefit of the Government, the Government should have 
     borne the expense based on the same principles stated in (1) 
     and (2) above;
       (4) Tribal funds were used to pay for tribal health, 
     education, and welfare expenses while the Government 
     routinely paid for these services for other tribes with 
     Government funds. The Tribe alleges that it was a breach of 
     trust to spend the Tribe's money on such expenses 
     particularly when the Tribe's funds were depleted far below 
     the amount necessary for the Tribe to operate its mill and 
     forest profitably before Termination, and to have the 
     necessary capital on hand to make repairs and rehabilitation 
     after Termination.
       The total amount of funds the Tribe alleges were 
     imprudently spent in these four claims is $2,553,180. Had 
     those funds remained in the Tribe's trust fund, and had the 
     Secretary invested those funds as required by 15 U.S.C. 162a, 
     the Tribe alleges that it would have received additional 
     interest. In the Tribe's view, the lost interest is a valid 
     claim. Cheyenne-Arapahoe Tribes v.  United States, 206 Ct.Cl. 
     340 (1975). The Tribe's valuation of lost interest to date is 
     $27,388,973. Its total valuation on the accounting claim is 
     therefore $29,942,153. The Tribe maintains that the claim for 
     improper expenditures would be an equitable claim within the 
     context of a reference. The government disagrees with the 
     Tribe's assessment of this claim. Despite their differing 
     positions, the parties nevertheless agree the claim is 
     appropriate for inclusion in an overall compromise and 
     settlement of all the Reference claims. The hearing officer 
     has not heard this claim.
       (X) Loss of Government Programs.--The Tribe considers that 
     the damages of this claim are properly included within the 
     damages of Count I. No separate claim is stated herein.
       (XI) Imposition of Bond Debt.--As part of the Termination 
     Plan approved by the Secretary of the Interior, each tribal 
     member received an income bond at $3,000 face value bearing 
     four percent interest. The Tribe argues that, while normally 
     bonds are issued in return for financial capital, in MEI's 
     case a debt was incurred but it received no corresponding 
     funds or assets. Furthermore, the Tribe argues that there was 
     no practical way for MEI to avoid paying the interest on the 
     bonds even when it did not have the funds to do so. The Tribe 
     argues that, although tribal revenues had been sufficient to 
     make stumpage payments to tribal members before Termination, 
     the Secretary knew that MEI would become subject to a massive 
     tax burden, as well as other new expenses after Termination, 
     and that the Secretary also knew, or should have known, that 
     the imposition of such a massive debt burden in addition to 
     these other expenses would undermine the viability of MEI and 
     cause great hardship to the Menominee.
       The Tribe argues that the Secretary was required to ensure 
     that the provisions of the Termination Plan which he approved 
     were in the best interest of the Tribe and its members. See 
     Cheyenne Arapaho Tribes v. United States, 512 F.2d 1390, 1396 
     (1975) (BIA required to make ``an independent judgment that 
     the tribe's request was in its own best interest''); Oglala 
     Sioux Tribe v. United States, 21 Cl. Ct. 176, 193 (Cl. Ct. 
     1990) (BIA not permitted to place responsibility for poor 
     decisions on Tribe, since tribal decisions subject to final 
     BIA approval).
       For these reasons, the Tribe argues, the Secretary breached 
     his duty to the Menominee Tribe by approving the bond 
     provisions of the Termination Plan. If the Secretary breached 
     his trust duty to the Tribe as alleged, it would, in the 
     Tribe's view, be the proper basis for a equitable claim. The 
     hearing officer has not heard this claim. The United States 
     disputes the legal and factual bases for this claim. Despite 
     their differing positions, the parties nevertheless agree the 
     claim is appropriate for inclusion in an overall compromise 
     and settlement of all the Reference claims. The Tribe's 
     valuation of this claim is $20,574,000.
       (XII) Taking of Tribal Property.--Upon Termination, the 
     tribal office building was transferred to Menominee County by 
     the Secretary of the Interior. The Tribe alleges that The 
     Termination Act, which required the Secretary to approve and 
     put into effect a plan for the management of tribal assets 
     after Termination, contemplated that such transfers of 
     property from control of the Tribe to other entities would 
     take place. The Secretary issued a deed transferring title to 
     the tribal office building to the County. Despite restoration 
     of the Tribe to federal status in 1973, this property was 
     never returned to the Tribe. Further, according to the Tribe, 
     at no time has the Tribe received any compensation for this 
     property taken by the United States, despite the fact that 
     recognized tribal title, including land and buildings, is 
     protected by the Fifth Amendment, and cannot be taken by the 
     Government without just compensation. The United States does 
     not concur in the Tribe's assessment of this claim. Despite 
     their differing positions, the parties nevertheless agree the 
     claim is appropriate for inclusion in an overall compromise 
     and settlement of all the Reference claims.
       This claim, then an undefined part of the accounting claim, 
     was not heard in the original case and it has not been heard 
     by the hearing officer in this Congressional Reference. The 
     Tribe's valuation of this claim is $87,688 including 
     principal and interest.
       In summary, the Tribe values its 12 claims at $141 million. 
     The United States does not concur in the Tribe's assessment 
     of the claims. However, as mentioned above, both parties 
     agree that the Reference overall is appropriate for 
     settlement.
       5. There has been a full and extensive development of the 
     record in the prior adjudication before the Court of Claims 
     as to many of these claims. Further extensive development of 
     the facts occurred before the hearing officer in the present 
     proceeding including the filing of supplemental evidence in 
     the record of additional plaintiff expert reports, 
     affidavits, and depositions. The parties agree that, after 
     over thirty years of dispute, including seventeen years of 
     litigation in the first case and some thirteen more years of 
     seeking and litigating this Congressional Reference, there 
     has been a sufficient development of all of the claims to 
     support a compromise and settlement. Further, while the 
     parties are each confident in their positions, they each 
     recognize that the outcome with respect to each claim, if 
     fully litigated, is not certain.
       6. The hearing officer issued a detailed opinion on the 
     first three claims as well as on the issue of whether the 
     statute of limitations should be removed. This opinion 
     prompted the parties to enter into extensive settlement 
     negotiations.
       7. The stipulations herein are based upon an exhaustive 
     review of the evidence by the parties and these stipulations 
     are justified and supported by competent evidence.
       Now therefore the parties stipulate and agree,
       (a) That the Congress directed the Court through this 
     Reference to determine whether the Menominee Tribe has legal 
     or equitable claims against the United States as a result of 
     ``(a) the enactment and implementation by the United States 
     of the Menominee assets held in trust by the United States 
     prior to April 30, 1961 . . .'';
       (b) That this Reference overall is a proper one for 
     compromise and settlement, given the extensive development of 
     the legal and factual record that has already occurred in 
     this and prior litigation between the parties, and given the 
     parties' careful consideration and negotiation of the legal 
     and factual issues in this matter;
       (c) That, recognizing that the parties reserve their 
     positions on these matters, the legal and factual record 
     developed with respect to the Menominee in this and prior 
     litigation establishes a basis for equitable

[[Page 9297]]

     claims against the United States within the scope of this 
     Reference, including a potential basis for removal of the bar 
     of the statute of limitations;
       (d) That it would be fair, just, and equitable, under the 
     terms of the Reference, to pay the Menominee Tribe of 
     Wisconsin the sum of $32,052,547 as a final settlement of all 
     claims that the Tribe has stated in this action, and that 
     that amount is supported by the record in this and prior 
     litigation;
       (e) That, as demonstrated by the record in this and prior 
     litigation, and as acknowledged by President Richard Nixon 
     and members of Congress, the policy of forced termination as 
     applied to the Menominee Tribe, was ``wrong'';
       (f) That the hearing officer in this matter, the Review 
     Panel, and the Chief Judge should approve this Stipulation 
     and recommend to Congress the above-stated sum as the 
     appropriate amount to be paid to the Menominee Tribe;
       (g) That the compromise and settlement of these claims 
     include any and all claims which were, or could have been, 
     alleged--either directly or indirectly--pursuant to S. 1355, 
     including, but not limited to, claims for attorney's fees and 
     other expenses;
       (h) That any and all claims encompassed by S. 1335 will, 
     consistent with Paragraph (i), below, be fully and finally 
     resolved upon a recommendation of payment of $32,052,547 as 
     consistent with the overall merit of the claims;
       (i) That, upon the tendering of a recommendation by the 
     hearing officer in approving the compromise and settlement of 
     any and all claims encompassed by S. 1335 for the amount 
     agreed to by the parties, and the transmission to Congress by 
     the Chief Judge of the Court's Report to the same effect, the 
     Reference under S. 1335 to the Court of Federal Claims shall 
     be fully and finally resolved; and
       (j) That this compromise and settlement derives from the 
     unique circumstances of the Menominee Tribe with respect to 
     the Act of June 17, 1954, and the Tribe's continuous effort 
     since 1967 to obtain relief, and that this compromise and 
     settlement shall not be cited for, and does not constitute, 
     precedent in any fashion with respect to any other dispute.
       (k) That, if this stipulation is accepted by the hearing 
     officer, the parties waive their right under RCFC Appendix D 
     para. 9 to file within 30 days a notice of acceptance or 
     exception to the hearing officer's report. They herewith 
     accept such a report.
       (l) That, if the hearing officer accepts this stipulation 
     and so reports to the review panel, and if the review panel 
     adopts the report of the hearing officer, the parties waive 
     the right under Appendix D para. 11 to seek rehearing within 
     ten days, and instead request that the matter be promptly 
     filed with the Clerk for transmission by the Chief Judge to 
     Congress.
       Stipulated and signed this 11th day of August, 1998.
     Charles A. Hobbs,
       Attorney for the plaintiff.
     James Brookshire,
       Attorney for the United States.
                                  ____

                                                      U.S. Senate,


                                  Committee on Indian Affairs,

                                   Washington, DC, April 22, 1999.
     Hon. Orrin G. Hatch,
     Chairman, Committee on the Judiciary, U.S. Senate, 
         Washington, DC.
     Hon. Patrick Leahy,
     Ranking Member, Committee on Judiciary, U.S. Senate, 
         Washington, DC.
       Dear Chairman Hatch and Senator Leahy: This letter concerns 
     a Congressional reference made by the United States Senate 
     during the 103rd Congress concerning the Menominee Tribe of 
     Wisconsin. Through Senate Resolution 137, the Senate directed 
     the United States Court of Federal Claims to hear a series of 
     claims of the Menominee Tribe and, based on its findings, 
     make recommendations to Congress.
       Senator Kohl has indicated that he will soon introduce 
     legislation based upon the findings, recommendations, and 
     conclusions reached by the Court of Federal Claims on August 
     11, 1998. I understand that the proposed legislation would 
     authorize the settlement of all of the claims referred by 
     Congress in return for a payment of approximately $32 
     million. This settlement amount is based on an agreement 
     reached between the Menominee Indian Tribe of Wisconsin and 
     the United States Department of Justice.
       On August 12, 1998, the U.S. Court of Federal Claims 
     reported to the Senate that it ``recommends that Congress 
     adopted legislation paying to the Menominee Tribe of 
     Wisconsin $32,052,547 in settlement of the claims embraced in 
     this congressional reference.'' It is significant that the 
     hearing officer independently concluded that the settlement 
     was ``fair and reasonable'' and that the Court's Review Panel 
     concluded that ``the stipulated agreement between the parties 
     is a just and equitable resolution of the lengthy dispute 
     that it resolves.
       Accepting the recommendations of the Court of Claims 
     provides a means for brining closure to this painful chapter 
     in our Nation's treatment of the Menominee Tribe. The 
     legislative and judicial path to restitution has been a long 
     road for this Tribe. This journey can and should be brought 
     to an appropriate conclusion during the 106th Congress.
       After reviewing this matter, it is clear that the 
     settlement proposal is consistent with past practices and 
     precedents.
           Sincerely,
                                          Ben Nighthorse Campbell.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Conrad, and Mr. Wellstone):
  S. 1022. A bill to authorize the appropriation of an additional 
$1,700,000,000 for fiscal year 2000 for health care for veterans; to 
the Committee on Veterans' Affairs.


               veterans emergency health care act of 1999

  Mr. DORGAN. Mr. President, this country made a promise years ago to 
the men and women who risked their lives in defense of this nation. 
They were promised that their health care needs would be provided for 
by a grateful nation. That promise is not being kept, and it is time to 
stop paying lip service to those who served this country so well.
  The current state of veterans' health care funding is shameful. 
Spending on veterans' health care has seen no significant increase for 
three consecutive years, at the very time that more and more of our 
World War II and Korean war veterans are relying on the VA health care 
system.
  In a memo to VA Secretary Togo West, Under Secretary for Health Dr. 
Kenneth Kizer expressed concern that a fourth year with a stagnant 
health care budget ``poses very serious financial challenges which can 
only be met if decisive and timely actions are taken.'' If increased 
funding is not secured even deeper cuts will be required such as 
``mandatory employee furloughs, severe curtailment of services or 
elimination of programs, and possible unnecessary facility closures.''
  Today, veterans' health care facilities are laying off care-givers 
and other critical staff.
  It is unlikely that the Senate will increase normal appropriations 
for veterans health care funding enough to correct three years of 
neglect. That is why Senator Conrad and I are proposing an additional 
$1.7 billion in emergency spending to address the health care needs of 
our country's veterans. We need to keep our promises to those who have 
served our country and risked their lives to preserve our freedoms. 
This bill is a step in the right direction.
  This legislation will help the Veterans' Administration keep up with 
medical inflation, provide cost of living adjustments for VA employees, 
allow new medical initiatives that the VA wants to begin (Hepatitis C 
screenings and emergency care services), address long-term health care 
costs, provide funding for homeless veterans, and aid compliance with 
the Patients Bill of Rights.
  In light of other emergency measures this Congress is considering, it 
is our opinion that preventing a health care catastrophe for our 
veterans is of equal, if not greater, importance than funding items 
like the NATO infrastructure fund and overseas military construction 
projects. Congress is debating right now, many new emergencies, new 
programs, and new initiatives. I'm not passing judgment on those 
decisions.
  What I am saying, is that because of insufficient funding, and 
unforeseen health care needs, we have an emergency right now, in our 
ability to honor our commitment to this nation's veterans. We must not 
break our promise.
  Mr. President, I urge my colleagues to swiftly approve this 
legislation. The veterans who proudly served their country deserve no 
less.
  Mr. CONRAD. Mr. President, I am very pleased to join my distinguished 
colleague from North Dakota, in introducing legislation to authorize 
$1.7 billion in emergency funding for FY 2000

[[Page 9298]]

Veterans Health Administration programs. Since the release of the 
Administration's FY 2000 budget for the Department of Veterans Affairs, 
I have been deeply concerned by the level of funding--$17.3 billion--
for the Veterans Health Administration.
  This concerned was heightened by comments in an internal memo by Dr. 
Kenneth Kizer, VA Undersecretary for Health, in February, regarding the 
FY 2000 veterans health care budget. In that memo, Dr. Kizer warned VA 
Secretary Togo West that the Administration budget for FY 2000 ``poses 
very serious challenges which can only be met if decisive and timely 
actions are taken.''
  Dr. Kizer went on the say that unless the VA acts soon, ``* * * we 
face the very real prospect of far more problematic decisions, e.g. 
mandatory employee furloughs, severe curtailment of services or 
elimination of programs and possible unnecessary facility closures''
  Indeed, Mr. President, I can confirm, that concern over VA health 
care funding in FY 2000, and the possibility of severe curtailment of 
services, and the furlough VA employees is a very real concern for 
North Dakota veterans and DVA officials at the Fargo VA Medical Center 
in North Dakota. Veterans health care funding in FY 2000, and the hope 
that funding can be authorized this year to under take critical 
environmental improvements at the Fargo DVA Medical Center are high 
priorities for North Dakota veterans. These key priorities were 
discussed during a visit to the Fargo DVA Medical Center earlier this 
year, at my request, by Deputy Secretary Hershel Gober. In fact, so 
concerned are members of the Disabled American Veterans nationwide, 
including North Dakota members, about funding for VA medical programs, 
that a rally has been scheduled on May 30th at the Fargo DVA Medical 
Center to heighten public awareness of the FY 2000 budget for veterans 
medical care and to press for additional funds.
  Mr. President, over the past few months, Members of the Senate 
Committee on Veterans' Affairs and many of my colleagues have been 
working hard to increase funding for veterans medical care in FY 2000. 
I have strongly supported these efforts. During consideration of the FY 
2000 budget resolution in committee, and when the resolution was 
reported to the Senate for consideration, I voted to increase funding 
for VA medical care by $3 billion, the figure recommended in the FY 
2000 Independent Budget supported by the AMVETS, Disabled American 
Veterans, the Veterans of Foreign Wars, and the Paralyzed Veterans of 
America. House and Senate conferees eventually agreed to increase 
veterans health care funding by $1.66 billion in FY 2000. Most 
recently, I cosigned a letter to Members of the Senate Appropriations 
Committee urging the committee to provide $1.7 billion above the 
administration's request for the Veterans Health Administration. 
Although Senate appropriators have not made a decision on how much to 
increase funding for veterans medical care, initial reports for a 
significant increase are not encouraging.
  Because of concerns that the FY 2000 appropriations for veterans 
health are not expected to be adequate, and may result in unnecessary 
furloughs and disruptions of health care services for veterans, Senator 
Dorgan and I are introducing legislation to provide an emergency 
authorization of $1.7 billion in funding above the administration's 
request for $17.3 billion for the Veterans Health Administration. This 
figure also represents the level of additional health care funding 
recommended for the VA to Senate appropriators by Senate Veterans' 
Committee Chairman Arlen Specter and Ranking Member John D. 
Rockefeller. We must make every effort to find these emergency FY 2000 
funds for veterans medical care, and to include them in appropriate 
legislation to avoid disruptions in critical health care. We can do no 
less for our veterans.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                               Department of Veterans Affairs,

     Date: Feb. 8, 1999
     From: Under Secretary for Health (10)
     Subj: FY 99/2000 VHA Budget
     To: Secretary (00)
       1. As you know, current VHA program projections indicate 
     that the FY 99 budget is adequate to meet demands. However, 
     the President's FY 2000 requested budget, and especially the 
     1.4 billion of management efficiencies, pose very serious 
     financial challenges which can be met only if decisive and 
     timely actions are taken.
       2. Strategic planning initiatives undertaken by VHA 
     networks over the past year are culminating in 
     recommendations for a variety of program adjustments, 
     including facility integrations, bed reductions, program 
     consolidations and mission changes, which reflect necessary 
     shifts in patient care service delivery and practices.
       3. In most cases, these changes are, or will be, 
     accompanied by requests for reductions-in-force and staffing 
     adjustments which will better configure our workforce to meet 
     the changing needs of our patients and programs. While 
     difficult, these changes are absolutely essential if we are 
     to prepare ourselves for the limitations inherent in the 
     proposed FY 2000 budget.
       4. Please know that I believe we are in a serious and 
     precarious situation and that if we do not institute these 
     difficult changes in a timely manner, then we face the very 
     real prospect or far more problematic decisions, e.g., 
     mandatory employee furloughs, severe curtailment of services 
     or elimination of programs, and possible unnecessary facility 
     closures.
       5. In short, the earlier we act in this fiscal year to take 
     the necessary steps to position ourselves for next year's 
     budget, the less likely we will be to face far more drastic 
     and untenable actions in FY 2000.
       6. I therefore request that we quickly establish a protocol 
     for rapidly processing requests for actions to right-size the 
     VHA healthcare system. Such a process should identify 
     specific steps and associated timelines for assessing such 
     requests, ensuring proper Congressional notification and 
     issuing approval so that implementation actions can begin.
       7. Again, I cannot overstate the need for timely action so 
     as to avoid far more severe actions in the next fiscal year. 
     I am prepared to discuss this with you at your convenience.
     Kenneth W. Kizer, MD., M.P.H.
                                  ____


              Administrators Warn of VA Hospital Closings

       (By Katherine Rizzo, Associated Press, February 25, 1999)

       Washington (AP)--Veterans' hospitals may have to reduce 
     staff and services next year unless Congress comes up with 
     more money than the president has proposed, say 
     administrators and interest groups.
       ``When your drug costs go up 15 percent a year and employee 
     salaries go up 4 percent a year and our employees are 70 
     percent of our budget, at some point there are choices that 
     have to be made,'' said Laura Miller, who oversees hospitals 
     in Ohio and northern Kentucky.
       ``Administering this budget would be like trying to build a 
     house of cards in an Oklahoma tornado,'' added recently 
     retired Veterans Health Administration official Tom Trujillo.
       Trujillo, Miller and other administrators appeared before 
     the House Veterans' Affairs subcommittee on health Wednesday 
     to answer lawmakers' questions about a spending request that 
     all present deemed was insufficient.
       Miller said the no-growth budget proposal has her bracing 
     for a cut of 200 positions next year, most likely achieved by 
     closing hospital wards and suspending plans for new 
     outpatient clinics.
       Other administrators said they either expected to reduce 
     staff in 2000 or had requests pending to start reducing staff 
     this year.
       James Farsetta, director of the VA region that operates 
     seven medical centers in New Jersey and southern New York, 
     said he has already submitted a request to eliminate 400 
     jobs.
       William Galey, who oversees services in Alaska, Washington, 
     Oregon and Idaho, told the subcommittee he's considering 
     staff reductions of anywhere from 300 to 800.
       Veterans groups offered their own denunciations.
       ``It is unfair that in the presence of the largest budget 
     surplus in recent history, while other federal agencies will 
     have double-digit increases, veterans are being asked to once 
     again sacrifice,'' said the Veterans of Foreign Wars.
       The Paralyzed Veterans of America accused the Clinton 
     administration of crafting a budget that kills the VA health 
     system ``through intentional budget strangulation.''
       ``Nobody on either side of the aisle likes this budget,'' 
     said Rep. Mike Doyle, D-Pa. ``I don't know how we can flat-
     line a budget from 1997 to 2002 and not expect the system to 
     collapse.''
       Deputy Under Secretary for Health Thomas Garthwaite said 
     the administration was aware of ``significant financial 
     challenges

[[Page 9299]]

     ahead'' but that plans still was being made to prepare for 
     the possibility that Congress might not add money to the 
     administration's spending request.
       The veterans' organizations made public an internal 
     Department of Veterans Affairs memo written by Under 
     Secretary Kenneth Kizer, who heads the hospital system.
       ``I believe we are in a serious and precarious situation 
     and that if we do not institute these difficult changes in a 
     timely manner, then we face the very real prospect of far 
     more problematic decisions, e.g. mandatory employee 
     furloughs, severe curtailment of services or elimination of 
     programs, and possible unnecessary facility closures,'' Kizer 
     wrote.
       The veterans' groups did not say how they obtained the 
     memo, but Garthwaite did not dispute its authenticity. He 
     said he believed it was intended to outline the importance of 
     moving quickly because ``it will cost more later if we don't 
     take the administrative actions early.''
                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Kennedy, Mr. Schumer, Mr. 
        Helms, Mr. Kerry, Mr. Torricelli, Mr. Durbin, Mr. Santorum, Mr. 
        Lieberman, Mr. Kerrey, Mr. Levin, Mrs. Murray, Mr. Specter, Mr. 
        Cleland, and Mr. Edwards):
  S. 1023. A bill to amend title XVIII of the Social Security Act to 
stabilize indirect graduate medical education payments; to the 
Committee on Finance.


       graduate medical education payment restoration act of 1999

                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Schumer, Mr. Specter, Mr. 
        Kerry, Mr. Kerrey, Mr. Santorum, Mr. Durbin, Mr. Cleland, and 
        Mr. Chafee):
  S. 1024. A bill amend title XVIII of the Social Security Act to carve 
out from payments to Medicare+Choice organizations amounts attributable 
to disproportionate share hospital payments and pay such amounts 
directly to those disproportionate share hospitals in which their 
enrollees receive care; to the Committee on Finance.


                 managed care fair payment act of 1999

                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Breaux, Mr. Daschle, Mr. 
        Santorum, Mr. Durbin, Mr. Schumer, Mr. Kerry, Mr. Specter, Mr. 
        Conrad, Mr. Baucus, Mr. Chafee, Mr. Kerrey, and Mr. Cleland):
  S. 1025. A bill to amend title XVIII of the Social Security Act to 
ensure the proper payment of approved nursing and allied health 
education programs under the medicare program; to the Committee on 
Finance.


       nursing and allied health payment improvement act of 1999

 Mr. MOYNIHAN. Mr. President, today I am introducing three 
bills that will provide much needed financial support for America's 144 
accredited medical schools and 1,250 graduate medical education (GME) 
teaching institutions. These institutions are national treasures; they 
are the very best in the world. Yet today they find themselves in a 
precarious financial situation as market forces reshape the health care 
delivery system in the United States.
  The growth of managed for-profit care combined with GME payment 
reductions under the Balanced Budget Act of 1997 (BBA) have put these 
hospitals in dire financial straits. Hospitals are losing money--
millions of dollars every year. And these losses are projected to 
increase, as additional scheduled Medicare payment reductions are 
phased in. Many of the teaching hospitals that we know and depend on 
today may not survive--including those in my state of New York--if 
these additional GME payment reductions are not repealed.
  To ensure that this precious public resource is maintained and the 
United States continues to lead the world in the quality of its health 
care system, the three bills I am introducing today --the Graduate 
Medical Education Payment Restoration Act of 1999, the Managed Care 
Fair Payment Act of 1999, and the Nursing and Allied Health Payment 
Improvement Act of 1999--will provide critically required funding for 
teaching hospitals.
  Everyone in America benefits from the research and medical education 
conducted in our medical schools and affiliated teaching hospitals. 
They are what economists call public goods --something that benefits 
everyone but which is not provided for by market forces alone. Think of 
an army. Or a dam.
  The Medicare program is the nation's largest explicit financier of 
GME, with annual payments of about $7 billion. In the past, other 
payers of health care have also contributed to the costs of GME. 
However, in an increasingly competitive managed care health care 
system, these payments are being squeezed out.
  Earlier this year, I reintroduced the Medical Education Trust Fund 
Act of 1999. This legislation requires the public sector, through the 
Medicare and Medicaid programs, and the private sector, through an 
assessment on health insurance premiums, to contribute broad-based and 
equitable financial support for graduate medical education. I hope that 
one day Congress will see the wisdom of enacting such a measure. 
However, our teaching hospitals need help now.
  We are in the midst of a great era of discovery in medical science. 
It is certainly no time to close medical schools. This great era of 
medical discovery is occurring right here in the United States, not in 
Europe like past ages of scientific discovery. And it is centered in 
New York City.
  It started in the late 1930s. Before then, the average patient was 
probably as well off, perhaps better, out of a hospital as in one. 
Progress since that point sixty years ago has been remarkable. The last 
few decades have brought us images of the inside of the human body 
based on the magnetic resonance of bodily tissues; laser surgery; micro 
surgery for reattaching limbs; and organ transplantation, among other 
wonders. Physicians are now working on a gene therapy that might 
eventually replace bypass surgery. One can hardly imagine what might be 
next--but we do know that much of it will be discovered in the course 
of ongoing research activities in our teaching hospitals and medical 
schools. That is a process which is of necessity unplanned, even 
random--but which regularly produces medical breakthroughs. To cite 
just a few examples:
  At Memorial Sloan-Kettering Cancer Center, the world renowned 
teaching hospital in New York City, researchers in 1998 discovered 
among many other things a surgical biopsy technique that can predict 
whether breast cancer has spread to surrounding lymph node tissue. This 
technique will spare 60,000 to 80,000 patients each year from having to 
undergo surgical removal of their lymph nodes.
  In 1997, at Mount Sinai-NYU Medical Center, it was discovered that 
malignant brain tumors in young children can be eradicated through the 
use of high-dose chemotherapy and stem-cell transplants.
  And in May of last year, a doctor at Children's Hospital in Boston 
created a global media sensation with his discovery that a combination 
of the drugs endostatin and angiostatin appeared to cure cancer in mice 
by cutting off the supply of blood to tumors. Although the efficacy of 
this therapy in humans is not yet known, the research holds great 
promise that a cure for cancer may actually be within reach. And it was 
discovered in a teaching hospital.
  The Graduate Medical Education Payment Restoration Act, with a total 
of 15 cosponsors, will freeze the current schedule of BBA reductions to 
the indirect portion of GME funding. Congressman Rangel today is 
introducing a similar bill in the House. Under the BBA, the indirect 
payment adjustor is scheduled to be reduced from 7.7 percent to 5.5 
percent by FY 2001. This bill will maintain the current payment 
adjustor at its current level of 6.5 percent, thereby rolling back 
about half of the indirect GME funding cuts in the BBA. In total, this 
provision restores about $3 billion over 5 years and $8 billion over 10 
years in indirect GME funding for teaching hospitals.
  The Managed Care Fair Payment Act, with nine cosponsors, will 
redirect more than $2.5 billion over 5 years of Medicare 
Disproportionate Share Hospital (DSH) funds from the Medicare managed 
care payment rates to the more than 1,900 hospitals that qualify for 
DSH funding. Congressman Rangel

[[Page 9300]]

introduced a similar bill in the House this past March. More than two-
thirds of teaching hospitals also qualify for DSH funds. Under the 
current payment method, payments to managed care plans include these 
DSH funds, but unfortunately, these funds are not necessarily passed-on 
to DSH hospitals. Managed care plans often do not contract with DSH 
hospitals, and when they do the negotiated payment rates often do not 
include these DSH payments. Like GME funding under current law, this 
bill would carve out DSH funds from the managed care rates and require 
the Health Care Financing Administration to pass them on directly to 
qualifying hospitals.
  The third bill I am introducing today, which has 13 cosponsors, is 
the Nursing and Allied Health Payment Improvement Act. This bill was 
introduced by Congressmen Crane and Bentsen on April 20 of this year. 
While Congress in the BBA of 1997 recognized the need to carve-out GME 
funding from managed care rates, it unintentionally did not carve out 
the funding for the training of nurses and allied health professionals. 
Like DSH funds, without the carve-out, funding for these education 
programs is unlikely to reach the more than 700 hospitals that provide 
training to these vitally important health professionals. This bill 
seeks to correct this problem by carving out the funding for the 
training of nurses and other allied health professionals and directing 
them to the hospitals that provide these training programs.
  Combined, these three bills will strengthen our nation's teaching 
hospitals and ensure that the United States will continue to be in the 
forefront of developing new cures, new medical technology, and training 
of the worlds finest medical professionals. Without these bills, the 
state of our nation's teaching hospitals and the delivery of health 
care will remain in jeopardy.
  I ask that the text of the bills, along with two articles from the 
New York Times, be included in the Record.
  The material follows:

                                S. 1023

       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 ``Graduate Medical Education 
     Payment Restoration Act of 1999''.

     SEC. 2. TERMINATION OF MULTIYEAR REDUCTION OF INDIRECT 
                   GRADUATE MEDICAL EDUCATION PAYMENTS.

       Section 1886(d)(5)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395ww(d)(5)(B)(ii)) is amended--
       (1) by adding ``and'' at the end of subclause (II); and
       (2) by striking subclauses (III), (IV), and (V) and 
     inserting the following:

       ``(III) on or after October 1, 1998, `c' is equal to 
     1.6.''.
                                  ____


                                S. 1024

       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 ``Managed Care Fair Payment 
     Act of 1999''.

     SEC. 2. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO 
                   MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE 
                   AMOUNTS DIRECTLY TO DSH HOSPITALS ENROLLING 
                   MEDICARE+CHOICE ENROLLEES.

       (a) In General.--Section 1853(c)(3) of the Social Security 
     Act (42 U.S.C. 1395w-23(c)(3)) is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (D)'';
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following:
       ``(D) Removal of payments attributable to disproportionate 
     share payments from calculation of adjusted average per 
     capita cost.--
       ``(i) In general.--In determining the area-specific 
     Medicare+Choice capitation rate under subparagraph (A) for a 
     year (beginning with 2001), the annual per capita rate of 
     payment for 1997 determined under section 1876(a)(1)(C) shall 
     be adjusted, subject to clause (ii), to exclude from the rate 
     the additional payments that the Secretary estimates were 
     made during 1997 for additional payments described in section 
     1886(d)(5)(F).
       ``(ii) Treatment of payments covered under state hospital 
     reimbursement system.--To the extent that the Secretary 
     estimates that an annual per capita rate of payment for 1997 
     described in clause (i) reflects payments to hospitals 
     reimbursed under section 1814(b)(3), the Secretary shall 
     estimate a payment adjustment that is comparable to the 
     payment adjustment that would have been made under clause (i) 
     if the hospitals had not been reimbursed under such 
     section.''.
       (b) Additional Payments for Managed Care Enrollees.--
     Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(F)) is amended--
       (1) in clause (ii), by striking ``clause (ix)'' and 
     inserting ``clauses (ix) and (x)''; and
       (2) by adding at the end the following:
       ``(x)(I) For portions of cost reporting periods occurring 
     on or after January 1, 2001, the Secretary shall provide for 
     an additional payment amount for each applicable discharge of 
     any subsection (d) hospital that is a disproportionate share 
     hospital (as described in clause (i)).
       ``(II) For purposes of this clause, the term `applicable 
     discharge' means the discharge of any individual who is 
     enrolled with a Medicare+Choice organization under part C.
       ``(III) The amount of the payment under this clause with 
     respect to any applicable discharge shall be equal to the 
     estimated average per discharge amount (as determined by the 
     Secretary) that would otherwise have been paid under this 
     subparagraph if the individual had not been enrolled as 
     described in subclause (II).
       ``(IV) The Secretary shall establish rules for an 
     additional payment amount for any hospital reimbursed under a 
     reimbursement system authorized under section 1814(b)(3) if 
     such hospital would qualify as a disproportionate share 
     hospital under clause (i) were it not so reimbursed. Such 
     payment shall be determined in the same manner as the amount 
     of payment is determined under this clause for 
     disproportionate share hospitals.''.
                                  ____


                                S. 1025

       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 ``Nursing and Allied Health 
     Payment Improvement Act of 1999''.

     SEC. 2. EXCLUSION OF NURSING AND ALLIED HEALTH EDUCATION 
                   COSTS IN CALCULATING MEDICARE+CHOICE PAYMENT 
                   RATE.

       (a) Excluding Costs in Calculating Payment Rate.--
       (1) In general.--Section 1853(c)(3)(C)(i) of the Social 
     Security Act (42 U.S.C. 1395w-23(c)(3)(C)(i)) is amended--
       (A) by striking ``and'' at the end of subclause (I);
       (B) by striking the period at the end of subclause (II) and 
     inserting ``, and''; and
       (C) by adding at the end the following new subclause:

       ``(III) for costs attributable to approved nursing and 
     allied health education programs under section 1861(v).''.

       (2) Effective date.--The amendments made by paragraph (1) 
     apply in determining the annual per capita rate of payment 
     for years beginning with 2001.
       (b) Payment to Hospitals of Nursing and Allied Health 
     Education Program Costs for Medicare+Choice Enrollees.--
     Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is 
     amended by adding at the end the following new subparagraph:
       ``(V) In determining the amount of payment to a hospital 
     for portions of cost reporting periods occurring on or after 
     January 1, 2001, with respect to the reasonable costs for 
     approved nursing and allied health education programs, 
     individuals who are enrolled with a Medicare+Choice 
     organization under part C shall be treated as if they were 
     not so enrolled.''.
                                  ____


                 [From the New York Times, May 6, 1999]

         Teaching Hospitals Battling Cutbacks in Medicare Money

                          (By Carey Goldberg)

       BOSTON, May 5--Normally, the great teaching hospitals of 
     this medical Mecca carry an air of whitecoated, best-in-the-
     world arrogance, the kind of arrogance that comes of 
     collecting Nobels, of snaring more Federal money for medical 
     research than hospitals anywhere else, of attracting patients 
     from the four corners of the earth.
       But not lately. Lately, their chief executives carry an air 
     of pleading and alarm. They tend to cross the edges of their 
     palms in an X that symbolizes the crossing of rising costs 
     and dropping payments, especially Medicare payments. And to 
     say they simply cannot go on losing money this way and remain 
     the academic cream of American medicine.
       Dr. Mitchell T. Rabkin, chief executive emeritus of Beth 
     Israel Hospital, says, ``Everyone's in deep yogurt.''
       The teaching hospitals here and elsewhere have never been 
     immune from the turbulent change sweeping American health 
     care--from the expansion of managed care to spiraling drug 
     prices to the fierce fights for survival and shotgun 
     marriages between hospitals with empty beds and flabby 
     management.
       But they are contending that suddenly, in recent weeks, a 
     Federal cutback in Medicare spending has begun putting such a 
     financial squeeze on them that it threatens their ability to 
     fulfill their special missions: to handle

[[Page 9301]]

     the sickest patients, to act as incubators for new cures, to 
     treat poor people and to train budding doctors.
       The budget hemorrhaging has hit at scattered teaching 
     hospitals across the country, from San Francisco to 
     Philadelphia. New York's clusters of teaching hospitals are 
     among the biggest and hardest hit, the Greater New York 
     Hospital Association says. It predicts that Medicare cuts 
     will cost the state's hospitals $5 billion through 2002 and 
     force the closing of money-losing departments and whole 
     hospitals.
       Dr. Samuel O. Thier, president of the group that owns 
     Massachusetts General Hospital, says, ``We've got a problem, 
     and you've got to nip it in the bud, or else you're going to 
     kill off some of the premier institutions in the country.''
       Here in Boston, with its unusual concentration of academic 
     medicine and its teaching hospitals affiliated with the 
     medical schools of Harvard, Tufts and Boston Universities, 
     the cuts are already taking a toll in hundreds of eliminated 
     jobs and pockets of miserable morale.
       Five of Boston's top eight private employers are teaching 
     hospitals, Mayor Thomas M. Menino notes. And if five-year 
     Medicare cuts totaling an estimated $1.7 billion for 
     Massachusetts hospitals continue, Mayor Menino says, ``We'll 
     have to lay off thousands of people, and that's a big hit on 
     the city of Boston.''
       Often, analysts say, hospital cut-backs, closings and 
     mergers make good economic sense, and some dislocation and 
     pain are only to be expected, for all the hospitals' tendency 
     to moan about them. Some critics say the hospitals are partly 
     to fault, that for all their glittery research and 
     credentials, they have not always been efficiently managed.
       ``A lot of teaching hospitals have engaged in what might be 
     called self-sanctification--`We're the greatest hospitals in 
     the world and no one can do it better or for less'--and that 
     may or may not be true,'' said Alan Sager, a health-care 
     finance expert at the Boston University School of Public 
     Health.
       But the hospital chiefs argue that they have virtually no 
     fat left to cut, and warn that their financial problems may 
     mean that the smartest edge of American medicine will get 
     dumbed down.
       With that message, they have been lobbying Congress in 
     recent weeks to reconsider the cuts that they say have turned 
     their financial straits from tough to intolerable.
       ``Five years from now, the American people will wake up and 
     find their clinical research is second rate because the big 
     teaching hospitals are reeling financially,'' said Dr. David 
     G. Nathan, president of the Dana-Farber Cancer Institute 
     here.
       In a half-dozen interviews, around the Boston medical-
     industrial complex known as the Longwood Medical Center and 
     Academic Area and elsewhere, hospital executives who normally 
     compete and squabble all espoused one central idea: teaching 
     hospitals are special, and that specialness costs money.
       Take the example of treating heart-disease patients, said 
     Dr. Michael F. Collins, president and chief executive of 
     Caritas Christi Health Care System, a seven-hospital group 
     affiliated with Tufts.
       In 1988, Dr. Collins said, it was still experimental for 
     doctors to open blocked arteries by passing tiny balloons 
     though them; now, they have a bouquet of expensive new 
     options for those patients, including springlike devices 
     called stents that cost $900 to $1,850 each; tiny rotobladers 
     that can cost up to $1,500, and costly drugs to supplement 
     the reaming that cost nearly $1,400 a patient.
       ``A lot of our scientists are doing research on which are 
     the best catheters and which are the best stents,'' Dr. 
     Collins said. ``And because they're giving the papers on the 
     drug, they're using the drug the day it's approved to be 
     used. Right now it's costing us about $50,000 a month and 
     we're not getting a nickel for it, because our case rates are 
     fixed.''
       Hospital chiefs and doctors also argue that a teaching 
     hospital and its affiliated university are a delicate 
     ecosystem whose production of critical research is at risk.
       ``The grand institutions in Boston that are venerated are 
     characterized by a wildflower approach to invention and the 
     generation of new knowledge,'' said Dr. James Reinertsen, the 
     chief executive of Caregroup, which owns Beth Israel 
     Deaconess Medical Center. ``We don't run our institutions 
     like agribusiness, a massively efficient operation where we 
     direct research and harvest it. It's unplanned to a great 
     extent, and that chaotic fermenting environment is part of 
     what makes the academic health centers what they are.''
       ``There wouldn't have been a plan to do what Judah Folkman 
     has done over the last 20 years,'' Dr. Reinertsen said of the 
     doctor-scientist at Children's Hospital in Boston who has 
     developed a promising approach to curing cancer.
       Federal financing for research is plentiful of late, 
     hospital heads acknowledge. But they point out that the 
     Government expects hospitals to subsidize 10 percent or 15 
     percent of that research, and that they must also provide 
     important support for researchers still too junior to win 
     grants.
       A similar argument for slack in the system comes in 
     connection with teaching. Teaching hospitals are pressing 
     their faculties to take on more patients to bring in more 
     money, said Dr. Daniel D. Federman, dean for medical 
     education of Harvard Medical School. A doctor under pressure 
     to spend time in a billable way, Dr. Federman said, has less 
     time to spend teaching.
       The Boston teaching hospitals generally deny that the money 
     squeeze is affecting patients' care (a denial some patients 
     would question), or students' quality of medical education (a 
     denial some students would question), or research--yet.
       The Boston hospitals' plight may be partly their fault for 
     competing so hard with each other, driving down prices, some 
     analysts say. Though some hospitals have merged in recent 
     years, Boston is still seen as having too many beds, and 
     virtually all hospitals are teaching hospitals here.
       Whatever the causes, said Dr. Stuart Altman, professor of 
     national health policy at Brandeis University and past 
     chairman for 12 years of the committee that advised the 
     Government on Medicare prices, ``the concern is very real.''
       ``What's happened to them is that all of the cards have 
     fallen the wrong way at the same time,'' Dr. Altman said, ``I 
     believe their screams of woe are legitimate.''
       Among the cards that fell wrong, begin with managed care. 
     Massachusetts has an unusually large quotient of patients in 
     managed-care plans. Managed-care companies, themselves 
     strapped, have gotten increasingly tough about how much they 
     will pay.
       Boston had already gone through a spate of fat-trimming 
     hospital mergers, closings and cost cutting in recent years. 
     Add to the troublesome complaints that affect all hospitals: 
     expenses to prepare their computers for 2000, problems 
     getting insurance companies and the Government to pay up, new 
     efforts to defend against accusations of billing fraud.
       But the back-breaking straw, hospital chiefs say, came with 
     Medicare cuts, enacted under the 1997 balanced-budget law, 
     that will cut more each year through 2002. The Association of 
     American Medical Colleges estimates that by then the losses 
     for teaching hospitals could reach $14.7 billion, and that 
     major teaching hospitals will lose about about $150 million 
     each. Nearly 100 teaching hospitals are expected to be 
     running in the red by then, the association said last month.
       For years, teaching hospitals have been more dependent than 
     any others on Medicare. Unlike some other payers, Medicare 
     has compensated them for their special missions--training, 
     sicker patients, indigent care--by paying them extra.
       For reasons yet to be determined, Dr. Altman and others say 
     the Medicare cuts seem to be taking an even greater toll on 
     the teaching hospitals than had been expected. Much has 
     changed since the 1996 numbers on which the cuts are based, 
     hospital chiefs say; and the cuts particularly singled out 
     teaching hospitals, whose profit margins used to look fat.
       Frightening the hospitals still further, President 
     Clinton's next budget proposes even more Medicare cuts.
       Not everyone sympathizes, though. Complaints from hospitals 
     that financial pinching hurts have become familiar refrains 
     over recent years, gaining them a reputation for crying wolf. 
     Critics say the Boston hospitals are whining for more money 
     when the only real fix is broad health-care reform.
       Some propose that the rational solution is to analyze which 
     aspects of the teaching hospitals' work society is willing to 
     pay for, and then abandon the Byzantine Medicare cross-
     subsidies and pay for them straight out, perhaps through a 
     new tax.
       Others question the numbers.
       Whenever hospitals face cuts, Alan Sager of Boston 
     University said, ``they claim it will be teaching and 
     research and free care of the uninsured that are cut first.''
       If the hospitals want more money, Mr. Sager argued, they 
     should allow in independent auditors to check their books 
     rather than asking Congress to rely on a ``scream test.''
       For many doctors at the teaching hospitals, however, the 
     screaming is preventive medicine, meant to save their 
     institutions from becoming ordinary.
       Medical care is an applied science, said Dr. Allan Ropper, 
     chief of neurology at St. Elizabeth's Hospital, and strong 
     teaching hospitals, with their cadres of doctors willing to 
     spend often-unreimbursed time on teaching and research, are 
     essential to helping move it forward.
       ``There's no getting away from a patient and their 
     illness,'' Dr. Ropper said, ``but if all you do is fix the 
     watch, nobody ever builds a better watch. It's a very subtle 
     thing, but precisely because it's so subtle, it's very easy 
     to disrupt.''
                                  ____


                 [From the New York Times, May 6, 1999]

                   New York Hospitals Braced for Cuts

                           (By Randy Kennedy)

       The fiscal knife that has begun to cut into teaching 
     hospitals in Boston and other cities has not yet had the same 
     dire effects--layoffs or widespread operating deficits--in 
     hospitals around New York State.
       But hospital executives and health-care experts alike say 
     that if the Federal cuts to Medicare are not softened, the 
     state will lose much more than any other--$5 billion and

[[Page 9302]]

     23,000 medical jobs--by 2002. And they warn that those cuts, 
     a result of the Balanced Budget Act, pose a huge economic 
     threat to New York, which has the nation's greatest 
     concentration of medical schools and teaching hospitals and 
     trains about 15 percent of the nation's medical residents.
       ``The carnage which is created by the Balanced Budget 
     Act,'' said Kenneth Raske, president of the Greater New York 
     Hospital Association, a trade group of 175 hospitals and 
     nursing homes, ``will totally disrupt the health care system 
     in New York when it's fully implemented. It goes at the heart 
     of the infrastructure.''
       The cuts, now in their second year, come at the same time 
     as sharp increases in uninsured patients and the growing 
     dominance of managed care, which have prompted all hospitals 
     in the New York region to brace for what they say will be one 
     of the most difficult fiscal years ever.
       But with critics complaining that New York still has too 
     many hospital beds and administrative fat that should be 
     trimmed, those who run the prestigious teaching hospitals in 
     the city find it hard to make their case that the Medicare 
     cuts put them in real peril.
       ``I know this sounds like wolf, wolf, wolf because of the 
     successes generally in the health care industry,'' said Dr. 
     Spencer Foreman, president of Montefiore Hospital in the 
     Bronx, which lost $24 million in Medicare money in fiscal 
     1999. ``But New York teaching hospitals are in trouble.''
       His own hospital did $750 million in business in 1993 and 
     ended that year with a $3 million profit margin. This year, 
     it will do $1 billion in business and end with a $6 million 
     margin.
       ``Those are supermarket margins,'' Dr. Foreman said, adding 
     that the hospital has ``managed to keep a razor-thin margin 
     every year by every year cutting costs and cutting again.''
       ``But you can only cut so far before things begin to 
     happen,'' he said. ``The industry is touching bottom in a lot 
     of areas, and the difference between profit and loss in this 
     atmosphere is an eyelash. This is not the way normal billion-
     dollar enterprises are conducted.''
       Because the teaching hospitals have traditionally served a 
     high percentage of poor patients, the threat to their future 
     is even more important, Dr. Foreman and others said.
       While he and other teaching hospital administrators avoid 
     talking about it, the only way to keep from going into the 
     red is to cut jobs and either shrink or close money-losing 
     departments--which usually means emergency rooms, outpatients 
     clinics, psychiatric and rehabilitation departments and 
     maternity wards, among others.
       ``The so-called low-hanging fruit has all been picked,'' 
     said Dr. David B. Skinner, the chief executive of New York 
     Presbyterian Hospital, where every department has been asked 
     to cut spending by 5 percent. The Greater New York Hospital 
     Association projects that New York Presbyterian will lose 
     more money over the courts of the Balanced Budget Act than 
     any other American hospital--about $320 million.
       Dr. Skinner said that as the Hospital plans its year 2000 
     budget ``we're going to have to look very closely at staffing 
     ratios.''
       ``Something's got to give here,'' he said. ``You then look 
     at where can you downsize departments that are losing money. 
     And we're looking at that now. I don't want to say which ones 
     because I don't want to unnecessarily panic the troops.''
       While the refrain in health-care politics in New York is 
     usually for hospitals to cry poverty and many experts and 
     budget analysts to cry hyperbole, experts said yesterday that 
     the teaching hospitals were probably not exaggerating their 
     problems much.
       ``This certainly appears to be putting real strains on 
     teaching hospitals throughout the country and especially in 
     New York,'' said Edward Salsberg, director of the Center for 
     Health Workforce Studies at the State University in Albany. 
     ``They seem to be building a case that this year it is more 
     real than other years.''

 Mr. LEVIN. Mr. President, I am proud to be an original 
cosponsor of the bill introduced today by Senator Moynihan which will 
help to reduce some of the financial strain that teaching hospitals are 
currently experiencing due to Graduate Medical Education (GME) cuts put 
in place under the Balanced Budget Act of 1997 (BBA).
  The teaching hospitals in this nation are the very best in the world. 
There are over 1,200 teaching hospitals in the United States, 57 of 
which are in my own state of Michigan. Although these hospitals are 
providing excellent care while training residents, they are currently 
facing dire financial circumstances brought about by the growth of 
managed care combined with GME payment reductions. Additional Medicare 
payment reductions are currently scheduled to be phased in as per the 
BBA.
  A major teaching hospital in my own state, the Detroit Medical Center 
(DMC), trains over 1,100 residents each year. The DMC stands to lose a 
total of $53.8 million from IME reductions for Fiscal Years 1998-2002. 
It is important that we continue to support the DMC and other teaching 
hospitals, not turn our back on them.
  I believe that the survival of our valuable teaching hospitals is at 
stake if we do not act now which is why I have cosponsored this 
legislation. This bill will freeze the Indirect Medical Education (IME) 
adjustment factor (the IME is the part of the GME payment that reflects 
the higher costs, such as more intensive treatments, of caring for 
patients at teaching hospitals) at the FY 1999 level of 6.5 percent, 
thereby rolling back about half of the IME funding cuts in the BBA. In 
total, this provision restores about $3 billion over 5 years and $8 
billion over 10 years in IME funding for teaching hospitals.
  Our medical schools and affiliated teaching hospitals conduct a great 
deal of the research and medical education which benefits everyone in 
America. The University of Michigan is one of the most prominent 
teaching institutions in the country. The UM is currently doing 
important prostate cancer research while providing health care to 
citizens from every county in the state. It is imperative that we allow 
this research to continue while we are on the verge of new discoveries 
in medical science.
  Mr. President, I hope the Senate will pass this important 
legislation.
                                 ______
                                 
      By Mr. SMITH of Oregon (for himself and Mr. Wyden):
  S. 1027. A bill to reauthorize the participation of the Bureau of 
Reclamation in the Deschutes Resources Conservancy, and for other 
purposes; to the Committee on Energy and Natural Resources.


      deschutes resources conservancy reauthorization act of 1999

 Mr. SMITH. Mr. President, today I am introducing legislation, 
cosponsored by my colleague from Oregon, to reauthorize participation 
by the Bureau of Reclamation in the Deschutes Resources Conservancy for 
an additional five years.
  The Deschutes Resources Conservancy, also known as the Deschutes 
Basin Working Group, was authorized in 1996 as a five-year pilot 
project designed to achieve local consensus around on-the-ground 
projects to improve ecosystem health in the Deschutes River basin. This 
river is truly one of Oregon's greatest resources. It drains Oregon's 
high desert along the eastern front of the Cascades, eventually flowing 
into the Columbia River. It is the state's most intensively used 
recreational river. It provides water to both irrigation projects and 
to the city of Bend, which is one of Oregon's fastest growing cities. 
The Deschutes Basin also contains hundreds of thousands of acres of 
productive forest and rangelands, serves the treaty fishing and water 
rights of the Confederated Tribes of Warm Springs, and has Oregon's 
largest non-federal hydroelectric project.
  By all accounts, the Deschutes Basin Working Group has been a huge 
success. It has brought together diverse interests within the basin, 
including irrigators, tribes, ranchers, environmentalists, an investor-
owned utility, local businesses, as well as local elected officials and 
representatives of state and federal agencies. Together, the Working 
Group was able to develop project criteria and identified a number of 
water quality, water quantity, fish passage and habitat improvement 
projects that could be funded. Projects are selected by consensus, and 
there must be a fifty-fifty cost share from non-federal sources.
  From October 1998 to March 1999, the Deschutes Resources Conservancy 
has leveraged 272,180 dollars of its funds to complete 777,680 dollars 
in on-the-ground restoration projects. These projects include: piping 
irrigation district delivery systems to prevent loss; securing water 
rights to be left instream to restore flows to Squaw Creek; providing 
riparian fences to protect riverbanks; working with private timberland 
owners to restore riparian and wetlands areas; and seeking donated 
water rights to enhance instream

[[Page 9303]]

flows in the Deschutes River Basin. They have been very successful at 
finding cooperative, market-based solutions to enhance the ecosystem in 
the basin.
  The existing authorization provides for up to one million dollars 
each year for projects. Funding is provided through the Bureau of 
Reclamation, the group's lead federal agency. The group did not 
actually receive federal funding until this fiscal year, but it has 
already successfully allocated these funds. The Deschutes Resources 
Conservancy enjoys widespread support in Oregon. It has very committed 
board members who represent diverse interests in the basin. The high 
caliber of their work, and their pragmatic approach to ecosystem 
restoration have been recognized by others outside the region.
  I am convinced this pilot project needs to continue. That is why the 
legislation I am introducing today would extend the authorization for 
federal funds through fiscal year 2006, and increases the authorization 
for fiscal years 2002 through 2006 to two million dollars each year. I 
urge my colleagues to support this project. Not only is it important to 
central Oregon, but the Deschutes Recources Conservancy can serve as a 
national model for cooperative watershed restoration at the local 
level.

                          ____________________