[Congressional Record (Bound Edition), Volume 147 (2001), Part 9]
[Senate]
[Pages 12494-12559]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HATCH (for himself, Mr. Feingold, Mr. Grassley, Mr. Leahy, 
        Mr. Warner, Mr. Breaux, Mr. Burns, Mr. Reid, Mr. Craig, Mr. 
        Torricelli, Mr. Bennett, Ms. Snowe, Mr. DeWine, Mr. Thomas, and 
        Mr. Hutchinson):
  S. 1140. 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; to the Committee on the Judiciary.
  Mr. HATCH. Mr. President, I rise today to introduce S. 1140, ``The 
Motor Vehicle Franchise Contract Arbitration Fairness Act of 2001.'' I 
am pleased to be joined in cosponsorship of this legislation by 
Senators Feingold, Grassley, Leahy, Warner, Breaux, Burns, Reid, Craig, 
Torricelli, Bennett, Snowe, DeWine, Thomas, and Hutchinson. Our bill is 
intended to allow automobile dealers their day in court when they have 
disputes with the manufacturers.
  As automobile dealers throughout Utah have pointed out to me, the

[[Page 12495]]

motor vehicle dealer contract often includes mandatory arbitration 
clauses, and they also point out their unequal bargaining power. This 
is usually the result of various factors, including the manufacturers' 
discretion to allocate vehicle inventory and control on the timing of 
delivery. Manufacturers can, thus, determine the dealer's financial 
future with the allocation of the best-selling models. Manufacturers 
can also exercise leverage over the flow of revenue to dealers, such as 
warranty payments. Manufacturers can limit dealers' rights to transfer 
ownership or control of the business, even to family members. And 
manufacturers have tried, arbitrarily, to take businesses away from 
dealers without cause.
  I recognize the efficiencies of mandatory arbitration clauses in 
general, but the specific circumstances in the manufacturer-dealer 
relationship justifies this widely-supported bipartisan proposal. It is 
worthy to note that Congress in 1956 enacted the Automobile Dealer Day 
in Court Act, which provided a small business dealer in limited 
circumstances the right to proceed in Federal court when faced with 
abuses by manufacturers. And State legislatures have enacted 
significant protections for auto dealers.
  S. 1140 amends Title 9 of the U.S. Code and make arbitration of 
disputes in motor vehicle franchise contracts optional. This would 
allow dealers to opt voluntarily for arbitration or use procedures and 
remedies available under State law, such as state-established 
administrative boards specifically established to resolve dealer/
manufacturer disputes.
  I must note that this legislation is extremely narrow and affects 
only the unique relationship between small business auto dealers and 
motor vehicle manufacturers, which is strictly governed by State law. 
This legislation is necessary to protect the States' interest in 
regulating the motor vehicle dealer/manufacturer relationship.
  All States, except for Alaska, have enacted laws specifically 
designed to regulate the economic relationship between motor vehicle 
dealers and manufacturers to prevent unfair manufacturer contract terms 
and practices. In most States, including my home State of Utah, 
effective State administrative forums already exist to handle dealer/
manufacturer disputes outside of the court system. Indeed, in the 
majority of States, a special State agency or forum is charged with 
administering and enforcing motor vehicle franchise law. These State 
forums provide an inexpensive, speedy, and non-judicial resolution of 
disputes.
  I urge my colleagues to support this worthwhile legislation.
  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. 1140

       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 ``Motor Vehicle Franchise 
     Contract Arbitration Fairness Act of 2001''.

     SEC. 2. ELECTION OF ARBITRATION.

       (a) Motor Vehicle Franchise Contracts.--Chapter 1 of title 
     9, United States Code, is amended by adding at the end the 
     following:

     ``Sec. 17. Motor vehicle franchise contracts

       ``(a) For purposes of this section, the term--
       ``(1) `motor vehicle' has the meaning given such term under 
     section 30102(6) of title 49; and
       ``(2) `motor vehicle franchise contract' means a contract 
     under which a motor vehicle manufacturer, importer, or 
     distributor sells motor vehicles to any other person for 
     resale to an ultimate purchaser and authorizes such other 
     person to repair and service the manufacturer's motor 
     vehicles.
       ``(b) Whenever a motor vehicle franchise contract provides 
     for the use of arbitration to resolve a controversy arising 
     out of or relating to the contract, arbitration may be used 
     to settle such controversy only if after such controversy 
     arises both parties consent in writing to use arbitration to 
     settle such controversy.
       ``(c) Whenever arbitration is elected to settle a dispute 
     under a motor vehicle franchise contract, the arbitrator 
     shall provide the parties to the contract with a written 
     explanation of the factual and legal basis for the award.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 1 of title 9, United States Code, is 
     amended by adding at the end the following:

``17. Motor vehicle franchise contracts.''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by section 2 shall apply to contracts 
     entered into, amended, altered, modified, renewed, or 
     extended after the date of the enactment of this Act.

  Mr. GRASSLEY. Mr. President, 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 Congress, 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 a 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 opportunist 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 hits 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 v. Keating. This, 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 we 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

[[Page 12496]]

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 me in supporting this legislation to 
address this unfair franchise practice.
  Mr. FEINGOLD. Mr. President, I rise today to introduce, with my 
distinguished colleague from Utah, Senator Hatch, the Motor Vehicle 
Franchise Contract Arbitration Fairness Act of 2001. I want to 
recognize the efforts of the Senator from Iowa, Senator Grassley, in 
advancing this legislation in the last Congress, and note how pleased I 
am that the distinguished ranking member and former chairman of the 
Judiciary Committee has decided to take the lead on this bill this 
year. By the time the 106th Congress concluded, we had the support of 
56 Senators for this bill. So I believe we have an excellent 
opportunity to pass this bill this year, and I look forward to working 
with the Senator from Utah to make that happen.
  While alternative methods of dispute resolution such as arbitration 
can serve a useful purpose in resolving disputes between parties, I am 
extremely concerned about 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. In every Congress since 
1994, I have introduced the Civil Rights Procedures Protection Act, 
which amends certain civil rights statutes to prevent the involuntary 
imposition of arbitration to claims that arise from unlawful employment 
discrimination and sexual harassment.
  A few years ago, it came 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 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 Hatch, 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 2001, would simply provide that 
each party to an auto or truck franchise contract has the option of 
selecting arbitration, but cannot be forced to do so.
  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 legal rights and foregoing the opportunity to use 
the courts or administrative forums. I cannot say this more strongly, 
this is unacceptable; this is

[[Page 12497]]

wrong. It is at great odds with our tradition of fair play and 
elementary notions of justice. I therefore urge my colleagues to join 
in this bipartisan effort to put an end to this invidious practice.
                                 ______
                                 
      By Mr. LIEBERMAN:
  S. 1142. A bill to amend the Internal Revenue Code of 1986 to repeal 
the minimum tax preference for exclusion for incentive stock options; 
to the Committee on Finance.
  Mr. LIEBERMAN. Mr. President, today I am reintroducing a proposal 
with regard to the perverse impact of the Alternative Minimum Tax, AMT, 
on Incentive Stock Options, ISOs. I previously introduced this proposal 
on April 30, 2001, as Section 5 of S. 798, the Productivity, 
Opportunity, and Prosperity Act of 2001. I am reintroducing this 
proposal as a separate bill to highlight the importance of this issue.
  Incentive stock options and the AMT did not exist when Franz Kafka's 
``The Castle'' was published in 1926. The book describes the relentless 
but futile efforts of the protagonist, K., to gain recognition from the 
mysterious authorities ruling from their castle a village where K. 
wants to establish himself. The world he inhabits is both absurd and 
real. Kafka's characters are trapped, and punished or threatened with 
punishment before they even have offended the authorities.
  The AMT/ISO interaction would be one that Kafka would appreciate. In 
the case of ISOs an employee who receives ISOs as an incentive can be 
taxed on the phantom paper gains the tax code deems to exist when he or 
she exercises an option, and be required to pay the AMT tax on these 
``gains'' even if the ``gains'' do not, in fact, exist when the tax is 
paid. This means the taxpayer may have no gains, no profits or assets, 
with which to pay the AMT and might even have to borrow funds to pay 
the tax or even go into default on his or her AMT liability.
  This Kafkaesque situation is unfair. It is not fair to impose tax on 
``income'' or ``gains'' unless the income or gains exist. With the AMT 
tax on ISOs, it is not relevant if the ``gains'' exist in a financial 
sense. That they exist on paper is sufficient to trigger the tax.
  This situation is also inconsistent with many well-established 
Federal Government policies. For example, our country favors stock 
options as an incentive for hard-working and productive employees of 
entrepreneurial companies. In most cases, entrepreneurs take enormous 
risks, receive less compensation than employees working for established 
companies, and have no company-sponsored pension plan. In addition, our 
country favors employee-ownership of firms. This ownership gives these 
employees a huge stake in the success of the company and motivates them 
to dedicate themselves to the firm's success. Finally, our country also 
favors long-term investments that generate growth. We know that growth 
is most likely to arise when entrepreneurs take risks over the long-
term and build fundamental value for their companies and shareholders 
and owners. The policy favoring long-term investments is reflected in 
the fact that capital gains incentives are available only if an 
investment is held for at least one year. An investment sold before the 
end of this ``holding period'' receives no capital gains benefit. The 
application of the AMT to ISOs is inconsistent with all three of these 
public policies.
  Let me explain the difference between ISOs and NSOs. Incentive stock 
options are sanctioned by the Internal Revenue code. Under current law 
the employee pays no tax when he or she exercises the option and buys 
the company's shares at the stock option price. The company receives no 
tax deduction on the spread, the difference between the option price 
and the market price of the stock. If the employee holds the stock for 
two years after the grant of the option and one year after the exercise 
of the option, he or she pays the capital gains tax on the difference 
between the exercise and sale price on the sale of the stock. The tax 
payment is deferred until the stock is sold and the tax is paid on the 
real gains that are realized from the sale.
  NSOs are stock options that do not satisfy the tax code requirements 
for ISOs. They are ``non-qualifying stock options'' or NSOs. With NSOs 
the employee is taxed immediately when the option is exercised on the 
spread between the grant and exercised price. This forces an employee 
to sell stock as soon as he or she exercise their options so that they 
can pay the tax on the spread. This is a zero sum game for the 
employee, selling the stock he or she has just bought to pay a tax on 
the spread. Even worse, because the stock is not ``held'' for one year, 
this tax is paid at the ordinary income tax rates, not the preferential 
capital gains tax rates. The company receives a business expense 
deduction on the spread.
  If this were the whole story, it is clear that companies would tend 
to offer ISOs rather than NSOs to their employees. Employees would be 
encouraged to hold their shares for at least a year after the option is 
exercised, which helps to bind them to the company. They would then 
qualify for capital gains tax rates on the realized gains.
  The problem is that ISOs come with a major liability, the application 
of the Alternative Minimum Tax, AMT, to the spread at the time of 
exercise. This tax is due to be paid even if the stock is held for the 
required period and even if the stock is eventually sold at a fraction 
of its value at the time the option is exercised. This tax at the time 
of exercise is inconsistent with the rule that applies to all other 
capital gains transactions, where the tax is paid when the gains are 
``realized,'' when the investment is sold with gains or losses. This 
tax at the time of exercise defeats the purpose of ISOs, forces 
employees to sell their stock, to pay the AMT tax, before the end of 
the holding period, and pay ordinary income tax rates. The difference 
between ordinary income tax rates and capital gains tax rates can be 15 
percent or more.
  The AMT tax is imposed on the spread at the time the option is 
exercised and it is irrelevant if the stock price at the time when the 
AMT tax is paid or when the stock is sold is a fraction of this price. 
The ``gains'' at the time of exercise are what count, not real gains in 
a financial sense when the investment is finally sold.
  The application of the AMT at the time of exercise to ISOs is a major 
disincentive for companies to offer ISOs to their employees. The 
purpose of the ISO law when it was enacted by Congress back in 1981 was 
to encourage long-term holdings of the stock. This purpose is defeated 
by the AMT application at the time of exercise. Even if firms could 
educate their employees about the AMT liability, the fact that this tax 
is imposed at the time of exercise on phantom gains would remain a 
major disincentive for them to offer ISOs. The risks are too great that 
the employee will have no real gains with which to pay the tax, that 
employee will have to sell stock immediately at ordinary income tax 
rates to make sure that funds are available to pay the tax when it is 
due, or take the risk of holding the stock.
  My understanding is that the firms that are most likely to grant ISOs 
are those firms that have no ability to use the corporate deduction 
that is available for NSOs. These are small firms with no tax liability 
for which the deduction is simply a tax loss carryforward with no 
current year value. With these firms the ISO held out the possibility 
of the employees receiving capital gains tax treatment of their gains. 
It is particularly sad that it is these firms and these employees which 
are feeling the brunt of the AMT/ISO problem.
  The application of the AMT to ISOs is strange because long-term 
holdings of stock, as required by the ISO law, are classic capital 
gains transactions and we do not apply the AMT to the tax benefit 
conferred by the capital gains tax. Under the AMT only ``tax preference 
items'' enumerated in the AMT are included when the AMT calculation is 
made. The capital gains differential, the difference between the 
ordinary tax rate on income and the lower capital gains rate, is a tax 
benefit but that differential is not included in the AMT. Given all the 
problems we are now seeing with the AMT

[[Page 12498]]

the capital gains differential should not be included as a preference 
item. But, by an accident of history, the AMT is still applied to ISOs. 
This makes no sense and it is an anomaly in the tax code. When the 
Congress restored the capital gains differential, and did not include 
it as an AMT tax preference item, we should have enacted a conforming 
amendment regarding the AMT and ISOs. We didn't, and we should do so 
now.
  With the AMT applied to ISOs, taxpayers are caught in a Catch-22 
situation. If they hold the stock for the required year, they can 
qualify for capital gains treatment on the eventual sale of the stock. 
But, in doing so they are taking a huge risk that the AMT tax bill will 
exceed the value of the stock when the AMT is paid. If the tax is too 
large, they may have to sell their stock before the capital gains 
holding period has run and pay ordinary income tax rates on any gains. 
This is a form of lottery that serves no public policy.
  The AMT was created to ensure the rich cannot use tax shelters to 
avoid paying their ``fair share.'' Taxpayers are supposed to calculate 
both their regular tax and the AMT bill, then pay whichever is higher. 
The AMT is likely to snare 1.5 million taxpayers this year and nearly 
36 million by 2010. But the case with ISOs is one where the taxpayers 
may never see the ``gains,'' and noneless owe a tax on them. Whatever 
the merits might be for the AMT for taxpayers with real gains, they 
have no bearing on taxpayers who may never see the gains. It is simply 
unfair to impose a tax on gains that exist only on paper. If the 
employee does realize gains, they should and will pay tax on them, but 
only if and when the gains are realized.
  Of course, with the recent huge drop in values for some stocks, many 
entrepreneurs are now being hit with immense AMT tax bills on the paper 
gains on stocks that are now worth a fraction of the price at the time 
of exercise. At a townhall meeting held in California by Representative 
Lofgren and Representative Bob Matsui, Kathy Swartz, a Mountain View 
woman, six months pregnant and soon to sell her ``dream house'' because 
she and her husband Karl owe $2.4 million in AMT, asked, ``How many 
victims do you need before you say it's horrible?'' We are talking 
about taxpayers who in fact owe five- to seven-figure tax bills on 
gains they never realized.
  My bill would change those tax rules so that the AMT no longer 
applies to ISOs and no tax is owed at the time when the entrepreneur 
exercises the option. This change would eliminate the unfair taxation 
of paper gains on ISOs. This would encourage long-term holdings of 
stock, not immediate sale of the stock as a hedge against AMT tax 
liability. It would do nothing to exempt entrepreneurs from paying tax 
on their real gains when they eventually sell the stock.
  My bill would solve this problem going forward. It would not, as 
drafted, provide relief to the taxpayers who already have been hit with 
AMT taxes on phantom gains. There is a bipartisan group in the House 
and Senate focusing on this group of taxpayers. This group has a strong 
claim for relief based on the inherent unfairness of the AMT as applied 
to ISOs. The unfairness of this law leads me to call for reform going 
forward should be remedied for current, as well as future taxpayers.
  Let me be clear about the cost and budget implications of my bill. 
The Joint Tax Committee on Taxation has found that my proposal would 
reduce government tax revenues by $12.412 billion over ten years. I am 
puzzled by this estimate, but there is no way for me to appeal it. The 
JTC does not provide explanations for its estimates, but I would assume 
that this estimate is based on the likelihood that there would be fewer 
tax payments at the time options are exercised as firms move from NSOs 
to ISOs, those employees with ISOs would not be paying the AMT, and 
there will be more employees who hold the stock and pay capital gains 
tax rates. Offsetting this, there will be fewer companies taking the 
deduction for NSOs. The revenue loss year-by-year is as follows: --
$1.821 billion (2002), --$1.126 (2003), --$858 (2004), --$825 (2005), 
--$941 (2006), --$1.106 (2007), --$1.341 (2009), --$1.620 (2010), and 
$1.910 (2011). The loss during the 2002-2006 period is --$5.494 
billion. I will not propose to enact my bill unless this sum is 
financed and will have no impact on the Federal budget.
  I am pleased that Rep. Zoe Lofgren (D-CA) has introduced legislation 
on AMT/ISO in the other body (H.R. 1487). Her bill has attracted a 
bipartisan group of cosponsors. I look forward to working with her and 
other Members to remedy this inequity in the tax code and to do so with 
regard to current as well as future taxpayers.
  Let me note that I have proposed in S. 798 to provide a special 
capital gains tax rate, in fact to set a zero tax rate, for stock 
purchased by employees in stock option plans, by investors in Initial 
Public Offerings, and similar purchases of company treasury stock. This 
zero rate would be effective, however, only if the shares are held for 
at least three years, so the AMT gamble would be even more dramatic. 
During the first year of that holding period, the AMT would have to be 
paid and during the remaining period the value of the stock could well 
dive from the exercise price creating an even more invidious trap.
  Kafka ``The Castle'' should remain as magnificent fiction. We have no 
place for taxes on phantom income and paper gains. Our taxpayers should 
be able to communicate effectively with the castle, not be caught in a 
bureaucratic nightmare that makes no sense and serves no policy.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 1143. A bill to require the Secretary of the Treasury to mint 
coins in commemoration of former President Ronald Reagan; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. CAMPBELL. Mr. President, today I introduce the ``Ronald Reagan 
Commemorative Coin Act of 2001.''
  The bill I am introducing today would accomplish two worthy goals. 
First, it would help honor Ronald Reagan, the 40th President of the 
United States. Second, it would also help raise much needed resources 
to help families across the United States provide care for their loved 
ones who have been stricken by Alzheimer's disease.
  I believe that a commemorative coin program would honor Ronald 
Reagan's life and contributions to our Nation, while also raising funds 
to help American families in their day to day struggle against this 
terrible disease.
  This legislation's worthiness and timeliness were underscored just 
last night when ABC televised a powerful program in which Diane Sawyer 
interviewed Nancy Reagan. Watching Mrs. Reagan as she so openly and 
eloquently shared touching insights about their ongoing struggle with 
Alzheimer's disease was moving. There is no doubt about the truly deep 
bonds that unite Ronald and Nancy Reagan and that we need to do what we 
can to fight the disease that has slowly taken its terrible toll on the 
Reagans and so many other American families.
  Ronald Reagan has worn many hats in his life, including endeavors as 
a sports announcer, actor, governor and President of the United States. 
He was first elected president in 1980 and served two terms, becoming 
the first president to serve two full terms since Dwight Eisenhower.
  Ronald Reagan's boundless optimism and deep-seated belief in the 
people of the United States and the American Dream helped restore our 
Nation's pride in itself and brought about a new ``Morning in 
America.'' His challenge to Gorbachev to ``tear down this wall,'' his 
successful revival of our economic power, his determination to rebuild 
our armed forces in order to contain the spread of communism, and his 
international summitry skills as seen at Reykjavik, Iceland, combined 
to help bring an end to the Cold War. Ronald Reagan left our Nation in 
much better shape than it was when he took office.
  As Alzheimer's sets in, brain cells gradually deteriorate and die. 
People afflicted by the disease gradually lose their cognitive ability. 
Patients eventually become completely helpless and dependent on those 
around them for

[[Page 12499]]

even the most basic daily needs. Each of the millions of Americans who 
is now affected will eventually, barring new discoveries in treatment, 
lose their ability to remember recent and past events, family and 
friends, even simple things like how to take a bath or turn on lights. 
Ronald Reagan, one of the most courageous and optimistic Presidents in 
American history, is no exception.
  Shortly after being shot in an assassination attempt, Ronald Reagan's 
courage and good humor in the face of a life threatening situation were 
evident when he famously apologized to his wife Nancy saying ``Sorry 
honey. I forgot to duck.'' Unfortunately, once Alzheimer's disease 
takes hold, it delivers a slow mind destroying bullet that none of us 
can duck to avoid. As Ronald Reagan wrote shortly after learning of his 
diagnosis ``I only wish there was some way I could spare Nancy from 
this painful experience.'' From the moment of diagnosis, it's ``a truly 
long, long, goodbye,'' Nancy Reagan said.
  Fortunately for all of us, when Ronald Reagan courageously announced 
in such an honest and public manner that he had Alzheimer's, rather 
than covering it up, he did a great deal to help alleviate the negative 
stigma that has long faced those suffering from this terrible disease. 
Much of the shame and pity traditionally associated with Alzheimer's 
was transformed almost overnight into sympathy and understanding as 
public awareness suddenly shot up and those suffering from Alzheimer's, 
and their families, knew that they were not alone.
  While Ronald Reagan's health didn't deteriorate right away, according 
to Mrs. Reagan, he had his good days and bad days, ``just like 
everybody else.'' In recent years, however, Reagan's condition has 
completely deteriorated. ``It's frightening and it's cruel,'' Nancy 
said, speaking of the disease and what it has done to her husband and 
family. ``It's sad to see somebody you love and have been married to 
for so long, with Alzheimer's, and you can't share memories,'' Mrs. 
Reagan said.
  In the introduction to a recently released book based on the touching 
love letters exchanged between herself and Reagan, Nancy elaborated on 
her sense of loss when she wrote, ``You know that it's a progressive 
disease and that there's no place to go but down, no light at the end 
of the tunnel. You get tired and frustrated, because you have no 
control and you feel helpless.'' She also said, ``There are so many 
memories that I can no longer share, which makes it very difficult.''
  Nancy Reagan has earned our Nation's admiration for her steadfast and 
loving dedication to her husband as she has watched her beloved husband 
slowly fade away. Likewise, families all across our Nation, day in and 
day out, choose to personally provide care for their loved ones 
suffering from Alzheimer's, rather than putting them in institutions. 
They deserve our respect and support.
  Fortunately, Nancy Reagan has had access to vital resources that help 
her care for her husband. This is how it should be. Unfortunately, 
there are many American families out there who do not have access to 
these resources. This bill will help alleviate that by raising money to 
help American families who are struggling while providing care for 
their loved ones.
  Fortunately, funding for Alzheimer's research has increased 
significantly over the past several years. Ronald Reagan's courage in 
coming forward and publically announcing his condition played an 
important role in raising public awareness of Alzheimer's and paved the 
way for the recent increases in research funding. This bill would 
complement these efforts.
  Once again, the legislation I am introducing today authorizes the 
U.S. Mint to produce commemorative coins honoring Ronald Reagan while 
raising funds to help families care for their family members suffering 
from Alzheimer's disease. I urge my colleagues to support passage of 
this legislation.
  Ronald Reagan's eternal optimism and deep seated belief in an even 
better future for our Nation was underscored when he said, ``I know 
that for America, there will always be a bright future ahead.'' This 
bill, in keeping with this quote's spirit, will help provide for a 
better future for many American families.
  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. 1143

       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 ``Ronald Reagan Commemorative 
     Coin Act of 2001''.

     SEC. 2. COIN SPECIFICATIONS.

       (a) Denominations.--The Secretary of the Treasury 
     (hereafter in this Act referred to as the ``Secretary'') 
     shall mint and issue the following coins:
       (1) $5 gold coins.--Not more than 100,000 $5 coins, which 
     shall--
       (A) weigh 8.359 grams;
       (B) have a diameter of 0.850 inches; and
       (C) contain 90 percent gold and 10 percent alloy.
       (2) $1 silver coins.--Not more than 500,000 $1 coins, which 
     shall--
       (A) weigh 26.73 grams;
       (B) have a diameter of 1.500 inches; and
       (C) contain 90 percent silver and 10 percent copper.
       (b) Bimetallic Coins.--The Secretary may mint and issue not 
     more than 200,000 $10 bimetallic coins of gold and platinum 
     instead of the gold coins required under subsection (a)(1), 
     in accordance with such specifications as the Secretary 
     determines to be appropriate.
       (c) Legal Tender.--The coins minted under this Act shall be 
     legal tender, as provided in section 5103 of title 31, United 
     States Code.

     SEC. 3. SOURCES OF BULLION.

       (a) Platinum and Gold.--The Secretary shall obtain platinum 
     and gold for minting coins under this Act from available 
     sources.
       (b) Silver.--The Secretary may obtain silver for minting 
     coins under this Act from stockpiles established under the 
     Strategic and Critical Materials Stock Piling Act and from 
     other available sources.

     SEC. 4. DESIGN OF COINS.

       (a) Design Requirements.--
       (1) In general.--The design of the coins minted under this 
     Act shall--
       (A) be emblematic of the presidency and life of former 
     President Ronald Reagan;
       (B) bear the likeness of former President Ronald Reagan on 
     the obverse side; and
       (C) bear a design on the reverse side that is similar to 
     the depiction of an American eagle carrying an olive branch, 
     flying above a nest containing another eagle and hatchlings, 
     as depicted on the 2001 American Eagle Gold Proof coins.
       (2) Designation and inscriptions.--On each coin minted 
     under this Act, there shall be--
       (A) a designation of the value of the coin;
       (B) an inscription of the year ``2005''; and
       (C) inscriptions of the words ``Liberty'', ``In God We 
     Trust'', ``United States of America'', and ``E Pluribus 
     Unum''.
       (b) Design Selection.--The design for the coins minted 
     under this Act shall be--
       (1) selected by the Secretary, after consultation with the 
     Commission of Fine Arts; and
       (2) reviewed by the Citizens Commemorative Coin Advisory 
     Committee.

     SEC. 5. ISSUANCE OF COINS.

       (a) Quality of Coins.--Coins minted under this Act shall be 
     issued in uncirculated and proof qualities.
       (b) Mint Facility.--Only one facility of the United States 
     Mint may be used to strike any particular combination of 
     denomination and quality of the coins minted under this Act.
       (c) Period for Issuance.--The Secretary may issue coins 
     minted under this Act only during the period beginning on 
     January 1, 2005 and ending on December 31, 2005.

     SEC. 6. SALE OF COINS.

       (a) Sale Price.--The coins issued under this Act shall be 
     sold by the Secretary at a price equal to the sum of--
       (1) the face value of the coins;
       (2) the surcharge provided in subsection (d) with respect 
     to such coins; and
       (3) the cost of designing and issuing the coins (including 
     labor, materials, dies, use of machinery, overhead expenses, 
     marketing, and shipping).
       (b) Bulk Sales.--The Secretary shall make bulk sales of the 
     coins issued under this Act at a reasonable discount.
       (c) Prepaid Orders.--
       (1) In general.--The Secretary shall accept prepaid orders 
     for the coins minted under this Act before the issuance of 
     such coins.
       (2) Discount.--Sale prices with respect to prepaid orders 
     under paragraph (1) shall be at a reasonable discount.
       (d) Surcharges.--All sales of coins issued under this Act 
     shall include a surcharge established by the Secretary, in an 
     amount equal to not more than--

[[Page 12500]]

       (1) $50 per coin for the $10 coin or $35 per coin for the 
     $5 coin; and
       (2) $10 per coin for the $1 coin.

     SEC. 7. DISTRIBUTION OF SURCHARGES.

       (a) In General.--Subject to section 5134(f) of title 31, 
     United States Code, the proceeds from the surcharges received 
     by the Secretary from the sale of coins issued under this Act 
     shall be paid promptly by the Secretary to the Department of 
     Health and Human Services to be used by the Secretary of 
     Health and Human Services for the purposes of--
       (1) providing grants to charitable organizations that 
     assist families in their efforts to provide care at home to a 
     family member with Alzheimer's disease; and
       (2) increasing awareness and educational outreach regarding 
     Alzheimer's disease.
       (b) Audits.--Any organization or entity that receives funds 
     from the Secretary of Health and Human Services under 
     subsection (a) shall be subject to the audit requirements of 
     section 5134(f)(2) of title 31, United States Code, with 
     regard to such funds.

     SEC. 8. FINANCIAL ASSURANCES.

       (a) No Net Cost to the Government.--The Secretary shall 
     take such actions as may be necessary to ensure that minting 
     and issuing coins under this Act will not result in any net 
     cost to the United States Government.
       (b) Payment for Coins.--A coin shall not be issued under 
     this Act unless the Secretary has received--
       (1) full payment for the coin;
       (2) security satisfactory to the Secretary to indemnify the 
     United States for full payment; or
       (3) a guarantee of full payment satisfactory to the 
     Secretary from a depository institution, the deposits of 
     which are insured by the Federal Deposit Insurance 
     Corporation or the National Credit Union Administration 
     Board.
                                 ______
                                 

By Mr. LIEBERMAN (for himself, Ms. Collins, Mr. Levin, Mr. Durbin, and 
                              Mr. Akaka):

  S. 1144. A bill to amend title III of the Stewart B. McKinney 
Homeless Assistance Act (42 U.S.C. 11331 ed seq.) to reauthorize the 
Federal Emergency Management Food and Shelter Program, and for other 
purposes; to the Committee on Governmental Affairs.
  Mr. LIEBERMAN. Mr. President, I rise to introduce a bill that will 
re-authorize a small but highly effective program, the Emergency Food 
and Shelter Program, or EFS for short. The EFS program, which is 
administered by the Federal Emergency Management Agency, supplements 
community efforts to meet the needs of the homeless and hungry in all 
fifty States. I am very pleased that my colleagues on the Committee on 
Governmental Affairs, Senators Collins, Levin, Durbin, and Akaka, are 
joining me as original co-sponsors of this legislation. Our committee 
has jurisdiction over the EFS program, and it is my hope that together 
we can generate even more bipartisan support for a program that makes a 
real difference with its tiny budget. The EFS program is a great help 
not only to the Nation's homeless population but also to working people 
who are trying to feed and shelter their families at entry-level wages. 
Services supplemented by the EFS funding, such as food banks and 
emergency rent/utility assistance programs, are especially helpful to 
families with big responsibilities but small paychecks.
  One of the things that distinguishes the EFS program is the extent to 
which it relies on non-profit organizations. Local boards in counties, 
parishes, and municipalities across the country advertise the 
availability of funds, decide on non-profit and local government 
agencies to be funded, and monitor the recipient agencies. The local 
boards, like the program's National Board, are made up of charitable 
organizations including the National Council of Churches, the United 
Jewish Communities, Catholic Charities, USA, the Salvation Army, and 
the American Red Cross. By relying on community participation, the 
program keeps administrative overhead to an unusually low amount, less 
than 3 percent.
  The EFS program has operated without authorization since 1994 but has 
been sustained by annual appropriations. The proposed bill will re-
authorize the program for the next three years. It will also authorize 
modest funding increases over the amounts appropriated in recent years. 
A similar bill introduced by Senator Thompson and me in the last 
Congress, S. 1516, passed the Senate by Unanimous Consent.
  In summary, FEMA's Emergency Food and Shelter Program is a highly 
efficient example of the government relying on the country's non-profit 
organizations to help people in innovative ways. The EFS program aids 
the homeless and the hungry in a majority of the Nation's counties and 
in all fifty States, and I ask my colleagues to support this program 
and our re-authorizing legislation.
  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. 1144

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

     SECTION 1. AUTHORIZATION OF APPROPRIATIONS.

       Section 322 of the Stewart B. McKinney Homeless Assistance 
     Act (42 U.S.C. 11352) is amended to read as follows:

     ``SEC. 322. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     title $150,000,000 for fiscal year 2002, $160,000,000 for 
     fiscal year 2003, and $170,000,000 for fiscal year 2004.''.

     SEC. 2. NAME CHANGE TO NOMINATING ORGANIZATION.

       Section 301(b) of the Stewart B. McKinney Homeless 
     Assistance Act (42 U.S.C. 11331(b)) is amended by striking 
     paragraph (5) and inserting the following:
       ``(5) United Jewish Communities.''.

     SEC. 3. PARTICIPATION OF HOMELESS INDIVIDUALS ON LOCAL 
                   BOARDS.

       Section 316(a) of the Stewart B. McKinney Homeless 
     Assistance Act (42 U.S.C. 11346(a)) is amended by striking 
     paragraph (6) and inserting the following:
       ``(6) guidelines requiring each local board to include in 
     their membership not less than 1 homeless individual, former 
     homeless individual, homeless advocate, or recipient of food 
     or shelter services, except that such guidelines may waive 
     such requirement for any board unable to meet such 
     requirement if the board otherwise consults with homeless 
     individuals, former homeless individuals, homeless advocates, 
     or recipients of food or shelter services.''.
                                 ______
                                 
      By Mrs. BOXER:
  S. 1145. A bill to amend the Internal Revenue Code of 1986 to extend 
the work opportunity credit to encourage the hiring of certain 
veterans, and for other purposes; to the Committee on Finance.
  Mrs. BOXER. Mr. President, I am introducing legislation to help the 
estimated 1.5 million veterans who are now living in poverty by giving 
a tax credit to those employers who hire them and put them on the road 
to financial independence. This idea was proposed and is supported by 
the National Coalition for Homeless Veterans and the Non-Commissioned 
Officers Association.
  This legislation is based upon the current tax credit offered for 
employers who hire those coming off welfare. Veterans groups tell me 
that the current tax credit is underutilized by veterans because many 
are not receiving food stamps or are not on welfare. Because the bill I 
am introducing today bases eligibility on the poverty level, more 
veterans will be able to benefit from this credit.
  My bill would allow employers to receive a hiring tax credit of 50 
percent of the veteran's first year wages and a retention credit of 25 
percent of the veteran's second year wages. Only the first $20,000 of 
wages per year will count toward the credit.
  I offered this legislation as an amendment to the tax bill. While my 
amendment failed on a procedural vote, 49-50, opponents indicated that 
enacting this legislation would be a good thing to do. This being the 
case, I am hopeful that the Senate will take up and pass the bill I am 
introducing today in a bipartisan manner. It is the least we can do for 
our veterans who so bravely served our Nation and deserve our help.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1145

       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 ``Veterans Opportunity to Work 
     Act.''

     SEC. 2. EXPANSION OF WORK OPPORTUNITY TAX CREDIT.

       (a) In General.--Section 51(d)(1) of the Internal Revenue 
     Code of 1986 (relating to

[[Page 12501]]

     members of targeted groups) is amended by striking ``or'' at 
     the end of subparagraph (G), by striking the period at the 
     end of subparagraph (H) and inserting ``, or'', and by adding 
     at the end the following:
       ``(I) a qualified low-income veteran.''
       (b) Qualified Low-Income Veteran.--Section 51(d) of the 
     Internal Revenue Code of 1986 (relating to members of 
     targeted groups) is amended by redesignating paragraphs (10) 
     through (12) as paragraphs (11) through (13), respectively, 
     and by inserting after paragraph (9) the following:
       ``(10) Qualified low-income veteran.--
       ``(A) In general.--The term `qualified low-income veteran' 
     means any veteran whose gross income for the taxable year 
     preceding the taxable year including the hiring date, was 
     below the poverty line (as defined by the Office of 
     Management and Budget) for such preceding taxable year.
       ``(B) Veteran.--The term `veteran' has the meaning given 
     such term by paragraph (3)(B).
       ``(C) Special rules for determining amount of credit.--For 
     purposes of applying this subpart to wages paid or incurred 
     to any qualified low-income veteran--
       ``(i) subsection (a) shall be applied by substituting `50 
     percent of the qualified first-year wages and 25 percent of 
     the qualified second-year wages' for `40 percent of the 
     qualified first year wages', and
       ``(ii) in lieu of paragraphs (2) and (3) of subsection (b), 
     the following definitions and special rule shall apply:

       ``(I) Qualified first-year wages.--The term `qualified 
     first-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning with the day the individual begins 
     work for the employer.
       ``(II) Qualified second-year wages.--The term `qualified 
     second-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning on the day after the last day of the 
     1-year period with respect to such individual determined 
     under subclause (I).
       ``(III) Only first $20,000 of wages per year taken into 
     account.--The amount of the qualified first and second year 
     wages which may be taken into account with respect to any 
     individual shall not exceed $20,000 per year.''.

       (c) Permanence of Credit.--Section 51(c)(4) of the Internal 
     Revenue Code of 1986 (relating to termination) is amended by 
     inserting ``(except for wages paid to a qualified low-income 
     veteran)'' after ``individual''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act.
                                 ______
                                 
      By Mr. ALLARD:
  S. 1146. A bill to amend the Act of March 3, 1875, to permit the 
State of Colorado to use land held in trust by the State as open space; 
to the Committee on Energy and Natural Resources.
  Mr. ALLARD. Mr. President, today I am introducing legislation to 
fulfill the wishes of my fellow Coloradans to allow the State to 
protect 300,000 acres of State land as open space.
  The origins of this issue date back to 1875 when Congress passed the 
legislation which authorized the Territory of Colorado to form a 
constitution, State government and be admitted into the Union. The 1875 
Enabling Act established that Sections 16 and 36 of each township in 
the new State would be ``granted to said State for the support of 
common schools.'' The Federal directive to the State was clear: provide 
a sound financial basis for the long-term benefit of public schools. 
The Colorado State Constitution further strengthened this position and 
required that the new State Board of Land Commissioners manage its land 
holdings ``in such a matter as will secure the maximum possible 
amount'' for the public school fund.
  Today, there are some three million surface acres of State trust 
lands which are leased for ranching, farming, oil and gas production 
and other uses. Some of these lands are the most beautiful parcels in 
the state and offer a tremendous natural resource.
  Through the years, the lands have been a reliable, but a dwindling 
source of funds to the overall education budget. Currently, the State 
of Colorado spends approximately $3.5 billion annually on public 
schools, of this amount revenues from State trust lands account for 
about $22 million.
  Now, however, Coloradans priorities have changed, including a strong 
desire to protect open space and the environment. These changes became 
evident in a 1996 voter approved State Constitutional Amendment which 
gave more flexibility in the management of the trust lands. Among other 
things, the Amendment established a 300,000 acre Stewardship Trust. The 
voters recognized that certain State trust lands may be more valuable 
in the future if they are kept in the trust land portfolio rather than 
disposed of for a short term financial gains. The lands in the new 
Stewardship Trust will be managed ``to maximize options for continued 
stewardship, public use or future disposition'' by protecting and 
enhancing the ``beauty, natural values, open space and wildlife 
habitat'' on these parcels. Further, it struck the provision requiring 
``maximizing revenue'' and replaced it with a requirement that the land 
board to manage its land holdings ``in order to produce reasonable and 
consistent income over time.''
  While the Amendment has withstood court challenges, it still remains 
that the Stewardship Trust could, in the future, cause a breach of the 
Enabling Act. In order to correct this potential breach, I am 
introducing this legislation with the full support of the State of 
Colorado to ensure that the wishes of the voters are upheld and the 
Stewardship Trust is fully implemented. There are two key points of the 
legislation. First, the bill allows 300,000 acres of state trust lands 
to be used for open space, wildlife habitat, scenic value or other 
natural value. Second, it exempts these lands from the requirement that 
they generate income for the common schools.
  The Colorado State Land Board has a clear mission for implementing 
the Stewardship Trust: to protect the crown jewels of the state trust 
lands and ensure that these lands receive special protection from sale 
or development.
  It is also clear that Colorado voters wanted to set aside 300,000 
acres from potential development. I want to help the State fulfill 
these goals.
  This is a unique bill and ensures the state's flexibility in managing 
the trust lands. It does not change the intent of the Stewardship 
Trust, just ensures that the Enabling Act and the State Constitution 
are consistent.
  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. 1146

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

     SECTION 1. COLORADO TRUST LAND.

       Section 7 of the Act of March 3, 1875 (18 Stat. 475, 
     chapter 139) (commonly known as the ``Colorado Enabling 
     Act''), is amended by inserting before the period at the end 
     the following: ``and for use for open space, wildlife 
     habitat, scenic value, or other natural value, regardless of 
     whether the land generates income for the common schools as 
     described under section 14, except that the amount of land 
     used for natural value shall not exceed 300,000 acres''.
                                 ______
                                 
      By Mr. NICKLES:
  S. 1147. A bill to amend title X and title XI of the Energy Policy 
Act of 1992; to the Committee on Energy and Natural Resources.
  Mr. NICKLES. Mr. President, I rise today to introduce legislation, 
the Thorium Remediation Reauthorization Act of 2001. This bill will 
provide authorization for the Federal Government to pay its share of 
decommissioning and remediation costs for a thorium facility in West 
Chicago, Illinois. In a DOE proceeding, it was determined that the 
government is responsible for 55.2 percent of all West Chicago cleanup 
costs because 55.2 percent of West Chicago tailings resulted from 
Federal contracts. Under Title X of the Energy Policy Act of 1992 
(``EPACT''), the thorium licensee pays for all West Chicago cleanup 
costs, and is then reimbursed, though annual appropriations, the 
government's share of those costs.
  There is already more than a $60 million shortage in authorized 
funding for the Federal share of West Chicago cleanup costs. Despite 
that, the thorium licensee has continued to pay all decommissioning 
costs at the West Chicago factory site, as well as remediation costs at 
vicinity properties known as Reed-Keppler Park, Residential Properties, 
and Kress Creek. Remediation of Reed-Keppler Park was finished late 
last year and remediation of

[[Page 12502]]

more than 600 Residential Properties is expected to be substantially 
complete by the end of this year. Decommissioning of the factory site, 
with the exception of groundwater, is expected to conclude in 2004. 
Cleanup requirements at Kress Creek have not been determined, and until 
those are established, the costs associated with the cleanup of that 
vicinity property cannot be accurately projected.
  The significant costs associated with the West Chicago cleanup are a 
result, in large part, of extensive government use of the facility 
during the development of our country's nuclear defense program, 
including the Manhattan project. With the exception of Kress Creek and 
groundwater, total cleanup costs at the factory site and all vicinity 
properties can now be estimated with reasonable certainty. The $123 
million authorized by this bill will permit the government to begin 
reimbursing the amount it is already in arrears to the thorium 
licensee. It also will provide the authorization necessary for the 
government to pay its share of costs, excluding costs for Kress Creek 
and for groundwater, that will be incurred by the licensee through 
completion of West Chicago cleanup.
  Funding for this reauthorization would come from the General 
Treasury. Thus, this legislation will not diminish the availability of 
funds in the DOE's Decontamination and Decommissioning Fund, from which 
both Title X uranium licensees and the DOE's gaseous diffusion plants 
receive funding.
  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. 1147

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

     SECTION 1. REAUTHORIZATION OF THORIUM REIMBURSEMENT.

       (a) Section 1001(b)(2)(C) of the Energy Policy Act of 1992 
     (42 U.S.C. 2296a) is amended by striking ``$140,000,000'' and 
     inserting ``$263,000,000''.
       (b) Section 1003(a) of such Act (42 U.S.C. 2296a-2) is 
     amended by striking ``$490,000,000'' and inserting 
     ``$613,000,000''.
       (c) Section 1802(a) of the Atomic Energy Act of 1954 (42 
     U.S.C. 2297g-1) is amended by striking ``$488,333,333'' and 
     inserting ``$508,833,333''.
                                 ______
                                 
      By Mr. BURNS:
  S. 1148. A bill to convey the Lower Yellowstone Irrigation Project, 
the Savage Unit of the Pick-Sloan Missouri Basin Program, and the 
Intake Irrigation Project to the appurtenant irrigation districts; to 
the Committee on Energy and Natural Resources.
  Mr. BURNS. Mr. President, I rise today to introduce a piece of 
legislation that helps a large number of family farmers on the border 
of Montana and North Dakota. The Lower Yellowstone Irrigation Projects 
Title Transfer moves ownership of these irrigation projects from 
Federal control to local control. Both the Bureau of Reclamation and 
those relying on the projects for their livelihood agree there is 
little value in having the Federal Government retain ownership.
  I introduced this legislation in the last Congress, and continue to 
believe it helps us to achieve the long term goals of Montana 
irrigators, and the mission of the Bureau of Reclamation. Just this 
week I attended the confirmation hearing of John W. Keys, III, who is 
the designate for Commissioner of the Bureau of Reclamation. I asked 
his position on title transfers of irrigation projects like the Lower 
Yellowstone, where local irrigation districts have successfully managed 
the Federal properties, and where the Bureau has encouraged the 
transfer of title to the Districts. His response to me was very 
encouraging. He stated this type of title transfer ``makes sense and is 
an opportunity to move facilities from Federal ownership to more 
appropriate control.'' He has promised to work with me and the 
Irrigation District to make this a reality, and I look forward to it.
  The history of these projects dates to the early 1900's with the 
original Lower Yellowstone project being built by the Bureau of 
Reclamation between 1906 and 1910. The Savage Unit was added in 1947-
48. The end result was the creation of fertile, irrigated land to help 
spur economic development in the area. To this day, agriculture is the 
number one industry in the area.
  The local impact of the projects is measurable in numbers, but the 
greatest impacts can only be seen by visiting the area. About 500 
family farms rely on these projects for economic substance, and the 
entire area relies on them to create stability in the local economy. In 
an area that has seen booms and busts in oil, gas, and other 
commodities, these irrigated lands continued producing and offering a 
foundation for the businesses in the area.
  As we all know, the agricultural economy is not as strong as we'd 
like it to be, but these irrigated lands offer a reasonable return over 
time and are the foundation for strong communities based upon the 
ideals that have made this country successful. The 500 families 
impacted are hard working, honest producers, and I can think of no 
better people to manage their own irrigation projects.
  Every day, we see an example of where the Federal Government is 
taking on a new task. We can debate the merits of these efforts on an 
individual basis, but I think we can all agree that while the 
government gets involved in new projects there are many that we can 
safely pass on to state or local control. The Lower Yellowstone 
Projects are a prime example of such an opportunity, and I ask my 
colleagues to join me in seeing this legislation passed as quickly as 
possible.
                                 ______
                                 
      By Mr. SMITH of New Hampshire:
  S. 1150. A bill to waive tolls on the Interstate System during peak 
holiday travel periods; to the Committee on Environment and Public 
Works.
  Mr. SMITH of New Hampshire. Mr. President, I rise to introduce the 
Interstate Highway System Toll-Free Holiday Act.
  As we move into this Fourth of July holiday to celebrate our nation's 
225th birthday, many will do so in true American fashion by loading up 
the kids and the dog in the family car and heading out for a fun 
holiday vacation. Unfortunately, many of those family trips will 
quickly turn into frustration. Just as you get on the road and begin 
that family outing, you are greeted by a screeching halt, faced with 
what seems to be an endless line that is not moving. Soon, the kids 
will grow restless and angry. You've just reached the end of the line 
of the first toll booth and the delay and frustration begins. Of 
course, when you do finally make it to the booth, they take your money. 
Every holiday, no exception. I want to help make those holiday driving 
vacations more enjoyable by removing that toll booth frustration. My 
legislation will provide the much deserved relief from all of that 
holiday grief.
  The Interstate Highway System Toll-Free Holiday Act provides that no 
tolls will be collected and no vehicles will be stopped at toll booths 
on the Interstate System during peak holiday travel periods. The exact 
duration of the toll waivers will be left to the States to determine, 
but will include, at a minimum, the entire 24 hour period of each legal 
Federal holiday. The bill will also authorize the Secretary of 
Transportation to reimburse the State, at the State's request, for lost 
toll revenues out of the Highway Trust Fund, which is funded by the tax 
that we all pay when we purchase gas for our cars. I want to keep the 
State highway funds whole, and, at the same time, provide relief to all 
those who simply want a hassle-free holiday trip.
  There are currently some 2,200 miles of toll facilities on the 42,800 
mile Interstate System. On peak holiday travel days, traffic increases 
up to 50 percent over a typical weekday. In New Hampshire last year, 
the I-95 Hampton toll booth had a 10 percent average increase in 
traffic over the four-day Fourth of July weekend compared to the 
previous weekend. That is equivalent to an additional 8,000 vehicles 
passing through this one toll booth every day. That increase in volume 
at the toll sites is not only an inconvenience in time and money, but 
also adds to safety concerns and, because vehicle

[[Page 12503]]

emissions are higher when idling, air quality suffers. I am pleased 
that this bill will alleviate the headaches and problems associated 
with increased toll booth traffic on holidays.
  This is just one of what will be a series of bills that I will be 
introducing, as the Ranking Member of the Environment and Public Works 
Committee, to address transportation needs in New Hampshire and across 
the Nation, as we prepare for the reauthorization of the next major 
comprehensive highway bill in 2003.
  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. 1150

       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 ``Interstate Highway System 
     Toll-Free Holiday Act''.

     SEC. 2. WAIVER OF TOLLS ON THE INTERSTATE SYSTEM DURING PEAK 
                   HOLIDAY TRAVEL PERIODS.

       (a) Definitions.--In this section, the terms ``Interstate 
     System'', ``public authority'', ``Secretary'', ``State'', and 
     ``State transportation department'' have the meanings given 
     the terms in section 101(a) of title 23, United States Code.
       (b) Waiver.--
       (1) In general.--No tolls shall be collected, and no 
     vehicle shall be required to stop at a toll booth, for any 
     toll highway, bridge, or tunnel on the Interstate System 
     during any peak holiday travel period determined under 
     paragraph (2).
       (2) Peak holiday travel periods.--For the purposes of 
     paragraph (1), the State transportation department or the 
     public authority having jurisdiction over the toll highway, 
     bridge, or tunnel shall determine the number and duration of 
     peak holiday travel periods, which shall include, at a 
     minimum, the 24-hour period of each legal public holiday 
     specified in section 6103(a) of title 5, United States Code.
       (c) Federal Reimbursement.--
       (1) In general.--For each fiscal year, upon request by a 
     State or public authority and approval by the Secretary, the 
     Secretary shall reimburse the State or public authority for 
     the amount of toll revenue not collected by reason of 
     subsection (b).
       (2) Requests for reimbursement.--On or before September 30 
     of a fiscal year, each State or public authority that desires 
     a refund described in paragraph (1) shall submit to the 
     Secretary a request for reimbursement, based on actual 
     traffic data, for the amount of toll revenue not collected by 
     reason of subsection (b) during the fiscal year.
       (3) Use of reimbursed funds.--A request for reimbursement 
     under paragraph (2) shall include a certification by the 
     State or public authority that the amount of the 
     reimbursement will be used only for debt service or for 
     operation and maintenance of the toll facility, including 
     reconstruction, resurfacing, restoration, and rehabilitation.
       (4) Authorization of appropriations.--There are authorized 
     to be appropriated from the Highway Trust Fund (other than 
     the Mass Transit Account) such sums as are necessary to carry 
     out this subsection.
                                 ______
                                 
      By Mr. REID (for himself and Mr. Ensign):
  S. 1151. A bill to amend the method for achieving quiet technology 
specified in the National Parks Air Tour Management Act of 2000; to the 
Committee on Commerce, Science, and Transportation.
  Mr. REID. Mr. President, I rise today along with my good friend and 
colleague from Nevada, Senator Ensign because I am deeply concerned 
that the Federal Aviation Administration has failed to develop the 
incentives for quiet technology aircraft.
  The bill we are introducing today, the ``Grand Canyon Quiet 
Technology Implementation Act,'' completes the Congressional mandates 
contained in the National Park Air Tour Management Act of 2000 which 
called for the implementation of ``reasonably achievable'' quiet 
technology standards for the Grand Canyon air tour operators.
  Key provisions of the Act called for the Federal Aviation 
Administration, by April 5th of this year, to: 1. Designate reasonably 
achievable requirements for fixed-wing and helicopter aircraft 
necessary for such aircraft to be considered as employing quiet 
aircraft technology; and 2. establish corridors for commercial air tour 
operations by fixed-wing and helicopter aircraft that employ quiet 
aircraft technology, or explain to Congress why they can't. The agency 
has failed to comply with any of these provisions.
  The Act also provides that operators employing quiet technology shall 
be exempted from operational flight caps. This relief is essential to 
the very survival of many of these air tour companies. By not complying 
with these Congressional mandates, the Federal Aviation Administration 
places the viability of the Grand Canyon air tour industry in jeopardy.
  While Senator Ensign and I along with the air tour community have 
sought to work with the Federal agencies in a cooperative manner, our 
repeated overtures have been summarily ignored, which forces us to take 
further legislative action.
  Our bill simply requires the Federal Aviation Administration to do 
its job. It identifies ``reasonably achievable'' quiet technology 
standards and provides relief for air tour operators who have spent 
many years and millions of dollars of their money voluntarily 
transitioning to quieter aircraft to help restore natural quiet to the 
Grand Canyon.
  I would like to compliment my good friend from Arizona, Senator John 
McCain for his vision and leadership in the Senate in recognizing that 
quieter aircraft was the key to restoring natural quiet to the Grand 
Canyon. During his tenure as chairman of the Senate Commerce Committee, 
it was Senator McCain who insisted on the quiet technology provisions 
contained in the National Park Air Tour Management Act of 2000. It was 
Senator McCain who wanted to ensure that those air tour companies which 
already have made huge investments in current technology quiet aircraft 
modifications were rewarded for their initiative. It was Senator 
McCain, an advocate for restoring natural quiet to the Grand Canyon, 
who took the lead in seeking to ensure that the elderly, disabled and 
time-constrained visitor still would be able to enjoy the magnificence 
of the Grand Canyon by air. The legislation we are introducing today, 
supports Senator McCain's vision.
  The National Park Air Tour Management Act of 2000 is clear. It calls 
for the implementation of ``reasonably achievable'' quiet technology 
incentives. Our Grand Canyon Quiet Technology Implementation 
legislation is based on today's best aircraft technology.
  Some may ask what is ``reasonably achievable?'' It constitutes the 
following: replacing smaller aircraft with larger and quieter aircraft 
with more seating capacity reducing the number of flights needed to 
carry the same number of passengers; adding propellers on turbine-
powered airplanes or main rotor blades on helicopters which reduces 
prop tip speeds by reducing engine RPMs; modifying engine exhaust 
systems with high-tech mufflers to absorb engine noise; modifying 
helicopter tail rotors with high-tech components for quieter operation.
  These modifications typically reduce the sound generated by these 
aircraft by more than 50 percent.
  This is what is ``reasonably achievable'' in aviation technology. In 
the year 2001, this is essentially all that can be done to make 
aircraft quieter. Operators which have spent millions of dollars to 
make these modifications, in our view, have complied with the intent of 
the law and deserve relief.
  Let us not forget the original intent of this legislation to help 
restore natural quiet to the Grand Canyon and, as the 1916 Organic Act 
directs, to provide for the enjoyment of our national parks ``in such 
manner and by such means as will leave them unimpaired for the 
enjoyment of future generations.''
  Air touring is consistent with the Park Service mission.
  Based on current air tour restrictions, more than 1.7 million 
tourists will be denied access to the Grand Canyon during the next 
decade at a cost to air tour operators conservatively estimated at $250 
million.
  Senator Ensign and I agree that, to the extent possible and 
practical, that the quieter these air tour aircraft can be made to be, 
the better for everyone. That's why it is so important that the Grand 
Canyon Quiet Technology Implementation Act become the law.

[[Page 12504]]

  I ask unanimous consent that the text of the Grand Canyon Quiet 
Technology Implementation Act be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1151

       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 referred to as the ``Grand Canyon Quiet 
     Technology Implementation Act''.

     SEC. 2. AMENDMENTS TO QUIET AIRCRAFT TECHNOLOGY.

       (a) In General.--Section 804 of the National Parks Air Tour 
     Management Act of 2000 (49 U.S.C. 40128 note) is amended by 
     adding at the end the following new subsection:
       ``(f) Alternative Quiet Aircraft Technology.--
       ``(1) General rule.--Notwithstanding any other provision of 
     law, an air tour operator based in Clark County, Nevada or at 
     the Grand Canyon National Park Airport shall be treated as 
     having met the requirements for quiet aircraft technology 
     that apply with respect to commercial air tour operations for 
     tours described in subsection (b), if the air tour operator 
     has met the following requirements:
       ``(A) The aircraft used by the air tour operator for such 
     tours--
       ``(i) meet the requirements designated under subsection 
     (a); or
       ``(ii) if not previously powered by turbine engines, have 
     been modified to be powered by turbine engines and, after the 
     conversion--

       ``(I) have a higher number of propellers (in the case of 
     fixed-wing aircraft) or main rotor blades (in the case of 
     helicopters) than the aircraft had before the conversion, 
     thereby resulting in a reduction in prop or blade tip speeds 
     and engine revolutions per minute;
       ``(II) have current technology engine exhaust mufflers;
       ``(III) in the case of helicopters, have current technology 
     quieter tail rotors; or
       ``(IV) have any other modifications, approved by the 
     Federal Aviation Administration, that significantly reduce 
     the aircraft's sound.

       ``(B) The air tour operator has replaced, for use for the 
     tours, smaller aircraft with larger aircraft that have more 
     seating capacity, thereby reducing the number of flights 
     needed to transport the same number of passengers.
       ``(C) The air tour operator can safely demonstrate, through 
     flight testing administered by the Federal Aviation 
     Administration that applies a sound measurement methodology 
     accepted as standard, that the tour operator can fly existing 
     aircraft in a manner that achieves a sound signature in the 
     same noise range or having the same or similar sound effect 
     as the aircraft that satisfy the requirements of subparagraph 
     (A) or (B).
       ``(2) Exemption from flight caps.--Any air tour operator 
     that meets the requirements described in paragraph (1), shall 
     be--
       ``(A) exempt from the operational flight allocations 
     referred to in subsection (c) and from flight curfews and any 
     other requirement not imposed solely for reasons of aviation 
     safety; and
       ``(B) granted air tour routes that are preferred for the 
     quality of the scenic views for--
       ``(i) tours from Clark County, Nevada to the Grand Canyon 
     National Park Airport; and
       ``(ii) `local loop' tours referred to in subsection 
     (b)(2).''.
       (b) Reinstatement of Certain Air Tour Routes.--Any air tour 
     route from Clark County, Nevada, to the Grand Canyon National 
     Park Airport, Tusayan, Arizona, that was eliminated, or 
     altered in any way, by regulation or by action by the Federal 
     Aviation Administration, on or after January 1, 2001, and 
     before the date of enactment of this Act shall be reinstated 
     effective as of such date of enactment and no further 
     changes, modifications, or elimination of any other air tour 
     route flown by an air tour company based in Clark County, 
     Nevada or at the Grand Canyon National Park Airport, Tusayan, 
     Arizona may be made after such date of enactment without the 
     approval of Congress.
                                 ______
                                 
      By Mr. CRAIG (for himself and Mrs. Feinstein):
  S. 1153. A bill to amend the Food Security Act of 1985 to establish a 
grassland reserve program to assist owners in restoring and protecting 
grassland; to the Committee on Agriculture, Nutrition, and Forestry.
  Mr. CRAIG. Mr. President, I rise today to introduce the ``Grassland 
Reserve Act'', a bill to authorize a voluntary program to purchase 
permanent or 30 year easement from willing producers in exchange for 
protection of ranches, grasslands, and lands of high resource value. I 
am pleased that Senators Feingold, and Thomas, have joined as original 
cosponsors.
  Grasslands provided critical habitat for complex plant and animal 
communities throughout much of North America. However, many of these 
lands have been, and are under pressure to be, converted to other uses, 
threatening and eliminating plant and animal communities unique to this 
continent. A significant portion of the remaining grasslands occur on 
working ranches. Ranchland provides important open-space buffers for 
animal and plant habitat. Moreover, ranching forms the economic 
backbone for much of rural western United States. Loss of this economic 
activity will invariably lead to the loss of the open space that is 
indispensable for plant and animal communities and for citizens who 
love the western style of life.
  As a rancher from a rural community in Idaho, I have noticed the 
changes taking place in some parts of my State where, for a number of 
reasons, working ranchers have been sold into ranchetts leaving the 
landscape divided by fences and homes where cattle and wildlife once 
roamed. Currently, no Federal programs exist to conserve grasslands, 
ranches, and other lands of high resource values, other than wetlands, 
on a national scale. I believe the United States needs a voluntary 
program to conserve these lands, and the Grasslands Reserve Act does 
just that.
  Specifically, this bill establishes the Grasslands Reserve program 
through the Natural Resources Conservation Service to assist owners in 
restoring and conserving eligible land. To be eligible to participate 
in the program an owner must enroll 100 contiguous acres of land west 
of the 90th meridian or 50 contiguous acres of land east of the 90th 
meridian. A maximum of 1,000,000 acres may be enrolled in the program 
in the form of a permanent or a 30-year easement. Land eligible for the 
program includes: native grasslands, working ranches, other areas that 
contain animal or plant populations of significant ecological value, 
and land that is necessary for the efficient administration of the 
easement.
  The terms of the easements allow for grazing in a manner consistent 
with maintaining the viability of native grass species. All uses other 
than grazing, such as hay production, may be implemented according to 
the terms of a written agreement between the landowner and easement 
holder. Easements prohibit the production of row crops, and other 
activities that disturb the surface of the land covered by the 
easement. The Secretary will work with the State technical committees 
to establish criteria to evaluate and rank applications for easements 
which will emphasize support for grazing operations, plant and animal 
biodiversity, and native grass and shrubland under the greatest threat 
of conversion. The Secretary may prescribe terms to the easement 
outlining how the land shall be restored including duties of the land 
owner and the Secretary. If the easement is violated, the Secretary may 
require the owner to refund all or part of the payments including 
interest. The Secretary may also conduct periodic inspections, after 
providing notice to the owner, to determine that the landowner is in 
compliance with the terms of the easement. The easement may be held and 
enforced by a private conservation, land trust organization, or a State 
agency in lieu of the Secretary, if the Secretary determines that 
granting such permission will promote grassland protection and the 
landowner agrees.
  This legislation requires the Secretary to make payments for 
permanent easements based on the fair market value of the land less the 
grazing value of the land encumbered by the easement, and for 30 year 
easements the payment will be 30 percent of the fair market value of 
the land less the grazing value of the land encumbered by the easement. 
Payments may be made in one lump sum or over a 10 year period. 
Landowners may also choose to enroll their land in a 30-year rental 
agreement instead of a 30-year easement where the Secretary would make 
thirty annual payments which approximate the value of a lump sum 
payment the owner would receive under a 30-year easement. The Secretary 
is required to assess the payment schedule every five years to make 
sure that the payments do approximate the value of

[[Page 12505]]

a 30-year easement. USDA is also required to cover up to 75 percent of 
the cost of restoration and provide owners with technical assistance to 
execute the easement and restore the land.
  I believe this legislation fills a need we have in our agriculture 
policy and I look forward to working with other members to include the 
Grasslands Reserve program in a responsible and balanced farm bill.
  Mrs. FEINSTEIN. Mr. President, today I am pleased to join my 
colleague from Idaho to introduce legislation that provides fair 
compensation to producers and other landowners who maintain open spaces 
for plants and animals to thrive.
  This bill creates a voluntary program authorizing the United States 
Department of Agriculture, USDA, to obtain either 30-year or permanent 
easements from landowners in exchange for a cash payment. Easements 
allow for grazing while maintaining the viability of native grass 
species. Moreover, these uses must only occur upon the conclusion of 
the local bird nesting season.
  Vast amounts of grassland are being lost to urban development every 
year in large part because of economic pressures faced by ranchers, 
livestock producers, and other grassland owners.
  Currently, there are no long-term programs to protect grasslands on a 
national scale. The Grassland Reserve Act provides real options to 
financially-strapped land owners of grasslands who wish to keep their 
lands in a natural state. There is a need for this bill because 
existing programs to protect lands, such as the Forest Legacy program, 
target forested lands only.
  This legislation represents a win-win situation for both the 
environment and people who make their livelihood on grasslands. The 
loss of grassland is a serious problem for preserving wildlife habitat 
and a rural way of life. This bill is a step in the right direction to 
protect these lands from future development.
  I have always felt that protecting our Nation's unique natural areas, 
including grasslands, should be one of our highest priorities. I invite 
my colleagues to join Senator Craig and me in supporting this 
legislation.
                                 ______
                                 
      By Mr. LEVIN (for himself and Mr. Warner) (by request):
  S. 1155. A bill to authorize appropriations for fiscal year 2002 for 
military activities of the Department of Defense, to prescribe military 
personnel strengths for fiscal year 2002, and for other purposes; to 
the Committee on Armed Services.
  Mr. LEVIN. Mr. President, I ask unanimous consent that the text of 
the President's request for Defense and the text of the bill be printed 
in the Record, including the section-by-section analysis.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1155

       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 ``National Defense 
     Authorization Act for Fiscal Year 2002''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Table of contents.

                          TITLE I--PROCUREMENT

                    Authorization of Appropriations

Sec. 101. Army.
Sec. 102. Navy and Marine Corps.
Sec. 103. Air Force.
Sec. 104. Defense-Wide Activities.
Sec. 105. Defense Inspector General.
Sec. 106. Defense Health Program.

          TITLE II-RESEARCH, DEVELOPMENT, TEST, AND EVALUATION

Sec. 201. Authorization of Appropriations.

                  TITLE III--OPERATION AND MAINTENANCE

              Subtitle A--Authorization of Appropriations

Sec. 301. Operation and Maintenance Funding.
Sec. 302. Working Capital Funds.
Sec. 303. Armed Forces Retirement Home.
Sec. 304. Acquisition of Logistical Support for Security Forces.
Sec. 305. Contract Authority for Defense Working Capital Funds.

                  Subtitle B--Environmental Provisions

Sec. 310. Reimburse EPA for Certain Costs in Connection with Hooper 
              Sands Site, in South Berwick, Maine.
Sec. 311. Extension of Pilot Program for the Sale of Air Pollution 
              Emission Reduction Incentives.
Sec. 312. Elimination of Report on Contractor Reimbursement Costs.

  Subtitle C--Commissaries and Nonappropriated Fund Instrumentalities

Sec. 315. Costs Payable to the Department of Defense and Other Federal 
              Agencies for Services Provided to the Defense Commissary 
              Agency.
Sec. 316. Reimbursement for Non-Commissary Use of Commissary 
              Facilities.
Sec. 317. Commissary Contracts and Other Agencies and 
              Instrumentalities.
Sec. 318. Operation of Commissary Stores.

                       Subtitle D--Other Matters

Sec. 320. Reimbursement, for Reserve Intelligence Support.
Sec. 321. Disposal of Obsolete and Excess Materials Contained in the 
              National Defense Stockpile.

              TITLE IV--MILITARY PERSONNEL AUTHORIZATIONS

                       Subtitle A--Active Forces

Sec. 401. End Strengths for Active Forces.

                       Subtitle B--Reserve Forces

Sec. 405. End Strengths for Selected Reserve.
Sec. 406. End Strengths for Reserves on Active Duty in Support of the 
              Reserves.
Sec. 407. End Strengths for Military Technicians (Dual Status).
Sec. 408. Fiscal Year 2002 Limitation on Number of Non-Dual Status 
              Technicians.
Sec. 409. Authorized Strengths: Reserve Officers and Senior Enlisted 
              Members on Active Duty or Full-time National Guard Duty 
              for Administration of the Reserves or National Guard.
Sec. 410. Increase in Authorized Strengths for Air Force Officers on 
              Active Duty in the Grade of Major.

                   TITLE V--MILITARY PERSONNEL POLICY

                  Subtitle A--Officer Personnel Policy

Sec. 501. Elimination of Certain Medical and Dental Requirements for 
              Army Early-Deployers.
Sec. 502. Medical Deferment of Mandatory Retirement or Separation.
Sec. 503. Officer in Charge; United States Navy Band.
Sec. 504. Removal of Requirement for Certification for Certain Flag 
              Officers to Retire in Their Highest Grade.
Sec. 505. Three-Year Extension of Certain Force Drawdown Transition 
              Authorities Relating to Personnel Management and 
              Benefits.
Sec. 506. Judicial Review of Selection Boards.

             Subtitle B--Reserve Component Personnel Policy

Sec. 511. Retirement of Reserve Personnel.
Sec. 512. Amendment to Reserve PERS- TEMPO Definition.
Sec. 513. Individual Ready Reserve Physical Examination Requirement.
Sec. 514. Benefits and Protections for Members in a Funeral Honors Duty 
              Status.
Sec. 515. Funeral Honors Duty Performed by Members of the National 
              Guard.
Sec. 516. Strength and Grade Ceiling Accounting for Reserve Component 
              Members on Active Duty in Support of a Contingency 
              Operation.
Sec. 517. Reserve Health Professionals Stipend Program Expansion.
Sec. 518. Reserve Officers on Active Duty for a Period of Three Years 
              or Less.
Sec. 519. Active Duty End Strength Exemption for National Guard and 
              Reserve Personnel Performing Funeral Honors Functions,
Sec. 520. Clarification of Functions That May Be Assigned to Active 
              Guard and Reserve Personnel on Full-Time National Guard 
              Duty.
Sec. 521. Authority for Temporary Waiver of the Requirement for a 
              Baccalaureate Degree for Promotion of Certain Reserve 
              Officers of the Army.
Sec. 522. Authority of the President to Suspend Certain Laws Relating 
              to Promotion, Retirement and Separation; Duties.

                   Subtitle C--Education and Training

Sec. 531. Authority for the Marine Corps University to Award the Degree 
              of Master of Strategic Studies.
Sec. 532. Reserve Component Distributed Learning.
Sec. 533. Repeal of Limitation on Number of Junior Reserve Officers' 
              Training Corps (JROTC) Units.

[[Page 12506]]

Sec. 534. Modification of the Nurse Officer Candidate Accession Program 
              Restriction on Students Attending Civilian Educational 
              Institutions with Senior Reserve Officers' Training 
              Programs.
Sec. 535. Defense Language Institute Foreign Language Center.

           Subtitle D--Decorations, Awards, and Commendations

Sec. 541. Authority for Award of the Medal of Honor to Humbert R. 
              Versace for Valor During the Vietnam War.
Sec. 542. Issuance of Duplicate Medal of Honor.
Sec. 543. Repeal of Limitation on Award of Bronze Star to Members in 
              Receipt of Special Pay.

              Subtitle E--Uniform Code of Military Justice

Sec. 551. Revision of Punitive UCMJ Article Regarding Drunken Operation 
              of Vehicle, Aircraft, or Vessel.

          TITLE VI--COMPENSATION AND OTHER PERSONNEL BENEFITS

                     Subtitle A--Pay and Allowances

Sec. 601. Increase in basic pay for fiscal year 2002.
Sec. 602. Partial Dislocation Allowance Authorized Under Certain 
              Circumstances.
Sec. 603. Funeral Honors Duty Allowance for Retirees.
Sec. 604. Basic Pay Rate for Certain Reserve Commissioned Officers with 
              Prior Service as an Enlisted Member or Warrant Officer.
Sec. 605. Family Separation Allowance.
Sec. 606. Housing Allowance for the Chaplain for the Corps of Cadets, 
              United States Military Academy.
Sec. 607. Clarifying Amendment that Space-Required Travel for Annual 
              Training Reserve Duty Does Not Obviate Transportation 
              Allowances.

           Subtitle B--Bonuses and Special and Incentive Pays

Sec. 611. Authorize the Secretary of the Navy to Prescribe Submarine 
              Duty Incentive Pay Rates.
Sec. 612. Extension of Authorities Relating to Payment of Other Bonuses 
              and Special Pays.
Sec. 613. Extension of Certain Bonuses and Special Pay Authorities for 
              Nurse Officer Candidates, Registered Nurses, Nurse 
              Anesthetists, and Dental Officers.
Sec. 614. Extension of Authorities Relating to Nuclear Officer Special 
              Pays.
Sec. 615. Extension of Special and Incentive Pays.
Sec. 616. Accession Bonus for Officers in Critical Skills.
Sec. 617. Critical Wartime Skill Requirement for Eligibility for the 
              Individual Ready Reserve Bonus.
Sec. 618. Hazardous Duty Incentive Pay: Maritime Board and Search.

            Subtitle C--Travel and Transportation Allowances

Sec. 621. Funded Student Travel: Exchange Programs.
Sec. 622. Payment of Vehicle Storage Costs in Advance.
Sec. 623. Travel and Transportation Allowances for Family Members to 
              Attend the Burial of a Deceased Member of the Armed 
              Forces.
Sec. 624. Shipment of Privately Owned Vehicles When Executing CONUS 
              Permanent Change of Station Moves.

                           Subtitle D--Other

See. 631. Montgomery GI Bill--Selected Reserve Eligibility Period.
Sec. 632. Improved Disability Benefits for Certain Reserve Component 
              Members.
Sec. 633. Acceptance of Scholarships by Officers Participating in the 
              Funded Legal Education Program.

        TITLE VII--ACQUISITION POLICY AND ACQUISITION MANAGEMENT

                     Subtitle A--Acquisition Policy

Sec. 701. Acquisition Milestone Changes.
Sec. 702. Clarification of Inapplicability of the Requirement for Core 
              Logistics Capabilities Standards to the Nuclear Refueling 
              of an Aircraft Carrier.
Sec. 703. Depot Maintenance Utilization Waiver.

                   Subtitle B--Acquisition Workforce

Sec. 705. Acquisition Workforce Qualifications.
Sec. 706. Tenure Requirement for Critical Acquisition Positions.

       Subtitle C--General Contracting Procedures and Limitations

Sec. 710. Amendment of Law Applicable to Contracts for Architectural 
              and Engineering Services and Construction Design.
Sec. 711. Streamlining Procedures for the Purchase of Certain Goods.
Sec. 712. Repeal of the Requirement for the Limitations on the Use of 
              Air Force Civil Engineering Supply Function Contracts.
Sec. 713. One-Year Extension of Commercial Items Test Program.
Sec. 714. Modification of Limitation on Retirement or Dismantlement of 
              Strategic Nuclear Delivery Systems.

          Subtitle D--Military Construction General Provisions

Sec. 715. Exclusion of Unforeseen Environmental Hazard Remediation from 
              the Limitation on Cost Increases for Military 
              Construction and Family Housing Construction Projects.
Sec. 716. Increase of Overseas Minor Construction Threshold Using 
              Operations and Maintenance Funds.
Sec. 717. Leasebacks of Base Closure Property.
Sec. 718. Alternative Authority For Acquisition and Improvement of 
              Military Housing.
Sec. 719. Annual Report to Congress on Design And Construction.

     TITLE VIII--DEPARTMENT OF DEFENSE ORGANIZATION AND MANAGEMENT

     Subtitle A--Department of Defense Organizations and Positions

Sec. 801. Organizational Alignment Change for Director for 
              Expeditionary Warfare.
Sec. 802. Consolidation of Authorities Relating to Department of 
              Defense Regional Centers for Security Studies.
Sec. 803. Change of Name for Air Mobility Command.
Sec. 804. Transfer of Intelligence Positions in Support of the National 
              Imagery and Mapping Agency.

                          Subtitle B--Reports

Sec. 811. Amendment to National Guard and Reserve Component Equipment: 
              Annual Report to Congress.
Sec. 812. Elimination of Triennial Report on the Roles and Missions of 
              the Armed Forces.
Sec. 813. Change in Due Date of Commercial Activities Report.

                       Subtitle C--Other Matters

Sec. 821. Documents, Historical Artifacts, and Obsolete or Surplus 
              Materiel: Loan, Donation, or Exchange.
Sec. 822. Charter Air Transportation of Members of the Armed Forces.

                      TITLE IX--GENERAL PROVISIONS

             Subtitle A--Matters Relating to Other Nations

Sec. 901. Test and Evaluation Initiatives.
Sec. 902. Cooperative Research and Development Projects: Allied 
              Countries.
Sec. 903. Recognition of Assistance from Foreign Nationals.
Sec. 904. Personal Service Contracts in Foreign Areas.

          Subtitle B--Department of Defense Civilian Personnel

Sec. 911. Removal of Limits on the Use of Voluntary Early Retirement 
              Authority and Voluntary Separation Incentive Pay for 
              Fiscal Years 2002 and 2003.
Sec. 912. Authority for Designated Civilian Employees Abroad to Act as 
              a Notary.
Sec. 913. Inapplicability of Requirement for Studies and Reports When 
              All Directly Affected Department of Defense Civilian 
              Employees Are Reassigned to Comparable Federal Positions.
Sec. 914. Preservation of Civil Service Rights for Employees of the 
              Former Defense Mapping Agency.
Sec. 915. Financial Assistance to Certain Employees in Acquisition of 
              Critical Skills.
Sec. 916. Pilot Program for Payment of Retraining Expenses.

                       Subtitle C--Other Matters

Sec. 921. Authority to Ensure Demilitarization of Significant Military 
              Equipment Formerly Owned by the Department of Defense.
Sec. 922. Motor Vehicles: Documentary Requirements for Transportation 
              for Military Personnel and Federal Employees on Change of 
              Permanent Station.
Sec. 923. Department of Defense Gift Initiatives.
Sec. 924. Repeal of the Joint Requirements Oversight Council Semi-
              Annual Report.
Sec. 925. Access to Sensitive Unclassified Information.
Sec. 926. Water Rights Conveyance, Andersen Air Force Base, Guam.
Sec. 927. Repeal of Requirement For Separate Budget Request For 
              Procurement of Reserve Equipment.
Sec. 928. Repeal of Requirement for Two-year Budget Cycle for the 
              Department of Defense.
                          TITLE I--PROCUREMENT
                    Authorization of Appropriations
Sec. 101. Army.

[[Page 12507]]

Sec. 102. Navy and Marine Corps.
Sec. 103. Air Force.
Sec. 104. Defense-Wide Activities.
Sec. 105. Defense Inspector General.
Sec. 106. Defense Health Program.

     SEC. 101. ARMY.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for procurement for the Army as follows:
       (1) For aircraft, $1,925,491,000.
       (2) For missiles, $1,859,634,000.
       (3) For weapons and tracked combat vehicles, 
     $2,276,746,000.
       (4) For ammunition, $1,193,365,000.
       (5) For other procurement, $3,961,737,000.
       (6) For chemical agents and munitions destruction, 
     $1,153,557,000 for--
       (A) the destruction of lethal chemical weapons in 
     accordance with section 1412 of the Department of Defense 
     Authorization Act, 1986 (50 U.S.C. 1521) and
       (B) the destruction of chemical warfare material of the 
     United States that is not covered by section 1412 of such 
     Act.

     SEC. 102. NAVY AND MARINE CORPS.

       (a) Navy.--Funds axe hereby authorized to be appropriated 
     for fiscal year 2002 for procurement for the Navy as follows:
       (1) For aircraft, $8,252,543,000.
       (2) For weapons, including missiles and torpedoes, 
     $1,433,475,000.
       (3) For shipbuilding and conversion, $9,344,121,000.
       (4) For other procurement, $4,097,576,000.
       (b) Marine Corps.--Funds are hereby authorized to be 
     appropriated for fiscal year 2002 for procurement for the 
     Marine Corps in the amount of $981,724,000.
       (c) Navy and Marine Corps Ammunition.--Funds are hereby 
     authorized to be appropriated for fiscal year 2002 for 
     procurement of ammunition for the Navy and Marine Corps in 
     the amount of $457,099,000.

     SEC. 103. AIR FORCE.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for procurement for the Air Force as follows:
       (1) For aircraft, $10,744,458,000.
       (2) For missiles, $3,233,536,000.
       (3) For procurement of ammunition, $865,344,000.
       (4) For other procurement, $8,158,521,000.

     SEC. 104. DEFENSE-WIDE ACTIVITIES.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for defense-wide procurement in the amount of 
     $1,603,927,000.

     SEC. 105. DEFENSE INSPECTOR GENERAL.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for procurement for the Defense Inspector General 
     in the amount of $1,800,000.

     SEC. 106. DEFENSE HEALTH PROGRAM.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for the Department of Defense for procurement for 
     carrying out health care programs, projects, and activities 
     of the Department of Defense in the total amount of 
     $267,915,000.
         TITLE II--RESEARCH, DEVELOPMENT, TEST, AND EVALUATION
Sec. 201. Authorization of Appropriations.

     SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for the use of the Armed Forces for research, 
     development, test, and evaluation, as follows:
       (1) For the Army, $6,693,920,000.
       (2) For the Navy, $11,123,389,000.
       (3) For the Air Force, $14,343,982,000.
       (4) For Defense-wide research, development, test, and 
     evaluation, $15,268,142,000, of which $217,355,000 is 
     authorized for the Director of Operational Test and 
     Evaluation.
       (5) For the Defense Health Program, $65,304,000.
                  TITLE III--OPERATION AND MAINTENANCE
              Subtitle A--Authorization of Appropriations
Sec. 301. Operation and Maintenance Funding.
Sec. 302. Working Capital Funds.
Sec. 303. Armed Forces Retirement Home.
Sec. 304. Acquisition of Logistical Support for Security Forces.
Sec. 305. Contract Authority for Defense Working Capital Funds.

     SEC. 301. OPERATION AND MAINTENANCE FUNDING.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for the use of the Armed Forces of the United 
     States and other activities and agencies of the Department of 
     Defense, for expenses, not otherwise provided for, for 
     operation and maintenance, in amounts as follows:
       (1) For the Army, $21,191,680,000.
       (2) For the Navy, $26,961,382,000.
       (3) For the Marine Corps, $2,892,314,000.
       (4) For the Air Force, $26,146,770,000.
       (5) For the Defense-wide activities, $12,518,631,000.
       (6) For the Army Reserve, $1,787,246,000.
       (7) For the Naval Reserve, $1,003,690,000.
       (8) For the Marine Corps Reserve, $144,023,000.
       (9) For the Air Force Reserve, $2,029,866,000.
       (10) For the Army National Guard, $3,677,359,000.
       (11) For the Air National Guard, $3,867,361,000.
       (12) For the Defense Inspector General, $150,221,000.
       (13) For the United States Court of Appeals for the Armed 
     Forces, $9,096,000.
       (14) For Environmental Restoration, Army, $389,800,000.
       (15) For Environmental Restoration, Navy, $257,517,000.
       (16) For Environmental Restoration, Air Force, 
     $385,437,000.
       (17) For Environmental Restoration, Defense-wide, 
     $23,492,000.
       (18) For Environmental Restoration, Formerly Used Defense 
     Sites, $190,255,000.
       (19) For Overseas Humanitarian, Disaster, and Civic Aid 
     programs, $49,700,000.
       (20) For Drug Interdiction and Counter-drug Activities, 
     Defense-wide, $820,381,000.
       (21) For the Kaho'olawe Island Conveyance, Remediation, and 
     Environmental Restoration Trust Fund, $25,000,000.
       (22) For the Defense Health Program, $17,565,750,000.
       (23) For Cooperative Threat Reduction programs, 
     $403,000,000.
       (24) For Overseas Contingency Operations Transfer Fund, 
     $2,844,226,000.
       (25) For Support for International Sporting Competitions, 
     Defense, $15,800,000.

     SEC. 302. WORKING CAPITAL FUNDS.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2002 for the use of the Armed Forces of the United 
     States and other activities and agencies of the Department of 
     Defense for providing capital for working capital and 
     revolving funds in amounts as follows:
       (1) For the Defense Working Capital Funds, $1,951,986,000.
       (2) For the National Defense Sealift Fund, $506,408,000.

     SEC. 303. ARMED FORCES RETIREMENT HOME.

       There is hereby authorized to be appropriated for fiscal 
     year 2002 from the Armed Forces Retirement Home Trust Fund 
     the sum of $71,440,000 for the operation of the Armed Forces 
     Retirement Home, including the United States Soldiers' and 
     Airmen's Home and the Naval Home.

     SEC. 304. ACQUISITION OF LOGISTICAL SUPPORT FOR SECURITY 
                   FORCES.

       Section 5 of the Multinational Force and Observers 
     Participation Resolution (Public Law 97-132; 95 Stat. 1695; 
     22 U.S.C. 3424) is amended by adding at the end the following 
     new subsection:
       ``(d) The United States may use contractors or other means 
     to provide logistical support to the Multinational Force and 
     Observers under this section in lieu of providing such 
     support through a logistical support unit comprised of 
     members of the armed forces. Notwithstanding subsections (a) 
     and (b) and section 7(b), support by a contractor or other 
     means under this subsection may be provided without 
     reimbursement, whenever the President determines that such 
     action enhances or supports the national security interests 
     of the United States.''.


     SEC. 305. CONTRACT AUTHORITY FOR DEFENSE WORKING CAPITAL 
                   FUNDS.

       Contract authority in the amount of $427, 100,000, to 
     remain available until September 30, 2002, is hereby 
     authorized and appropriated to the Defense Working Capital 
     Fund for the procurement, lease-purchase with substantial 
     private sector risk, capital or operating multiple-year 
     lease, of a capital asset, multiple-year time charter of a 
     commercial craft or vessel and associated services.
                  Subtitle B--Environmental Provisions
Sec.  310.  Reimburse EPA for Certain Costs in Connection with Hooper 
              Sands Site, in South Berwick, Maine.
Sec.  311.  Extension of Pilot Program for the Sale of Air Pollution 
              Emission Reduction Incentives.
Sec.  312.  Elimination of Report on Contractor Reimbursement Costs.

     SEC. 310. REIMBURSE EPA FOR CERTAIN COSTS IN CONNECTION WITH 
                   HOOPER SANDS SITE, IN SOUTH BERWICK, MAINE.

       (a) Authority to Reimburse EPA.--Using funds described in 
     subsection (b), the Secretary of the Navy may pay 
     $1,005,478.00 to the Hooper Sands Special Account within the 
     Hazardous Substance Superfund established by section 9507 of 
     the Internal Revenue Code of 1986 (26 U.S.C. 9507) to 
     reimburse the Environmental Protection Agency in full for the 
     Remaining Past Response Costs incurred by the agency for 
     actions taken pursuant to the Comprehensive Environmental 
     Response, Compensation and Liability Act of 1980 (42 U.S.C. 
     9601, et seq.) at the Hooper Sands site in South Berwick, 
     Maine, pursuant to an Interagency Agreement entered into by 
     the Department of the Navy and the Enviromental Protection 
     Agency in January 2001.
       (b) Source of Funds.--Any payment under subsection (a) 
     shall be made using the amounts authorized to be appropriated 
     by paragraph (15) of section 301 to the Enviromental 
     Restoration, Navy account, established by section 2703(a)(3) 
     of title 10, United States Code.

     SEC. 311. EXTENSION OF PILOT PROGRAM FOR THE SALE OF AIR 
                   POLLUTION EMISSION REDUCTION INCENTIVES

       Section 351(a) of the National Defense Authorization Act 
     for Fiscal Year 1998 (Public Law. 105-85; 111 Stat. 1629, 
     1692) is amended to read as follows:
       ``(2) The Secretary may carry out the pilot program during 
     the period beginning on the date of enactment of this Act 
     through September 30, 2003.''.

[[Page 12508]]



     SEC. 312. ELIMINATION OF REPORT ON CONTRACTOR REIMBURSEMENT 
                   COSTS.

       Section 2706 of title 10, United States Code, is amended by 
     striking subsection (c) and redesignating subsections (d) and 
     (e) as subsections (c) and (d), respectively.
  Subtitle C--Commissaries and Nonappropriated Fund Instrumentalities
Sec. 315. Costs Payable to the Department of Defense and Other Federal 
              Agencies for Services Provided to the Defense Commissary 
              Agency.
Sec. 316. Reimbursement for Non-Commissary Use of Commissary 
              Facilities.
Sec. 317. Commissary Contracts and Other Agencies and 
              Instrumentalities.
Sec. 318. Operation of Commissary Stores.

     SEC. 315. COSTS PAYABLE TO THE DEPARTMENT OF DEFENSE AND 
                   OTHER FEDERAL AGENCIES FOR SERVICES PROVIDED TO 
                   THE DEFENSE COMMISSARY AGENCY.

       Section 2482(b)(1) of title 10, United States Code, is 
     amended by striking ``However, the Defense Commissary Agency 
     may not pay for any such service provided by the United 
     States Transportation Command any amount that exceeds the 
     price at which the service could be procured through full and 
     open competition, as such term is defined in section 4(6) of 
     the Office of Federal Procurement Policy Act (41 U.S.C. 
     403(6)).'' and inserting ``The Defense Commissary Agency may 
     not pay for any service provided by a Defense working capital 
     fund activity which exceeds the price at which the service 
     could be procured through full and open competition by the 
     Defense Commissary Agency, as such term is defined in section 
     4(6) of the Office of Federal Procurement Policy Act (41 
     U.S.C. 403(6)). In determining the cost for providing such 
     service the Defense Commissary Agency may pay a Defense 
     working capital fund activity those administrative and 
     handling costs it would be required to pay for the provision 
     of such services had the Defense Commissary Agency acquired 
     them under full and open competition. Under no circumstances 
     will any costs associated with mobilization requirements, 
     maintenance of readiness, or establishment or maintenance of 
     infrastructure to support such mobilization or readiness 
     requirements, be included in rates charged the Defense 
     Commissary Agency.''.

     SEC. 316. REIMBURSEMENT FOR NON-COMMISSARY USE OF COMMISSARY 
                   FACILITIES.

       (a) In General.--Chapter 147 of title 10, United States 
     Code, is amended by inserting at the beginning of the chapter 
     the following new section:

     ``Sec. 2481. Reimbursement for non-commissary use of 
       commissary facilities

       ``If a commissary facility acquired, constructed or 
     improved (in whole or in part) with commissary surcharge 
     revenues is used for non-commissary purposes, the Secretary 
     of the military department concerned shall reimburse the 
     commissary surcharge revenues for the commissary's share of 
     the depreciated value of the facility.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter 147 is amended by inserting before 
     the item relating to section 2482 the following new item:
``2481. Reimbursement for non-commissary use of commissary 
              facilities.''.

     SEC. 317. COMMISSARY CONTRACTS AND OTHER AGENCIES AND 
                   INSTRUMENTALITIES.

       Section 2482(b) of title 10, United States Code, is 
     amended--
       (1) by redesignating paragraph (2) as paragraph (3); and
       (2) by inserting after paragraph (1) the following new 
     paragraph (2):
       ``(2) Where the Secretary of Defense authorizes the Defense 
     Commissary Agency to sell limited exchange merchandise as 
     commissary store inventory under section 2486(b)(11) of this 
     title, the Defense Commissary Agency shall enter into a 
     contract or other agreement to obtain such merchandise 
     available from the Armed Service Exchanges, provided that 
     such merchandise shall be obtained at a cost of no more than 
     the exchange retail price less the amount of commissary 
     surcharge authorized to be collected by section 2486 of this 
     title. If such merchandise is procured by the Defense 
     Commissary Agency from other than the Armed Service 
     Exchanges, the limitations provided in section 2486(e) of 
     this title apply.''.

     SEC. 318. OPERATION OF COMMISSARY STORES.

       Section 2482(a) of title 10, United States Code, is amended 
     by striking ``A contract with a private person'' and all that 
     remains to the end of the subsection.
                       Subtitle D--Other Matters
Sec. 320.  Reimbursement for Reserve Intelligence Support.
Sec. 321.  Disposal of Obsolete and Excess Materials Contained in the 
              National Defense Stockpile.

     SEC. 320. REIMBURSEMENT FOR RESERVE INTELLIGENCE SUPPORT.

       (a) Appropriations available to the Department of Defense 
     for operations and maintenance may be used to reimburse 
     National Guard and Reserve units or organizations for the 
     pay, allowances and other expenses which are incurred by such 
     National Guard and Reserve units or organizations when 
     members of the National Guard or Reserve provide 
     intelligence, including counterintelligence, support to 
     Combatant Commands, Defense Agencies and Joint Intelligence 
     Activities, including the activities and programs included 
     within the National Foreign Intelligence Program, the Joint 
     Military Intelligence Program, and the Tactical Intelligence 
     and Related Activities aggregate.
       (b) Nothing in this section authorizes deviation from 
     established Reserve and National Guard personnel and training 
     procedures.

     SEC. 321. DISPOSAL OF OBSOLETE AND EXCESS MATERIALS CONTAINED 
                   IN THE NATIONAL DEFENSE STOCKPILE.

       Subject to the conditions specified in section 10(c) of the 
     Strategic and Critical Materials Stock Piling Act (50 U.S.C. 
     Sec. 98h-1(c)), the President may dispose of the following 
     obsolete and excess materials contained in the National 
     Defense Stockpile in the following quantities:
       Bauxite, Refractory, 40,000 short tons.
       Chromium Metal, 3,512 short tons.
       Iridium, 25,140 troy ounces.
       Jewel Bearings, 30,273,221 pieces.
       Manganese, Ferro HC, 209,074 short tons.
       Palladium, 11 troy ounces.
       Quartz Crystal, 216,648 pounds.
       Tantalum Metal Ingot, 120,228 pounds contained tantalum.
       Tantalum Metal Powder, 36,020 pounds contained tantalum.
       Thorium Nitrate, 600,000 pounds.
              TITLE IV--MILITARY PERSONNEL AUTHORIZATIONS
                       Subtitle A--Active Forces
Sec. 401. End Strengths for Active Forces.

     SEC. 401. END STRENGTHS FOR ACTIVE FORCES.

       The Armed Forces are authorized strengths for active duty 
     personnel as of September 30, 2002, as follows:
       (1) The Army, 480,000.
       (2) The Navy, 376,000.
       (3) The Marine Corps, 172,600.
       (4) The Air Force, 358,800.
                       Subtitle B--Reserve Forces
See. 405. End Strengths for Selected Reserve.
Sec. 406. End Strengths for Reserves on Active Duty in Support of the 
              Reserves.
Sec. 407. End Strengths for Military Technicians (Dual Status).
Sec. 408. Fiscal Year 2002 Limitation on Number of Non-Dual Status 
              Technicians.
Sec. 409. Authorized Strengths: Reserve Officers and Senior Enlisted 
              Members on Active Duty or Full-time National Guard Duty 
              for Administration of the Reserves or National Guard.
Sec. 410. Increase in Authorized Strengths for Air Force Officers on 
              Active Duty in the Grade of Major.

     SEC. 405. END STRENGTHS FOR SELECTED RESERVE.

       (a) In General.--The Armed Forces are authorized strengths 
     for Selected Reserve personnel of the reserve components as 
     of September 30, 2002, as follows:
       (1) The Army National Guard of the United States, 350,000.
       (2) The Army Reserve, 205,000.
       (3) The Naval Reserve, 87,000.
       (4) The Marine Corps Reserve, 39,558.
       (5) The Air National Guard of the United States, 108,400.
       (6) The Air Force Reserve, 74,700.
       (7) The Coast Guard Reserve, 8,000.
       (b) Adjustments.--The end strengths prescribed by 
     subsection (a) for the Selected Reserve of any reserve 
     component shall be proportionately reduced by--
       (1) the total authorized strength of units organized to 
     serve as units of the Selected Reserve of such component 
     which are on active duty (other than for training) at the end 
     of the fiscal year, and
       (2) the total number of individual members not in units 
     organized to serve as units of the Selected Reserve of such 
     component who are on active duty (other than for training or 
     for unsatisfactory participation in training) without their 
     consent at the end of the fiscal year.
       Whenever such units or such individual members are released 
     from active duty during any fiscal year, the end strength 
     prescribed for such fiscal year for the Selected Reserve of 
     such reserve component shall be increased proportionately by 
     the total authorized strengths of such units and by the total 
     number of such individual members.

     SEC. 406. END STRENGTHS FOR RESERVES ON ACTIVE DUTY IN 
                   SUPPORT OF THE RESERVES.

       Within the end strengths prescribed in section 411(a), the 
     reserve components of the Armed Forces are authorized, as of 
     September 30, 2002, the following number of Reserves to be 
     serving on full-time active duty or, in the case of members 
     of the National Guard, full-time National Guard duty for the 
     purpose of organizing, administering, recruiting, 
     instructing, or training the reserve components:
       (1) The Army National Guard of the United States, 22,974.
       (2) The Army Reserve, 13,108.
       (3) The Naval Reserve, 14,811.
       (4) The Marine Corps Reserve, 2,261.
       (5) The Air National Guard of the United States, 11,591.
       (6) The Air Force Reserve, 1,437.

[[Page 12509]]



     SEC. 407. END STRENGTHS FOR MILITARY TECHNICIANS (DUAL 
                   STATUS).

       The Reserve Components of the Army and the Air Force are 
     authorized strengths for military technicians (dual status) 
     as of September 30, 2002, as follows:
       (1) For the Army Reserve, 5,999.
       (2) For the Army National Guard of the United States, 
     23,128.
       (3) For the Air Force Reserve, 9,818.
       (4) For the Air National Guard of the United States, 
     22,422.

     SEC. 408. FISCAL YEAR 2002 LIMITATION ON NUMBER OF NON-DUAL 
                   STATUS TECHNICIANS.

       The number of civilian employees who are non-dual status 
     technicians of a reserve component of the Army or Air Force 
     as of September 30, 2002, may not exceed the following:
       (1) For the Army Reserve, 1,095.
       (2) For the Army National Guard of the United States, 
     1,600.
       (3) For the Air Force Reserve, 0.
       (4) For the Air National Guard of the United States, 350.

     SEC. 409. AUTHORIZED STRENGTHS: RESERVE OFFICERS AND SENIOR 
                   ENLISTED MEMBERS ON ACTIVE DUTY OR FULL-TIME 
                   NATIONAL GUARD DUTY FOR ADMINISTRATION OF THE 
                   RESERVES OR NATIONAL GUARD.

       (a) In General.--Section 12011 of title 10, United States 
     Code, is amended by amending the body of the section to read 
     as follows:
       ``(a) Ceilings for Full-Time Reserve Component Field Grade 
     Officers.--The number of reserve officers of the reserve 
     components of the Army, Navy, Air Force, and Marine Corps who 
     may be on active duty in the pay grades of O-4, O-5, O-6 for 
     duty described in sections 10211, 10302 through 10305, 123 
     10, or 12402 of this title, or full-time National Guard duty 
     (other than for training) under section 502(f) of title 32, 
     or section 708 of title 32, may not, at the end of any fiscal 
     year, exceed a number for that grade and reserve component in 
     accordance with the following tables:

                          ``Army National Guard
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
20,000........................        1,500           850           325
22,000........................        1,650           930           350
24,000........................        1,790         1,010           370
26,000........................        1,930         1,085           385
28,000........................        2,070         1,160           400
30,000........................        2,200         1,235           405
32,000........................        2,330         1,305           408
34,000........................        2,450         1,375           411
36,000........................        2,570         1,445           411
38,000........................        2,670         1,515           411
40,000........................        2,770         1,580           411
42,000........................        2,837         1,644           411
------------------------------------------------------------------------


                           ``U.S. Army Reserve
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
10,000........................        1,390           740           230
11,000........................        1,529           803           242
12,000........................        1,668           864           252
13,000........................        1,804           924           262
14,000........................        1,940           984           272
15,000........................        2,075         1,044           282
16,000........................        2,210         1,104           291
17,000........................        2,345         1,164           300
18,000........................        2,479         1,223           309
19,000........................        2,613         1,282           318
20,000........................        2,747         1,341           327
21,000........................        2,877         1,400           336
------------------------------------------------------------------------


                          ``U.S. Naval Reserve
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
10,000........................          807           447           141
11,000........................          867           467           153
12,000........................          924           485           163
13,000........................          980           503           173
14,000........................        1,035           521           183
15,000........................        1,088           538           193
16,000........................        1,142           555           203
17,000........................        1,195           565           213
18,000........................        1,246           575           223
19,000........................        1,291           585           233
20,000........................        1,334           595           242
21,000........................        1,364           603           250
22,000........................        1,384           610           258
23,000........................        1,400           615           265
24,000........................        1,410           620           270
------------------------------------------------------------------------


                       ``U.S. Marine Corps Reserve
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
1,100.........................          106            56            20
1,200.........................          110            60            21
1,300.........................          114            63            22
1,400.........................          118            66            23
1,500.........................          121            69            24
1,600.........................          124            72            25
1,700.........................          127            75            26
1,800.........................          130            78            27
1,900.........................          133            81            28
2,000.........................          136            84            29
2,100.........................          139            87            30
2,200.........................          141            90            31
2,300.........................          143            92            32
2,400.........................          145            94            33
2,500.........................          147            96            34
2,600.........................          149            98            35
------------------------------------------------------------------------


                          ``Air National Guard
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
5,000.........................          333           335           251
6,000.........................          403           394           260
7,000.........................          472           453           269
8,000.........................          539           512           278
9,000.........................          606           571           287
10,000........................          673           630           296
11,000........................          740           688           305
12,000........................          807           742           314
13,000........................          873           795           323
14,000........................          939           848           332
15,000........................        1,005           898           341
16,000........................        1,067           948           350
17,000........................        1,126           998           359
18,000........................        1,185         1,048           368
19,000........................        1,235         1,098           377
20,000........................        1,283         1,148           380
------------------------------------------------------------------------


                        ``U.S. Air Force Reserve
------------------------------------------------------------------------
        AGR Population            O-4 (MAJ)     O-5 (LTC)     O-6 (COL)
------------------------------------------------------------------------
500...........................           83            85            50
1,000.........................          155           165            95
1,500.........................          220           240           135
2,000.........................          285           310           170
2,500.........................          350           369           203
3,000.........................          413           420           220
3,500.........................          473           464           230
4,000.........................          530           500           240
4,500.........................          585           529           247
5,000.........................          638           550           254
5,500.........................          688           565           261
6,000.........................          735           575           268
7,000.........................          770           595           280
8,000.........................          805           615           290
10,000........................          835           635           300
------------------------------------------------------------------------

       ``(b) Grade Substitutions for Lower Grade Ceilings.--
     Whenever the number of officers serving in any grade for duty 
     described in subsection (a) is less than the number 
     authorized for that grade under this section, the difference 
     between the two numbers may be applied to increase the number 
     authorized under this section for any lower grade.
       ``(c) Determination of Authorized Ceilings.--If the total 
     number of members serving in the grades prescribed in the 
     above tables is between any two consecutive numbers in the 
     first column of the appropriate table, the corresponding 
     authorized strengths for each of the grades shown in that 
     table, for that component, are determined by mathematical 
     interpolation between the respective numbers of the two 
     strengths. If the total numbers of members serving on AGR 
     duty in the first column are greater or less than the figures 
     listed in the first column of the appropriate table, the 
     Secretary concerned shall fix the corresponding strengths for 
     the grades shown in that table at the same proportion as 
     reflected in the nearest limit shown in the table.
       ``(d) Secretarial Waiver.--Upon determination by the 
     Secretary of Defense that such action is in the national 
     interest, the Secretary may increase the number of reserve 
     officers that may be on active duty or full-time National 
     Guard duty in a controlled grade authorized pursuant to 
     subsection (a) for the current fiscal year for any of the 
     Reserve components by a number equal to not more than 5% of 
     the authorized strength in that controlled grade.''.
       (b) In General.--Section 12012 of title 10, United States 
     Code, is amended by amending the body of the section to read 
     as follows:
       C4 (a) Ceilings for Full-Time Reserve Component Senior 
     Enlisted Members.--The number of enlisted members in pay 
     grades of E-8 and E-9 for who may be on active duty under 
     section 10211 or 12310, or on full-time National Guard duty 
     under the authority of section 502(f) of title 32 (other than 
     for training) in connection with organizing, administering, 
     recruiting, instructing, or training the reserve components 
     or the National Guard may not, at the end of any fiscal year, 
     exceed a number determined in accordance with the following 
     tables:

                          ``Army National Guard
------------------------------------------------------------------------
               AGR Population                   E-8 (MSG)     E-9 (SGM)
------------------------------------------------------------------------
20,000......................................        1,650           550
22,000......................................        1,775           615
24,000......................................        1,900           645
26,000......................................        1,945           675
28,000......................................        1,945           705
30,000......................................        1,945           725
32,000......................................        1,945           730
34,000......................................        1,945           735
36,000......................................        1,945           738
38,000......................................        1,945           741
40,000......................................        1,945           743
42,000......................................        1,945           743
------------------------------------------------------------------------


                           ``U.S. Army Reserve
------------------------------------------------------------------------
               AGR Population                   E-8 (MSG)     E-9 (SGM)
------------------------------------------------------------------------
10,000......................................        1,052           154
11,000......................................        1,126           168
12,000......................................        1,195           180
13,000......................................        1,261           191
14,000......................................        1,327           202
15,000......................................        1,391           213
16,000......................................        1,455           224
17,000......................................        1,519           235
18,000......................................        1,583           246
19,000......................................        1,647           257
20,000......................................        1,711           268
21,000......................................        1,775           278
------------------------------------------------------------------------


                          ``U.S. Naval Reserve
------------------------------------------------------------------------
             AGR Population                 E-8 (SCPO)      E-9 (MCPO)
------------------------------------------------------------------------
10,000..................................            340             143
11,000..................................            364             156
12,000..................................            386             169
13,000..................................            407             182
14,000..................................            423             195
15,000..................................            435             208
16,000..................................            447             221
17,000..................................            459             234
18,000..................................            471             247
19,000..................................            483             260
20,000..................................            495             273
21,000..................................            507             286
22,000..................................            519             299
23,000..................................            531             312
24,000..................................            540             325
------------------------------------------------------------------------


                       ``U.S. Marine Corps Reserve
------------------------------------------------------------------------
            AGR Population               E-8 (IST SGT)     E-9 (SGTMAJ)
------------------------------------------------------------------------
1,100.................................              50               11
1,200.................................              55               12
1,300.................................              60               13

[[Page 12510]]

 
1,400.................................              65               14
1,500.................................              70               15
1,600.................................              75               16
1,700.................................              80               17
1,800.................................              85               18
1,900.................................              89               19
2,000.................................              93               20
2,100.................................              96               21
2,200.................................              99               22
2,300.................................             101               23
2,400.................................             103               24
2,500.................................             105               25
2,600.................................             107               26
------------------------------------------------------------------------


                          ``Air National Guard
------------------------------------------------------------------------
            AGR Population                E-8 (SMSGT)      E-9 (CMSGT)
------------------------------------------------------------------------
5,000.................................           1,020              405
6,000.................................           1,070              435
7,000.................................           1,120              465
8,000.................................           1,170             490,
9,000.................................           1,220              510
10,000................................           1,270              530
11,000................................           1,320              550
12,000................................           1,370              570
13,000................................           1,420              589
14,000................................           1,470              608
15,000................................           1,520              626
16,000................................           1,570              644
17,000................................           1,620              661
18,000................................           1,670              678
19,000................................           1,720              695
  20,000..............................           1,770              712
------------------------------------------------------------------------


                        ``U.S. Air Force Reserve
------------------------------------------------------------------------
            AGR Population                E-8 (SMSGT)      F-9 (CMSGT)
------------------------------------------------------------------------
500...................................              75               40
1,000.................................             145               75
1,500.................................             208              105
2,000.................................             270              130
2,500.................................             325              150
3,000.................................             375              170
3,500.................................             420              190
4,000.................................             460              210
4,500.................................             495              230
5,000.................................             530              250
05,500................................             565              270
6,000.................................             600              290
7,000.................................             670              330
8,000.................................             740              370
10,000................................             800              400
------------------------------------------------------------------------

       ``(b) Grade Substitution for Lower Grade Ceilings.--
     Whenever the number of members serving in pay grade E-9 for 
     duty described in subsection (a) is less than the number 
     authorized for that grade under this section, the difference 
     between the two numbers may be applied to increase the number 
     authorized under this section for pay grade E-8.
       ``(c) Determination of Authorized Ceilings.--If the total 
     number of members serving in the grades prescribed in the 
     above tables is between, any two consecutive numbers in the 
     first column of the appropriate table, the corresponding 
     authorized strengths for each of the grades shown in that 
     table, for that component, are determined by mathematical 
     interpolation between the respective numbers of the two 
     strengths. If the total numbers of members serving on AGR 
     duty in the first column are greater or less than the figures 
     listed in the first column of the appropriate table, the 
     Secretary concerned shall fix the corresponding strengths for 
     the grades shown in that table at the same proportion as 
     reflected in the nearest limit shown in the table.
       ``(d) Secretarial Waiver.--Upon determination by the 
     Secretary of Defense that such action is in the national 
     interest, the Secretary may increase the number of senior 
     reserve enlisted members that may be on active duty or full-
     time National Guard duty in a controlled grade authorized 
     pursuant to subsection (a) for the current fiscal year for 
     any of the Reserve components by a number equal to not more 
     than 5% of the authorized strength in that controlled 
     grade.''.

     SEC. 410. INCREASE IN AUTHORIZED STRENGTHS FOR AIR FORCE 
                   OFFICERS ON ACTIVE DUTY IN THE GRADE OF MAJOR.

       The table in section 523(a)(1) of title 10, United States 
     Code, is amended by striking the figures under the heading 
     ``Major'' relating to the Air Force and inserting the 
     following:

    ``9,861
    ``10,727
    ``11,593
    ``12,460
    ``13,326
    ``14,192
    ``15,058
    ``15,925
    ``16,792
    ``17,657
    ``18,524
    ``19,389
    ``20,256
    ``21,123
    ``21,989
    ``22,855
    ``23,721
    ``24,588
    ``25,454.''.
                   TITLE V--MILITARY PERSONNEL POLICY
                  Subtitle A--Officer Personnel Policy
Sec. 501. Elimination of Certain Medical and Dental Requirements for 
              Army Early-Deployers.
Sec. 502. Medical Deferment of Mandatory Retirement or Separation.
Sec. 503. Officer in Charge; United States Navy Band.
Sec. 504. Removal of Requirement for Certification for Certain Flag 
              Officers to Retire in Their Highest Grade.
Sec. 505. Three-Year Extension of Certain Force Drawdown Transition 
              Authorities Relating to Personnel Management and 
              Benefits.
Sec. 506. Judicial Review of Selection Boards.

     SEC. 501. ELIMINATION OF CERTAIN MEDICAL AND DENTAL 
                   REQUIREMENTS FOR ARMY EARLY-DEPLOYERS.

       Section 1074a of title 10, United States Code, is amended--
       (1) by striking subsection (d); and
       (2) by redesignating subsection (e) as subsection (d).

     SEC. 502. MEDICAL DEFERMENT OF MANDATORY RETIREMENT OR 
                   SEPARATION.

       Section 640 of title 10, United States Code, is amended----
       (1) by inserting ``(a)'' at the beginning of the paragraph;
       (2) by striking ``cannot'' and inserting ``may not''; and
       (3) by adding at the end the following new subparagraph 
     (b):
       ``(b) An officer whose mandatory retirement or separation 
     under this chapter or chapter 63 of this title is subject to 
     deferral under this section, may be extended for a period not 
     to exceed 30 days following completion of the evaluation 
     requiring hospitalization or medical observation.''.

     SEC. 503. OFFICER IN CHARGE; UNITED STATES NAVY BAND.

       (a) Detail and Grade.--Chapter 565 of title 10, United 
     States Code, is amended by inserting after section 6221 the 
     following new section:

     Sec. 6221a. United States Navy Band: officer in charge

       ``An officer serving in a grade not below lieutenant 
     commander may be detailed as Officer in Charge of the United 
     States Navy Band. While so serving, an officer who holds a 
     grade lower than captain shall hold the grade of captain if 
     he is appointed to that grade by the President, by and with 
     the advice and consent of the Senate. Such appointment may 
     occur notwithstanding the limitation of subsection 5596(d) of 
     this title.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter 565 is amended by inserting after 
     the item referring to section 6221 the following new item:
``6221a. United States Navy Band: officer in charge.''.

     SEC. 504. REMOVAL OF REQUIREMENT FOR CERTIFICATION FOR 
                   CERTAIN FLAG OFFICERS TO RETIRE IN THEIR 
                   HIGHEST GRADE.

       Section 1370(c)(1) of title 10, United States Code, is 
     amended----
       (1) by striking ``certifies in writing to the President and 
     Congress'' and inserting ``determines in writing''; and
       (2) by adding at the end of the paragraph the following new 
     sentence:
       ``The Secretary of Defense shall issue regulations to 
     implement this paragraph.''.

     SEC. 505. THREE-YEAR EXTENSION OF CERTAIN FORCE DRAWDOWN 
                   TRANSITION AUTHORITIES RELATING TO PERSONNEL 
                   MANAGEMENT AND BENEFITS.

       (a) Extension of Early Retirement Authority for Active Duty 
     Members.--Section 4403(i) of the National Defense 
     Authorization Act for Fiscal Year 1993 (10 U.S.C. 1293 note) 
     is amended by striking ``October 1, 2001 ``and inserting 
     ``October 1, 2004''.
       (b) Extension of Authority for Special Separation Benefit 
     and Voluntary Early Separation Incentive.--(I) Section 
     1174a(h)(1) of title 10, United States Code, is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (2) Section 1175(d)(3) of such title is amended by striking 
     ``December 31, 2001 and inserting ``September 30, 2004''.
       (c) Extension of Authority for Selective Early Retirement 
     Boards.--Section 63 8a(a) of such title is amended by 
     striking ``December 31, 2001 `` and inserting ``September 30, 
     2004''.
       (d) Time-in-Grade Requirement for Retention of Grade upon 
     Voluntary Retirement.--(I) Section 1370(a)(2)(A) of such 
     title is amended by striking ``December 31, 2001'' and 
     inserting ``September 30, 2004''.
       (2) Section 1370(d)(5) of such title is amended by striking 
     ``December 31, 2001 and inserting ``September 30, 2004''.
       (e) Minimum Commissioned Service for Voluntary Retirement 
     as an Officer.--
       (1) Army.--Section 3911(b) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (2) Navy.--Section 6323(a)(2) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (3) Air force.--Section 8911(b) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (f) Travel, Transportation, and Storage Benefits.--(1) 
     Section 404(c)(1)(C) of title 37, United States Code, is 
     amended by striking ``December 31, 2001'' and inserting 
     ``September 30, 2004''.
       (2) Section 404(f)(2)(B)(v) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (3) Section 406(a)(2)(B)(v) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (4) Section 406(g)(1)(C) of such title is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.

[[Page 12511]]

       (5) Section 503(c)(1) of the National Defense Authorization 
     Act for Fiscal Year 1991 (37 U.S.C. 406 note) is amended by 
     striking ``December 31, 2001 ``and inserting ``September 30, 
     2004''.
       (g) Educational Leave for Public and Community Service.--
     Section 4463(f) of the National Defense Authorization Art for 
     Fiscal Year 1993 (10 U.S.C. 1143a note) is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (h) Transitional Health Benefits.--Section 1145 of title 
     10, United States Code, is amended--
       (1) in subsection (a)(i), by striking ``December 31, 2001'' 
     and inserting ``September 30, 2004''.
       (2) in subsection (c)(1), by striking ``December 31, 2001'' 
     and inserting ``September 30, 2004''.
       (3) in subsection (e), by striking ``December 31, 2001'' 
     and inserting ``September 30, 2004''.
       (i) Transitional Commissary and Exchange Benefits.--Section 
     1146 of such title is amended by striking ``December 31, 
     2001'' both places it appears and inserting ``September 30, 
     2004''.
       (j) Transitional Use of Military Housing.--Section 1147(a) 
     of such title is amended--
       (1) in paragraph (1), by striking ``December 31, 2001'' and 
     inserting ``September 30, 2004''.
       (2) in paragraph (2), by striking ``December 31, 2001'' and 
     inserting ``September 30, 2004''.
       (k) Continued Enrollment of Dependents in Defense 
     Dependents Education System.--Section 1407(c)(1) of the 
     Defense Dependents' Education Act of 1978 (20 U.S.C. 
     926(c)(1)) is amended by striking ``December 31, 2001'' and 
     inserting ``September 30, 2004''.
       (l) Force Reduction Transition Period Definition.--Section 
     4411 of the National Defense Authorization Act for Fiscal 
     Year 1993 (10 U.S.C. 12681 note) is amended by striking 
     ``December 31, 2001'' and inserting ``September 30, 2004''.
       (m) Temporary Special Authority for Force Reduction Period 
     Retirements.--Section 4416(b)(1) of the National Defense 
     Authorization Act for Fiscal Year 1993 (10 U.S.C. 12681 note) 
     is amended by striking ``October 1, 2001'' and inserting 
     ``October 1, 2004''.
       (n) Retired Pay for Non-regular Service.--(1) Section 
     12731(f) of title 10, United States Code, is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2004''.
       (2) Section 12731a of such title is amended--
       (A) in subsection (a)(1)(B), by striking ``the end of the 
     period described in subsection (b)'' and inserting ``October 
     1, 2004''.
       (B) in subsection (b), by striking ``December 31, 2001'' 
     and inserting ``October 1, 2004''.
       (o) Affiliation with Guard and Reserve Units; Waiver of 
     Certain Limitations.--Section 1150(a) of such title is 
     amended by striking ``December 31, 2001'' and inserting 
     ``'September 30, 2004''.
       (p) Reserve Montgomery GI Bill.--Section 16133(b)(1)(B) of 
     such title is amended by striking ``December 31, 2001'' and 
     inserting ``September 30, 2004''.

     SEC. 506. REVIEW OF ACTIONS OF SELECTION BOARDS.

       (a) In General.--Chapter 79 of title 10, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1558. Exclusive remedies in cases involving selection 
       boards

       ``(a) Correction of Military Records.--The Secretary 
     concerned may correct a person's military records in 
     accordance with a recommendation made by a special board. Any 
     such correction shall be effective, retroactively, as of the 
     effective date of the action taken on a report of a previous 
     selection board that resulted in the action corrected in the 
     person's military records.
       ``(b) Relief Associated with Corrections of Certain 
     Actions.--(1) The Secretary concerned shall ensure that a 
     person receives relief under paragraph (2) or (3), as the 
     person may elect, if the person--
       ``(A) was separated or retired from an armed force, or 
     transferred to the retired reserve or to inactive status in a 
     reserve component, as a result of a recommendation of a 
     selection board; and
       ``(B) becomes entitled to retention on or restoration to 
     active duty or active status in a reserve component as a 
     result of a correction of the person's military records under 
     subsection (a).
       ``(2)(A) With the consent of a person referred to in 
     paragraph (1), the person shall be retroactively and 
     prospectively restored to the same status, rights, and 
     entitlements (less appropriate offsets against back pay and 
     allowances) in the person's armed force as the person would 
     have had if the person had not been selected to be separated, 
     retired, or transferred to the retired reserve or to inactive 
     status in a reserve component, as the case may be, as a 
     result of an action corrected under subsection (a). An action 
     under this subparagraph is subject to subparagraph (B).
       ``(B) Nothing in subparagraph (A) shall be construed to 
     permit a person to be on active duty or in an active status 
     in a reserve component after the date on which the person 
     would have been separated, retired, or transferred to the 
     retired reserve or to inactive status in a reserve component 
     if the person had not been selected to be separated, retired, 
     or transferred to the retired reserve or to inactive status 
     in a reserve component, as the case may be, in an action of a 
     selection board that is corrected under subsection (a).
       ``(3) If the person does not consent to a restoration of 
     status, rights, and entitlements under paragraph (2), the 
     person shall receive back pay and allowances (less 
     appropriate offsets) and service credit for the period 
     beginning on the date of the person's separation, retirement, 
     or transfer to the retired reserve or to inactive status in a 
     reserve component, as the case may be, and ending on the 
     earlier of--
       ``(A) the date on which the person would have been so 
     restored under paragraph (2), as determined by the Secretary 
     concerned; or
       ``(B) the date on which the person would otherwise have 
     been separated, retired, or transferred to the retired 
     reserve or to inactive status in a reserve component, as the 
     case may be.
       ``(c) Finality of Unfavorable Action.--If a special board 
     makes a recommendation not to correct the military records of 
     a person regarding action taken in the case of that person on 
     the basis of a previous report of a selection board, the 
     action previously taken on that report shall be considered as 
     final as of the date of the action taken on that report.
       ``(d) Regulations.--(1) The Secretary concerned may 
     prescribe regulations to carry out this section (other than 
     subsection (e)) with respect to the armed force or armed 
     forces under the jurisdiction of the Secretary.
       ``(2) The Secretary may prescribe in the regulations the 
     circumstances under which consideration by a special board 
     may be provided for under this section, including the 
     following:
       ``(A) The circumstances under which consideration of a 
     person's case by a special board is contingent upon 
     application by or for that person.
       ``(B) Any time limits applicable to the filing of an 
     application for consideration.
       ``(3) Regulations prescribed by the Secretary of a military 
     department under this subsection shall be subject to the 
     approval of the Secretary of Defense.
       ``(e) Judicial Review.--(l) A person challenging for any 
     reason the action or recommendation of a selection board, or 
     the action taken by the Secretary concerned on the report of 
     a selection board, is not entitled to relief in any judicial 
     proceeding unless the person has first been considered by a 
     special board under this section or the Secretary concerned 
     has denied such consideration.
       ``(2) A court of the United States may review a 
     determination by the Secretary concerned under this section 
     not to convene a special board. A court may set aside such 
     determination only if it finds the determination to be 
     arbitrary or capricious, not based on substantial evidence, 
     or otherwise contrary to law. If a court sets aside a 
     determination not to convene a special board, it shall remand 
     the case to the Secretary concerned, who shall provide for 
     consideration of the person by a special board under this 
     section.
       ``(3) A court of the United States may review the 
     recommendation of a special board convened under this section 
     and any action taken by the Secretary concerned on the report 
     of such special board. A court may set aside such 
     recommendation or action, as the case may be, only if it 
     finds that the recommendation or action was contrary to law 
     or involved a material error of fact or a material 
     administrative error. If a court sets aside the 
     recommendation of a special board, it shall remand the case 
     to the Secretary concerned, who shall provide for 
     reconsideration of the person by another special board. If a 
     court sets aside the action of the Secretary concerned on the 
     report of a special board, it shall remand the case to the 
     Secretary concerned for a new action on the report of the 
     special board.
       ``(f) Exclusivity of Remedies.--Notwithstanding any other 
     provision of law, but subject to subsection (g), the remedies 
     provided under this section are the only remedies available 
     to a person for correcting an action or recommendation of a 
     selection board regarding that person or an action taken on 
     the report of a selection board regarding that person.
       ``(g) Existing Jurisdiction.--(1) Nothing in this section 
     limits the jurisdiction of any court of the United States 
     under any provision of law to determine the validity of any 
     statute, regulation, or policy relating to selection boards, 
     except that, in the event that any such statute, regulation, 
     or policy is held invalid, the remedies prescribed in this 
     section shall be the sole and exclusive remedies available to 
     any person challenging the recommendation of a special board 
     on the basis of the invalidity.
       ``(2) Nothing in this section limits authority to correct a 
     military record under section 1552 of this title.
       ``(h) Timeliness of Action.--(1) For the purposes of 
     subsection (e)--
       ``(A) If, not later than six months after receipt of a 
     complete application for consideration by a special board, 
     the Secretary concerned shall have neither convened a special

[[Page 12512]]

     board nor denied consideration by a special board, the 
     Secretary shall be deemed to have been denied such 
     consideration.
       ``(B) If, not later than one year after the convening of a 
     special board, the Secretary concerned shall not have taken 
     final action on the report of such board, the Secretary shall 
     be deemed to have denied relief to the person applying for 
     consideration by the board.
       ``(2) Under regulations prescribed in accordance with 
     subsection (d), the Secretary concerned may exclude an 
     individual application from the time limits prescribed in 
     this subsection if the Secretary determines that the 
     application warrants a longer period of consideration. The 
     authority of the Secretary of a military department under 
     this paragraph may not be delegated.
       ``(i) Inapplicability to Coast Guard.--This section does 
     not apply to the Coast Guard when it is not operating as a 
     service in the Navy.
       ``(j) Definitions.--In this section:
       ``(1) The term `special board'--
       ``(A) means a board that the Secretary concerned convenes 
     under any authority to consider whether to recommend a person 
     for appointment, enlistment, reenlistment, assignment, 
     promotion, retention, separation, retirement, or transfer to 
     inactive status in a reserve component instead of referring 
     the records of that person for consideration by a previously 
     convened selection board which considered or should have 
     considered that person;
       ``(B) includes a board for the correction of military or 
     naval records convened under section 1552 of this title, if 
     designated as a special board by the Secretary concerned; and
       ``(C) does not include a promotion special selection board 
     convened under section 628 or 14502 of this title.
       ``(2) The term `selection board'--
       ``(A) means a selection board convened under section 
     573(c), 580, 580a, 581, 611(b), 637, 638, 638a, 14101(b), 
     14701, 14704, or 14705 of this title, and any other board 
     convened by the Secretary concerned under any authority to 
     recommend persons for appointment, enlistment, reenlistment, 
     assignment, promotion, or retention in the armed forces or 
     for separation, retirement, or transfer to inactive status in 
     a reserve component for the purpose of reducing the number of 
     persons serving in the armed forces; and
       ``(B) does not include--
       ``(i) a promotion board convened under section 573(a), 
     611(a), or 14101(a) of this title;
       ``(ii) a special board;
       ``(iii) a special selection board convened under section 
     628 of this title; or
       ``(iv) a board for the correction of military records 
     convened under section 1552 of this title.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter 79 is amended by adding at the end 
     the following:

``1558. Exclusive remedies in cases involving selection boards.''.

       (c) Special Selection Boards.--Section 628 of such title is 
     amended--
       (1) by redesignating subsection (g) as subsection (j); and
       (2) by inserting after subsection (f) the following new 
     subsections:
       ``(g) Limitations of Other Jurisdiction.--No official or 
     court of the United States may--
       ``(1) consider any claim based to any extent on the failure 
     of an officer or former officer of the armed forces to be 
     selected for promotion by a promotion board until--
       ``(A) the claim has been referred by the Secretary 
     concerned to a special selection board convened under this 
     section and acted upon by that board and the report of the 
     board has been approved by the President; or
       ``(B) the claim has been rejected by the Secretary 
     concerned without consideration by a special selection board; 
     or
       ``(2) except as provided in subsection (h), grant any 
     relief on such a claim unless the officer or former officer 
     has been selected for promotion by a special selection board 
     convened under this section to consider the officer's claim 
     and the report of the board has been approved by the 
     President.
       ``(h) Judicial Review.--(1) A court of the United States 
     may review a determination by the Secretary concerned under 
     subsection (a)(1) or (b)(1) not to convene a special 
     selection board. If a court finds the determination to be 
     arbitrary or capricious, not based on substantial evidence, 
     or otherwise contrary to law, it shall remand the case to the 
     Secretary concerned, who shall provide for consideration of 
     the officer or former officer by a special selection board 
     under this section.
       ``(2) A court of the United States may review the action of 
     a special selection board convened under this section on a 
     claim of an officer or former officer and any action taken by 
     the President on the report of the board. If a court finds 
     that the action was contrary to law or involved a material 
     error of fact or a material administrative error, it shall 
     remand the case to the Secretary concerned, who shall provide 
     for reconsideration of the officer or former officer by 
     another special selection board.
       ``(i) Existing Jurisdiction.--(1) Nothing in this section 
     limits the jurisdiction of any court of the United States 
     under any provision of law to determine the validity of any 
     statute, regulation, or policy relating to selection boards, 
     except that, in the event that any such statute, regulation, 
     or policy is held invalid, the remedies prescribed in this 
     section shall be the sole and exclusive remedies available to 
     any person challenging the recommendation of a selection 
     board on the basis of the invalidity.
       ``(2) Nothing in this section limits the authority of the 
     Secretary of a military department to correct a military 
     record under section 1552 of this title.''.
       (c) Effective Date and Applicability.--(1) The amendments 
     made by this section shall take effect on the date of the 
     enactment of this Act and, except as provided in paragraph 
     (2), shall apply with respect to any proceeding pending on or 
     after that date without regard to whether a challenge to an 
     action of a selection board of any of the Armed Forces being 
     considered in such proceeding was initiated before, on, or 
     after that date.
       (2) The amendments made by this section shall not apply 
     with respect to any action commenced in a court of the United 
     States before the date of the enactment of this Act.
             Subtitle B--Reserve Component Personnel Policy
Sec. 511. Retirement of Reserve Personnel.
Sec. 512. Amendment to Reserve PERSTEMPO Definition.
Sec. 513. Individual Ready Reserve Physical Examination Requirement.
Sec. 514. Benefits and Protections for Members in a Funeral Honors Duty 
              Status.
Sec. 515. Funeral Honors Duty Performed by Members of the National 
              Guard.
Sec. 516. Strength and Grade Ceiling Accounting for Reserve Component 
              Members on Active Duty in Support of a Contingency 
              Operation.
Sec. 517. Reserve Health Professionals Stipend Program Expansion.
Sec. 518. Reserve Officers on Active Duty for a Period of Three Years 
              or Less.
Sec. 519. Active Duty End Strength Exemption for National Guard and 
              Reserve Personnel Performing Funeral Honors Functions.
Sec. 520. Clarification of Functions That May Be Assigned to Active 
              Guard and Reserve Personnel on Full-Time National Guard 
              Duty.
Sec. 521. Authority for Temporary Waiver of the Requirement for a 
              Baccalaureate Degree for Promotion of Certain Reserve 
              Officers of the Army.
Sec. 522. Authority of the President to Suspend Certain Laws Relating 
              to Promotion, Retirement and Separation; Duties.

     SEC. 511. RETIREMENT OF RESERVE PERSONNEL.

       (a) Retired Reserve.--Section 10154(2) of title 10, United 
     States Code, is amended by striking ``upon their request''.
       (b) Retirement for Failure of Selection of Promotion.--(1) 
     Section 14513 of such title 10 is amended--
       (A) in the heading, by inserting ``or retirement'' after 
     `Separation''; and
       (B) in paragraph (2), by striking ``and applies'' and 
     inserting ``unless the officer requests not to be transferred 
     to the Retired Reserve'' before the semicolon.
       (2) The table of sections at the beginning of chapter 1407 
     of such title 10 is amended by striking the item relating to 
     section 14513 and inserting the following new item:
``14513. Separation or retirement for failure of selection for 
              promotion.''.
       (c) Retirement for Years of Service or After Selection for 
     Early Removal.--Section 14514 of such title 10 is amended--
       (1) in paragraph (1), by striking ``and applies'' and 
     inserting ``unless the officer requests not to be transferred 
     to the Retired Reserve'' before the semicolon; and
       (2) in paragraph (2), by striking ``does not apply for such 
     transfer'' and inserting ``has requested not to be 
     transferred to the Retired Reserve'' after ``is not qualified 
     or''.
       (d) Retirement for Age.--Section 14515 of such title 10 is 
     amended--
       (1) in paragraph (1), by striking ``and applies'' and 
     inserting ``unless the officer requests not to be transferred 
     to the Retired Reserve'' before the semicolon; and
       (2) in paragraph (2), by striking ``does not apply for 
     transfer'' and inserting ``has requested not to be 
     transferred'' following ``is riot qualified or''.
       (e) Discharge or Retirement of Warrant Officers for Years 
     of Service or Age.--(1) Chapter 1207 of such title 10 is 
     amended by adding at the end the following new section:

     ``12244. Warrant officers: discharge or retirement for years 
       of service or for age

       ``Each reserve warrant officer of the Army, Navy, Air 
     Force, or Marine Corps who is in an active status and has 
     reached the maximum years of service or age prescribed by the 
     Secretary concerned shall--
       ``(1) be transferred to the Retired Reserve, if the warrant 
     officer is so qualified for such transfer, unless the warrant 
     officer requests not to be transferred to the Retired 
     Reserve; or

[[Page 12513]]

       ``(2) if the warrant officer is not qualified for such 
     transfer or requests not to be transferred to the Retired 
     Reserve, be discharged.''.
       (2) The table of sections at the beginning of such chapter 
     1207 of title 10 is amended by adding at the end the 
     following new item:
``12244. Warrant officers: discharge or retirement for years of service 
              or for age.''.
       (f) Discharge, or Retirement of Enlisted Members for Years 
     of Service or Age.--(1) Chapter 1203 of such title 10 is 
     amended by adding, at the end the following new section:

     ``12108. Enlisted members: discharge or retirement for years 
       of service or for age

       ``Each reserve enlisted member of the Army, Navy, Air 
     Force, or Marine Corps who is in an active status and has 
     reached the maximum years of service or age prescribed by the 
     Secretarv concerned shall--
       ``(1) be transferred to the Retired Reserve, if the member 
     is so qualified for such transfer, unless the member requests 
     not to be transferred to the Retired Reserve; or
       ``(2) if the member is not qualified for such transfer or 
     requests not to be transferred to the Retired Reserve, be 
     discharged.''.
       (2) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:
``12108. Enlisted members: discharge or retirement for years of service 
              or for age.''.

     SEC. 512. AMENDMENT TO RESERVE PERSTEMPO DEFINITION.

       Section 991(b) of title 10, United States Code, is 
     amended--
       (1) in paragraph (1), by inserting ``active'' before 
     ``service'' and adding at the end the following new sentence:
       ``For the purpose of this definition, the housing in which 
     a member of a reserve component resides is either the housing 
     the member normally occupies when on garrison duty or the 
     member's permanent civilian residence.'';
       (2) by striking paragraph (2);
       (3) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3) respectively; and
       (4) in paragraph (3) (as redesignated), by striking ``in 
     paragraphs (1) and (2).'' and inserting ``in paragraph 
     (1).''.

     SEC. 513. INDIVIDUAL READY RESERVE PHYSICAL EXAMINATION 
                   REQUIREMENT.

       Section 10206 of title 10, United States Code, is amended--
       (1) in subsection (a), by striking ``Ready Reserve'' and 
     inserting ``Selected Reserve'';
       (2) by redesignating subsection (b) as subsection (c); and
       (3) by inserting after subsection (a) the following new 
     subsection:
       ``(b) As determined by the Secretary concerned, each member 
     of the Individual Ready Reserve or Inactive National Guard 
     shall be provided a physical examination, if required--
       ``(1) to determine the member's fitness for military duty; 
     or
       ``(2) for promotion, attendance at a military school or 
     other career progression requirements.''.

     SEC. 514. BENEFITS AND PROTECTIONS FOR MEMBERS IN A FUNERAL 
                   HONORS DUTY STATUS.

       (a) Persons Subject to the Uniformed Code of Military 
     Justice.--Section 802 of title 10, United States Code, is 
     amended--
       (1) in subsection (a)(3), by inserting ``or in a funeral 
     honors duty status'' after ``on inactive-duty training''; and
       (2) in subsection (d)(2)(B), by inserting ``or in a funeral 
     honors duty status'' after ``on inactive-duty training''.
       (b) Benefits for Dependents of a Deceased Reserve Component 
     Member.--Section 1061 of such title 10 is amended--
       (1) in subsection (b)(1), by striking ``or'' the first time 
     it appears and inserting ``, or funeral honors duty'' before 
     the semicolon; and
       (2) in subsection (b)(2), by striking ``or'' the first time 
     it appears and inserting ``, or funeral honors duty'' before 
     the period.
       (c) Payment of a Death Gratuity.--(1) Section 1475(a) of 
     such title 10 is amended--
       (A) by redesignating paragraphs (3), (4) and (5) as 
     paragraphs (4), (5) and (6), respectively;
       (B) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) a Reserve of an armed force who dies while performing 
     funeral honors duty;''; and
       (C) in paragraph (4) (as redesignated in subsection (c)(1)) 
     by--
       (i) striking ``or'' both time it appears;
       (ii) inserting ``or funeral honors duty'' after ``Public 
     Health Service),'';
       (iii) inserting a comma before and after ``inactive duty 
     training'' the second time it appears in the sentence; and
       (iv) inserting ``or funeral honors duty'' before the 
     semicolon.
       (2) Section 1476(a) of such title 10 is amended--
       (A) in paragraph (1)(A), by striking ``or'';
       (B) in paragraph (1)(B), by striking the period and 
     inserting ``; or'';
       (C) by adding at the end of paragraph (1) the following new 
     subparagraph:
       ``(C) funeral honors duty.''; and
       (D) in paragraph (2)(A), by striking ``or'' the first time 
     it appears and inserting ``, or funeral honors duty'' after 
     ``inactive-duty training''.
       (d) Military Authority for Members of the Coast Guard 
     Reserve.--Section 704 of title 14, United States Code, is 
     amended by--
       (1) striking ``or'' the first time it appears in the second 
     sentence; and
       (2) inserting ``, or funeral honors duty'' after 
     ``inactive-duty training''.
       (E) Benefits for Members of the Coast Guard Reserve.--
     Section 705(a) of such title 14 is amended by inserting ``on 
     funeral honors duty,'' after ``on inactive-duty training,''.
       (f) Definitions.--Section 101 of title 38, United States 
     Code, is amended--(l) in paragraph (24), by striking ``and'' 
     following ``aggravated in the line of duty,'' and inserting 
     ``, and any period of funeral honors duty during which the 
     individual concerned was disabled or died from an injury 
     incurred or aggravated in line of duty'' before the period; 
     and
       (2) by adding at the end the following new paragraph:
       ``(34) The term ``Funeral Honors Duty'' means--
       ``(A) duty prescribed for Reserves by the Secretary 
     concerned under section 12503 of title 10 to prepare for or 
     perform funeral honors functions at the funeral of a veteran;
       `` (B) in the case of members of the Army National Guard or 
     Air National Guard of any State, duty under section 115 of 
     title 32 to prepare for or perform funeral honors functions 
     at the funeral of a veteran; and
       ``(C) Authorized travel to and from such duty.''.

     SEC. 515. FUNERAL HONORS DUTY PERFORMED BY MEMBERS OF THE 
                   NATIONAL GUARD.

       Section 1491 (b) of title 10, United States Code, is 
     amended by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) A member of the Army National Guard of the United 
     States or Air National Guard of the United States who serves 
     as a member of a funeral honors detail while serving in a 
     duty status authorized under state law shall be considered to 
     be a member of the armed forces for the purpose of fulfilling 
     the two member funeral honors detail requirement in paragraph 
     (2).''.

     SEC. 516. STRENGTH AND GRADE CEILING ACCOUNTING FOR RESERVE 
                   COMPONENT MEMBERS ON ACTIVE DUTY IN SUPPORT OF 
                   A CONTINGENCY OPERATION.

       (a) Active Duty Strength Accounting--Section 11 5(c) of 
     title 10, United States Code is amended--
       (1) in subparagraph (1), by striking ``and'' at the end of 
     the subparagraph;
       (2) in subparagraph (2), by striking the period and adding 
     ``; and'' at the end of the subparagraph; and
       (3) by adding the following new subparagraph:
       ``(3) increase the end strength authorized pursuant to 
     subsection (a)(1)(A) for a fiscal year for any of the armed 
     forces by a number equal to the number of members of the 
     reserve components on active duty under section 12301(d) of 
     this title in support of a contingency operation as defined 
     in section 101(a)(13) of this title.''.
       (b) Increase in Authorized Daily Average for Members in Pay 
     Grades E-8 and E-9 on Active Duty Under Certain 
     Circumstances.--Section 517 of such title 10 is amended at 
     the end by adding the following new paragraph:
       ``(d) The Secretary of Defense may increase the authorized 
     daily average number of enlisted members on active duty in an 
     armed force in pay grades E-8 and E-9 in a fiscal year 
     pursuant to subsection (a) by the number of enlisted members 
     of a reserve component in that armed force in the pay grades 
     of E-8 and E-9 on active duty under section 12301(d) of this 
     title in support of a contingency operation as defined in 
     section 101(a)(13) of this title,''.
       (c) Increase in Authorized Strengths for Commissioned 
     Officers in Pay Grades O-4, O-5 and O-6 on Active Duty Under 
     Certain Circumstances.--Section 523 of such title 10 is 
     amended----
       (1) in paragraphs (a)(1) and (a)(2), by striking 
     ``subsection (c)'' and inserting subsections (c) and (e)''; 
     and
       (2) by adding at the end the following new subsection:
       ``(e) The Secretary of Defense may increase the authorized 
     total number of commissioned officers serving on active duty 
     at the end of any fiscal year pursuant to subsection (a) by 
     the number of commissioned officers of a reserve component of 
     the Army, Navy, Air Force, or Marine Corps on active duty 
     under section 12301(d) of this title in support of a 
     contingency operation as defined in section 101(a)(13) of 
     this title.''.
       (d) Increase, in Authorized Strengths for General and Flag 
     Officers on Active Duty Under Certain Circumstances.--Section 
     526(a) of such title 10 is amended by----
       (1) striking ``the'' the first time it appears;
       (2) inserting ``(1) Except as provided in paragraph (2), 
     the'' following ``Limitations.----'';
       (3) redesignating paragraphs (1), (2), (3) and (4) as 
     subparagraphs (A), (B), (C) and (D), respectively; and
       (4) inserting after subparagraph (D) (as redesignated by 
     section (d)(3)) the following new paragraph:
       ``(2) The Secretary of Defense may increase the number of 
     general and flag officers on active duty pursuant to 
     paragraph (1) by the number of reserve component general and

[[Page 12514]]

     flag officers on active duty under section 12301(d) of this 
     title in support of a contingency operation as defined in 
     section 101(a)(13) of this title.''.

     SEC. 517. RESERVE HEALTH PROFESSIONALS STIPEND PROGRAM 
                   EXPANSION.

       (a) Purpose of Program.--Section 16201(a) of title 10, 
     United States Code, is amended to read as follows:
       ``(a) Establishment of Program.--For the purposes of 
     obtaining adequate numbers of commissioned officers in the 
     reserve components who are qualified in health professions, 
     the Secretary of each military department may establish and 
     maintain a program to provide financial assistance under this 
     chapter to persons engaged in training that leads to a degree 
     in medicine or dentistry, and to a health professions 
     specialty critically needed in wartime. Under such a program, 
     the Secretary concerned may agree to pay a financial stipend 
     to persons engaged in health care education and training in 
     return for a commitment to subsequent service in the Ready 
     Reserve.''
       (b) Medical and Dental Student Stipend.--Section 16201 of 
     such title 10 is amended by----
       (1) redesignating subsections (b), (c), (d) and (e) as 
     subsections (c), (d), (e) and (f);
       (2) inserting the following new subsection:
       ``(b) Medical and Dental School Students.--(1) Under the 
     stipend program under this chapter, the Secretary of the 
     military department concerned may enter into an agreement 
     with a person who----
       ``(A) is eligible to be appointed as an officer in a 
     Reserve component;
       ``(B) is enrolled or has been accepted for enrollment in an 
     institution in a course of study that results in a degree in 
     medicine or dentistry;
       ``(C) signs an agreement that, unless sooner separated, the 
     person will----
       ``(i) complete the educational phase of the program;
       ``(ii) accept a reappointment or redesignation within his 
     reserve component, if tendered, based upon his health 
     profession, following satisfactory completion of the 
     educational and intern programs; and
       ``(iii) participate in a residency program; and
       (D) if required by regulations prescribed by the Secretary 
     of Defense, agrees to apply for, if eligible, and accept, if 
     offered, residency training in a health profession skill 
     which has been designated by the Secretary of Defense as a 
     critically needed wartime skill.
       ``(2) Under the agreement----
       ``(A) the Secretary of the military department concerned 
     shall agree to pay the participant a stipend, in the amount 
     determined under subsection (f), for the period or the 
     remainder of the period the student is satisfactorily 
     progressing toward a degree in medicine or dentistry while 
     enrolled in an accredited medical or dental school;
       ``(B) the participant shall not be eligible to receive such 
     stipend before appointment, designation, or assignment as an 
     officer for service in the Ready Reserve;
       (C) the participant shall be subject to such active duty 
     requirements as may be specified in the agreement and to 
     active duty in time of war or national emergency as provided 
     by law for members of the Ready Reserve; and
       ``(D) the participant shall agree to serve, upon successful 
     completion of the program, one year in the Selected Reserve 
     for each six months, or part thereof, for which the stipend 
     is provided. In the case of a participant who enters into a 
     subsequent agreement under subsection (c) and successfully 
     completes residency training in a specialty designated by the 
     Secretary of Defense as a specialty critically needed by the 
     military department in wartime, the requirement to serve in 
     the Selected Reserve may be reduced to one year for each 
     year, or part thereof, for which the stipend was provided 
     while enrolled in medical or dental school.''
       (c) Wartime Critical Skills.--Section 16201(c), (as 
     redesignated by section (b)), is amended----
       (1) by inserting ``WARTIME'' following ``CRITICAL'' in the 
     heading; and
       (2) in paragraph (1)(B) by inserting ``or has been 
     appointed as a medical or dental officer in the Reserve of 
     the armed force concerned'' before the semicolon at the end 
     of the paragraph.
       (d) Service Obligation Requirement.--Subparagraph (2)(D) of 
     subsection (c), (as redesignated by section (b)), and 
     subparagraph (2)(D) of subsection (d), (as redesignated by 
     section (b)), are amended by striking ``two years in the 
     Ready Reserve for each year,'' and inserting ``one year in 
     the Ready Reserve for each six months,''.
       (e) Clerical Amendments.--Subparagraphs (2)(A) of 
     subsection (c), (as redesignated by section (b)), and 
     subparagraph (2)(A) of subsection (d), (as redesignated by 
     section (b)), are amended by striking ``subsection (e)'' and 
     inserting ``subsection (f)''.

     SEC. 518. RESERVE OFFICERS ON ACTIVE DUTY FOR A PERIOD OF 
                   THREE YEARS OR LESS.

       (a) Clarification of Exemption.--Section 641(l)(D) of title 
     10, United States Code, is amended to read as follows:
       ``(D) on active duty under section 12301(d) of this title, 
     other than as provided under subparagraph (C), provided the 
     call or order to active duty, as prescribed in regulations of 
     the Secretary concerned, specifies a period of three years or 
     less and continued placement on the reserve active-status 
     list;''.
       (b) Retroactive Application.--(1) Officers who were placed 
     on the reserve active status list under section 641(1)(D), as 
     amended by section 521 of the Floyd D. Spence National 
     Defense Authorization Act for Fiscal Year 2001 (Public Law 
     106-398; 114 Stat. 1654A-108), may be considered, as 
     determined by the Secretary concerned, to have been on the 
     active-duty list during the period beginning on the date of 
     enactment of Public Law 106-398 through the date of enactment 
     of this Act.
         (2) Officers who were placed on the active duty list on 
     or after October 30, 1997, may, at the discretion of the 
     Secretary concerned, be placed on the reserve active-status 
     list upon enactment of this Act, provided they otherwise meet 
     the conditions specified in section 641(1)(D) as amended by 
     this Act.

     SEC. 519. ACTIVE DUTY END STRENGTH EXEMPTION FOR NATIONAL 
                   GUARD AND RESERVE PERSONNEL PERFORMING FUNERAL 
                   HONORS FUNCTIONS.

       Section 115(d) of title 10, United States Code, is amended 
     by adding at the end the following new paragraphs:
       ``(10) Members of reserve components on active duty to 
     prepare for and to perform funeral honors functions for 
     funerals of veterans in accordance with section 1491 of this 
     title.
       ``(11) Members on full-time National Guard duty to prepare 
     for and to perform funeral honors functions for funerals of 
     veterans in accordance with section 1491 of this title.''.

     SEC. 520. CLARIFICATION OF FUNCTIONS THAT MAY BE ASSIGNED TO 
                   ACTIVE GUARD AND RESERVE PERSONNEL ON FULL-TIME 
                   NATIONAL GUARD DUTY.

       Section 12310(b) of title 10, United States Code, is 
     amended by inserting ``, or a Reserve who is a member of the 
     National Guard serving on full-time National Guard duty under 
     section 502(f) of title 32 in connection with functions 
     referred to in subsection (a),'' after ``on active duty as 
     described in subsection (a)''.

     SEC. 521. AUTHORITY FOR TEMPORARY WAIVER OF THE REQUIREMENT 
                   FOR A BACCALAUREATE DEGREE FOR PROMOTION OF 
                   CERTAIN RESERVE OFFICERS OF THE ARMY.

       Section 516 of the Strom Thurmond National Defense 
     Authorization Act for Fiscal Year 1999 (Public Law 105-261; 
     112 Stat. 1920, 2008) is amended----
       (1) in subsection (a), by striking ``(a) Waiver Authority 
     for Army OCS Graduates.--'' and ``before the date of the 
     enactment of this Act''; and
       (2) in subsection (b), by striking ``2000'' and inserting 
     ``2003''.

     SEC. 522. AUTHORITY OF THE PRESIDENT TO SUSPEND CERTAIN LAWS 
                   RELATING TO PROMOTION, RETIREMENT AND 
                   SEPARATION; DUTIES.

       Section 12305 of title 10, United States Code, is amended 
     by adding at the end the following new subsection (c):
       ``(c) Active duty members whose mandatory separations or 
     retirements incident to section 1251 or sections 632-637 of 
     this title are delayed pursuant to invocation of this 
     section, will be afforded up to 90 days following termination 
     of the suspension before being separated of retired.''.
                   Subtitle C--Education and Training
Sec. 531. Authority for the Marine Corps University to Award the 
    Degree of Master of Strategic Studies.
Sec. 532. Reserve Component Distributed Learning.
Sec. 533. Repeal of Limitation on Number of Junior Reserve Officers' 
              Training Corps (JROTC) Units.
Sec. 534. Modification of the Nurse Officer Candidate Accession Program 
              Restriction on Students Attending Civilian Educational 
              Institutions with Senior Reserve Officers' Training 
              Programs.
Sec. 535. Defense Language Institute Foreign Language Center.

     SEC.531. AUTHORITY FOR THE MARINE CORPS UNIVERSITY TO AWARD 
                   THE DEGREE OF MASTER OF STRATEGIC STUDIES.

       (a) Authority to Confer Degree.--Upon the recommendation of 
     the Director and faculty of the Marine Corps War College of 
     the Marine Corps University, the President of the Marine 
     Corps University may confer the degree of master of strategic 
     studies upon graduates of the college who fulfill the 
     requirements for the degree.
       (b) Regulation.--The Secretary of the Navy shall promulgate 
     regulations under which the Director of the faculty of the 
     Marine Corps War College of the Marine Corps University shall 
     administer the authority in subsection (a).
       (e) Effective Date.--The authority to award degrees 
     provided by subsection (a) shall become effective on the date 
     on which the Secretary of Education determines that the 
     requirements established by the Marine Corps War College of 
     the Marine Corps University for the degree of master of 
     strategic studies are in accordance with generally applicable 
     requirements for a degree of master of arts.

[[Page 12515]]



     SEC. 532. RESERVE COMPONENT DISTRIBUTED LEARNING.

       (a) Compensation for Distributed Learning.--Section 206(d) 
     of title 37, United States Code, is amended to read as 
     follows:
       ``(d) A member of a Reserve Component may be paid 
     compensation under this section for the successful completion 
     of courses of instruction undertaken by electronic, paper-
     based, or other distributed learning. Distributed Leaming is 
     structured leaming that takes place without 55 requiring the 
     physical presence of an instructor. To be compensable, the 
     instruction must be required by law, Department of Defense 
     policy, or service regulation and may be accomplished either 
     independently or as part of a group.''.
       (b) Definition of Inactive-Duty Training.--Section 101(22) 
     of title 37, United States Code, is amended by striking ``, 
     but does not include work or study in connection with a 
     correspondence course of a uniformed service''.

     SEC. 533. REPEAL OF LIMITATION ON NUMBER OF JUNIOR RESERVE 
                   OFFICERS' TRAINING CORPS (JROTC) UNITS.

       Section 2031(a)(1) of title 10, United States Code, is 
     amended by striking the second sentence.

     SEC. 534. MODIFICATION OF THE NURSE OFFICER CANDIDATE 
                   ACCESSION PROGRAM RESTRICTION ON STUDENTS 
                   ATTENDING CIVILIAN EDUCATIONAL INSTITUTIONS 
                   WITH SENIOR RESERVE OFFICERS' TRAINING 
                   PROGRAMS.

       Section 2130a of title 10, United States Code, is amended--
       (1) in paragraph (a)(2), by striking ``that does not have a 
     Senior Reserve Officers' Training Program established under 
     section 2102 of this title;'' and
       (2) in paragraph (b)(1), by adding at the end ``or that has 
     a Senior Reserve Officers' Training Program for which the 
     student is ineligible.''.

     SEC. 535. DEFENSE LANGUAGE INSTITUTE FOREIGN LANGUAGE CENTER.

       (a) Subject to subsection (b), the Commandant of the 
     Defense Language Institute Foreign Language Center 
     (Institute) may confer an Associate of Arts degree in Foreign 
     Language upon graduates of the Institute who fulfill the 
     requirements for the degree.
       (b) No degree may be conferred upon any student under this 
     section unless the Provost certifies to the Commandant of the 
     Institute that the student has satisfied all the requirements 
     prescribed for such degree.
       (c) The authority provided by subsection (a) shall be 
     exercised under regulations prescribed by the Secretary of 
     Defense.
           Subtitle D--Decorations, Awards, and Commendations
Sec. 541. Authority for Award of the Medal of Honor to Humbert R. 
              Versace for Valor During the Vietnam War.
Sec. 542. Issuance of Duplicate Medal of Honor.
Sec. 543. Repeal of Limitation on Award of Bronze Star to Members in 
              Receipt of Special Pay.

     SEC. 541. AUTHORITY FOR AWARD OF THE MEDAL OF HONOR TO 
                   HUMBERT R. VERSACE FOR VALOR DURING THE VIETNAM 
                   WAR.

       (a) Waiver of Time Limitations.--Notwithstanding the time 
     limitations specified in section 3744 of title 10, United 
     States Code, or any other time limitation with respect to the 
     awarding of certain medals to persons who served in the 
     military service, the President may award the Medal of Honor 
     under section 3741 of that title to Humbert R. Versace for 
     the acts of valor referred to in subsection (b).
       (b) Action Described.--The acts of valor referred to in 
     subsection (a) are the actions of Humbert R. Versace between 
     October 29, 1963, and September 26, 1965, while interned as a 
     prisoner of war by the Vietnamese Communist National 
     Liberation Front (Viet Cong) in the Republic of Vietnam.

     SEC. 542. ISSUANCE OF DUPLICATE MEDAL OF HONOR.

       (a) Section 3747 of title 10, United States Code, is 
     amended--
       (1) in the section heading, by adding at the end ``issuance 
     of duplicate medal of honor'';
       (2) by striking ``Any medal of honor'' and inserting ``(a) 
     Replacement of Medals.--Any medal of honor'';
       (3) by inserting ``stolen,'' before ``lost or destroyed,''; 
     and
       (4) by adding at the end the following new subsection:
       ``(b) Issuance of Duplicate Medal of Honor.--Upon written 
     application by a person to whom a medal of honor has been 
     awarded under this chapter, the Secretary of the Army may 
     issue such person, without charge, one duplicate medal of 
     honor, with ribbons and appurtenances. Such duplicate shall 
     be marked, in a manner the Secretary may determine, as a 
     duplicate or for display purposes only. The issuance of a 
     duplicate medal of honor under the authority of this 
     subsection shall not constitute the award of more than one 
     medal of honor within the meaning of section 3744(a) of this 
     title.''.
       (b) Section 6253 of such title is amended--
       (1) in the section heading, by adding at the end ``; 
     issuance of duplicate medal of honor'';
       (2) by striking ``The Secretary of the Navy may replace'' 
     and inserting ``(a) Replacement of Medals.--The Secretary of 
     the Navy may replace'';
      (3) by inserting ``stolen,'' before ``lost or destroyed''; 
     and
      (4) by adding at the end the following new subsection:
        ``(b) Issuance of Duplicate Medal of Honor.--Upon written 
     application by a person to whom a medal of honor has been 
     awarded under this chapter, the Secretary of the Navy may 
     issue such person, without charge, one duplicate medal of 
     honor, with ribbons and appurtenances. Such duplicate shall 
     be marked, in a manner the Secretary may determine, as a 
     duplicate or for display purposes only. The issuance of a 
     duplicate medal of honor under the authority of this 
     subsection shall not constitute the award of more than one 
     medal of honor within the meaning of section 6247 of this 
     title.''.
       (c) Section 8747 of such title is amended--
       (1) in the section heading, by adding at the end ``; 
     issuance of duplicate medal of honor'';
       (2) by striking ``Any medal of honor'' and inserting ``(a) 
     Replacement of Medals.--Any medal of honor'';
       (3) by inserting ``stolen,'' before ``lost or destroyed,''; 
     and
       (4) by adding at the end the following new subsection:
       ``(b) Issuance of Duplicate Medal of Honor.--Upon written 
     application by a person to whom a medal of honor has been 
     awarded under this chapter, the Secretary of the Air Force 
     may issue such person, without charge, one duplicate medal of 
     honor, with ribbons and appurtenances. Such duplicate shall 
     be marked, in a manner the Secretary may determine, as a 
     duplicate or for display purposes only. The issuance of a 
     duplicate medal of honor under the authority of this 
     subsection shall not constitute the award of more than one 
     medal of honor within the meaning of section 8744(a) of this 
     title.''.
       (d) Clerical Amendments.--(1) The item relating to section 
     3747 of such title in the table of sections at the beginning 
     of chapter 357 of such title is amended to read as follows:

``3747. Medal of honor; distinguished-service cross; distinguished-
              service medal; silver star: replacement; issuance of 
              duplicate medal of honor.'';

       (2) The item relating to section 6253 of such title in the 
     table of sections at the beginning of chapter 567 of such 
     title is amended to read as follows:
``6253. Replacement; issuance of duplicate medal of honor.''; and

       (3) The item relating to section 8747 of such title in the 
     table of sections at the beginning of chapter 857 of such 
     title is amended to read as follows:

``8747. Medal of honor; Air Force cross; distinguished-service cross; 
              distinguished-service medal; silver star: replacement; 
              issuance of duplicate medal of honor.''.

     SEC. 543. REPEAL OF LIMITATION ON AWARD OF BRONZE STAR TO 
                   MEMBERS IN RECEIPT OF SPECIAL PAY.

       Section 1133 of title 10, United States Code, is repealed.
              Subtitle E--Uniform Code of Military Justice
Sec. 551. Revision of Punitive UCMJ Article Regarding Drunken Operation 
              of Vehicle, Aircraft, or Vessel.

     SEC. 551. REVISION OF PUNITIVE UCMJ ARTICLE REGARDING DRUNKEN 
                   OPERATION OF VEHICLE, AIRCRAFT, OR VESSEL.

       (a) Standard for Drunken Operation of Vehicle, Aircraft, or 
     Vessel.--Paragraph (2) of section 911 of title 10, United 
     States Code (article III of the Uniform Code of Military 
     Justice), is amended by striking ``0.10 grams or more of 
     alcohol'' and inserting ``0.08 grams or more of alcohol'' 
     both places such term appears.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act 
     and shall apply to offenses committed on or after that date.
          TITLE VI--COMPENSATION AND OTHER PERSONNEL BENEFITS
                     Subtitle A--Pay and Allowances
Sec. 601. Increase in Basic Pay for Fiscal Year 2002.
Sec. 602. Partial Dislocation Allowance Authorized Under Certain 
              Circumstances.
Sec. 603. Funeral Honors Duty, Allowance for Retirees.
See. 604. Basic Pay Rate for Certain Reserve Commissioned Officers with 
              Prior Service as an Enlisted Member or Warrant Officer.
Sec. 605. Family Separation Allowance.
Sec. 606. Housing Allowance for the Chaplain for the Corps of Cadets, 
              United States Military Academy.
Sec. 607. Clarify Amendment that Space-Required Travel for Annual 
              Training Reserve Duty Does Not Obviate Transportation 
              Allowances.

     SEC. 601. INCREASE IN BASIC PAY FOR FISCAL YEAR 2002.

       (a) Waiver of Section 1009 Adjustment.--The adjustment to 
     become effective during fiscal year 2002 required by section 
     1009 of title 37, United States Code, in the rates of monthly 
     basic pay authorized members of the uniformed services shall 
     not be made.

[[Page 12516]]

       (b) Increase in Basic Pay.--Effective on January 1, 2002, 
     the rates of monthly basic pay for members of the uniformed 
     services shall be as follows:

                                                                                                        MONTHLY BASIC PAY*,**,***
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               YEARS OF SERVICE (COMPUTED UNDER 37 U.S.C. 205)
                             PAY GRADE                              --------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         <2         2          3          4          6          8          10         12         14         16         18         20         22         24         26
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          COMMISSIONED OFFICERS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0-10...............................................................          0          0          0          0          0          0          0          0          0          0          0   11601.90   11659.20   11901.30   12324.00
0-9................................................................          0          0          0          0          0          0          0          0          0          0          0   10147.50   10293.60   10504.80   10873.80
0-8................................................................    7180.20    7415.40    7571.10    7614.90    7809.30    8135.10    8210.70    8519.70    8608.50    8874.30    9259.50    9614.70    9852.00    9852.00    9852.00
0-7................................................................    5966.40    6371.70    6371.70    6418.20    6657.90    6840.30    7051.20    7261.80    7472.70    8135.10    8694.90    8694.90    8694.90    8694.90    8738.70
0-6................................................................    4422.00    4857.90    5176.80    5176.80    5196.60    5418.90    5448.60    5448.60    5628.60    6305.70    6627.00    6948.30    7131.00    7316.10    7675.20
0-5................................................................    3537.00    4152.60    4440.30    4494.30    4673.10    4673.10    4813.50    5073.30    5413.50    5755.80    5919.00    6079.80    6262.80    6262.80    6262.80
0-4................................................................    3023.70    3681.90    3927.60    3982.50    4210.50    4395.90    4696.20    4930.20    5092.50    5255.70    5310.60    5310.60    5310.60    5310.60    5310.60
0-3................................................................    2796.60    3170.40    3421.80    3698.70    3875.70    4070.10    4232.40    4441.20    4549.50    4549.50    4549.50    4549.50    4549.50    4549.50    4549.50
0-2................................................................    2416.20    2751.90    3169.50    3276.30    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10    3344.10
0-1................................................................    2097.60    2183.10    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50    2638.50
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                                       COMMISSIONED OFFICERS WITH OVER 4 YEARS ACTIVE DUTY SERVICE
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         <2         2          3          4          6          8          10         12         14         16         18         20         22         24         26
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                AS AN ENLISTED MEMBER OR WARRANT OFFICER
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0-3E...............................................................       0.00       0.00       0.00    3698.70    3875.70    4070.10    4232.40    4441.20    4617.00    4717.50    4855.20    4855.20    4855.20    4855.20    4855.20
0-2E...............................................................       0.00       0.00       0.00    3276.30    3344.10    3450.30    3630.00    3768.90    3872.40    3872.40    3872.40    3872.40    3872.40    3872.40    3872.40
O-IE...............................................................       0.00       0.00       0.00    2638.50    2818.20    2922.30    3028.50    3133.20    3276.30    3276.30    3276.30    3276.30    3276.30    3276.30    3276.30
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            WARRANT OFFICERS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         <2         2          3          4          6          8          10         12         14         16         18         20         22         24         26
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
W-5................................................................       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00    4965.60    5136.00    5307.00    5478.60
W-4................................................................    2889.60    3108.60    3198.00    3285.90    3437.10    3586.50    3737.70    3885.30    4038.00    4184.40    4334.40    4480.80    4632.60    4782.00    4935.30
W-3................................................................    2638.80    2862.00    2862.00    2898.90    3017.40    3152.40    3330.90    3439.50    3558.30    3693.90    3828.60    3963.60    4098.30    4233.30    4368.90
W-2................................................................    2321.40    2454.00    2569.80    2654.10    2726.40    2875.20    2984.40    3093.90    3200.40    3318.00    3438.90    3559.80    3680.10    3801.30    3801.30
W-1................................................................    2049.90    2217.60    2330.10    2402.70    2511.90    2624.70    2737.80    2850.00    2963.70    3077.10    3189.90    3275.10    3275.10    3275.10    3275.10
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            ENLISTED MEMBERS
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         <2         2          3          4          6          8          10         12         14         16         18         20         22         24         26
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
E-9................................................................       0.00       0.00       0.00       0.00       0.00       0.00    3423.90    3501.30    3599.40    3714.60    3830.40    3944.10    4098.30    4251.30    4467.00
E-8................................................................       0.00       0.00       0.00       0.00       0.00    2858.10    2940.60    3017.70    3110.10    3210.30    3314.70    3420.30    3573.00    3724.80    3937.80
E-7................................................................    1986.90    2169.00    2251.50    2332.50    2417.40    2562.90    2645.10    2726.40    2808.00    2892.60    2975.10    3057.30    3200.40    3292.80    3526.80
E-6................................................................    1701.00    1870,80    1953.60    2033.70    2117.40    2254.50    2337.30    2417.40    2499.30    2558.10    2602.80    2602.80    2602.80    2602.80    2602.80
E-5................................................................    1561.50    1665,30    1745.70    1828.50    1912.80    2030.10    2110.20   12193.30    2193.30    2193.30    2193.30    2193.30    2193.30    2193.30    2193.30
E-4................................................................    1443.60    1517.70    1599.60    1680.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30    1752.30
E-3................................................................    1303.50    1385.40    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50    1468.50
E-2................................................................    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30    1239.30
E-1 >4+............................................................    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50    1105.50
E-1 <4++...........................................................    1022.70       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00      0.00
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Basic pay for 0-7 to 0-10 is limited to the rate of basic pay for level III of the Executive Schedule. Basic pay for 0-6 and below is limited to level V of the Executive Schedule.
** While serving as Chairman or Vice Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army, Chief of Naval Operations, Chief of Staff of the Air Force, Commandant of the Marine Corps, or Commandant of the Coast Guard,
  basic pay for this grade is $13,598. 10, regardless of cumulative years of service computed under section 205 of title 37, United States Code.
*** While serving as Sergeant Major of the Army, Master Chief Petty Officer of the Navy or Coast Guard, Chief Master Sergeant of the Air Force, or Sergeant Major of the Marine Corps, basic pay for this grade is $5,382.90, regardless
  of cumulative years of service computed under section 205 of title 37, United States Code.
+Applies to personnel who have served 4 months or more on active duty.
++Applies to personnel who have served less than 4 months on active duty.

     SEC. 602. PARTIAL DISLOCATION ALLOWANCE AUTHORIZED UNDER 
                   CERTAIN CIRCUMSTANCES.

       (a) Authorization of Partial Dislocation Allowance.--
     Section 407 of title 37, United States Code is amended----
       (1) by redesignating subsections (c) through (g) as 
     subsections (d) through (h), respectively;
       (2) in subsections (a)(1) and (b)(1), by striking 
     ``subsection (c)'' and inserting ``subsection (d)'';
       (3) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Partial Dislocation Allowance.--(1) Under regulations 
     prescribed by the Secretary concerned, a member ordered to 
     occupy or to vacate Government family housing for the 
     convenience of the Government (including pursuant to the 
     privatization or renovation of housing), and not pursuant to 
     a permanent change of station, may be paid a partial 
     dislocation allowance of $500.
       ``(2) Effective on the same date that the monthly rates of 
     basic pay for members are increased for a subsequent calendar 
     year, the Secretary of Defense shall adjust the rate for the 
     partial dislocation allowance for that calendar year by the 
     percentage equal to the percentage increase in the rate of 
     basic pay for that calendar year.
       ``(3) Payments made under this subsection are not subject 
     to the fiscal year limitations in subsection (e).''; and
       (4) in subsection (d)(1) as redesignated by paragraph (1), 
     by striking at the beginning ``The amount'' and inserting 
     ``Except as provided in subsection (c), the amount''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 2001.

     SEC. 603. FUNERAL HONORS DUTY ALLOWANCE FOR RETIREES.

       Section 435 of title 37, United States Code, is amended----
       (1) in subsection (a), by inserting before the period at 
     the end ``or a retired member of the armed forces who 
     performs at least two hours of duty preparing for or 
     performing honors at the funeral of a veteran''; and
       (2) by adding at the end the following new subsection:
       ``(d) Concurrent Payment.--Notwithstanding any other 
     provision of law, the allowance paid to a retired member of 
     the armed forces under subsection (a) shall be in

[[Page 12517]]

     addition to any other compensation authorized under title 10, 
     title 37, and title 38 to which the retired member may be 
     entitled.''.

     SEC. 604. BASIC PAY RATE FOR CERTAIN RESERVE COMMISSIONED 
                   OFFICERS WITH PRIOR SERVICE AS AN ENLISTED 
                   MEMBER OR WARRANT OFFICER.

       Section 203(d) of title 37, United States Code, is amended 
     by inserting ``, or who earns a total of more than 1,460 
     points credited under section 12732(a)(2) of title 10 while 
     serving as a warrant officer or as a warrant officer and 
     enlisted member'' following ``or as a warrant officer and 
     enlisted member''.

     SEC. 605. FAMILY SEPARATION ALLOWANCE.

       Section 427(c) of title 37, United States Code, is amended 
     by amending the first sentence to read as follows:
       ``A member who elects to serve an unaccompanied tour of 
     duty because dependent movement to the permanent station is 
     denied for certified medical reasons is entitled to an 
     allowance under subsection (a)(1)(A). In all other cases, a 
     member who elects to serve a tour unaccompanied by his 
     dependents at a permanent station to which movement of his 
     dependents is authorized at the expense of the United States 
     under section 406 of this title is not entitled to an 
     allowance under subsection (a)(1)(A).''.

     SEC. 606. HOUSING ALLOWANCE FOR THE CHAPLAIN FOR THE CORPS OF 
                   CADETS, UNITED STATES MILITARY ACADEMY.

       Section 4337 of title 10, United States Code, is amended by 
     striking the second sentence and inserting ``Notwithstanding 
     any other provision of law, the chaplain is entitled to the 
     same basic allowance for housing allowed to a lieutenant 
     colonel, and to fuel and light for quarters in kind.''.

     SEC. 607. CLARIFYING AMENDMENT THAT SPACE-REQUIRED TRAVEL FOR 
                   ANNUAL TRAINING RESERVE DUTY DOES NOT OBVIATE 
                   TRANSPORTATION ALLOWANCES.

       Section 18505(a) of title 10, United States Code, is 
     amended by striking ``annual training duty or'' each time 
     such term appears.
           Subtitle B--Bonuses and Special and Incentive Pays
Sec.  611. Authorize the Secretary of the Navy to Prescribe Submarine 
              Duty Incentive Pay Rates.
Sec. 612.  Extension of Authorities Relating to Payment of Other 
              Bonuses and Special Pays.
Sec. 613.  Extension of Certain Bonuses and Special Pay Authorities for 
              Nurse Officer Candidates, Registered Nurses, Nurse 
              Anesthetists, and Dental Officers.
Sec. 614.  Extension of Authorities Relating to Nuclear Officer Special 
              Pays.
Sec. 615.  Extension of Special and Incentive Pays.
Sec. 616.  Accession Bonus for Officers in Critical Skills.
Sec. 617.  Critical Wartime Skill Requirement for Eligibility for the 
              Individual Ready Reserve Bonus.
Sec. 618.  Hazardous Duty Incentive Pay: Maritime Board and Search.

     SEC. 611. AUTHORIZE THE SECRETARY OF THE NAVY TO PRESCRIBE 
                   SUBMARINE DUTY INCENTIVE PAY RATES.

       (a) In General.--Section 301c of title 37, United States 
     Code, is amended by striking subsection (b) and inserting the 
     following:
       ``(b) A member who meets the requirements prescribed in 
     subsection (a) is entitled to monthly submarine duty 
     incentive pay in an amount prescribed by the Secretary of the 
     Navy, but not more than $1,000 per month.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2002.

     SEC. 612. EXTENSION OF AUTHORITIES RELATING TO PAYMENT OF 
                   OTHER BONUSES AND SPECIAL PAYS.

       (a) Aviation Officer Retention Bonus.--Section 301b(a) of 
     title 37, United States Code, is amended by striking 
     ``December 31, 2001'' and inserting ``September 30, 2003''.
       (b) Reenlistment Bonus for Active Members.--Section 308(g) 
     of such title 37 is amended by striking ``December 31, 2001'' 
     and inserting ``September 30, 2003''.
       (c) Enlistment Bonus.--Section 309(e) of such title 37 is 
     amended by striking ``December 31, 2001'' and inserting 
     ``September 30, 2003''.
       (d) Retention Bonus for Members Qualified in a Critical 
     Military Skill.--Section 323(i) of such title 37 is amended 
     by striking ``December 31, 2001'' and inserting ``September 
     30, 2003''.

     SEC. 613. EXTENSION OF CERTAIN BONUSES AND SPECIAL PAY 
                   AUTHORITIES FOR NURSE OFFICER CANDIDATES, 
                   REGISTERED NURSES, NURSE ANESTHETISTS, AND 
                   DENTAL OFFICERS.

       (a) Nurse Officer Candidate Accession Program.--Section 
     2130a(a)(1) of title 10, United States Code, is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2003''.
       (b) Accession Bonus for Registered nurses.--Section 
     302d(a)(1) of title 37, United States Code, is amended by 
     striking ``December 31, 2001'' and inserting ``September 30, 
     2003''.
       (C) Incentive Special Pay for Nurse Anesthetists.--Section 
     302e(a)(1) of such title 37 is amended by striking ``December 
     31, 2001'' and inserting ``September 30, 2003''.
       (d) Accession Bonus for Dental Officers.--Section 
     302h(a)(1) of such title 37 is amended by striking 
     ``September 30, 2002'' and inserting ``September 30, 2003''.

     SEC. 614. EXTENSION OF AUTHORITIES RELATING TO NUCLEAR 
                   OFFICER SPECIAL PAYS.

       (a) Special Pay for Nuclear-Qualified Officers Extending 
     Period of Active Service.--Section 312(e) of title 37, United 
     States Code, is amended by striking ``December 31, 2001'' and 
     inserting ``December 31, 2003''.
       (b) Nuclear Career Accession Bonus.--Section 312b(c) of 
     such title 37 is amended by striking ``December 31, 2001'' 
     and inserting ``December 31, 2003''.
       (c) Nuclear Career Annual Incentive Bonus.--Section 312c(d) 
     of such title 37 is amended by striking ``December 31, 2001'' 
     and inserting ``December 31, 2003''.

     SEC. 615. EXTENSION OF SPECIAL AND INCENTIVE PAYS.

       (a) Special Pay for Reserve Health Professionals in 
     Critically Short Wartime Specialties.--Section 302g(f) of 
     title 37, United States Code, is amended by striking 
     ``December 31, 2001'' and inserting ``December 31, 2002''.
       (b) Selected Reserve Reenlistment Bonus.--Section 308b(f) 
     of such title is amended by striking ``December 31, 2001'' 
     and inserting ``December 31, 2002''.
       (C) Selected Reserve Enlistment Bonus.--Section 308c(e) of 
     such title is amended by striking ``December 31, 2001'' and 
     inserting ``December 31, 2002''.
       (d) Special Pay for Enlisted Members Assigned to Certain 
     High Priority Units.--Section 308d(c) of such title is 
     amended by striking ``December 31, 2001'' and inserting 
     ``December 31, 2002''.
       (e) Selected Reserve Affiliation Bonus.--Section 308e(e) of 
     such title is amended by striking ``December 31, 2001'' and 
     inserting ``December 31, 2002''.
       (f) Ready Reserve Enlistment and Reenlistment Bonus.--
     Section of 308h(g) of such title is amended by striking 
     ``December 31, 2001'' and inserting ``December 31, 2002''.
       (g) Prior Service Enlistment Bonus.--Section 308i(f) of 
     such title is amended by striking ``December 31, 2001'' and 
     inserting ``December 31, 2002''.
       (h) Repayment of Education Loans for Certain Health 
     Professionals Who Serve in the Selected Reserve.--Section 
     16302(d) of title 10, United States Code, is amended by 
     striking ``January 1, 2002'' and inserting ``January 1, 
     2003''.

     SEC. 616. ACCESSION BONUS FOR OFFICERS IN CRITICAL SKILLS.

       (a) In General.--Chapter 5 of title 37, United States Code, 
     is amended by inserting after section 323 the following new 
     section:

     ``Sec. 324. Special Pay: officer critical skills accession 
       bonus

       ``(a) Accession Bonus Authorized.--Under regulations 
     prescribed by the Secretary of Defense and the Secretary of 
     Transportation with respect to the Coast Guard when it is not 
     operated as a service in the Navy, and subject to the 
     limitations in subsection (b), an individual who executes a 
     written agreement to accept a commission as an officer of an 
     armed force and serve on active duty in an officer critical 
     skill for the period specified in the agreement may be paid 
     an accession bonus not to exceed $20,000 upon acceptance of 
     the written agreement by the Secretary concerned.
       ``(b) Limitation on Eligibility for Bonus.--An individual 
     may not be paid a bonus under subsection (a) if the 
     individual has received, or is receiving, an accession bonus 
     for the same period of service under subsections 302d, 302h, 
     or 312b.
       ``(C) Proration.--The term of an agreement and the amount 
     of the payment under subsection (a) may be prorated.
       ``(d) Payment Method.--Upon acceptance of the written 
     agreement by the Secretary concerned, the total amount 
     payable pursuant to the agreement under subsection (a) 
     becomes fixed and may be paid by the Secretary in either a 
     lump sum or installments.
       ``(e) Repayment.--(1) If an individual who has entered into 
     an agreement under subsection (a) has received all or part of 
     a bonus under this section fails to accept an appointment or 
     to commence or complete the total period of active duty in 
     the designated critical skill specified in the agreement, the 
     Secretary concerned may require the individual to repay the 
     United States, on a pro rata basis and to the extent that the 
     Secretary determines conditions and circumstances warrant, 
     any or all sums paid to the individual under this section.
       ``(2) An obligation to repay the United States imposed 
     under paragraph (1) is for all purposes a debt owed to the 
     United States.
       ``(3) A discharge in bankruptcy under title II that is 
     entered less than five years after the termination of a 
     written agreement entered into under subsection (a) does not 
     discharge the individual signing the agreement from a debt 
     arising under such agreement or under paragraph (1).
       ``(f) Definition.--In this section, the term ``officer 
     critical skill'' means a skill designated as critical with 
     respect to accession of officers to the skill by the 
     Secretary of Defense, or by the Secretary of Transportation 
     with respect to the Coast Guard when it is not operating as a 
     service in the Navy.

[[Page 12518]]

       ``(g) Termination of Bonus Authority.--No bonus may be paid 
     under this section with respect to any agreement to continue 
     on active duty in the armed forces entered into after 
     September 30, 2003, and no agreement under this section may 
     be entered into after that date.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 5 of such title 37 is amended by 
     inserting after the item relating to section 323 the 
     following new item:
``324. Special Pay: officer critical skills accession bonus.''

     SEC. 617. CRITICAL WARTIME SKILL REQUIREMENT FOR ELIGIBILITY 
                   FOR THE INDIVIDUAL READY RESERVE BONUS.

       Section 308h(a)(1) of title 37, United States Code, is 
     amended--
       (1) by striking ``a combat or combat support skill of''; 
     and
       (2) by inserting ``is qualified in a skill or specialty 
     designated by the Secretary concerned as critically short to 
     meet wartime requirements and'' after ``and who''.

     SEC. 618. HAZARDOUS DUTY INCENTIVE PAY: MARITIME BOARD AND 
                   SEARCH.

       Section 301(a) of title 37, United States Code, is amended 
     by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) involving regular participation as a member of a 
     team conducting visit, board, search, and seizure operations 
     as defined by the Secretary concerned, aboard vessels in 
     support of maritime interdiction operations as designated by 
     such Secretary.
            Subtitle C--Travel and Transportation Allowances
Sec. 621. Funded Student Travel: Exchange Programs.
Sec. 622. Payment of Vehicle Storage Costs in Advance.
Sec. 623. Travel and Transportation Allowances for Family Members to 
              Attend the Burial of a Deceased Member of the Armed 
              Forces.
Sec. 624. Shipment of Privately Owned Vehicles When Executing CONUS 
              Permanent Change of Station Moves.

     SEC. 621. FUNDED STUDENT TRAVEL: EXCHANGE PROGRAMS.

       Section 430 of title 37, United States Code, is amended--
       (1) in subsection (a)(3), by inserting ``(or a school 
     outside the United States if the dependent is attending that 
     school for less than one year under a program approved by the 
     school in the continental United States at which the 
     dependent is enrolled)'' after ``United States''; and
       (2) in subsection (b)--
       (A) in paragraph (1), by inserting ``(or a school outside 
     the United States if the dependent is attending that school 
     for less than one year under a program approved by the school 
     in the continental United States at which the dependent is 
     enrolled)'' after ``United States'' the first place it 
     appears; and
       (B) by adding at the end the following new subparagraph:
       ``(3) The transportation allowance under paragraph (1) for 
     a dependent child who is attending a school outside the 
     United States for less than one year under a program approved 
     by the school in the continental United States at which the 
     dependent is enrolled shall not exceed the allowance the 
     member would be paid for a trip between the school in the 
     continental United States and the member's duty station 
     outside the continental United States and return.''.

     SEC. 622. PAYMENT OF VEHICLE STORAGE COSTS IN ADVANCE.

       Section 2634(b) of title 10, United States Code, is amended 
     by adding at the end the following new paragraph:
       ``(4) Storage costs payable under this subsection may be 
     paid in advance.''.

     SEC. 623. TRAVEL AND TRANSPORTATION ALLOWANCES FOR FAMILY 
                   MEMBERS TO ATTEND THE BURIAL OF A DECEASED 
                   MEMBER OF THE ARMED FORCES.

       (a) Consolidation of Authorities.--Section 411f of title 
     37, United States Code, is amended--
       (1) in subsection (a)--
       (A) by inserting ``Allowances Authorized.--(1)'' after 
     ``(a)''; and
       (B) by inserting at the end following new paragraph:
       ``(2) If a dependent of a deceased member who is authorized 
     travel and transportation allowances under this section is 
     unable to travel unattended to the burial ceremonies of the 
     deceased member--
       ``(A) because of--
       ``(i) age;
       ``(ii) physical condition; or
       ``(iii) other justifiable reason, as determined under 
     uniform regulations prescribed by the Secretaries concerned; 
     and
       ``(B) there is no other dependent qualified for travel and 
     transportation allowances under this section available and 
     qualified to serve as an attendant for the dependent while 
     traveling to and attending the burial ceremonies, an 
     attendant may be paid roundtrip travel and transportation 
     allowances under this section.'';
       (2) in subsection (b)(1)--
       (A) by striking ``(b)(1) Except as provided in paragraph 
     (2)'' and inserting
       ``(b) Limitation on Allowances.--(l) Except as provided in 
     paragraphs (2) and (3)''; and
       (B) by inserting before the period at the end, the 
     following: ``and the time necessary for such travel''; and
       (3) in subsection (b)(2), by striking ``be extended to 
     accommodate'' and inserting ``not exceed the rates for 2 days 
     and'';
       (4) by adding at the end of subsection (b) the following 
     new paragraph:
       ``(3) If a deceased member is interred in a cemetery 
     maintained by the American Battle Monuments Commission, the 
     allowances authorized under this section may be provided to 
     and from such cemetery and may not exceed the rates for 2 
     days and time necessary for such travel.''; and
       (5) by amending subsection (c) to read as follows:
       ``(c) Definitions.--(1) In this section, the term 
     ``dependents'' means--
       ``(A) the surviving spouse (including a remarried surviving 
     spouse) of the deceased member and any child of the deceased 
     member as defined in section 401(a)(2);
       ``(B) if no person described in subparagraph (A) is paid 
     travel and transportation allowances under this section, the 
     parents (as defined in section 401(b)(2)) of the deceased 
     member; or
       ``(C) if no person described in subparagraphs (A) or (B) is 
     paid travel and transportation allowances under this section, 
     then--
       ``(i) the person who directs the disposition of the remains 
     of the deceased member under section 1482(c) of 74 title 10, 
     United States Code, and two additional persons selected by 
     that person who are closely related to the deceased member; 
     or
       ``(ii) in the case of a deceased member whose remains are 
     commingled and buried in a common grave in a national 
     cemetery, the person who would have been designated under 
     section 1482(c) of such title to direct the disposition of 
     the remains if individual identification had been made and 
     two additional persons selected by that person who are 
     closely related to the deceased member.
       ``(2) In this section, the term ``burial ceremonies'' 
     includes--
       ``(A) an interment of casketed or cremated remains;
       ``(B) a placement of cremated remains in a columbarium:
       ``(C) a memorial service for which reimbursement is 
     authorized under section 1482(e)(2) of title 10; and
       ``(D) a burial of commingled remains that cannot be 
     individually identified in a common grave in a national 
     cemetery.''.
       (b) Conforming Amendments.--(1) Section 1482 of title 10, 
     United States Code, is amended by striking subsection (d) and 
     redesignating subsections (e), (f), and (g) as subsections 
     (d), (e), and (f), respectively.
       (2) The Funeral Transportation and Living Expense Benefits 
     Act of 1974 (37 U.S.C. 406 note; Public Law 93-257) is 
     repealed.

     SEC. 624. SHIPMENT OF PRIVATELY OWNED VEHICLES WHEN EXECUTING 
                   CONUS PERMANENT CHANGE OF STATION MOVES.

       Section 2634(h)(1) of title 10, United States Code, is 
     amended by inserting before the period at the end ``, or when 
     the Secretary concerned determines that the transport of a 
     vehicle upon transfer is advantageous and cost-effective to 
     the government''.
                           Subtitle D--Other
Sec. 631. Montgomery GI Bill-Selected Reserve Eligibility Period.
Sec. 632. Improved Disability Benefits for Certain Reserve Component 
              Members.
Sec. 633. Acceptance of Scholarships by Officers Participating in the 
              Funded Legal Education Program.

     SEC. 631. MONTGOMERY GI BILL--SELECTED RESERVE ELIGIBILITY 
                   PERIOD.

       Section 16133(a) of title 10, United States Code, is 
     amended by striking `` 10-year'' and inserting ``14-year''.

     SEC. 632. IMPROVED DISABILITY BENEFITS FOR CERTAIN RESERVE 
                   COMPONENT MEMBERS.

       (a) Medical and Dental Care for Members.--Section 
     1074a(a)(3) of title 10, United States Code, is amended by 
     inserting before the period: ``, or if otherwise authorized 
     under applicable regulations''.
       (b) Medical and Dental Care for Dependents.--Section 
     1076(a)(2)(C) of such title 10 is amended by inserting before 
     the period: ``, or if otherwise authorized under applicable 
     regulations''.
       (c) Eligility for Disability Retirement or Separation.--(1) 
     Section 1204(2)(B)(iii) of such title 10 is amended by 
     inserting before the semicolon: ``, or if otherwise 
     authorized under applicable regulations''.
       (2) Section 1206(2)(C) of such title 10 is amended by 
     inserting before the semicolon: ``, or if otherwise 
     authorized under applicable regulations''.
       (d) Recovery, Care, and Disposition of Remains.--Section 
     1481(a)(2)(D) of such title 10 is amended by inserting before 
     the semicolon: ``, or if otherwise authorized under 
     applicable regulations''.
       (e) Entitlement to Basic Pay.--(l) Section 204(g)(1)(D) of 
     title 37, United States Code, is amended by inserting before 
     the period: ``, or if otherwise authorized under applicable 
     regulations''.
       (2) Section 204(h)(1)(D) of title such 37 is amended by 
     inserting before the period: ``, or

[[Page 12519]]

     if otherwise authorized under applicable regulations''.
       (f) Compensation for Inactive-Duty Training.--Section 
     206(a)(3)(C) of such title 37 is amended by inserting before 
     the period: ``, or if otherwise authorized under applicable 
     regulations''.

     SEC. 633. ACCEPTANCE OF SCHOLARSHIPS BY OFFICERS 
                   PARTICIPATING IN THE FUNDED LEGAL EDUCATION 
                   PROGRAM.

       (a) Acceptance of Scholarship.--Section 2004 of title 10, 
     United States Code, is amended by adding at the end the 
     following new subsection:
       ``(g) An officer detailed at a law school under this 
     section also may accept a fellowship, scholarship, or grant 
     under section 2603 of this title. Any service obligation 
     incurred under section 2603 shall be served consecutively 
     with the service obligation incurred under subsection 
     (b)(2)(C).''.
       (b) Conforming Amendment.--Section 2603 of such title 10 is 
     amended by adding at the end the following new subsection:
       ``(c) A member who accepts a fellowship, scholarship, or 
     grant in accordance with subsection (a) also may be detailed 
     at a law school under section 2004 of this title. Any service 
     obligation incurred under section 2004 shall be served 
     consecutively with the service obligation incurred under 
     subsection (b).''.
        TITLE VII--ACQUISITION POLICY AND ACQUISITION MANAGEMENT
                     Subtitle A--Acquisition Policy
Sec. 701. Acquisition Milestone Changes.
Sec. 702. Clarification of Inapplicability of the Requirement for Core 
              Logistics Capabilities Standards to the Nuclear Refueling 
              of an Aircraft Carrier.
Sec. 703. Depot Maintenance Utilization Waiver.

     SEC. 701. ACQUISITION MILESTONE CHANGES.

       (a) System Development and Demonstration.--Section 2366(c) 
     of title 10, United States Code, is amended--
       (1) in paragraph (1) by striking ``engineering and 
     manufacturing development'' and inserting ``system 
     development and demonstration''; and
       (2) in paragraph (2) by striking ``engineering and 
     manufacturing development'' and inserting ``system 
     development and demonstration''.
       (b) Milestone B.--Section 2400 of title 10, United States 
     Code, is amended--
       (1) in subsections (a)(1)(A), (a)(2), (a)(4) and (a)(5), by 
     striking ``milestone II'' each place it appears and inserting 
     ``milestone B.''.
       (2) in subsection (a)(2), by striking ``engineering and 
     manufacturing development'' and inserting ``system 
     development and demonstration.''.
       (c) System Development and Demonstration.--Section 2432 of 
     title 10, United States Code, is amended in subsections 
     (b)(3)(A), (c)(3)(A) and (h)(1), by striking ``engineering 
     and manufacturing development'' each place it appears and 
     inserting ``system development and demonstration.''.
       (d) Section 2434 of title 10, United States Code, is 
     amended in subsection (a), by striking ``engineering and 
     manufacturing development'' and inserting ``system 
     development and demonstration.''.
       (e) System Development and Demonstration and Full Rate 
     Production.--Section 2435 of Title 10, United States Code, is 
     amended--
       (1) in subsection (b) by striking ``engineering and 
     manufacturing development'' and inserting ``system 
     development and demonstration.''
       (2) in subsection (c)(1), by striking ``demonstration and 
     validation'' and inserting ``system development and 
     demonstration.''
       (3) in subsection (c)(2) by striking ``engineering and 
     manufacturing development'' and inserting ``production and 
     deployment.''
       (4) in subsection (c)(3) by striking ``production and 
     deployment'' and inserting ``full rate production.''--
       (f) Milestone Designators.--Section 8102(b) of Public Law 
     106-259 is amended--
       (1) by striking ``milestone I'' and inserting ``milestone 
     B.''
       (2) by striking ``milestone II'' and inserting ``milestone 
     C.''
       (3) by striking ``milestone III'' and inserting ``full rate 
     production.''.
       (g) Milestone Designators.--Section 81l(c) of Public Law 
     106-398, is amended--
       (1) by striking ``Milestone I'' and inserting ``Milestone 
     B.''
       (2) by striking ``Milestone II'' and inserting ``Milestone 
     C.''
       (3) by striking ``Milestone III'' and inserting ``full rate 
     production''.

     SEC. 702. CLARIFICATION OF INAPPLICABILITY OF THE REQUIREMENT 
                   FOR CORE LOGISTICS CAPABILITIES STANDARDS TO 
                   THE NUCLEAR REFUELING OF AN AIRCRAFT CARRIER.

       Section 2464(a)(3) of title 10, United States Code, is 
     amended--
       (1) by striking ``nuclear aircraft carriers,''; and
       (2) by adding at the end the following new sentence:

     ``Core logistics capabilities identified under paragraphs (1) 
     and (2) shall not include nuclear refueling of an aircraft 
     carrier.''.

     SEC. 703. DEPOT MAINTENANCE UTILIZATION WAIVER.

       Section 2466(c) of title 10, United States Code, is amended 
     by striking ``the waiver is'' and inserting ``a depot is 
     fully utilized within existing resources and, where multiple 
     depots are capable of performing the same maintenance 
     activities that the utilization of another such depot is 
     uneconomical, or that the waiver is otherwise''.
                   Subtitle B--Acquisition Workforce
Sec. 705. Acquisition Workforce Qualifications.
See. 706. Tenure Requirement for Critical Acquisition Positions.

     SEC. 705. ACQUISITION WORKFORCE QUALIFICATIONS.

       (a) Amendments to Authority.--Section 1724 of title 10, 
     United States Code, is Amnended--
       (1) in subsection (a)--
       (A) by striking ``(a) Contracting Officers.--The Secretary 
     of Defense shall require that in order to qualify to serve in 
     an acquisition position as a contracting officer with 
     authority to award or administer contracts for amounts above 
     the simplified acquisition threshold referred to in section 
     2304(g) of this title, a person must (except as provided in 
     subsections (e) and (d))--'' and inserting ``(a) Contracting 
     Officers.--The Secretary of Defense shall require that, with 
     the exception of the Contingency Contracting Force identified 
     in paragraph (c), in order to qualify to serve in an 
     acquisition position as a contracting officer with authority 
     to award or administer contracts for amounts above the 
     simplified acquisition threshold referred to in section 
     2304(g) of this title, a person must (except as provided in 
     subsections (e) and (f))--''; and
       (B) in paragraph (3)(A), by inserting a comma between 
     ``business'' and ``finance'';
       (2) by striking subsections (c) and (d); and
       (3) by inserting after subsection (b) the following new 
     subsections:
       ``(c) Contingency Contracting Force.--(1) Notwithstanding 
     subsections (a) and (b), the Secretary of Defense may 
     establish a Contingency Contracting Force consisting of 
     employees and members of the armed forces whose mission, as 
     determined by the Secretary, is to deploy in support of 
     contingency operations and other Department of Defense 
     operations.
       ``(2) The Secretary of Defense shall establish 
     qualification requirements for such Contingency Contracting 
     Force, to include--
       ``(A) completion of at least 24 semester credit hours (or 
     the equivalent) of study from an accredited institution of 
     higher education, or similar educational institution as 
     determined by the Secretary, in any of the following 
     disciplines: accounting, business finance, law, contracts, 
     purchasing, economics, industrial management, marketing, 
     quantitative methods, and organization and management;
       ``(B) passing an examination considered by the Secretary of 
     Defense to demonstrate skills, knowledge, or abilities 
     comparable to that of an individual who has completed at 
     least 24 semester credit hours (or the equivalent) of study 
     in any of the disciplines listed in subparagraph (A); or
       ``(C) any combination of (A) and (B) equaling 24 semester 
     hours or the equivalent as determined by the Secretary; and
       ``(D) such additional education and experience requirements 
     as the Secretary may prescribe.
       ``(d) Developmental Opportunities.--Not withstanding other 
     provisions of law, the Secretary of Defense may establish one 
     or more programs for the purpose of recruiting, selecting, 
     appointing, educating, qualifing, and developing the careers 
     of personnel to meet the requirements in subparagraphs (A) 
     and (B) of subsection (a)(3) above for contracting positions 
     in the Department of Defense covered by this section; may 
     appoint individuals to developmental positions in those 
     programs; and may separate from the civil service any person 
     appointed under this subsection who, as determined by the 
     Secretary, fails to complete satisfactorily any program 
     developed pursuant to this subsection. To qualify for any 
     developmental program under this subsection, an individual 
     must have met one of the following requirements:
       ``(1) Been awarded a baccalaureate degree from an 
     accredited educational institution authorized to grant 
     baccalaureate degrees.
       ``(2) Completed at least 24 semester credit hours (or the 
     equivalent) of study from an accredited institution of higher 
     education in any of the disciplines of accounting, business 
     finance, law, contracts, purchasing, economics, industrial 
     management, marketing, quantitative methods, and organization 
     and management.
       ``(e) Exception.--(1) The requirements imposed under 
     subsection (a) or (b) shall not apply to an employee or 
     member who--
       ``(A) served as a contracting officer with authority to 
     award or administer contracts in excess of the simplified 
     acquisition threshold in the Executive agency on or before 
     September 30, 2000;
       ``(B) served, on or before September 30, 2000, in a 
     position in an Executive agency either as an employee in the 
     GS-1102 series or as a member of the armed force in similar 
     occupational specialty; or
       ``(C) is determined by the Secretary of Defense to be a 
     member of the Contingency Contracting Force.
       ``(2) The requirements imposed under subsection (a) or (b) 
     of this section shall not

[[Page 12520]]

     apply to an employee for purposes of qualifying to serve in 
     the position in which the employee was serving on October 1, 
     1993, or any other position in the same or lower grade and 
     involving the same or lower level of responsibilities as the 
     position in which the employee was serving on such date.
       ``(3) To qualify for the exceptions in subparagraphs (A) or 
     (B) of paragraph (1) of this subsection, a civilian employee 
     must have met one of the following requirements, or have been 
     granted a waiver under subsection (f), on or before September 
     30, 2000--
       ``(A) received a baccalaureate degree from an accredited 
     educational institution authorized to grant baccalaureate 
     degrees;
       ``(B) completed at least 24 semester credit hours. (or the 
     equivalent) of study from an accredited institution of higher 
     education in any of the following disciplines: accounting, 
     business finance, law, contracts, purchasing, economics, 
     industrial management, marketing, quantitative methods, and 
     organization and management;
       ``(C) passed an examination considered by the Secretary of 
     Defense to demonstrate skills, knowledge, or abilities 
     comparable to that of an individual who has completed at 
     least 24 semester credit hours (or the equivalent) of study 
     in any of the disciplines listed in subparagraph (B); or
       ``(D) on October 1, 1991, had at least 10 years of 
     experience in acquisition positions, in comparable positions 
     in other government agencies or the private sector, or in 
     similar positions in which an individual obtains experience 
     directly relevant to the field of contracting.
       ``(f) Waiver.--The acquisition career program board 
     concerned may waive any or all of the requirements of 
     subsections (a) and (b) with respect to an individual if the 
     board certifies that the individual possesses significant 
     potential for advancement to levels of greater responsibility 
     and authority, based on demonstrated job performance and 
     qualifying experience. With respect to each waiver granted 
     under this subsection, the board shall set forth in a written 
     document the rationale for its decision to waive such 
     requirements. The document shall be submitted to and retained 
     by the Director of Acquisition Education, Training, and 
     Career Development.''.
       (b) Clerical Amendment.--Section 1732(c)(2) of such title 
     10 is amended by inserting a comma between ``business'' and 
     ``finance''.

     SEC. 706. TENURE REQUIREMENT FOR CRITICAL ACQUISITION 
                   POSITIONS.

       Section 1734 of title 10, United States Code, is amended--
       (1) in paragraph (a)(1), by inserting ``as a program 
     manager, deputy program manager, or senior contracting 
     official of a major system, as that term is defined in 
     section 23 02(5) of this title, and any person assigned to 
     such other critical acquisition position as the Secretary of 
     Defense may prescribe by regulation,'' after ``critical 
     acquisition position''.
       (2) in paragraph (a)(2), by inserting ``as a program 
     manager, deputy program manager, or senior contracting 
     official of a major system, as that term is defined in 
     section 2302(5) of this title, and any person assigned to 
     such other critical acquisition position as the Secretary of 
     Defense may prescribe by regulation,'' after ``critical 
     acquisition position''.
       Subtitle C--General Contracting Procedures and Limitations
Sec. 710. Amendment of Law Applicable to Contracts for Architectural 
              and Engineering Services and Construction Design.
Sec. 711. Streamlining Procedures for the Purchase of Certain Goods.
Sec. 712. Repeat of the Requirement for the Limitations on the Use of 
              Air Force Civil Engineering Supply Function Contracts.
Sec. 713. One-Year Extension of Commercial Items Test Program.
Sec. 714. Modification of Limitation on Retirement or Dismantlement of 
              Strategic Nuclear Delivery Systems.

     SEC. 710. AMENDMENT OF LAW APPLICABLE TO CONTRACTS FOR 
                   ARCHITECTURAL AND ENGINEERING SERVICES AND 
                   CONSTRUCTION DESIGN.

       Section 2855 of title 10 United States Code, is amended--
       (1) in subsection (a) by striking the subsection designator 
     ``(a)''; and
       (2) by striking subsection (b).

     SEC. 711. STREAMLINING PROCEDURES FOR THE PURCHASE OF CERTAIN 
                   GOODS.

       Section 2534(g)(2) of title 10, United States Code, is 
     amended by inserting before the period at the end: ``unless 
     the head of a contracting activity determines--
       ``(A) that the amount of the purchase is $25,000 or less;
       ``(B) the precision level of the ball or roller bearings is 
     rated lower than Annual Bearing Engineering Committee (ABEC) 
     5 or Roller Bearing Engineering Committee (RBEC) 5, or their 
     equivalent;
       ``(C) at least two manufacturers in the national technology 
     and industrial base capable of producing the ball or roller 
     bearings decline to respond to a request for quotation for 
     the required items; and
       ``(D) the bearings are neither miniature nor instrument 
     ball bearings, i.e. rolling contact ball bearings with a 
     basic outside diameter (exclusive of flange diameters) of 30 
     millimeters or less.''.

     SEC. 712. REPEAL OF THE REQUIREMENT FOR LIMITATIONS ON THE 
                   USE OF AIR FORCE CIVIL ENGINEERING SUPPLY 
                   FUNCTION CONTRACTS.

       Section 345 of the National Defense Authorization Act for 
     Fiscal Year 1999 (Public Law 105-261, 112 Stat. 1978) is 
     repealed.

     SEC. 713. ONE-YEAR EXTENSION OF COMMERCIAL ITEMS TEST 
                   PROGRAM.

       Section 4202(e) of the National Defense Authorization Act 
     for Fiscal Year 1996 (Public Law 104-106; 110 Stat. 184, 652 
     is amended by striking ``January 1, 2002'' and inserting 
     ``January 1, 2003.''.

     SEC. 714. MODIFICATION OF LIMITATION ON RETIREMENT OR 
                   DISMANTLEMENT OF STRATEGIC NUCLEAR DELIVERY 
                   SYSTEMS.

       Section 1302(a) of the National Defense Authorization Act 
     for Fiscal Year 1998 (Public Law 105-85; 111 Stat. 1948), as 
     amended by section 1501(a) of the National Defense 
     Authorization Act for Fiscal Year 2000 (Public Law 106-65; 
     113 Stat. 806), is further amended by striking paragraph 
     (1)(D).
          Subtitle D--Military Construction General Provisions
Sec. 715. Exclusion of Unforeseen Environmental Hazard Remediation from 
              the Limitation on Cost Increases for Military 
              Construction and Family Housing Construction Projects.
Sec. 716. Increase of Overseas Minor Construction Threshold Using 
              Operations and Maintenance Funds.
Sec. 717. Leasebacks of Base Closure Property.
Sec. 718. Alternative Authority For Acquisition and Improvement of 
              Military Housing.
Sec. 719. Annual Report to Congress on Design And Construction.

     SEC. 715. EXCLUSION OF UNFORESEEN ENVIRONMENTAL HAZARD 
                   REMEDIATION FROM THE LIMITATION ON COST 
                   INCREASES FOR MILITARY CONSTRUCTION AND FAMILY 
                   HOUSING CONSTRUCTION PROJECTS.

       Subsection 2853(d) of title 10, United States Code, is 
     amended--
       (1) by inserting ``(1)'' immediately following ``apply 
     to''; and
       (2) by inserting immediately before the period at the end 
     ``; or (2) the costs associated with environmental hazard 
     remediation such as asbestos removal, radon abatement, lead-
     based paint removal or abatement, and any other legally 
     required environmental hazard remediation, provided that such 
     remediation requirements could not be reasonably anticipated 
     at the time of budget submission''.

     SEC. 716. INCREASE OF OVERSEAS MINOR CONSTRUCTION THRESHOLD 
                   USING OPERATIONS AND MAINTENANCE FUNDS.

       Section 2805 of title 10, United States Code, amended--
       (1) in subsection (b)(1), by striking ``$500,000'' and 
     inserting ``$750,000'';
       (2) in subsection (c)(1)(A), by striking ``$1,000,000'' and 
     inserting ``$1,500,000''; and
       (3) in subsection (c)(1)(B), by striking ``$500,000'' and 
     inserting ``$750,000''.

     SEC. 717. LEASEBACKS OF BASE CLOSURE PROPERTY.

       (a) 1990 Law.--Section 2905(b)(4)(E) of the Defense Base 
     Closure and Realignment Act of 1990 (part A of title XXIX of 
     Public Law 101-510; 10 U.S.C. 2687 note) is amended as 
     follows:
       (1) in clause (iii), by striking ``A'' and inserting 
     ``Except as provided in clause (v) below, a''
       (2) by adding at the end the following new clause (v):
       ``(v) Notwithstanding clause (iii) or chapter 137 of title 
     10, United States Code, where the department or agency 
     concerned leases a substantial portion of the installation, 
     the department or agency may obtain, at a rate no higher than 
     that charged to non-Federal tenants, facility services for 
     the leased property and common area maintenance from the 
     redevelopment authority or the redevelopment authority's 
     assignee as a provision of a lease under clause (i). Facility 
     services and common area maintenance shall not include 
     municipal services that the state or local government is 
     required by law to provide to all landowners in its 
     jurisdiction without direct charge, or firefighting or 
     security-guard functions.''.
       (b) 1988 Law.--Section 204(b)(4) of the Defense 
     Authorization Amendments and Base Closure and Realignment Act 
     of (Public Law 100-526; 10 U.S.C. 2687 note) is amended by 
     adding at the end the following new subparagraph (J):
       ``(J)(i) The Secretary may transfer real property at an 
     installation approved for closure or realignment under this 
     title (including property at an installation approved for 
     realignment which will be retained by the Department of 
     Defense or another Federal agency after realignment) to the 
     redevelopment authority for the installation if the 
     redevelopment authority agrees to lease, directly upon 
     transfer, one or more portions of the property transferred 
     under this subparagraph to the Secretary or to the head of 
     another department or agency of the Federal Government. 
     Subparagraph (B) shall apply to a transfer under this 
     subparagraph.
       ``(ii) A lease under clause (i) shall be for a term of not 
     to exceed 50 years, but may provide for options for renewal 
     or extension of

[[Page 12521]]

     the term by the department or agency concerned.
       ``(iii) Except as provided in clause (v) below, a lease 
     under clause (i) may not require rental payments by the 
     United States.
       ``(iv) A lease under clause (i) shall include a provision 
     specifying that if the department or agency concerned ceases 
     requiring the use of the leased property before the 
     expiration of the term of the lease, the remainder of the 
     lease term may be satisfied by the same or another department 
     or agency of the Federal Government using the property for a 
     use similar to the use under the lease. Exercise of the 
     authority provided by this clause shall be made in 
     consultation with the redevelopment authority concerned.
       ``(v) Notwithstanding clause (iii) or chapter 137 of title 
     10, United States Code, where the department or agency 
     concerned leases a substantial portion of the installation, 
     the department or agency may obtain, at a rate no higher than 
     that charged to non-Federal tenants, facility services for 
     the leased property and common area maintenance from the 
     redevelopment authority or the redevelopment authority's 
     assignee as a provision of a lease under clause (i). Facility 
     services and common area maintenance shall not include 
     municipal services that the state or local government is 
     required by law to provide to all landowners in its 
     jurisdiction without direct charge, or firefighting or 
     security-guard functions.''.

     SEC. 718. ALTERNATIVE AUTHORITY FOR ACQUISITION AND 
                   IMPROVEMENT OF MILITARY HOUSING.

       (a) In General.--Subchapter IV of Chapter 169 of title 10, 
     United States Code, is amended by adding at the end the 
     following new section:

     ``Sec. 2886. Reimbursement of funds related to the execution 
       of military family housing privatization projects

       ``The Secretary of Defense may, during the first year of an 
     initiative under this Subchapter, transfer funds from 
     appropriations available for the operation and maintenance of 
     family housing to appropriations available for the pay of 
     military personnel in such amounts as are necessary to offset 
     additional housing allowance costs incurred as a result of 
     such initiative.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such subchapter IV of chapter 169 of title 10 is 
     amended by inserting after the item relating to section 2885 
     the following:

``2886. Reimbursement of funds related to the execution of military 
              family housing privatization projects.''.

     SEC. 719. ANNUAL REPORT TO CONGRESS ON DESIGN AND 
                   CONSTRUCTION.

  (a) In General.--Section 2861 of title 10, United States Code is 
repealed.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of subchapter III of chapter 169 of such title 10 
     is amended by striking the item referring to section 2861.
      TITLE VIII--DEPARTMENT OF DEFENSE ORGANIZATION AND POSITIONS
     Subtitle A--Department of Defense Organizations and Positions
Sec. 801. Organizational Alignment Change for Director for 
              Expeditionary Warfare.
Sec. 802. Consolidation of Authorities Relating to Department of 
              Defense Regional Centers for Security Studies.
Sec. 803. Change of Name for Air Mobility Command.
Sec. 804. Transfer of Intelligence Positions in Support of the National 
              Imagery and Mapping Agency.

     SEC. 801. ORGANIZATIONAL ALIGNMENT CHANGE FOR DIRECTOR FOR 
                   EXPEDITIONARY WARFARE.

       Section 5038(a) of title 10, United States Code, is amended 
     by striking ``Office of the Deputy Chief of Naval Operations 
     for Resources, Warfare Requirements, and Assessments'' and 
     inserting ``Office of the Deputy Chief of Naval Operations 
     for Warfare Requirements and Programs''.

     SEC. 802. CONSOLIDATION OF AUTHORITIES RELATING TO DEPARTMENT 
                   OF DEFENSE REGIONAL CENTERS FOR SECURITY 
                   STUDIES.

       (a) In General.--Chapter 6 of title 10, United States Code, 
     is amended, by adding at the end the following new section:

     ``Sec. 169. Regional centers for security studies

       ``(a) Authority To Establish, Operate and Terminate 
     Regional Centers.--The Secretary of Defense may establish, 
     operate and terminate regional centers for security studies 
     to serve as forums for bilateral and multilateral 
     communication and military and civilian exchanges. Such 
     regional centers shall use professional military education, 
     civilian defense education, and related academic and other 
     activities, as the Secretary deems appropriate, to pursue 
     such communication and exchanges. The Secretary of Defense 
     annually, in writing, shall evaluate the performance and 
     value to the United States of each such regional center and 
     determine whether to continue to operate such regional 
     center.
       ``(b) Acceptance of Gifts and Contributions.--The Secretary 
     may accept, hold, administer, and use gifts and contributions 
     of money, personal property (including loans of property), 
     and services for the purpose of defraying the costs or 
     enhancing the operations of one or more of the Regional 
     Centers, and may pay all reasonable expenses in connection 
     with the conveyance or transfer of any such gifts. 
     Contributions of money and proceeds from the sale of property 
     accepted by the Secretary under this subsection shall be 
     credited to funds available for the operation or support of 
     the Center or Centers intended to benefit from such 
     contribution and shall remain available until expended. No 
     gift or contribution may be accepted under this subsection 
     from a foreign state, or instrumentality or national thereof, 
     or organization domiciled therein, nor anyone acting on 
     behalf of any of them.
       ``(c) Limitation.--The Secretary may not accept a gift or 
     donation under subsection (b) if the acceptance of the gift 
     or donation would compromise or appear to compromise--
       ``(1) the ability of the Department of Defense, any 
     employee of the Department or members of the armed forces to 
     carry out the responsibility or duty of the Department in a 
     fair and objective manner; or
       ``(2) the integrity of any program of the Department of 
     Defense or any person involved in such a program.
       ``(d) Administration.--The Secretary may take the following 
     actions in furtherance of the mission of Regional Centers 
     operated under this section:
       ``(1) Employment and compensation of faculty and staff.--
     Notwithstanding the provisions of title 5, United States 
     Code, regarding appointment, pay and classification, the 
     Secretary may employ such civilian directors, faculty and 
     staff members for Regional Centers operated under this 
     section as the Secretary determines necessary.
       ``(2) Waiver of costs.--The Secretary may waive 
     reimbursement of the cost of conferences, seminars, courses 
     of instruction or similar educational activities of such 
     Regional Centers for foreign participants if the Secretary 
     determines that attendance of such personnel without 
     reimbursement is in the national security interests of the 
     United States.
       ``(3) Payment of expenses.--In addition to waiver of 
     reimbursement of costs described in paragraph (2), the 
     Secretary of Defense may pay the travel, subsistence, and 
     similar personal expenses of foreign participants in 
     connection with the attendance of such personnel at 
     conferences, seminars, courses of instruction, or similar 
     educational activities of such Regional Centers if the 
     Secretary determines that payment of such expenses is in the 
     national security interest of the United States.
       ``(e) Report to Congress.--The Secretary shall report 
     annually to the appropriate committees of Congress on the 
     status, objectives, operations and foreign participation of 
     the Regional Centers.
       ``(f) Definitions.--In this section:
       ``(1) The term `Appropriate committees of Congress' means 
     the Committees on Armed Services of the Senate and of the 
     House of Representatives.
       ``(2) The term `Contribution' means a contribution, gift or 
     donation of funds, materials (including research materials), 
     property or services (including lecture services and faculty 
     services), but does not include a contribution made pursuant 
     to chapter 138 of this title.''.
       (b) Conforming Amendments.--(1) Section 1306 of the 
     National Defense Authorization Act for Fiscal Year 1995, 
     (Public Law 103-337; 108 Stat. 2892) is repealed.
       (2) Section 1065 of the National Defense Authorization Act 
     for Fiscal Year 1997, (Public Law 104-201; 110 Stat. 2653) is 
     amended as follows--
       (A) by striking subsections (a) and (b); and
       (B) by striking the subsection designator ``(c)''.
       (3) Section 1595 of title 10, United States Code, is 
     amended as follows--
       (A) in subsection (c), by striking paragraphs (3) and (5);
       (B) by redesignating subparagraph (c)(4) as subparagraph 
     (c)(3); and
       (C) by striking subsection (e).
       (4) Section 2611 of title 10, United States Code, is 
     repealed.
       (c) Clerical Amendments.--(1) The table of sections at the 
     beginning of chapter 155 of such title 10 is amended by 
     striking the item relating to section 2611; and
       (2) The table of sections at the beginning of chapter 6 of 
     such title 10 is amended, by adding at the end the following 
     new item:

``169. Regional Centers for Security Studies''.

     SEC. 803. CHANGE OF NAME FOR AIR MOBILITY COMMAND.

       (a) Section 2544(d) of title 10, United States Code, is 
     amended by striking ``Military Airlift Command'' and 
     inserting ``Air Mobility Command''.
       (b) Section 2545(a) of such title 10 is amended by striking 
     ``Military Airlift Command'' and inserting ``Air Mobility 
     Command''.
       (c) Section 8074 of such title 10 is amended by striking 
     subsection (c).
       (d) Section 430(c) of title 37, United States Code, is 
     amended by striking ``Military Airlift Command'' and 
     inserting ``Air Mobility Command''.
       (e) Section 432(b) of such title 37 is amended by striking 
     ``Military Airlift Command'' and inserting ``Air Mobility 
     Command''.

[[Page 12522]]



     SEC. 804. TRANSFER OF INTELLIGENCE POSITIONS IN SUPPORT OF 
                   THE NATIONAL IMAGERY AND MAPPING AGENCY.

       Section 1606 of title 10, United States Code, is amended by 
     striking ``517'' and inserting ``544''.
                          Subtitle B--Reports
Sec. 811. Amendment to National Guard and Reserve Component Equipment: 
              Annual Report to Congress.
Sec. 812. Elimination of Triennial Report on the Roles and Missions of 
              the Armed Forces.
Sec. 813. Change in Due Date of Commercial Activities Report.

     SEC. 811. AMENDMENT TO NATIONAL GUARD AND RESERVE COMPONENT 
                   EQUIPMENT: ANNUAL REPORT TO CONGRESS.

       Section 10541 of title 10, United States Code, is amended 
     to read as follows:
       ``(a) The Secretary of Defense shall submit to the Congress 
     each year, not later than March 1, a written report 
     concerning the equipment of the National Guard and the 
     Reserve components of the armed forces, to include the U.S. 
     Coast Guard Reserve. This report shall cover the current 
     fiscal year and three succeeding years. The focus should be 
     on major items of equipment which address large dollar-value 
     requirements, critical Reserve component shortages and major 
     procurement items. Specific major items of equipment shall 
     include ships, aircraft, combat vehicles and key combat 
     support equipment.
       ``(b) Each annual report under this section should include 
     the following:
       ``(1) Major items of equipment required and on-hand in the 
     inventories of each Reserve component.
       ``(2) Major items of equipment which are expected to be 
     procured from commercial sources or transferred from the 
     Active component to the Reserve components of each Service.
       ``(3) Major items of equipment in the inventories of each 
     Reserve component which are substitutes for a required major 
     item of equipment.
       ``(4) A narrative explanation of the plan of the Secretary 
     concerned to equip each Reserve component, including an 
     explanation of the plan to equip units of the Reserve 
     components that are short major items of equipment at the 
     outset of war or a contingency operation.
       ``(5) A narrative discussing the current status of the 
     compatibility and interoperability of equipment between the 
     Reserve components and the active forces, the effect of that 
     level of compatibility or interoperability on combat 
     effectiveness, and a plan to achieve full equipment 
     compatibility and interoperability.
       ``(6) A narrative discussing modernization shortfalls and 
     maintenance backlogs within the Reserve components and the 
     effect of those shortfalls on combat effectiveness.
       ``(7) A narrative discussing the overall age and condition 
     of equipment currently in the inventory of each Reserve 
     component.
       ``(c) Each report under this section shall be expressed in 
     the same format and with the same level of detail as the 
     information presented in the Future Years Defense Program 
     Procurement Annex prepared by the Department of Defense.''.

     SEC. 812. ELIMINATION OF TRIENNIAL REPORT ON THE ROLES AND 
                   MISSIONS OF THE ARMED FORCES.

       (a) Repeal of Requirement for Report on Assignment of Roles 
     and Missions.--Section 153 of title 10, United States Code, 
     is amended--
       (1) in subsection (a), by striking the catchline and 
     section designator ``(a) Planning; Advice; Policy 
     Formulation.--``; and
       (2) by striking subsection (b).
       (b) Roles and Missions as Part of Defense Quadrennial 
     Review.--Subsection 118(e) of such title 10 is amended by 
     inserting after the first sentence the following two new 
     sentences: ``The Chairman shall also include his assessment 
     of the assignment of functions (or roles and missions) to the 
     Armed Forces and recommendations for change the Chairman 
     considers necessary to achieve the maximum efficiency of the 
     Armed Forces. This roles and missions assessment should 
     consider the unnecessary duplication of effort among the 
     armed forces and changes in technology that can be applied 
     effectively to warfare.''.

     SEC. 813. CHANGE IN DUE DATE OF COMMERCIAL ACTIVITIES REPORT.

       Section 2461(g), title 10, United States Code is amended by 
     striking ``February 1'' and inserting ``June 30''.
                       Subtitle C--Other Matters
Sec. 821. Documents, Historical Artifacts, and Obsolete or Surplus 
              Materiel: Loan, Donation, or Exchange.
Sec. 822. Charter Air Transportation of Members of the Armed Forces.

     SEC. 821. DOCUMENTS, HISTORICAL ARTIFACTS, AND OBSOLETE OR 
                   SURPLUS MATERIEL: LOAN, DONATION, OR EXCHANGE.

       (a) In General.--Section 2572 of title 10, United States 
     Code, is amended--
       (1) in subsection (a), by striking ``subsection (c)'' and 
     inserting ``subsection (c)(1)'';
       (2) in subsection (b), by striking ``subsection (c)'' and 
     inserting ``subsection (c)(2)''; and
       (3) in subsection (c)--
       (A) by striking ``(c) This section'' and inserting ``(c)(1) 
     Subsection (a)''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Subsection (b) applies to the following types of 
     property held by a military department or the Coast Guard: 
     books, manuscripts, works of art, historical artifacts, 
     drawings, plans, models, and obsolete or surplus materiel.''.
       (b) Conforming Amendment.--The heading of such section is 
     amended by striking ``condemned or obsolete combat'' and 
     inserting ``obsolete or   surplus''.

     SEC. 822. CHARTER AIR TRANSPORTATION OF MEMEBERS OF THE ARMED 
                   FORCES.

       Section 2640 of title 10, United States Code, is amended--
       (1) in subsection (a)(1)(A), by striking ``an'' after 
     ``contract with'' and inserting ``a domestic or foreign'';
       (2) in subsection (b)(5), by striking ``check-rides'' and 
     inserting ``cockpit safety observations'';
       (3) in subsection (e), by striking ``Military Airlift 
     Command'' and inserting ``Air Mobility Command'';
       (4) in subsection (g), by striking ``in an emergency''; and
       (5) in subsection (j)(1), by striking ``air carrier,''

                      TITLE IX--GENERAL PROVISIONS

             Subtitle A--Matters Relating to Other Nations
Sec. 901. Test and Evaluation Initiatives.
Sec. 902. Cooperative Research and Development Projects: Allied 
              Countries.
Sec. 903. Recognition of Assistance from Foreign Nationals.
Sec. 904. Personal Service Contracts in Foreign Areas.

     SEC. 901. TESTS AND EVALUATION INITIATIVES.

       (a) Authority To Engage in Cooperative Tests and Evaluation 
     at U.S. and Foreign Ranges and Other Facilities Where Testing 
     May Be Conducted.--Chapter 138 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 23501. Agreements for the cooperative use of ranges 
       and other facilities where testing may be conducted

       ``(a) Authority To Enter Into International Agreements.--
     The Secretary of Defense, with the concurrence of the 
     Secretary of State, may enter into a memorandum of 
     understanding (or other formal agreement) with an eligible 
     country or international organization for the purpose of 
     reciprocal use of ranges and other facilities where testing 
     of defense equipment may be conducted.
       ``(b) General Nature of Agreement.--Formal agreements 
     reached under subsection (a) shall require reciprocal use of 
     test ranges and other facilities where testing may be 
     conducted in the United States and at such ranges and 
     facilities operated by an eligible country or international 
     organization.
       ``(c) Payment of Costs.--Any agreement for the reciprocal 
     use of ranges and other facilities where testing may be 
     conducted shall contain the following pricing principles for 
     reciprocal application:
       ``(1) The price charged a recipient country for test and 
     evaluation services furnished by the officers, employees, or 
     governmental agencies of the supplying country or 
     international organization, shall be the direct costs to the 
     supplying country or international organization that are 
     incurred as a result of the test and evaluation services 
     acquired by the recipient country or international 
     organization.
       ``(2) The recipient country or international organization 
     may be charged for indirect costs related to the use of the 
     range or other facility where testing may be conducted only 
     as specified in the memorandum of understanding or other 
     formal agreement.
       ``(d) Retention of Funds Collected From Eligible Countries 
     and International Organizations.--Amounts collected under 
     subsection (c) from an eligible country or international 
     organization shall be credited to the appropriation accounts 
     under which such costs were incurred.
       ``(e) Definitions.--In this section:
       ``(1) Direct cost means any item of cost that is easily and 
     readily identified to a specific unit of work or output 
     within the range or facility where such testing and 
     evaluation occurred, that would not have been incurred if 
     such testing and evaluation had not taken place. Direct cost 
     may include labor, materials, facilities, utilities, 
     equipment, supplies, and any other resources of the range or 
     facility where such test and evaluation occurred, that is 
     consumed or damaged during such test and evaluation, or 
     maintained for the recipient country or international 
     organization.
       ``(2) Indirect costs means any item of cost that cannot 
     readily, or directly, be identified to a specific unit of 
     work or output. Indirect cost may include general and 
     administrative expenses for the supporting base operations, 
     manufacturing expenses, supervision, office supplies, 
     utility, costs, etc. Such costs are accumulated in a cost 
     pool and allocated to customers appropriately.
       ``(f) Delegation of Authority.--The Secretary may delegate 
     to the Deputy Secretary

[[Page 12523]]

     of Defense and to the head of one designated office of his 
     choosing the authority to determine the appropriateness of 
     the amount of indirect costs included in such charges.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by adding at the end the 
     following new item:

``23501. Agreements for the cooperative use of ranges and other 
              facilities where testing may be conducted.''.
       (c) Authority To Use Major Range and Test Facility 
     Installations of the Military Departments Under the 
     Department of Defense Contract.--Section 2681(c) of title 10, 
     United States Code, is amended--
       (1) by inserting ``(1)'' after ``(c)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Notwithstanding the requirement for reimbursement of 
     all direct costs under subparagraph (1), a contractor, using 
     a Major Range and Test Facility Base installation in support 
     of a Department of Defense requirement, may be provided 
     access to and use of the Major Range and Test Facility Base 
     Installations and charged for services for purposes of the 
     contract utilizing the same criteria as would be applied to 
     use of a Major Range and Test Facility Base Installation by 
     an activity or agency of the Department of Defense. A 
     contractor of a Department or agency of the Federal 
     Government other than the Department of Defense shall be 
     provided access to and use of a Major Range and Test Facility 
     Base Installation and services in support of such contract at 
     the discretion of the Secretary of Defense, and may be 
     charged for access, use and services on the same basis as the 
     Federal government Department or agency funding the 
     contract.''.

     SEC.__.COOPERATIVE RESEARCH AND DEVELOPMENT PROJECTS: ALLIED 
                   COUNTRIES.

       Section 2350a of title 10, United States Code, is amended 
     as follows:
       (1) In the title for Section 2350a--by striking out 
     ``allied'' and inserting ``NATO ally, major non-NATO ally, 
     other friendly foreign country, or NATO organization''.
       (2) Paragraph (a) is amended by striking ``one or more 
     major allies of the United States or NATO organizations'' and 
     inserting ``the North Atlantic Treaty Organization (NATO) or 
     with one or more member countries of that Organization, or 
     with any major non-NATO ally or other friendly foreign 
     country or NATO organization''.
       (3) Paragraph (b)(1) is amended--
       (A) by striking ``(1)'';
       (B) by striking ``the North Atlantic Treaty Organization 
     (NATO)'' and inserting ``NATO'';
       (C) by striking ``its major non-NATO allies.'' and 
     inserting ``a NATO ally, a major non-NATO ally or other 
     friendly foreign country or NATO organization.''.
       (4) Paragraph (b)(2) is amended by striking ``The authority 
     of the Secretary to make a determination under paragraph (1) 
     may only be delegated to the Deputy Secretary of Defense or 
     the Under Secretary of Defense for Acquisition and 
     Technology.'' and inserting ``The authority of the Secretary 
     to make a determination under paragraph (1) may be delegated 
     only to the Deputy Secretary of Defense and to one other 
     official the Secretary so determines.''.
       (5) Paragraph (d)(1) is amended by striking ``the major 
     allies of the United States'' and inserting ``a NATO ally, a 
     major non-NATO ally or other friendly foreign country or NATO 
     organization''.
       (6) Paragraph (d)(2) is amended by striking ``major ally of 
     the United States'' and inserting ``a NATO ally, a major non-
     NATO ally or other fdendly foreign country or NATO 
     organization''.
       (7) Paragraph (e)(1)(B)(2)(A) is amended by striking ``one 
     or more of the major allies of the United States.'' and 
     inserting ``a NATO ally, a major non-NATO ally or other 
     friendly foreign country or NATO organization.''.
       (8) Paragraph (e)(1)(B)(2)(B) in amended by striking ``one 
     or more major allies of the United States or NATO 
     organizations'' and inserting ``a NATO ally, a major non-NATO 
     ally or other friendly foreign country or NATO 
     organization''.
       (9) Paragraph (e)(1)(B)(2)(C) is amended by striking ``one 
     or more major allies of the United States'' and inserting ``a 
     NATO ally, a major non-NATO ally or other friendly foreign 
     country or NATO organization''.
       (10) Paragraph (e)(1)(B)(2)(D) in amended by striking ``one 
     or more major allies of the United States'' and inserting ``a 
     NATO ally, a major non-NATO ally or other friendly foreign 
     country or NATO organization''.
       (11) Paragraph (f)(B)(1) is amended by striking ``(1)''.
       (12) Paragraph (f)(B)(2) is amended by striking ``The 
     Secretary of Defense and the Secretary of State, whenever 
     they consider such action to be warranted, shall jointly 
     submit to the Committee on Armed Services and the Committee 
     on Foreign Relations of the Senate and the Committee on 
     National Security and the Committee on International 
     Relations of the House of Representatives a report--(A) 
     enumerating those countries to be added to or deleted from 
     the existing designation of countries designated as major 
     non-NATO allies for purposes of this section; and (B) 
     specifying the criteria used in determining the eligibility 
     of a country to be designated as a major non-NATO ally for 
     purposes of this section.''.
       (13) Paragraph (g)(1)(A) is amended by striking ``major 
     allies of the United States and other friendly foreign 
     countries.'' and inserting ``a NATO ally, a major non-NATO 
     ally or other friendly foreign country or NATO 
     organization''.
       (14) Paragraph (i) is amended by striking ``(2) The term 
     ``major ally of the United States'' means--(A) a member 
     nation of the North Atlantic Treaty Organization (other than 
     the United States); or (B) a major non-NATO ally.''.
       (15) Paragraph (i)(1) is amended by striking ``one or more 
     major allies of the United States or NATO organizations'' and 
     inserting ``a NATO ally, a major non-NATO ally or other 
     friendly foreign country or NATO organization''.

     SEC. 903. RECOGNITION OF ASSISTANCE FROM FOREIGN NATIONALS.

       (a) In General.--Chapter 57 of title 10, United States 
     Code, is amended by inserting after section 1133 the 
     following:

     ``Sec. 1134. Recognition of assistance from foreign nationals

       ``The Secretary of Defense may issue regulations, with the 
     concurrence of the Secretary of State, authorizing members of 
     the armed forces or civilian officers or employees of the 
     Department of Defense to present to foreign nationals 
     plaques, trophies, non-currency coins, certificates, and 
     other suitable commemorative items or mementos to recognize 
     achievements or performance, not involving combat, that 
     assists the armed forces of the United States.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 1133 the following new item:

``1134. Recognition of assistance from foreign nationals.''.

     SEC. 904. PERSONAL SERVICE CONTRACTS IN FOREIGN AREAS.

       Under such regulations as the Secretary of State, with the 
     concurrence of the Secretary of Defense, may prescribe, the 
     Department of State shall use authority available to the 
     Department of State to enter into personal services contracts 
     with individuals to perform services in support of the 
     Department of Defense in foreign countries.
          Subtitle B--Department of Defense Civilian Personnel
Sec. 911. Removal of Limits on the Use of Voluntary Early Retirement 
              Authority and Voluntary Separation Incentive Pay for 
              Fiscal Years 2002 and 2003.
Sec. 912. Authority for Designated Civilian Employees Abroad to Act as 
              a Notary.
Sec. 913. Inapplicability of Requirement for Studies and Reports When 
              All Directly Affected Department of Defense Civilian 
              Employees Are Reassigned to Comparable Federal Positions.
Sec. 914. Preservation of Civil Service Rights for Employees of the 
              Former Defense Mapping Agency.
Sec. 915. Financial Assistance to Certain Employees in Acquisition of 
              Critical Skills.
Sec. 916. Pilot Program for Payment of Retraining Expenses.

     SEC. 911. REMOVAL OF LIMITS ON THE USE OF VOLUNTARY EARLY 
                   RETIREMENT AUTHORITY AND VOLUNTARY SEPARATION 
                   INCENTIVE PAY FOR FISCAL YEARS 2002 AND 2003.

       Section 1153(b) of the Floyd D. Spence National Defense 
     Authorization Act for Fiscal Year 2001 (Public Law 106-398, 
     114 Stat. 1654A-323) is amended--
       (1) in paragraph (1), by striking ``(1) Subject to 
     paragraph (2), the'' and inserting ``The'';
       (2) by striking paragraph (2); and
       (3) by redesignating subparagraphs (A) and (B) as 
     paragraphs (1) and (2).

     SEC. 912. AUTHORITY FOR DESIGNATED CIVILIAN EMPLOYEES ABROAD 
                   TO ACT AS A NOTARY.

       (a) Clarification of Status of Civilian Attorneys Acting as 
     a Notary.--Section 1044a(b)(2) of title 10, United States 
     Code, is amended by striking ``legal assistance officers'' 
     and inserting ``legal assistance attorneys''.
       (b) Authority for Designated Civilian Employees Abroad To 
     Act as a Notary.--Subsection (b)(4) of such section 1044a is 
     amended by inserting ``and, when outside the United States, 
     all civilian employees of the armed forces of suitable 
     training,'' after ``duty status''.

     SEC. 913. INAPPLICABILITY OF REQUIREMENT FOR STUDIES AND 
                   REPORTS WHEN ALL DIRECTLY AFFECTED DEPARTMENT 
                   OF DEFENSE CIVILIAN EMPLOYEES ARE REASSIGNED TO 
                   COMPARABLE FEDERAL POSITIONS.

       Section 2461 of title 10, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(i) Inapplicability When All Directly Affected Department 
     of Defense Civilian Employees Are Reassigned to Comparable 
     Federal Positions.--The provisions of this section shall not 
     apply when all directly affected Department of Defense 
     civilian employees serving on permanent appointments

[[Page 12524]]

     are reassigned to comparable Federal positions for which they 
     are qualified.''.

     SEC. 914. PRESERVATION OF CIVIL SERVICE RIGHTS FOR EMPLOYEES 
                   OF THE FORMER DEFENSE MAPPING AGENCY.

       Notwithstanding section 1612 of title 10, United States 
     Code, the provisions of subchapters II and IV (sections 7511 
     through 7514 and sections 7531 through 7533, respectively) of 
     chapter 75 of title 5, United States Code, continue to apply, 
     for as long as the employee continues to serve as a 
     Department of Defense employee in the National Imagery and 
     Mapping Agency without a break in service, to each of those 
     former Defense Mapping Agency employees who occupied 
     positions established under title 5, United States Code, and 
     who on October 1, 1996, became employees of the National 
     Imagery and Mapping Agency under paragraph 1601 (a)(1) of 
     title 10, United States Code pursuant to Title XI of the 
     National Defense Authorization Act for Fiscal Year 1997 
     (Public Law 104-20 1; 110 Stat. 2675, et seq.) and for whom 
     the provisions of chapter 75 of title 5, United States Code, 
     applied before October 1, 1996. Each such employee, at any 
     time, may elect in writing to waive the provisions of this 
     section, in which case such waiver shall be permanent as to 
     that employee.

     SEC. 915. FINANCIAL ASSISTANCE TO CERTAIN EMPLOYEES IN 
                   ACQUISITION OF CRITICAL SKILLS.

       The Secretary of Defense may provide the Director, National 
     Imagery and Mapping Agency, the authority to establish an 
     undergraduate training program with respect to civilian 
     employees of the National Imagery and Mapping Agency that is 
     similar in purpose, conditions, content, and administration 
     to the program which the Secretary of Defense is authorized 
     to establish for civilian employees of the National Security 
     Agency under section 16 of the National Security Agency Act 
     of 1959 (50 U.S.C. 402 note).

     SEC. 916. PILOT PROGRAM FOR PAYMENT OF RETRAINING EXPENSES.

       (a) In General.--Chapter 141 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 2410o. Pilot program for payment of retraining 
       expenses

       ``(a) Authority.--The Secretary of Defense may establish a 
     pilot program for the payment of retraining expenses in 
     accordance with this section to facilitate the reemployment 
     of eligible employees of the Department of Defense who are 
     being involuntarily separated due to a reduction-in-force or 
     due to relocation resulting from transfer of function, 
     realignment, or change of duty station. Under the pilot 
     program, the Secretary may pay retraining incentives to 
     encourage non-Federal employers to hire and retain such 
     employees.
       ``(b) Eligible Employees.--For purposes of this section, an 
     eligible employee is an employee of the Department of 
     Defense, serving under an appointment without time 
     limitation, who has been employed by the Department of 
     Defense for a continuous period of at least 12 months and who 
     has been given notice of separation pursuant to a reduction 
     in force, except that such term does not include--
       ``(1) a re-employed annuitant under subchapter III of 
     chapter 83 of title 5, United States Code, chapter 84 of such 
     title, or another retirement system for employees of the 
     Government;
       ``(2) an employee who, upon separation from Federal 
     service, is eligible for an immediate annuity under 
     subchapter III of chapter 83 of title 5, United States Code, 
     or subchapter II of chapter 84 of such title; or
       ``(3) an employee who is eligible for disability retirement 
     under any of the retirement systems referred to in paragraph 
     (1).
       ``(c) Retraining Incentive.--(1) Under the pilot program, 
     the Secretary may enter into an agreement with a non-Federal 
     employer under which the non-Federal employer agees--
       ``(A) to employ an eligible person referred to in 
     subsection (a) for at least 12 months for a salary that is 
     mutually agreeable to the employer and such person; and
       ``(B) to certify to the Secretary the cost incurred by the 
     employer for any necessary training, as defined by the 
     Secretary, provided to such eligible employee in connection 
     with the employment by that employer.
       ``(2) The Secretary may pay a retraining incentive to the 
     non-Federal employer upon the employee's completion of 12 
     months of continuous employment with that employer. Subject 
     to this section, the Secretary shall prescribe the amount of 
     the incentive.
       ``(3) The Secretary may pay a prorated amount of the full 
     retraining incentive to the non-Federal employer for an 
     employee who does not remain employed by the nonFederal 
     employer for at least 12 months.
       ``(4) In no event may the amount of retraining incentive 
     paid for the training of any one person under the pilot 
     program exceed the amount certified for that person under 
     paragraph (1) or $10,000, whichever is greater.
       ``(d) Duration.--No incentive may be paid under the pilot 
     program for training commenced after September 30, 2005.
       ``(e) Definitions.--The following definitions apply in this 
     section:
       ``(1) The term ``non-Federal employer'' means an employer 
     that is not an Executive Agency, as defined in section 105 of 
     title 5, United States Code, or the legislative or judicial 
     branch of the Federal Government.
       ``(2) ``Reduction-in-force'' and ``transfer of function'' 
     shall have the same meaning as in chapter 35 of title 5, 
     United States Code.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such Chapter 141 is amended by adding at the end 
     the following new item:

``2410o. Pilot program for payment of retraining expenses.''.
                       Subtitle C--Other Matters
Sec. 921. Authority to Ensure Demilitarization of Significant Military 
              Equipment Formerly Owned by the Department of Defense.
Sec. 922. Motor Vehicles: Documentary Requirements for Transportation 
              for Military Personnel and Federal Employees on Change of 
              Permanent Station.
Sec. 923. Department of Defense Gift Initiatives.
Sec. 924. Repeal of the Joint Requirements Oversight Council Semi-
              Annual Report.
Sec. 925. Access to Sensitive Unclassified Information.
Sec. 926. Water Rights Conveyance, Andersen Air Force Base, Guam.
 Sec. 927. Repeal of Requirement For Separate Budget Request For 
              Procurement of Reserve Equipment.
Sec. 928. Repeal of Requirement for Two-year Budget Cycle for the 
              Department of Defense.

     SEC. 921. AUTHORITY TO ENSURE DEMILITARIZATION OF SIGNIFICANT 
                   MILITARY EQUIPMENT FORMERLY OWNED BY THE 
                   DEPARTMENT OF DEFENSE.

       (a) In General.--Chapter 153 of title 10, United States 
     Code, is amended by inserting after section 2572 the 
     following new section:

     ``Sec. 2573. Continued authority to require demilitarization 
       of significant military equipment after disposal

       ``(a) Authority To Require Demilitarization.--The Secretary 
     of Defense may require any person in possession of 
     significant military equipment formerly owned by the 
     Department of Defense--
       ``(1) to demilitarize the equipment:
       ``(2) to have the equipment demilitarized by a third party; 
     or
       ``(3) to return the equipment to the Government for 
     demilitarization.
       ``(b) Cost and Validation of Demilitarization.--When the 
     demilitarization of significant military equipment is carried 
     out by the person in possession of the equipment pursuant to 
     paragraph (1) or (2) of subsection (a), the person shall be 
     solely responsible for all demilitarization costs, and the 
     United States shall have the right to validate that the 
     equipment has been demilitarized.
       ``(c) Return of Equipment to Government.--When the 
     Secretary of Defense requires the return of significant 
     military equipment for demilitarization by the Government, 
     the Secretary shall bear all costs to transport and 
     demilitarize the equipment. If the person in possession of 
     the significant military equipment obtained the property in 
     the manner authorized by law or regulation and the Secretary 
     determines that the cost to demilitarize and return the 
     property to the person is prohibitive, the Secretary shall 
     reimburse the person for the purchase cost of the property 
     and for the reasonable transportation costs incurred by the 
     person to purchase the equipment.
       ``(d) Establishment of Demilitarization Standards.--The 
     Secretary shall issue regulations to prescribe what 
     constitutes demilitarization for each type of significant 
     military equipment, with the objective of ensuring that the 
     equipment does not pose a significant risk to public safety 
     and does not provide a significant weapon capability or 
     military-unique capability and ensure that any person from 
     whom private property is taken for public use under this 
     section receives just compensation.
       ``(e) Exceptions.--This section does not apply--
       ``(1) when a person is in possession of significant 
     military equipment formerly owned by the Department of 
     Defense for the purpose of demilitarizing the equipment 
     pursuant to a Government contract.
       ``(2 ) to small arms weapons issued under the Defense 
     Civilian Marksmanship Program established in Title 36, United 
     States Code.
       ``(3) to issues by the Department of Defense to museums 
     where modified demilitarization has been performed in 
     accordance with the Department of Defense Demilitarization 
     Manual, DoD 4160.21-M-1; or
       ``(4) to other issues and un-demilitarized significant 
     military equipment under the provisions of the provisions of 
     the Department of Defense Demilitarization Manual, DoD 
     4160.21-M-1.
       ``(f) Definition of Significant Military Equipment.--In 
     this section, the term ``significant military equipment'' 
     means--
       ``(l) an article for which special export controls are 
     warranted under the Arms Export Control Act (22 U.S.C. 2751 
     et seq.) because of its capacity for substantial military 
     utility

[[Page 12525]]

     or capability, as identified on the United States Munitions 
     List maintained under section 121.1 of title 22, Code of 
     Federal Regulations; and 46
       (2) any other article designated by the Department of 
     Defense as requiring demilitarization before its disposal.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 2572 the following new item:
``2573. Continued authority to require demilitarization of significant 
              military equipment after disposal.''.

     SEC. 922. MOTOR VEHICLES: DOCUMENTARY REQUIREMENTS FOR 
                   TRANSPORTATION FOR MILITARY PERSONNEL AND 
                   FEDERAL EMPLOYEES ON CHANGE OF PERMANENT 
                   STATION.

       (a) Military Personnel.--Section 2634 of title 10, United 
     States Code, is amended as follows:
       (1) by redesignating subsections (f), (g) and (h) as 
     subsections (g), (h), and (i) respectively; and
       (2) by inserting after subsection (e) the following new 
     subsection;
       ``(f) Motor vehicles transported under this section are not 
     subject to the provisions of the Anti Car Theft Act of 1992, 
     as amended, or any implementing regulations. The Secretary of 
     Defense (and the Secretary of Transportation with respect to 
     the Coast Guard when it is not operating as a Service in the 
     Navy) will prescribe regulations designed to ensure members 
     do not present for shipment stolen vehicles.''.
       (b) Civilian Employees.--Section 5727 of title 5, United 
     States Code, is amended as follows:
       (1) by redesignating subsection (f) as subsection (g); and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Motor vehicles transported under this section are not 
     subject to the provisions of the Anti Car Theft Act of 1992, 
     as amended, or any implementing regulations. Regulations 
     prescribed under section 5738 of this title will include 
     provisions designed to ensure employees do not present for 
     shipment stolen motor vehicles under subsection (b) of this 
     section.''.

     SEC. 923. DEPARTMENT OF DEFENSE GIFT INITIATIVES.

       (a) Loan or Gift of Obsolete Material and Articles of 
     Historical Interest.--Section 7545 of title 10, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) by inserting the following catchline after the 
     subsection designator: ``Additional Items To Be Donated by 
     the Secretary of the Navy.'';
     (B) by striking ``books, manuscripts, works of art, 
     drawings,'' and all that follows to the dash and inserting 
     ``obsolete combat or shipboard material not needed by the 
     Department of the Navy, to'';
       (C) in paragraph (5), by striking ``World War I or World 
     War 11'' and inserting ``a foreign war.'';
       (D) in paragraph (6), by striking ``soldiers'' and 
     inserting ``servicemen's''; and
       (E) in paragraph (8), by inserting ``or memorial'' after 
     ``a museum''; and
       (2) in subsection (b), by inserting the following catchline 
     after the subsection designator: ``Maintenance of the Records 
     of the Government.--'';
       (3) in subsection (c), by inserting the following catchline 
     after the subsection designator: ``Secretarial Authority To 
     Make Gifts or Loans.--''; and
       (4) by adding at the end the following new subsection:
       ``(d) Authority To Transfer a Portion of a Vessel.--The 
     Secretary may lend, give or otherwise transfer any portion of 
     the hull or superstructure of a vessel stricken from the 
     Naval Vessel Register and designated for scrapping to a 
     qualified organization listed under subsection (a). The terms 
     and conditions of any agreement for the transfer of a portion 
     of a vessel under this section shall include a requirement 
     that the transferee will maintain the material conveyed in a 
     condition that will not diminish the historical value of the 
     material or bring discredit upon the Navy.''.
       (b) Loan, Gift, or Exchange of Documents, Historical 
     Artifacts, and Condemned or Obsolete, Combat Material.--
     Section 2572(a)(1) of such title 10 is amended by striking 
     the period after ``A municipal corporation'' and inserting 
     county or other political subdivision of a state.''.

      SEC. 924. REPEAL OF THE JOINT REQUIREMENTS OVERSIGHT COUNCIL 
                   SEMI-ANNUAL REPORT.

        Section 916 of the Floyd D. Spence National Defense 
     Authorization Act for Fiscal Year 2001 (Public Law 106-398; 
     114 Stat. 1654) is repealed.

      SEC. 925. ACCESS TO SENSITIVE UNCLASSIFIED INFORMATION.

       (a) In General.--Chapter 137 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:

     Sec. ``2332. Limited access to sensitive unclassified 
       information by administrative support contractors

       ``(a) Authority.---Notwithstanding sections 552a of title 
     5, 2320 of title 10, and 1905 of title 18, United States 
     Code, the Secretary of Defense may provide administrative 
     support contractors with limited access to, and use of, 
     sensitive unclassified information, provided that--
       ``(1) such disclosure is not otherwise prohibited by law;
       ``(2) access shall be limited to sensitive unclassified 
     information that is necessary for the administrative support 
     contractor to perform contractual duties;
       ``(3) administrative support contractors shall be subject 
     to the same restrictions on using, reproducing, modifying, 
     performing, displaying, releasing or disclosing such 
     sensitive unclassified information as are applicable to 
     employees of the United States; and
       ``(4) administrative support contractors shall be subject 
     to the same civil and criminal penalties for unauthorized 
     disclosure or use of such sensitive unclassified information 
     as are applicable to employees of the United States.
       ``(b) Definitions.--The following definitions apply to this 
     section:
       ``(1) The term ``sensitive unclassified information'' means 
     all unclassified information for which disclosure to an 
     administrative support contractor is prohibited by the 
     Privacy Act (5 U.S.C. Sec. 552a); section 2320 of this title; 
     or the Trade Secrets Act (18 U.S.C. Sec. 1905).
       ``(2) The term ``administrative support contractor'' means 
     any officer or employee of a contractor or subcontractor who 
     performs any of the following for or on behalf of the 
     Department of Defense: secretarial or clerical support; 
     provisioning or logistics support; data entry; document 
     reproduction, scanning, or imaging; operation, management, or 
     maintenance of paper-based or electronic mail rooms, file 
     rooms, or libraries; installation, operation, management, or 
     maintenance of internet or intranet systems, networks, or 
     computer systems; and facilities or information security.''.
       (b) Clerical Amendnent.--The table of sections at the 
     beginning of such chapter 137 is amended by adding at the end 
     the following new item:

``2332. Limited access to sensitive unclassified information by 
              administrative support contractors.''.

     SEC. 926. WATER RIGHTS CONVEYANCE, ANDERSEN AIR FORCE BASE, 
                   GUAM.

       (a) Authority To Convey.--In conjunction with the 
     conveyance of a utility system under the authority of section 
     2688 of title 10, United States Code, and in accordance with 
     all the requirements of that section, the Secretary of the 
     Air Force may convey all right, title, and interest of the 
     United States, or such lesser estate as the Secretary 
     considers appropriate to serve the interests of the United 
     States, in the water rights related to Andy South (also known 
     as the Andersen Administrative Annex, MARBO (Marianas Bonins 
     Base Command), and the Andersen Water Supply Annex (also 
     known as the Tumon Water Well or the Tumon Maui Well), Air 
     Force properties located on Guam.
       (b) Additional Requirements.--The Secretary may exercise 
     the authority contained in subsection (a) only if--
       (1) the Secretary has determined that there exists adequate 
     supplies of potable groundwater under Andersen Air Force Base 
     that are sufficient to meet the current and long-term 
     requirements of the installation for water;
       (2) the Secretary has determined that such supplies of 
     groundwater are economically obtainable; and,
       (3) the Secretary requires the conveyee to provide a water 
     system capable of meeting the water supply needs of Anderson 
     Air Force Base, as determined by the Secretary.
       (c) Interim Water Supplies.--If the Secretary determines 
     that it is in the best interests of the United States to 
     transfer title to the water rights and utility systems at 
     Andy South and Andersen Water Supply Annex prior to placing 
     into service a new replacement water system and well field on 
     Andersen Air Force Base, the Secretary may require that the 
     United States have the primary right to all water produced 
     from Andy South and Andersen Water Supply Annex until such 
     new replacement water system and well field is placed into 
     service and operates to the satisfaction of the Secretary. In 
     exercising the authority of this subsection, the Secretary 
     may retain a reversionary interest in the water rights and 
     utility systems at Andy South and Andersen Water Supply Annex 
     until such time as the new replacement water system and well 
     field is placed into service and operates to the satisfaction 
     of the Secretary.
       (d) Sale of Excess Water Authorized.--(1) If the Secretary 
     exercises the authority contained in subsection (a), he may 
     provide in any such conveyance that the conveyee of the water 
     system may sell to public or private entities such water from 
     Andersen Air Force Base as the Secretary determines to be 
     excess to the needs of the United States. In the event the 
     Secretary authorizes the conveyee to resell water, the 
     Secretary shall negotiate a reasonable return to the United 
     States of the value of such excess water sold by the 
     conveyee, which return the Secretary may receive in the form 
     of reduced charges for utility services provided by the 
     conveyee.
       (2) If the Secretary cannot meet the requirements of 
     subsection (c), and the Secretary determines to proceed with 
     a water utility system conveyance under section 2688

[[Page 12526]]

     of title 10, United States Code, without the conveyance of 
     water rights, the Secretary may provide in any such 
     conveyance that the conveyee of the water system may sell to 
     public or private entities such water from Andy South and 
     Andersen Water Supply Annex as the Secretary determines to be 
     excess to the needs of the United States. The Secretary will 
     negotiate a reasonable return to the United States of the 
     value of such excess water sold by the conveyee, which return 
     the Secretary may receive in the form of reduced charges for 
     utility services provided by the conveyee.
       (e) Definitions.--(1) For purposes of this section, 
     ``Andersen Air Force Base'' means the Main Base and Northwest 
     Field.
       (2) The water rights referred to in subsection (a) shall be 
     considered as part of a ``utility system'' as that term is 
     defined in section 2688(g)(2) of title 10, United States 
     Code.
       (f) Application of the Other Land Disposal Acts.--The water 
     rights related to Andy South and Andersen Water Supply Annex 
     shall not be considered as real property for purposes of the 
     Act of November 13, 2000, to amend the Organic Act of Guam, 
     and for other purposes (Public Law 106-504; 114 Stat. 2309) 
     and the Federal Property and Administrative Services Act of 
     1949 (40 U.S.C. 471, et seq.).

     SEC. 927. REPEAL OF REQUIREMENT FOR SEPARATE BUDGET REQUEST 
                   FOR PROCUREMENT OF RESERVE EQUIPMENT.

       Section 114(e) of title 10, United States Code, is 
     repealed.

     SEC. 928. REPEAL OF REQUIREMENT FOR TWO-YEAR BUDGET CYCLE FOR 
                   THE DEPARTMENT OF DEFENSE.

       Section 1405 of the Department of Defense Authorization 
     Act, 1986 (31 U.S.C. 1105 note) is repealed.
                                  ____


                           Sectional Analysis

       Sections 101 through 106 provide procurement authorization 
     for the Military Departments and for Defense-wide 
     appropriations in amounts equal to the budget authority 
     included in the President's Budget for fiscal year 2002.
       Section 201 provides for the authorization of each of the 
     research, development, test, and evaluation appropriations 
     for the Military Departments and the Defense Agencies in 
     amounts equal to the budget authority included in the 
     President's Budget for fiscal year 2002.
       Section 301 provides for authorization of the operation and 
     maintenance appropriations of the Military Departments and 
     Defense-wide activities in amounts equal to the budget 
     authority included in the President's Budget for fiscal year 
     2002.
       Section 302 authorizes appropriations for the Working 
     Capital Funds and the National Defense Sealift Fund in 
     amounts equal to the budget authority included in the 
     President's Budget for fiscal year 2002.
       Section 303 authorizes appropriations for fiscal year 2002 
     for the Armed Forces Retirement Home Trust Fund for the Armed 
     Forces Retirement Home, including the United States Soldiers' 
     and Airmen's Home and the United States Naval Home in amounts 
     equal to the budget authority included in the President's 
     Budget for fiscal year 2002.
       Section 304 would amend section 5(a) of the Multinational 
     Force and Observers (MFO) Participation Resolution, to 
     authorize the President to approve contracting out logistical 
     support functions in support of the MFO that are currently 
     performed by U.S. military personnel and equipment. The 
     resolution was enacted in December 1981, in order to 
     authorize the United States to deploy peacekeepers and 
     observers to Sinai, Egypt to assist in the fulfillment of the 
     Camp David Accords. In this regard, it should be noted that 
     section 5(a) authorizes any agency of the United States to 
     provide administrative and technical support and services to 
     the MFO without reimbursement when the provision of such 
     support or services would not result in significant 
     incremental costs to the United States.
       Administrative and technical support is provided under 
     section 5(a) by the U.S. Army's 1st Support Battalion 
     pursuant to international agreements with the Arab Republic 
     of Egypt, the State of Israel, and the MFO. These agreements 
     stipulate the types of unit functions required to be 
     performed by the MFO in order for it to comply with its 
     treaty verification mission. The two primary support 
     functions currently provided by the United States to the MFO, 
     are aviation and logistics support. Aviation support is 
     provided to the MFO by ninety-nine soldiers and ten U.S. Army 
     UH-1H helicopters. General logistical support to the MFO is 
     provided by one hundred and fifty soldiers assigned to the 
     U.S. Logistical Support Unit.
       Section 305 would authorize the Secretary of Defense or 
     designee to enter into multiple-year operating contracts or 
     leases or charters of commercial craft, where economically 
     feasible, in advance of the availability of funds in the 
     working capital fund. The contract authority is available for 
     obligation for one year and cannot exceed in its entirely 
     $427,100,000. In subsequent years, the Department may submit 
     requests for additional contract authority. This authority is 
     appropriate for working capital funds where a history of use 
     indicates an annual utilization of these items by DoD 
     customers will be more than sufficient to pay for the annual 
     costs. The use of annual leases, charters or contracts is not 
     cost effective in obtaining capital items, or the use of 
     commercial craft. To reduce the overall costs for DoD, 
     authority to enter into multiple-year leases and charters is 
     needed. Additional annual appropriated funds, however, are 
     not needed, since the revenues generated from the use of 
     these items to fill customer orders will cover these costs.
       Section 1301 of title 31, United States Code, discusses the 
     application of appropriations and requires, in subsection 
     (d), that to authorize making a contract for the payment of 
     money in excess of an appropriation a new law must 
     specifically state that such a contract may be made. As the 
     change specifically addresses only multiple-year leases, 
     charters or contracts by working capital funds, the contract 
     authority granted by this proposal would not impact other 
     programs.
       Similar authority, successfully utilized by the Navy 
     Industrial Fund in connection with the long term vessel 
     charters of T-5 tankers, was approved by Congress as part of 
     the Supplemental Appropriations Act of 1983. That program and 
     the use of contract authority was favorably reviewed by the 
     Comptroller General in B-174839, March 20, 1984. As indicated 
     in the opinion, working capital funds are precluded from 
     negotiating cost effective multiple-year contracts for 
     capital items or associated services without posting 
     obligations for the entire amount, even though no 
     appropriations are likely to ever be needed.
       The Military Sealift Command (MSC) provides world-wide 
     capability for sealift, prepositioning assets, and a wide 
     arrange of oceanographic services. They operate approximately 
     125 ships worldwide with civilian mariners. Because the 
     Military Sealift Command is a Working Capital Fund activity, 
     their funding is provided through customer orders for sealift 
     services, generally on an annual basis. Contract authority is 
     required to allow MSC to enter into multiple year leases in 
     advance of appropriations. The legislative proposal provides 
     that authority.
       It is advantageous for the Government to have MSC enter 
     into multiple year leases for these charter and associated 
     services for a number of reasons, including:
       The 29 prepositioned ships carry a variety of items., 
     including ammunition, fuel, medical supplies, and heavy 
     armored equipment. The offload and onload of this cargo 
     requires significant logistics infrastructure and is a costly 
     undertaking. The DoD infrastructure is sized for that 
     operation to take place concurrent with the required 
     maintenance schedule for the ships, which ranges from two to 
     five years depending on the type of ship and type of cargo. 
     The contract period is established to coincide with this 
     schedule. If these contracts were required to be annual 
     contracts, there could be significant operational degradation 
     and excessive demand on the DoD infrastructure due to offload 
     and onload requirements at potentially annual periods.
       The commercial market standard is for multiple year 
     charters. There are savings to DoD by negotiating multiple 
     year leases, consistent with commercial practices. In 
     addition, DoD would not be able to effectively compete for 
     annual contracts because foreign flag carriers are not 
     interested in competing for short-term contracts due to the 
     costs they incur to re-flag the vessels and to prepare or 
     modify ships to meet DoD needs. Past experience indicates 
     that the costs to DoD would be significantly higher if 
     competition were limited to currently U.S.-flag vessels on an 
     annual basis.
       If the legislation is not enacted, MSC will be required to 
     negotiate the contracts on an annual basis, resulting in 
     increased costs and potential disruptions to military 
     operations.
       Section 310. The Navy and the U.S. Environmental Protection 
     Agency (EPA) entered into an agreement in January 2001 for 
     payment of EPA response costs at the Hooper Sands Site, South 
     Berwick, Maine for EPA's remaining past response costs 
     incurred by the agency for the period from May 12, 1992 
     through July 31, 2000. Activities of the Navy are liable 
     under the Comprehensive Environmental Response, Compensation 
     and Liability Act of 1980 as generators who arranged for 
     disposal of the hazardous substances that ended up at the 
     site, and there are no other viable responsible parties. 
     Under the agreement, the Navy would pay for EPA's final 
     response actions that were undertaken to protect human health 
     and the environment at this site. The agreement also 
     stipulated that the Navy would seek authorization from 
     Congress in the FY02 legislative program for payment of costs 
     previously incurred by EPA at the site. Should Congress 
     approve this legislative proposal, the Navy would pay EPA 
     with funds from the Navy's ``Environmental Restoration 
     Account, Navy'' in an amount equal to the principle 
     ($809,078.00) and interest ($196,400.00), or a total of 
     $1,005,478.00.
       Section 311 would extend the authority to conduct the pilot 
     program from September 30, 2001 to September 30, 2003. The 
     original legislation authorized the pilot program to run for 
     two years from the date of enactment on November 18, 1997. 
     Section 325 of the National Defense Authorization Act for 
     Fiscal

[[Page 12527]]

     Year 2000 (Public Law 106-65; 113 Stat. 512) extended that 
     two-year deadline an additional two years.
       The initial extension was requested because the Department 
     of Defense implementation guidance, required by the statute, 
     had not been completed as of the fall of 1998. In order to 
     fulfill the purpose of the legislation and adequately assess 
     the feasibility and advisability of the sale of economic 
     incentives, the pilot program was extended another two years 
     from its original deadline. We are requesting an additional 
     two-year extension to allow further opportunity for the 
     Department to assess the feasibility of the program. States 
     have been slower to develop emission-trading programs than 
     initially anticipated and more time is desired to allow 
     military installations to become familiar with the benefits 
     of economic incentive programs.
       Section 351 also provides authority to the Department of 
     Defense (DoD) to retain proceeds from the sale of Clean Air 
     Act emission reduction credits, allowances, offsets, or 
     comparable economic incentives. Federal fiscal law and 
     regulations generally require proceeds from the sale of 
     government property to be deposited in the U.S. Treasury. 
     These authorities preclude an agency from keeping the funds 
     generated by reducing air emissions and selling the credits 
     as does private industry. This inhibits the reinvestment of 
     those funds to purchase air credits needed in other areas and 
     eliminates any incentive for installations to spend the money 
     required to generate the credits in order to sell them.
       The Clean Air Act (CAA) mandates that states establish 
     state implementation plans (SIPS) to attain and maintain the 
     national ambient air quality standards (NAAQs), which are 
     health based standards established for certain criteria air 
     pollutants, e.g., ozone, particulate matter, carbon monoxide. 
     To further this mandate, the 1990 Clean Air Act Amendments 
     provided language encouraging the states to include 
     ``economic incentive'' programs in their SIPs. Such programs 
     encourage industry to reduce air pollution by offering 
     monetary incentives for the reduction of emissions of 
     criteria air pollutants.
       A significant and growing number of state and local air 
     quality districts have established various types of emission 
     trading systems. Absent the proposed legislation, the 
     military services would be required to remit any proceeds 
     from the sale of economic incentives to the U.S. Treasury. 
     The proposed legislation grants military installations 
     authority to sell the economic incentives and to retain the 
     proceeds in order to create a local economic incentive to 
     reduce air pollution above and beyond legal requirements. 
     Retention and use of proceeds at the installation level is a 
     key component of the pilot program.
       Section 312 would remove the requirement for the Department 
     of Defense to submit an annual report to Congress on its 
     reimbursement of environmental response action costs for the 
     top 20 defense contractors, as well as on the amount and 
     status of any pending requests for such reimbursement by 
     those same firms. This reporting requirement was slated to 
     end in December 1999 pursuant to section 3003(a) of the 
     Federal Reports Elimination and Sunset Act of 1995, Pub. L. 
     104-66; however, it was reinstated by section 1031 of the 
     National Defense Authorization Act for Fiscal Year 2000, Pub. 
     L. 106-65.
       The Department strongly recommends removal of this 
     statutory reporting requirement because the data collected 
     are not necessary, or even helpful, for properly determining 
     allowable environmental response action costs on Government 
     contracts. Moreover, the Department does not routinely 
     collect data on any other categories of contractor overhead 
     costs.
       This reporting requirement is very burdensome on both the 
     Department and contractors, diverting limited resources for 
     data collection efforts that do not benefit the procurement 
     process. Not only are there 20 different firms involved, but 
     for most of these contractors, data must be collected for 
     multiple locations in order to get an accurate company-wide 
     total. In many cases the data must be derived from company 
     records because it is not normally maintained in contractor 
     accounting systems. After the data is collected, Department 
     contracting officers must review, assemble, and forward the 
     data through their respective chains of command to the 
     Defense Contract Audit Agency for validation. After 
     validation, the data is provided to the Secretary of 
     Defense's staff for consolidation into the summary report 
     provided to Congress.
       In addition, the summary data provided to Congress in this 
     annual report have shown that the Department is not expending 
     large sums of money to reimburse contractors for such costs. 
     The Department's share of such costs in FY99 was 
     approximately $11 million. In the preceding years the costs 
     were, $13 million in FY98, $17 million for FY97, and $4 
     million for FY96.
       Section 315 would amend section 2482(b)(1) of title 10, to 
     extend its reach to all Defense working capital fund 
     activities that provide the Defense Commissary Agency 
     services, and allow them to recover those administrative and 
     handling costs the Defense Commissary Agency would be 
     required to pay for acquiring such services.
       Currently, section 2482(b)(1) restricts the amount that the 
     United States Transportation Command could charge to the 
     Defense Commissary Agency for such services to the price at 
     which the service could be obtained through full and open 
     competition, as section 4(6) of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 403(6)) defines such terms. 
     These same restrictions, however, do not apply to other 
     Defense working capital fund activities and preclude the 
     United States Transportation Command from recovering 
     ``freight forwarding'' costs that the Defense Commissary 
     Agency would ordinarily have had to pay a commercial 
     contractor.
       If enacted, the proposed amendment would end this inequity, 
     by applying a single cost-effective guideline for such 
     charges to all Defense working capital fund activities. It 
     should also be noted that the last sentence of the proposed 
     amendment continues the current policy of insuring that costs 
     associated with mobilization requirements, maintenance of 
     readiness, or establishment or maintenance of the 
     infrastructure to support mobilization or readiness 
     requirements, are not passed on to the customers of the 
     Defense Commissary Agency.
       This proposal will not increase the budgetary requirements 
     of the Department of Defense.
       Section 316 requires that the Defense Commissary Agency 
     surcharge account be reimbursed for the commissary's share of 
     the depreciated value of its stores when a Military 
     Department allows the occupation of a facility--previously 
     acquired, constructed or improved with commissary surcharge 
     funds--to be used for non-commissary related purposes.
       Section 317 would permit the Defense Commissary Agency 
     (DECA) to sell limited exchange merchandise at locations 
     where no exchange facility is operated by an Armed Service 
     Exchange. Under Section 2486(b) of title 10, United States 
     Code, the Secretary of Defense may authorize DeCA to purchase 
     and sell as commissary store inventory a limited line of 
     exchange merchandise. This amendment is required to obtain 
     the necessary authority for DeCA to procure the exchange 
     merchandise items from the Armed Service Exchange. The Armed 
     Service Exchange selling price to DeCA for such items would 
     not exceed the normal exchange retail cost less the amount of 
     the commissary surcharge, so that the amount paid by the 
     patron would be the same. If the Exchange cannot supply the 
     items authorized to be sold by DeCA, DeCA may procure them 
     from any authorized source subject to the limitations of 
     section 2486(e) of title 10 (i.e., that such items are only 
     exempt from competitive procurement if they comply with the 
     brand name sale requirements of being sold in the commercial 
     stores). Regardless from whom such items are procured, they 
     must be sold in commissaries at cost plus the amount of the 
     surcharge.
       Section 318 would amend a portion of section 2482 (a) of 
     title 10 that is entitled ``Private Operation'' to delete 
     overly restrictive language. The current section authorizes 
     Commissary stores to be operated by private persons under a 
     contract, but prohibits the contractor from carrying out 
     functions for the procurement of products to be sold in the 
     Commissary or from engaging in functions related to the 
     actual management of the stores. Consequently, the Department 
     is precluded from realizing the potential benefits that can 
     be derived from contracting out the operation and management 
     of the stores. By deleting this language a private contractor 
     selected to operate Commissary stores would be allowed to 
     apply best commercial practices in both store operations and 
     supply chain management, and to achieve economy of scale 
     savings in procurement, distribution, and transportation of 
     products to be sold in the Commissary stores. This change 
     will allow the Department to initiate pilot programs to test 
     these potential benefits at selected Commissary stores.
       Section 320 would establish permanent authority for active 
     Department of Defense units and organizations to reimburse 
     National Guard and Reserve units and organizations for the 
     expenses incurred when Guard and Reserve personnel provide 
     them intelligence and counterintelligence support. For the 
     last five years, Congress has authorized such reimbursement 
     in each year's defense appropriations act. See e.g., section 
     8059 of the Department of Defense Appropriations Act, 2001 
     (Public Law 106-259; 114 Stat. 656, 687). For the past 
     several years the language of these annual provisions has 
     remained unchanged, and the Department proposes to establish 
     authority for such reimbursement on a permanent basis.
       Such reimbursement constitutes an exception to the general 
     principle that funds for active DoD organizations may not be 
     expended to pay the expenses of Guard and Reserve units, and 
     vice versa. By their training and experience, reserve 
     intelligence personnel make unique contributions to the 
     intelligence and counterintelligence programs of active DoD 
     units and organizations. They also provide invaluable surge 
     capability to help respond to unforeseen contingencies. Guard 
     and Reserve units do not program funds for such support of 
     active DoD units

[[Page 12528]]

     and organizations, which makes it essential that the 
     supported active units and organizations have the authority 
     to reimburse the affected Guard and Reserve units and 
     organizations for the expenses they occur in providing 
     personnel to perform such support. The practical effect of 
     this reimbursement authority is in fact to further implement 
     the principle that active units and organizations should pay 
     for the expenses of their own programs and activities, while 
     Guard and Reserve units and organizations should do the same.
       A January 5, 1995 Deputy Secretary of Defense memorandum, 
     ``Peacetime Use of Reserve Component Intelligence Elements'' 
     approved a DoD ``Implementing Plan for Improving the 
     Utilization of the Reserve Military Intelligence Force'' 
     dated December 21, 1994. This plan explicitly recognized the 
     requirement for an arrangement under which active units and 
     organizations receiving reserve intelligence support would 
     reimburse the affected reserve units for their expenses in 
     providing such support.
       This memo was superseded by DoD Directive 3305.7, ``Joint 
     Reserve Intelligence Program (JRIP),'' February 29, 2000. 
     Under section 3.1 of this Directive, ``The JRIP engages 
     [reserve component] intelligence assets during periods of 
     active and inactive duty to support validated DoD 
     intelligence requirements across the entire engagement 
     spectrum from peacetime through full mobilization, coincident 
     with wartime readiness training.'' Reimbursement of the 
     affected reserve units is a cornerstone of this arrangement, 
     and such reimbursement is absolutely essential to success of 
     the JRIP. Five years of experience with this arrangement have 
     made it a mature program that should be permanently 
     authorized.
       Section 321 will authorize for sale the remaining materials 
     in the National Defense Stockpile for which there is no 
     Department of Defense requirement and which have not yet been 
     authorized for sale.
       Section 401 prescribes the personnel strengths for the 
     active forces in the numbers provided for by the budget 
     authority and appropriations requested for the Department of 
     Defense in the President's Budget for fiscal year 2002.
       Section 405 prescribes the strengths for the selected 
     Reserve of each reserve component of the Armed Forces in the 
     numbers provided for by the budget authority and 
     appropriations requested for the Department of Defense in the 
     President's budget for fiscal year 2002.
       Section 406 prescribes the end strengths for reserve 
     component members on full-time active duty or full-time 
     National Guard duty for the purpose of administering the 
     reserve forces for fiscal year 2002.
       Section 407 prescribes the minimum end strengths for the 
     reserve components of the Army and Air Force for dual status 
     military technicians for fiscal year 2002.
       Section 408 prescribes the maximum end strengths for the 
     reserve components of the Army and Air Force for non-dual 
     status military technicians for fiscal year 2002.
       Section 409 would replace the current sections 12011 and 
     12012 of title 10, United States Code, with new sections 
     12011 and 12012, which would accommodate both senior grade 
     officers (0-4, 0-5, 0-6) and senior grade enlisted members 
     (E-8, E-9) of the Active Guard and Reserve force. These new 
     sections would include tables for each Reserve component, 
     vice each Service, for senior grade officer (12011) and 
     enlisted member (12012) ceilings. This proposed amendment 
     would provide for a non-static method of authorizing senior 
     grade Active Guard and Reserve members, thus eliminating the 
     requirement to request changes in legislation when the size 
     of the Active Guard and Reserve force changes. The 
     methodology would be consistent with that used for Active 
     component senior grade officers, and tie the number of senior 
     grade authorizations to the size of the Active Guard and 
     Reserve force.
       Section 410. The proposed amendment to section 523 of title 
     10, United States Code, increases Defense Officer Personnel 
     Management Act-authorized end strength limitations for active 
     duty Air Force officers in the grade of major. This would 
     continue progress toward achieving an appropriate 
     distribution of officers within the Air Force. An appropriate 
     distribution may be achieved by increasing the authorized 
     strengths of commissioned officers in the grade of major by 
     seven percent starting in fiscal year 2002. This proposed 
     amendment would not increase the total number of commissioned 
     officers authorized for the Air Force and would not affect 
     the officer-to-enlisted ratio.
       The budgetary impact of this proposal on Air Force Military 
     Personnel appropriation budget requirements would be a net 
     increase of $10 million in FY 2002, as the grade relief is 
     phased in, and a net increase of approximately $20 million 
     per year thereafter.
       Section 501 would repeal subsection 1074a(d) of title 10, 
     United States Code, which requires certain health care for 
     Selected Reserve members of the Army assigned to units 
     scheduled to deploy within 75 days after mobilization. Since 
     this provision was enacted, the Department has implemented 
     several programs to ensure Reserve component members are 
     medically ready.
       The Army has implemented a program called FEDS-HEAL, which 
     is an alliance with the Department of Veterans Affairs (DVA) 
     and the Department of Health and Human Services (DHHS) that 
     allows Army Reserve and National Guard members to complete 
     physical examinations, receive inoculations and complete 
     other medical requirements in DVA and DHHS healthcare 
     facilities across the country. This significantly enhances 
     access for Reserve component members of the Army to meet 
     medical and dental readiness requirements.
       DoD policy now requires an annual dental examination. To 
     track Reserve component dental readiness, the Department has 
     developed a standard dental examination form that can be 
     completed by a member's personal civilian dentist. Moreover, 
     the recently expanded TRICARE Dental Program provides Reserve 
     component members with an affordable means of completing 
     dental examinations and receiving dental care through a much 
     larger provider network. The cost to the member to 
     participate in this insurance program is only $7.63 per month 
     with the Department paying the remaining 60 percent of the 
     premium share.
       The current statutory requirement to conduct a full 
     physical examination every two years for members over the age 
     of 40 and dental care identified during the annual dental 
     screening is difficult to implement for a select population 
     that is very fluid with a relatively high turnover of 
     individuals each year. Those Reserve Component units and 
     individual Reserve Component members identified as early-
     deploying change frequently. The annual cost to the 
     Department to meet this over-40 physical examination 
     requirement for early deploying unit members every two years 
     is $3.8 million, or over four times the annual cost if an 
     exam were provided every five years as required for other 
     members of the Reserve force. Additionally, requiring a 
     complete medical examination every two years exceeds the 
     recommendations of the U.S. Preventive Services Task Force, a 
     20-member non-federal panel commissioned by the Public Health 
     Service in 1984 to develop recommendations for clinicians on 
     the appropriate use of preventive measures. The Task Force 
     does not consider such frequency of examinations cost 
     effective in terms of identifying disease or determining 
     deployability. The use of yearly health assessment 
     questionnaires and appropriate age specific tests during the 
     five-year periodic medical examination provide sufficient 
     medical screening of the population over age 40. Finally, 
     providing medical and dental services for a specific 
     population in only two of the seven Reserve Components 
     creates an inequity among members of the Selected Reserve and 
     among Reserve Components.
       This recommendation was contained in the Secretary of 
     Defense report to Congress on the means of improving medical 
     and dental care for Reserve Component members, which 
     Secretary Cohen sent to Congress on November 5, 1999.
       Section 502 would amend section 640 of title 10, United 
     States Code, to afford members whose mandatory dates of 
     separation or retirement were delayed due to medical 
     deferment, a period of time to transition to civilian life 
     following termination of medical deferment. It would afford 
     active duty members whose mandatory separations or 
     retirements incident to Chapter 36 or Chapter 63 of this 
     title, a period of time, not to exceed 30 days, following 
     termination of suspensions made under section 640, to 
     transition to civilian life.
       As currently written, section 640 requires immediate 
     separation or retirement of those medically deferred members 
     who would have been subject to mandatory separation or 
     retirement under this title for age (section 1251), length of 
     service (sections 633-636), promotion (sections 632, 637) or 
     selective early retirement (section 638). An abrupt 
     termination, especially of a medical deferment, could cause 
     undue hardship on those whose planned departure to civilian 
     life was unexpectedly interrupted and now must be resumed 
     posthaste. Depending upon the nature of the medical 
     deferment, there may be some problems with employment 
     opportunities should the member be thrust back into civilian 
     life without a reasonable preparation time. The 30-day period 
     would allow individuals sufficient time to transition to 
     civilian life, without the distractions of the circumstances 
     of their deferments. This leeway must be provided for these 
     members to reschedule the many details incident to final 
     departure from military life.
       Section 503 would add a new section to title 10, United 
     States Code, to provide for the detail of an officer in a 
     grade not below lieutenant commander to serve as Officer-in-
     Charge of the United States Navy Band. While so serving, an 
     officer who holds a grade lower than captain (0-6) would have 
     the grade of captain. The officer's permanent status as a 
     commissioned officer would not be changed by his detail under 
     this section.
       Navy has one Limited Duty Officer captain (0-6) Bandmaster 
     (6430) billet--the position of Officer in Charge/Leader, U.S. 
     Navy Band. The United States Navy Band, Washington, D.C. is 
     the Navy's premier musical representative. As such, Navy 
     established this prestigious position at the captain level 
     because of its extremely high visibility; its importance to 
     Navy representation; the enormous demands of command as well 
     as the

[[Page 12529]]

     technical skill required of the incumbent; to provide proper 
     recognition and compensation for the officer serving as the 
     Band's leader; and to elevate and maintain this 
     organization's status at an appropriate level.
       Army, Marine Corps, and Air Force premier Service-band 
     Commanding Officers/Commanders are also 0-6 billets and 
     selection for those positions is accomplished in a manner 
     similar to that used by the U.S. Navy Band. Upon assignment 
     to these positions, leaders of the Army, Marine Corps, and 
     Air Force bands are specifically ``selected'' for promotion 
     to 0-6. That is not the case with the Officer-in-Charge/
     Leader of the U.S. Navy Band because selection for and 
     appointment to this position is limited to the Limited Duty 
     Officer community. As such, those selected for this special 
     appointment are generally officers with 28-32 years of total 
     active service at the time of selection and appointment as 
     Officer-in-Charge/Leader, U.S. Navy Band. However, the 
     established career path of Limited Duty Officers typically 
     results in selection for this position while serving in the 
     grade of lieutenant commander (0-4) or commander (0-5) and 
     flow points normally do not provide an opportunity for 
     promotion to 0-6 prior to statutory retirement.
       Section 504. General/flag officers serving above the grade 
     of 0-8 serve in a temporary grade that is authorized by the 
     position. Such officers generally hold a permanent grade of 
     0-8. Under current law, for the officer to retire in a grade 
     above 0-8, the Secretary of Defense must determine and then 
     certify to the President and the Congress that such officer 
     served satisfactorily on active duty in the higher grade. 
     Most officers who serve in grades above 0-8 are approved for 
     retirement in the highest grade held. Section 504 would 
     retain the requirement for the Secretary of Defense to 
     certify that the service of an officer on active duty in a 
     grade above 0-8 was satisfactory in order for the officer to 
     be retired in the grade above 0-8, but would do away with the 
     requirement for the Secretary of Defense to provide that 
     certification in writing to the President and the Congress. 
     Further, Section 504 would require the Secretary of Defense 
     to issue written regulations to implement these procedures.
       Section 505 would modify sections of titles 10, 37, and 20 
     of the United States Code to extend temporary military 
     drawdown authorities through Fiscal Year (FY) 2004. Most of 
     these authorities were initially established in the FY 1991 
     through FY 1993 National Defense Authorization Acts (NDAA). 
     They were designed to enable the Services to reduce their 
     military forces through a variety of voluntary and 
     involuntary programs and to provide benefits to assist 
     departing members in their transition to civilian life. The 
     FY 1994 NDAA extended these authorities through FY 1999. The 
     Department later requested a further extension through FY 
     2003, but the FY 1999 NDAA only extended them through FY 
     2001.
       Section 505 would add no new or changed programs. Rather, 
     it would extend the expiration date by three years for 
     existing programs. Programs affected include: early 
     retirement authority, enabling Services to offer retirement 
     to members with 15 through 19 years of service; voluntary 
     separation incentive or special separation benefit (VSI/SSB), 
     which offers an annuity or lump sum payment to members 
     separating with between 6 and 19 years of service; waivers of 
     time-in-grade and commissioned service time requirements for 
     officers; and relaxation of certain selective early 
     retirement and reduction-in-force restrictions. Separate, but 
     similar, provisions are included for Reserve and Guard 
     forces. These programs are discretionary and Service 
     Secretaries, when authorized by the Secretary of Defense, may 
     determine whether or not to use the programs.
       Transition benefits are otherwise not discretionary. Some 
     apply either to individuals involuntarily separated during 
     the drawdown period or to those accepting VSI or SSB. These 
     include a transition period in which the member and family 
     members continue to receive health care, commissary and 
     exchange benefits, use of military housing, extension of 
     separation or retirement travel, transportation, and storage 
     benefits for up to one year, and extension of the time 
     limitations on the Reserve Montgomery GI Bill. Others provide 
     transition benefits to all departing members during the 
     drawdown period, educational leave to prepare for post-
     military community and public service, and continued 
     enrollment of dependents for up to one year to graduate from 
     Department of Defense Dependent Schools.
       These programs have helped the Services take large 
     reductions in a short time. Although reductions have 
     stabilized and drawdown tools are not currently needed to 
     achieve overall end-strength, they may be necessary to 
     accomplish force-shaping reductions. In FY 1999 and 2000, the 
     Air Force used early retirement, time in grade, commissioned 
     service time waivers, and VSI/SSB to accomplish medical 
     right-sizing and to alleviate a significant field grade 
     imbalance in the chaplain corps. In FY 2001 and beyond, the 
     Air Force anticipates a continued need for drawdown tools 
     (with associated benefit programs) to stabilize non-line end-
     strengths. Future force-shaping initiatives could also 
     require limited use of drawdown tools.
       Section 506. Subsection (a) adds a new section 1558 at the 
     end of chapter 79 of title 10:
       Section 1558(a) authorizes the Secretary of the military 
     department concerned to correct the military records of a 
     person to reflect the favorable outcome of a special board, 
     retroactive to the date of the original board.
       Section 1558(b) provides that, in the case of a person who 
     was separated, retired or transferred to an inactive status 
     as a result of the recommendation of a selection board and 
     later becomes entitled to retention on or restoration to 
     active duty or active status as a result of a records 
     correction under section 1558(a), the person shall be 
     restored to the same status, rights and entitlements in his 
     or her armed force as he or she would have had but for the 
     selection board recommendation. If the member does not 
     consent to such restoration, he or she will be entitled to 
     appropriate back pay and allowances.
       Section 1558(c) provides that a special board outcome 
     unfavorable to the person considered confirms the action of 
     the original board, retroactive to the date of the original 
     board.
       Section 1558(d) authorizes the Secretary concerned to 
     prescribe regulations to implement section 1558, including 
     prescribing the circumstances under which special board 
     consideration is available, when it is contingent on 
     application by the person seeking consideration, and time 
     limits for making such application. Such regulations, issued 
     by the Secretary of a military department, must be approved 
     by the Secretary of Defense.
       Section 1558(e) provides that a person challenging the 
     action or recommendation of a selection board is not entitled 
     to judicial relief unless he or she has been considered by a 
     special board under section 1558, or has been denied such 
     consideration by the Secretary concerned. Denial of 
     consideration by a special board is made subject to judicial 
     review only on the basis that it is arbitrary, capricious, 
     not based on substantial evidence, or otherwise contrary to 
     law. If a court sets aside the Secretary's decision to deny 
     such consideration, it shall remand the matter to the 
     Secretary for consideration by a special board. The 
     recommendation of a special board, or a decision resulting 
     from that recommendation, is made subject to judicial review 
     only on the basis that it is contrary to law or involved a 
     material error of fact or a material administrative error. If 
     a court sets aside such a recommendation or decision, it 
     shall remand to the Secretary for new special board 
     consideration, or a new action on the special board's 
     recommendation, as the case may be. These limitations on 
     reviewability and remedies parallel those applicable to 
     reserve component selection boards under 10 U.S.C. 14502 and 
     are in accord with current Federal Circuit law regarding 
     review of military personnel decisions. Murphy v. U.S., 993 
     F.2d 871 (Fed. Cir. 1993). The term ``contrary to law'' is 
     intended to encompass constitutional as well as statutory 
     violations.
       Section 1558(f) provides that the remedies prescribed in 
     section 1558 are the exclusive remedies available to a person 
     challenging the action or recommendation of a selection 
     board, as that term is defined in section 1558(j).
       Section 1558(g) provides that section 1558 does not limit 
     the existing jurisdiction of any federal court to determine 
     the validity of any statute, regulation or policy relating to 
     selection boards, but limits relief in such cases to that 
     provided for in section 1558.
       Section 1558(h) contains time limits for action by the 
     Secretary concerned on a request for consideration by a 
     special board (six months) and on the recommendation of a 
     special board (one year after convening the board). Failure 
     to act within these time limits will be deemed a denial of 
     the requested relief The Secretary, acting personally, may 
     extend these time limits in appropriate cases, but may not 
     delegate the authority to do so.
       Section 1558(i) provides that section 1558 does not apply 
     to the Coast Guard when it is not operating as a service in 
     the Navy.
       Section 1558(j)(1) defines ``special board'' to encompass 
     any board, other than a special selection board convened 
     under section 628 or 14502 of title 10, convened by the 
     Secretary concerned to consider a person for appointment, 
     enlistment, reenlistment, assignment, promotion, retention, 
     separation, retirement, or transfer to inactive status in a 
     reserve component, in place of consideration by a prior 
     selection board that considered or should have considered the 
     person. A board for correction of military or naval records 
     under section 1552 of title 10 may be a special board if so 
     designated by the Secretary concerned.
       Section 1558(j)(2) defines ``selection board,'' for the 
     purposes of section 1558, as encompassing existing 
     statutorily established selection boards, (except a promotion 
     selection board convened under section 573(a), 611 (a) or 
     14101 (a) of title 10), and any other board convened by the 
     Secretary concerned to recommend persons for appointment, 
     enlistment, reenlistment, assignment, promotion, or retention 
     in the armed forces, or for separation, retirement, or 
     transfer to inactive

[[Page 12530]]

     status in a reserve component for the purpose of reducing the 
     number of persons serving in the armed forces.
       Subsection (b) adds new subsections (g), (h) and (i) to 
     section 628 of title 10, the section authorizing special 
     selection boards for promotion of active duty list 
     commissioned and warrant officers (redesignating existing 
     subsection (g) as subsection (j). New subsections (g) and (h) 
     correspond exactly to subsections (g) and (h) of section 
     14502 of title 10, the ROPMA provision authorizing special 
     selection boards for promotion of reserve active status list 
     commissioned officers.
       New subsection (g) provides that no court or official of 
     the United States shall have power or jurisdiction over any 
     claim by an officer or former officer based on his or her 
     failure to be selected for promotion unless the officer has 
     first been considered by a special selection board, or his 
     claim has been rejected by the Secretary concerned without 
     consideration by a special selection board. In addition, this 
     subsection precludes any official or court from granting 
     relief on a claim for promotion unless the officer has been 
     selected for promotion by a special selection board.
       Subsection (h) permits judicial review of a decision to 
     deny special selection board consideration. A court may 
     overturn such a decision and remand to the Secretary 
     concerned to convene a special selection board if it finds 
     the decision to be arbitrary or capricious, not based on 
     substantial evidence, or otherwise contrary to law. The term 
     ``contrary to law'' is intended to encompass constitutional 
     as well as statutory violations. Subsection (i) also provides 
     that if a court finds that the action of a special selection 
     board was contrary to law or involved material error of fact 
     or material administrative error, it shall remand to the 
     Secretary concerned for a new special selection board. No 
     other form of judicial relief is authorized.
       Subsection (i) provides (1) that nothing in this 
     legislation limits the existing jurisdiction of any court to 
     determine the validity of any statute, regulation or policy 
     relating to selection boards, but limits relief in such cases 
     to that provided for in this legislation, and (2) that 
     nothing in this legislation limits the existing authority of 
     the Secretary of a military department to correct a military 
     record under section 1552 of title 10.
       Subsection (c) provides that the amendments made by this 
     legislation are retroactive in effect, except that they do 
     not apply to any judicial proceeding commenced in a federal 
     court before the date of enactment.
       Section 511 would allow the Service Secretaries to 
     routinely transfer Reserve officers to the Retired Reserve--
     without requiring that the officer request such a transfer--
     for those officers who are required by statute to be removed 
     from the reserve active status list because of failure of 
     selection for promotion, length of service, or age. This 
     section would add a similar authority with respect to warrant 
     officers and enlisted members who have reached the maximum 
     age or years of service as prescribed by the Secretary 
     concerned. However, this section would allow these members to 
     request discharge or, in some cases, transfer to an inactive 
     status list in lieu of transfer to the Retired Reserve. 
     Giving the Service Secretaries this authority would also help 
     protect those members who entered military service after 
     September 7, 1980. Members who entered military service after 
     that date and are discharged after qualifying for a non-
     regular retirement (former members) remain eligible to 
     receive retired pay, but that pay is calculated on the pay 
     scale in effect when discharged, rather than the pay scale in 
     effect when they request retired pay. This is significant 
     since the retired pay for a former member in most cases will 
     be significantly less then that of a member of the Retired 
     Reserve because of the pay scale used to determine the amount 
     of retired pay. This amendment would require reservists to 
     make a positive election to be discharged with the full 
     understanding of the possible economic consequences of that 
     decision.
       Section 512. A specific definition with respect to Reserve 
     component members was added as section 991(b)(2) of title 10, 
     United States Code, by the Floyd D. Spence National Defense 
     Authorization Act for Fiscal Year 2001 (Public Law 106-398). 
     The purpose of this definition was to ensure consistent 
     treatment of Active and Reserve component members serving 
     under comparable circumstances and preclude Reserve component 
     members from being credited with deployed days when they 
     could spend off-duty time in their home.
       As provided in the National Defense Authorization Act for 
     Fiscal Year 2001, the Active component will count ``home 
     station training'' for deployment purposes whenever the 
     member is unable to spend off-duty hours in the housing in 
     which he or she resides when on garrison duty at his or her 
     permanent duty station or homeport. To maintain consistency 
     between Active and Reserve component members, the definition 
     of deployment with respect to Reserve component members must 
     be amended.
       Absent the proposed change in Section 512, an active duty 
     member who is not able to spend off-duty time in the housing 
     in which the member resides when on garrison duty at the 
     member's permanent duty station or homeport, because the 
     member is performing home station training, will be credited 
     with a day of deployment, while a Reserve component member 
     serving under comparable circumstances will not because they 
     will be within the 100-mile or three-hour limit. Section 512 
     would ensure consistency between Active and Reserve component 
     members with respect to the PERSTEMPO definition.
       Section 513 would eliminate the periodic physical 
     examination requirement for members of the Individual Ready 
     Reserve (IRR), which is required once every five years. In 
     lieu of conducting a physical examination every five years, 
     these members would receive a physical examination upon a 
     call to active duty, if they have not had a physical 
     examination within the previous five years. However, the 
     Secretary concerned would have the authority to provide a 
     physical examination when necessary to meet military 
     requirements. There is little return on investment for any 
     program to conduct physical exams for the more than 450,000 
     members of the IRR. The annual cost of ensuring that IRR 
     members are examined as to physical condition at least every 
     five years is approximately $2.3 million. This cost reflects 
     approximately 10 percent of what the Department should be 
     spending annually on physical exams for this population. 
     However, the Department is able to provide only about 11,000 
     of the more than 90,000 required physical exams for IRR 
     members each year. In this period of constrained resources, 
     it would be far more cost-effective to conduct physical exams 
     on these Reserve members at the time they are ordered to 
     active duty. This recommendation was contained in the 
     Secretary of Defense's report to Congress on the means of 
     improving medical and dental care for Reserve Component 
     members, which was sent to Congress on November 5, 1999.
       Section 514 would amend titles 10, 14 and 38, United States 
     Code (U.S.C.), to provide the same benefits and protections 
     for Reserve Component (RC) members while in a funeral honors 
     duty status as provided when RC members perform inactive duty 
     training (IDT) or traveling to or from IDT. Sections to be 
     amended are:
       (1) 10 U.S.C. 802--persons subject to the Uniformed Code of 
     Military Justice. Section 514 would specify that members of a 
     Reserve Component are subject to the Uniform Code of Military 
     Justice while performing funeral honors duty under 10 U.S.C. 
     12503.
       (2) 10 U.S.C. 1061--eligibility for commissary and exchange 
     benefits for dependents of a deceased Reserve Component 
     member. Section 514 would specify that the dependents of a 
     Reserve Component member who died while in a funeral honor 
     duty status, or while traveling to or from such duty would be 
     eligible for commissary and exchange benefits on the same 
     basis as the surviving dependents of an active duty member.
       (3) 10 U.S.C. 1475 and 1476--payment of a death gratuity. 
     Section 514 would authorize payment of a death gratuity upon 
     the death of a Reserve Component member who died while in a 
     funeral honor duty status, or while traveling to or from such 
     duty.
       (4) 14 U.S.C. 704--military authority of members of the 
     Coast Guard Reserve. Section 514 would specify that a member 
     of the Coast Guard Reserve would have the same authority, 
     rights and privileges as a member of the Regular Coast Guard 
     of a corresponding grade or rating when the member is in a 
     funeral honors duty status.
       (5) 14 U.S.C. 705--benefits for members of the Coast Guard 
     Reserve. Section 514 would specify that a member of the Coast 
     Guard Reserve would have the same benefits as a member of the 
     Naval Reserve of corresponding grade, rating and length of 
     service when the member is in a funeral honors duty status.
       (6) 38 U.S.C. 101--definitions. Section 514 would add the 
     term ``funeral honors duty'' and define that term, and then 
     include that term in the definition of ``active military, 
     naval, or air service.'' Including the definition of funeral 
     honors duty in the term active military, naval and air 
     service, would entitle a Reserve Component to healthcare and 
     disability compensation from the Department of Veterans 
     Affairs for a service-connected disability incurred or 
     aggravated while in a funeral honors duty status or traveling 
     to or from such duty.
       Amending the various statutes to add funeral honors duty as 
     a duty status in which these benefits are provided is 
     important to ensure a viable program of rendering honors at 
     the funerals of our veterans.
       Section 515 would specify that the performance of funeral 
     honors by members of the Army National Guard of the United 
     States or Air National Guard of the United States, while in a 
     state status, satisfies the two-person funeral honors detail 
     requirement. While members of the National Guard would meet 
     this requirement when called to duty under a provision of 
     title 10 or title 32, United States Code (U.S.C.), they are 
     not in a federal status when performing duty in a state 
     military duty status, and therefore would not fulfill the 
     two-person requirement for performing funeral honors when in 
     a state status. Amending 10 U.S.C. 1491 to permit National 
     Guard members to fulfill this requirement when performing 
     duty in a state status would help ensure this important 
     mission is accomplished.

[[Page 12531]]

       Section 516 would authorize Reserve Component members who 
     have been ordered to active duty under section 12301(d) of 
     title 10, United States Code (U.S.C.), to serve in support of 
     a contingency operation (as defined in 10 U.S.C. 101(a)(13)), 
     to be added to the authorized active duty end strength. It 
     would also authorize the ceiling for general and flag 
     officers and officers in the grades of O-6, O-5 and O-4 
     serving on active duty in those grades to be increased by a 
     number equal to the number of officers in each pay grade 
     serving on active duty in support of a contingency operation. 
     Lastly, it would authorize the ceiling for enlisted members 
     in the grades of E-9 and E-8 serving on active duty in those 
     grades to be increased by a number equal to the number of 
     enlisted members in each pay grade serving on active duty in 
     support of a contingency operation.
       Currently, Reserve Component members who are involuntarily 
     called to active duty are exempt from the strength 
     limitations in sections 115, 517 and 523 of title 10. Just as 
     the Services involuntarily call Reserve Component personnel 
     to active duty under section 10 U.S.C. 12304, to meet the 
     operational requirements to support a contingency, the 
     Services also use volunteers from their Reserve Components to 
     meet the operational requirements of a contingency operation. 
     These volunteers are called to active duty under 10 U.S.C. 
     12301(d). Regardless of the authority used, a voluntary call 
     to active duty or an involuntary call to active duty, the 
     additional manpower represents an unprogrammed expansion of 
     the force to meet operational requirements. The authority to 
     increase the end strength limits and grade ceilings would 
     permit the Services to meet contingency operation 
     requirements without adversely affecting the manpower 
     programmed for other national security objectives. Finally, 
     absent such an authority, the Services have an incentive to 
     use non-volunteers to support these operations to avoid 
     adversely affecting their end strength. This authority to 
     expand the force by the number of Reserve Component members 
     serving on active duty to support the contingency would 
     encourage the Services to use volunteers to meet these 
     mission requirements.
       Section 517 would authorize payment of the financial 
     assistance provided under 10 U.S.C. 16201 to a student who 
     has been accepted into an accredited medical or dental 
     school. Section 517 would further amend section 16201 to 
     authorize payment of subsequent financial assistance to an 
     officer who received financial assistance under this section 
     while a student enrolled in medical or dental school and has 
     now graduated and enters residency training in a healthcare 
     professions wartime skill designated by the Secretary of 
     Defense as critically short. When such a student agrees to 
     financial assistance for residency training, the two-for-one 
     service commitment previously incurred for financial 
     assistance while attending medical or dental school may be 
     reduced to one year for each year, or part thereof, of 
     financial assistance previously provided. However, the 
     service obligation incurred for residency training would 
     remain at two-for-one. Finally, Section 517 would authorize 
     the service obligation incurred for financial assistance for 
     a partial year to be incurred in six-month increments for 
     those agreements that require a two-for-one pay back. Thus, 
     for every six months, or part thereof, of benefits paid under 
     this program the recipient would be obligated for one year of 
     service in the Selected Reserve. Currently, two years of 
     service obligation is incurred for each partial year of 
     financial assistance provided, regardless of the number of 
     months in that partial year.
       These amendments would provide a more robust incentive 
     program that recruiters could offer students in the 
     healthcare professions in order to entice them into joining 
     the Guard or Reserve. The current medical recruiting 
     incentives, which originated in the early to mid 1980s, must 
     be updated to enable reserve recruiters to compete with 
     hospitals, HMOs and communities who offer financial 
     incentives to medical and dental students in return for a 
     commitment to work for them once they become a qualified 
     physician or dentist. As an example, both the Army Reserve 
     and the Army National Guard, which account for 65 percent of 
     Army medical requirements, have not been able to achieve 
     medical recruiting goals and are experiencing serious medical 
     end strength shortfalls.
       In summary, Section 517 would enhance the recruiting 
     incentives targeted at students entering the health care 
     profession in four ways: (1) allow medical and dental school 
     students to receive a stipend, (2) allow subsequent financial 
     assistance for officers who have completed medical or dental 
     school and enter residence training in a critically short 
     wartime skill, (3) allow the service obligation to be reduced 
     to one-for-one when a physician or dentist accepts additional 
     financial assistance for residency training, and (4) allow 
     those service obligations which require a two-for-one pay 
     back to be incurred in six-month increments.
       Section 518. Section 521 of the Floyd D. Spence National 
     Defense Authorization Act for Fiscal Year 2001 (Public Law 
     106-398) amended section 641(1) of title 10, United States 
     Code (U.S.C.), to exclude certain reserve component officers 
     serving on active duty for periods of three years or less 
     from the active duty list for promotion purposes. The 
     amendment inadvertently excluded a number of reserve officers 
     on active duty for three years or less who should properly be 
     considered on the active duty list. For example, Senior 
     Reserve Officers' Training Corps non-scholarship graduates 
     who attend law school in an educational delay status are 
     ordered to active duty for a period of three years and, as a 
     result of the recent amendment, are placed on the reserve 
     active-status list, rather than on the active duty list. 
     These officers, however, should compete for selection for 
     promotion with their contemporaries on the active duty list, 
     e.g., officers who are ordered to active duty for a period of 
     four years as a consequence of their participation in the 
     Senior Reserve Officers' Training Corps scholarship program.
       Section 518 would amend section 641 to provide that reserve 
     officers ordered to active duty for three years or less would 
     be placed on the reserve active-status list only if their 
     placement was required by regulations prescribed by the 
     Secretary concerned and only if ordered to active duty for 
     three years or less with placement on the reserve active-
     status list specified in their orders,. This amendment would 
     provide the Secretaries of the military departments with the 
     authority to prevent an inappropriate application of section 
     641(1)(D).
       However, Section 518 would allow Reserve officers who are 
     called to active duty to meet mission requirements of the 
     active forces to be released to resume a reserve career 
     following a limited period of active duty (three years or 
     less) and to be considered for promotion by a reserve 
     promotion selection board and managed under the provisions of 
     subtitle E of title 10, U.S.C., in the same manner as their 
     contemporaries not serving on active duty. Reserve component 
     general/flag officers would, under service regulations, be 
     retained on the reserve active-status list while serving on 
     active duty for a period of three years or less under the 
     provisions of 10 U.S.C. 526(b)(2).
       Finally, Section 518 would allow the service secretary to 
     return a Reserve officer to the reserve active status list 
     who otherwise met the criteria of this exemption, but for the 
     fact that the officer was on active duty and had already been 
     placed on the active duty list at the time section 641(1)(D), 
     as amended by Public Law 106-398, was enacted.
       Section 519 would permit Reserve component members on 
     active duty and members of the National Guard on full-time 
     National Guard duty to prepare for and perform funeral honors 
     for veterans as required by section 1491 of title 10, United 
     States Code, without counting against active duty end 
     strength. The delivery of funeral honors to veterans is a 
     continuous peacetime mission that has escalated from its 
     recent inception and mandate in Public Law 105-261. Further, 
     funeral honors mission requirements are projected to continue 
     their expansive growth in the out years. Section 519 would 
     allow the Services to fulfill the funeral honors mission 
     without adversely impacting readiness and affecting the end 
     strength needed to meet their wartime missions. For the 
     Department to meet the requirements of the law regarding the 
     provision of funeral honors for veterans, it is critical to 
     have Reserve component participation in this Total Force 
     mission. This end strength exemption would remove an 
     impediment to greater Reserve component participation in 
     funeral honors, provide greater latitude in manpower 
     application, and greatly assist the Department in meeting the 
     expanding requirements of the veterans' funeral honors law.
       Section 520. Section 555 of the National Defense 
     Authorization Act for Fiscal Year 2000 amended section 
     12310(b) of title 10, United States Code, to expand the 
     duties that may be assigned to Reserves, who are on active 
     duty, in connection with organizing, administering, 
     recruiting, instructing, or training the reserve components. 
     While the apparent intent of the amendment was to expand the 
     permissible activities of all Active Guard and Reserve (AGR) 
     personnel, practically, the amendment applies only to AGR 
     personnel performing active duty under section 12301(d) of 
     title 10 and does not include AGR personnel performing full-
     time National Guard duty under title 32 of the United States 
     Code. Therefore, Section 520 seeks to clarify the current 
     law, aligning the current practices in these missions with 
     the legislative authority governing them. This change is 
     necessary because, effectively, there are few distinctions 
     between the roles of AGR personnel serving on active duty and 
     the roles of reservists performing full-time National Guard 
     duty, outside of the different chains of command that each 
     respective group must report to.
       This section would amend section 12310(b) by inserting 
     language that clearly would make the section applicable to 
     Reserves who are members of the National Guard serving on 
     fulltime National Guard duty under section 502(f) of title 32 
     in connection with organizing, administering, recruiting, 
     instructing, or training the reserve components. It would 
     ensure that National Guard AGR personnel are treated in the 
     same manner as

[[Page 12532]]

     AGR personnel of the other reserve components when 
     determining the scope of permissible duties and functions 
     that they may perform. Section 520 would clarify the 
     authority for AGR personnel on full-time National Guard duty 
     to support an increasing number of operations and missions 
     being assigned in whole or in part to the National Guard. 
     Such duties include operational airlift support activities, 
     standby air defense operations, anticipated ballistic missile 
     defense operations, land information warfare activities, and 
     the use of National Guard instructors to train both active 
     component and reserve component personnel. Thus, this section 
     is important because, while some of these duties have been 
     periodically performed by AGR personnel on full-time duty, 
     there has been no explicit, binding, legal authority which 
     would outline the limits governing their actions.


       Section 521 would amend section 516 of the Strom Thurmond 
     National Defense Authorization Act for Fiscal Year 1999 
     (Public Law 105-261) to extend the time during which the 
     Secretary of the Army may waive the applicability of section 
     12205(a) of title 10, United States Code, to reserve officers 
     commissioned through the Army Officer Candidate School.
       Section 12205(a) provides that no person may be appointed 
     to a grade above the grade of first lieutenant in the Army 
     Reserve, Air Force Reserve, or Marine Corps Reserve or to a 
     grade above the grade of lieutenant (junior grade) in the 
     Naval Reserve, or be federally recognized in a grade above 
     the grade of lieutenant as a member of the Army National 
     Guard or Air National Guard, unless that person has been 
     awarded a baccalaureate degree by a qualifying educational 
     institution.
       Section 516 authorized the Secretary of the Army to waive 
     the applicability of section 12205(a) to any officer who 
     before the enactment of Public Law 105-261 was commissioned 
     through the Army's Officer Candidate School. The waiver may 
     continue in effect for no more than two years. A waiver under 
     the section may not be granted after September 30, 2000.
       Section 521 would amend section 516 to permit the Secretary 
     to waive the applicability of section 12205(a) to any officer 
     who was commissioned through the Army's Officer Candidate 
     School without regard to the date of commissioning and would 
     extend the Secretary's authority under the section to 
     September 30, 2003.
       This additional period would enable the Army to determine 
     how to alleviate the problems experienced by some officers 
     commissioned through the Army Officer Candidate School in 
     obtaining a baccalaureate degree during the relatively short 
     period before they are eligible for promotion to captain and 
     during times when they may be engaged either in intense 
     training or deployments for long periods.
       Section 522 would amend section 12305 of title 10, United 
     States Code, to afford members whose mandatory dates of 
     separation or retirement were delayed due to stop loss 
     action, a period of time to transition to civilian life 
     following termination of stop loss. Specifically, Section 522 
     would add subsection (c) to afford active duty members whose 
     mandatory separations or retirements incident to sections 
     1251 or 632-637 are delayed pursuant to invocation of section 
     12305, a period of time--not to exceed 90 days following 
     termination of suspensions made under section 12305--to 
     transition to civilian life.
       As currently written, section 12305 requires immediate 
     separation or retirement of those affected by stop loss, who, 
     without stop loss, would have been subject to mandatory 
     separation or retirement under this title for age (section 
     1251), length of service (sections 633-636), or promotion 
     (sections 632, 637). An abrupt termination of stop loss could 
     cause undue hardship on those whose planned departure to 
     civilian life was unexpectedly interrupted and now must be 
     resumed posthaste. For example, the Air Force invoked stop 
     loss in support of Operation Allied Force in 1998. Following 
     the termination of stop loss on 22 June 1998, eight officers 
     with a mandatory (by law) date of separation were required to 
     retire upon their original date of separation (1 July 1998); 
     another three officers were required to separate/retire by 1 
     August 1998. On the other hand, members with a date of 
     separation set by policy were given the option of either 
     extending their dates of separation up to 6 months or 
     withdrawing them. Some leeway must also be provided for 
     members with dates of separation established by law to 
     reschedule the many details incident to final departure from 
     military life.
       Section 531. The Marine Corps War College seeks 
     Congressional authority and regional accreditation to issue a 
     master's degree in Strategic Studies. The authority to begin 
     this process is vested in the Commanding General of the 
     Marine Corps Combat Developments Command and was authorized 
     on 1 June 2000. In December 1999, the Marine Corps University 
     achieved a seven-year goal by becoming accredited by the 
     Southern Association of Colleges and schools to award a 
     master's degree in Military Studies. While this accreditation 
     was awarded to the Marine Corps University, it specifically 
     addressed only the degree awarded by the Command and Staff 
     College. The Marine Corps War College now seeks similar 
     authority.
       The uniqueness of the Marine Corps War College's curriculum 
     and program of study is unparalleled by other civilian 
     universities or Federal War Colleges. Most of the Marine 
     graduates of the Marine Corps War College become faculty 
     members of the Command and Staff College and, since the 
     Command and Staff College already awards a master's degree, 
     it would be very beneficial for these future faculty members 
     to possess the required academic credentials when arriving at 
     their new positions at the Command and Staff College.
       A master's degree program would enhance the professional 
     reputation and prestige of the Marine Corps War College. This 
     would facilitate the Marine Corps War College's efforts to 
     sustain and recruit a world class faculty and demonstrate a 
     high level of faculty competence as first rate scholars and 
     speakers. Section 531 is intended only as a technical 
     amendment to the existing legislation. Enactment of this 
     section would not result in an increase in the budgetary 
     requirements of the Marine Corps.
       Section 532. Section 206(d) of title 37, United States 
     Code, states that ``[t]his section does not authorize 
     compensation for work or study by a member of a reserve 
     component in connection with correspondence courses of an 
     armed force.'' This is similar to the limitation in the 
     definition of ``inactive-duty training'' found in 37 U.S.C. 
     101(22), which states inactive-duty training ``does not 
     include work or study in connection with a correspondence 
     course of a uniformed service.''
       Since the correspondence course restrictions were enacted 
     more than 50 years ago, technological advances affecting 
     instructional methodology have made these restrictions 
     outdated. The law, as currently written, also contradicts 
     recent Congressional directions to maximize the use of 
     technologies such as telecommuting for the federal sector and 
     the National Guard's Distributed Technology Training Project 
     (DTTP).
       The Secretary of Defense's training technology vision is to 
     ``ensure that DoD personnel have access to the highest 
     quality education and training that can be tailored to their 
     needs and delivered cost effectively, anytime and anywhere.'' 
     The future learning environment created by the application of 
     new technology will extend learning opportunities for Service 
     members, active and reserve, around the globe. This 
     technology will be available at work (whether at a military 
     base or in the civilian sector), at home, and at individual 
     workstations provided for public use at libraries and 
     military classrooms. Distributed Learning is defined as 
     structured learning that takes place without requiring the 
     physical presence of an instructor. Distributed learning is 
     synchronous and/or asynchronous learning mediated with 
     technology and may use one or more of the following media: 
     audio/videotapes, CD-ROMs, audio/video teletraining, 
     correspondence courses, interactive television, and video 
     conferencing. Advanced Distributed Learning is an evolution 
     of distributed, or distance, learning that emphasizes 
     collaboration on standards-based versions of reusable 
     objects, networks, and learning management systems, yet may 
     include some legacy methods and media.
       The awarding of compensation and/or credit involving 
     innovative learning technologies should be for the successful 
     independent completion of the required learning based on 
     Service standards. It is the Service Secretary's 
     responsibility to establish what is ``required'' learning for 
     the purposes of compensating and/or awarding credit to 
     Reserve component personnel. In this context, ``required'' 
     learning means education/training that is necessary for 
     individual and/or unit readiness as called for by law, DoD 
     policy, or Service regulation. Required distance/distributed 
     learning and/or advanced distributed learning courses may 
     have some paper-based phases or modules and can be 
     compensated. In addition, it is the Service secretary's 
     responsibility to develop the policies and procedures to 
     ensure successful and accountable implementation of their 
     Reserve component's Distributed Learning programs. Such 
     policies and procedures should include, but not be limited 
     to, such topics as tracking members' participation at a 
     distance, measuring successful performance/participation, 
     failure policies, telecommuting policies, equipment funding 
     and availability, equipment liability, personal liability, 
     virtual training, virtual drilling, scheduling, 
     documentation, accountability, and implementation guidance.
       Section 532 would make no change in resource requirements 
     because budgetary decisions associated with the compensation 
     and/or credit for Reserve component members for work 
     performed through non-traditional methods is left up to the 
     discretion of the Service Secretaries.
       Section 533 would modify section 2031 of title 10, United 
     States Code, to strike the second sentence in paragraph 
     (a)(1) which reads as follows: ``The total number of units 
     which may be established and maintained by all of the 
     military departments under authority of this section, 
     including those units already established on October 13, 
     1964, may not exceed 3,500.''
       JROTC is DoD's largest youth program with over 450,000 
     students enrolled in more

[[Page 12533]]

     than 2,900 secondary schools. The statutory mission for JROTC 
     is to instill in students the value of citizenship, service 
     to the United States, personal responsibility, and a sense of 
     accomplishment. Surveys of JROTC cadets indicate that about 
     40 percent of the graduating high school seniors with more 
     than two years participation in the JROTC program are 
     interested in some type of military affiliation (active duty 
     enlistment, officer program participation, or service in the 
     Reserve or Guard). Translating this to hard recruiting 
     numbers, in Fiscal Years (FY) 1996-2000, about 9,000 new 
     recruits per year entered active duty after completing two 
     years of JROTC. The proportion of JROTC graduates who enter 
     the military following completion of high school is roughly 
     five times greater than the proportion of non-JROTC students. 
     Therefore, the program pays off in citizenship as well as 
     recruiting.
       Recognizing the merits of the JROTC program, the Military 
     Services have undertaken an aggressive expansion program and 
     are committed to reach the statutory maximum of 3,500 by FY 
     2006. As a result of this planned growth, the Military 
     Services have witnessed a marked increase in the number of 
     schools seeking establishment of JROTC units. We now face the 
     real potential that DoD and a waiting school might both wish 
     to proceed with an activation, yet face a legislative cap 
     that prevents execution of such a mutually-desirable course 
     of action. Enactment of Section 533 would permit DoD to be 
     responsive to mutually agreeable school needs which might 
     exceed the present 3,500-unit cap set in law.
       Section 534 would extend eligibility for the Nurse Officer 
     Candidate Accession Program to students enrolled at civilian 
     educational institutions with a Senior Reserve Officers' 
     Training Program (SROTP) who are not eligible for Senior 
     Reserve Officers' Training Programs.
       The Nurse Officer Candidate Accession Program (NCP) is a 
     primary accession source of new nurse officers and provides a 
     hedge against difficulty in the direct procurement market. It 
     provides financial assistance to students enrolled in a 
     baccalaureate nursing program in exchange for an active duty 
     commitment upon graduation.
       Market projections indicate increasing difficulty in 
     recruiting students for the NCP due to an increase in 
     civilian career opportunities and declining nursing school 
     enrollment. Evidence from nursing journals and employment 
     industry statistics confirm that a tightening job market for 
     nurses is expected over the next few years.
       Section 2130a of title 10, United States Code, currently 
     restricts eligibility for the NCP to students enrolled in a 
     nursing program at a civilian educational institution ``that 
     does not have a Senior Reserve Officers' Training Program.''
       Eligibility requirements for the SROTP limit age to 27 
     years. SROTP scholarships for junior or senior level students 
     are limited to a few quotas each year only to replace 
     students lost through attrition. The NCP age limit is up to 
     34 years and only bars those within six months of graduation. 
     Recruiters report considerable interest in the NCP program by 
     SROTP-ineligible students.
       Extending NCP eligibility to SROTP-ineligible students 
     would expand the potential applicant pool and demonstrate 
     strong Congressional support and commitment to providing 
     future nurse officers with the necessary skills to meet our 
     healthcare mission around the world.
       Section 535. The Defense Language Institute Foreign 
     Language Center serves as the Defense Department's primary 
     foreign language teaching and resource center. The Institute 
     has been accredited by the Accrediting Commission for 
     Community and Junior Colleges of the Western Association of 
     Schools and Colleges (Commission) since 1979. The Commission 
     has recommended that the Institute obtain degree-granting 
     status to maintain its accreditation. The Secretary of 
     Education has endorsed that recommendation. Section 535 would 
     provide the authority for the Institute to grant an Associate 
     of Arts degree. There are no resource implications other than 
     the routine administrative requirements to produce a diploma 
     suitable for presentation upon graduation.
       Section 541 is pursuant to the provisions and procedures of 
     section 1130 of title 10, United States Code. The Honorable 
     Sherrod Brown of the House of Representatives requested the 
     Secretary of the Army, the appropriate official under section 
     1130, to review the circumstance of this case. Section 541 
     follows the determination made under section 1130(b)(2) that 
     the award of the decoration warrants approval. It further 
     recommends a waiver of the specified time restrictions 
     prescribed by law. The Secretary of the Army and the Chairman 
     of the Joint Chiefs of Staff both agree and recommend that 
     Humbert R. Versace be awarded the Medal of Honor. Section 541 
     would waive the period of time limitations under Section 3744 
     of title 10 to authorize the President to award Humbert R. 
     Versace the Medal of Honor.
       Section 541 would authorize the President to award the 
     Medal of Honor to Humbert R. Versace, who served in the 
     United States Army during the Vietnam War and who was 
     assigned as a Captain with A Detachment, 5th Special Forces 
     Group. It would waive the specific provisions of section 3744 
     of title 10 that the award be made within three years of the 
     date of the act upon which the award is based. The acts of 
     then-Captain Humbert R. Versace clearly distinguish him 
     conspicuously by gallantry and intrepidity at the risk of his 
     life above and beyond the call of duty, as required by 
     section 3741 of title 10 to merit this legislation and the 
     award.
       Section 542 would amend sections 3747, 6253 and 8747 of 
     title 10, United States Code, to provide clear authority for 
     the Secretaries of the military departments to replace 
     certain medals if stolen and to issue medal of honor 
     recipients one duplicate medal of honor, with ribbons and 
     appurtenances.
       Sections 3747, 6253 and 8747 currently authorize free 
     replacement of any medal of honor, distinguished service 
     cross, distinguished service medal, silver star, Navy cross, 
     Navy and Marine Corps medal, or Air Force cross that is lost 
     or destroyed or becomes unfit for use without the fault or 
     neglect of the recipient. Enactment of Section 542 would also 
     clarify the intent of these sections to authorize 
     specifically the replacement of medals that are stolen, 
     subject to the limitation that the theft was without the 
     fault or neglect of the recipient.
       If enacted, Section 542 would also authorize the Service 
     Secretaries to issue each medal of honor recipient one 
     duplicate medal free of charge. There is no provision in 
     title 10 that authorizes issuance of a duplicate medal of 
     honor so that the recipient can donate the original medal or 
     otherwise safeguard it and wear the duplicate to functions 
     and events. In fact, sections 3747, 6253 and 8747 of title 
     10, in conjunction with sections 3744(a), 6247 and 8744(a) of 
     such title, may be construed to prohibit the issuance of a 
     duplicate medal of honor.
       If Section 542 is enacted, medal of honor recipients would 
     have to make written application to the Secretary concerned 
     for the issuance of a duplicate medal, which would be marked, 
     as determined by the Secretary concerned, as a duplicate or 
     for display purposes only. The issuance of a duplicate medal 
     under this new authority would not constitute the award of 
     ``more than one'' medal of honor to the same person. Sections 
     3744(a), 6247 and 8744(a) of title 10 prohibit the award of 
     ``more than one'' medal of honor to a person.
       Issuance of a duplicate medal of honor for display purposes 
     would allow recipients to place their original medals in 
     safekeeping or donate them to institutions for permanent 
     display while retaining the duplicate to wear at events. 
     Medal of honor recipients are expected to wear their medals 
     at many of the events to which they are invited. According to 
     the Congressional Medal of Honor Society, many of the 152 
     living recipients would like to donate or otherwise safeguard 
     their original medals because the value of the medals on the 
     ``black market'' has made them an attractive target for 
     theft. Medals marked as duplicates, by contrast, would 
     presumably have little or no ``black market'' value and would 
     be less attractive targets for theft.
       The cost of issuing duplicate medals of honor would be 
     minimal. The current cost of a medal of honor is 
     approximately eighty-five dollars. If every living recipient 
     requested a duplicate, the cost would not exceed $15,000, 
     including shipping.
       Section 543. Section 541 of the Floyd D. Spence National 
     Defense Authorization Act for FY 2001 (114 Stat. 1654A-114) 
     enacted section 1133 of title 10, United States Code 
     (U.S.C.), that restricts eligibility for the Bronze Star 
     Medal to members of the Armed Forces who are in receipt of 
     special pay under section 310 of title 37, U.S.C., at the 
     time of the events for which the decoration is to be awarded 
     or who receive such pay as a result of those events. 
     ``Special pay'' under section 310 includes both hostile fire 
     pay (HFP) and imminent danger pay (IDP). The reason for the 
     change stemmed from the belief that someone whose duties 
     never took them away from home did not perform the same kind 
     of service as someone who was in the combat zone. The 
     perception was that most people who received IDP or HFP 
     served in a combat zone.
       Currently, military personnel serve in 43 areas which 
     qualify for IDP or HFP, but only two areas are further 
     designated ``combat zones''--Yugoslavia (Serbia, Kosovo, 
     Albania, the Adriatic Sea, the Ionian Sea above the 39th 
     parallel, and the airspace above these areas) and the Persian 
     Gulf. Service members qualify for IDP not only in wartime 
     conditions, but also if they are subject to physical harm or 
     imminent danger due to terrorism, civil insurrection, or 
     civil war. HFP is awarded when a service member is subject to 
     hostile fire or explosion of hostile mines; on duty in an 
     area in which he is in imminent danger of being exposed to 
     hostile fire or explosion of hostile mines; or is killed, 
     injured, or wounded by hostile fire, explosion of a hostile 
     mine, or any other hostile action. The decision to declare an 
     area eligible for receipt of IDP or HFP is not immediate. A 
     recommendation is made by the regional commander in chief, 
     endorsed by the Joint Chiefs of Staff, and then approved by 
     DoD Force Management Policy.
       No other higher-level valor award, e.g., the Medal of 
     Honor, Service Cross, Silver Star, or Distinguished Flying 
     Cross, has similar eligibility criteria. Historically, the 
     Bronze

[[Page 12534]]

     Star Medal has been awarded outside of combat areas, such as 
     during the Korean conflict when it was approved for personnel 
     stationed in Okinawa for meritorious service in connection 
     with military operations against Northern Korea. Therefore, 
     limiting eligibility for the Bronze Star Medal to only those 
     members serving in an area where imminent danger pay is 
     authorized or to those receiving hostile fire pay would 
     exclude many deserving members of the Armed Forces.
       Awarding of the Bronze Star Medal should be disassociated 
     with any requirement for IDP or HFP and should instead stand 
     alone. The revolution in military warfare has changed the way 
     the U.S. has traditionally viewed force application and the 
     decorations, many of whose origins recognized traditional 
     ground combat operations, must also keep up and recognize the 
     changes in the way the U.S. conducts warfare.
       Section 551 would amend the Uniform Code of Military 
     Justice to lower the blood alcohol concentration (BAC) 
     necessary to establish drunken operation of a motor vehicle 
     from 0. 1 to 0.08 grams or more of alcohol per 100 
     milliliters of blood or 0.08 grams per 210 liters of breath. 
     This change would bring military practice in line with the 
     recently enacted nationwide drunk driving standard found in 
     section 351 of the Department of Transportation and Related 
     Agencies Appropriations Act for Fiscal Year 2001, Public Law 
     106-346, 114 Stat. 1356A-34.
       On March 3, 1998, President Clinton directed the Secretary 
     of Transportation to develop a plan to promote a .08 BAC 
     legal limit, which would include ``setting a. 08 BAC standard 
     on Federal property, including. . . on Department of Defense 
     installations, and ensuring strong enforcement and publicity 
     of this standard. . . .''
       Consistent with this planning effort, DoD legislation was 
     proposed in its omnibus legislative package in the spring of 
     1999 to amend the Uniform Code of Military Justice to reduce 
     the blood and breath alcohol levels for the offense of 
     drunken operation of a vehicle, aircraft, or vessel from 0.10 
     to 0.08 grams. The U.S. Senate adopted section 562 of S. 974 
     to make corresponding changes to the United States Code. H.R. 
     1401, as adopted by the U.S. House of Representatives, 
     contained no similar provision. The Senate receded in 
     Conference on this provision. S. 1059 was then substituted 
     and enacted, signed by the President, and became Public Law 
     106-65.
       The Conference Committee Report to S. 1059, National 
     Defense Authorization Act for Fiscal Year 2000, requested the 
     Secretary of Defense to submit a report to the Armed Services 
     Committees ``on the Department's efforts to reduce alcohol-
     related disciplinary infractions, traffic accidents, and 
     other such incidents. The report should include the 
     Secretary's recommendations for any appropriate changes.'' 
     The Conference Report noted that a recent General Accounting 
     Office (GAO) study concluded that statutory reductions, by 
     themselves, did not appear sufficient to reduce the number 
     and severity of alcohol-related accidents.
       The GAO study cited by the Conference Report is entitled 
     ``Highway Safety: Effectiveness of State .08 Blood Alcohol 
     Laws'' (June 1999). This GAO report concludes that ``.08 BAC 
     laws in combination with other drunk driving laws as well as 
     sustained public education and information efforts and strong 
     enforcement can be effective, [but] the evidence does not 
     conclusively establish that .08 BAC laws by themselves result 
     in reductions in the number and severity of crashes involving 
     alcohol.'' GAO Report at 22-23.
       The GAO report further found that ``it is difficult to 
     accurately predict how many lives would be saved if all 
     states passed .08 BAC laws. The effect of a .08 BAC law 
     depends on a number of factors, including the degree to which 
     the law is publicized; how well it is enforced; other drunk 
     driving laws in effect; and the unique culture of each state, 
     particularly public attitudes concerning alcohol.'' GAO 
     Report at 23. ``A .08 BAC law can be an important component 
     of a state's overall highway safety program, but a .08 BAC 
     law is not a `silver bullet'. Highway safety research shows 
     that the best countermeasure against drunk driving is a 
     combination of laws, sustained public education, and vigorous 
     enforcement.'' GAO Report at 23.
       Since 1983, DoD has pursued a ``comprehensive approach'' to 
     reduce drunk driving, believing that the best countermeasure 
     against drunk driving is a combination of laws, public 
     education, and enforcement. This comprehensive range of 
     programs currently include: a 0.10 blood alcohol 
     concentration (BAC) statute enforceable by court-martial; 
     strong policies to achieve a reduction in impaired driving; a 
     system for preliminary and mandatory suspension of licenses 
     in cases of impaired driving; innovative education and 
     training programs; a screening program for identifying 
     alcohol dependent individuals; a process to notify State 
     driver's license agencies regarding licenses suspended for 
     impaired driving; a local awards program for successful 
     impaired driving programs; and a system to monitor and ensure 
     quality control for impaired driving programs.
       Together, these programs have resulted in a reduction in 
     alcohol-related traffic accidents for DoD personnel which 
     compares favorably to analogous statistics of the National 
     Highway Traffic Safety Administration (NHTSA) for the 50 
     states and the District of Columbia.
       DoD recommends that the effectiveness of the existing DoD 
     programs be further enhanced through the amendment of Article 
     111(2) of the Uniform Code of Military Justice, 10 U.S.C. 
     Sec. 911(2), to reduce the enforceable BAC level to 0.08.
       Reducing the BAC level to 0.08 would be consistent with 
     statutes or administrative policies already in effect in 19 
     States, the District of Columbia, and Puerto Rico. Six 
     additional States currently have under consideration 
     legislation to change to the 0.08 BAC level. If enacted, DoD 
     believes the 0.08 BAC limit would be an important component 
     of our overall traffic safety program and support a 
     significant reduction in the annual number of alcohol-related 
     fatal and non-fatal crashes involving DoD personnel, with 
     corresponding human and economic savings.
       Section 601 The primary purpose of military compensation is 
     to provide a force structure that can support defense 
     manpower requirements and policies. To ensure that the 
     uniformed services can recruit and retain a force of 
     sufficient numbers and quality to support the military, 
     strategic and operational plans of this nation, military 
     compensation must be adequate. Comparison of the earnings of 
     military members with their civilian counterparts suggests 
     that without some adjustment to both the level and structure 
     of basic pay, the military will continue to face serious 
     difficulties in both recruiting and retention.
       The results of the military and civilian earnings profile 
     comparisons and the life-cycle earnings analysis conducted by 
     the 9th Quadrennial Review of Military Compensation (9th 
     QRMC) lead to several recommendations that both raise the 
     level of pay and alter the structure of the pay table as 
     well. The structural modifications include targeting pay 
     raises to the enlisted mid-grade ranks that will better match 
     their earnings profile, over a career, with that of 
     comparably-educated civilian counterparts and provide a 
     sufficient incentive for these members to complete a military 
     career. Recommended adjustments:
       Target large basic pay increases for enlisted members 
     serving in the E-5 to E-7 grades with 6-20 years of service. 
     This would alter the pay structure and thus the shape of the 
     earnings profile, increasing the slope of the earnings 
     profile for midgrade enlisted members to partially achieve 
     the levels suggested by the 9th QRMC.
       Raise basic pay for grades E-8 and E-9, to maintain 
     incentives throughout the enlisted career and prevent pay 
     inversion.
       Provide a modest increase in basic pay for junior enlisted 
     members. This increase reflects the importance of preventing 
     further deterioration in the percentage of high quality 
     recruits.
       Provide for structural changes in selected pay cells for 
     E3, E4, and E5 to motivate members to seek early promotion in 
     the junior grades.
       Raise basic pay for grades O-3 and O-4 to provide increased 
     retention incentives.
       Provide a modest increase for other officers to recognize 
     their contribution to the defense effort.
       Subsection (a) waives the adjustment in basic pay that is 
     prescribed in section 1009 of title 37, United States Code. 
     Subsection (b) provides a pay table describing the changes in 
     basic pay. These increases are summarized in the table on the 
     following page:

------------------------------------------------------------------------
                       Percentage                           Percentage
       Grade            increase            Grade            increase
------------------------------------------------------------------------
           E-1              6.0                  W-1           8.5*
           E-2              6.0                  W-2           8.5*
           E-3             6.0*                  W-3            8.0
           E-4             6.6*                  W-4            7.5
           E-5             7.5*                  W-5            7.0
           E-6             7.5*                  O-3            6.0
           E-7              8.5                  O-4            6.5
           E-8              9.0               others            5.0
           E-9             9.5*       .................  ...............
------------------------------------------------------------------------
*The following pay cells are increased by a different percentage for
  structural purposes:
E-3 <2: 7.3
E-4 <2: 12.0; E-4 >6 (through >26): 6.0
E-5 <2: 13.0
E-6 <2: 8.0
E-9 >26: 10.0; M/S: 10.0
W-1 <2: 15.0; W-1 >3: 14.0
W-2 >2: 6.0; W-2 >3: 11.0; W-2 >4: 11.0

       Section 602 would amend section 407 of title 37, United 
     States Code, to authorize payment of a partial dislocation 
     allowance of $500 to members who are ordered, for the 
     convenience of the Government (including pursuant to the 
     privatization or renovation of housing), to move into or out 
     of military family housing. Section 601 would allow members 
     to receive a partial dislocation allowance for a government-
     directed move at the current permanent duty station.
       Currently, a member directed to move due to privatization 
     or renovation of government housing does so at the member's 
     personnel expense. In line with the current dislocation 
     allowance authority, the member is making an authorized move; 
     however, there is no authority to provide the member a 
     dislocation allowance to set-up the new home. Section 601 
     would provide a partial dislocation allowance to help members 
     defer moving expenses caused by the government's housing 
     decisions. Section 601 would limit payment in these 
     circumstances to $500 initially. Adjustments would be made 
     annually in a manner

[[Page 12535]]

     consistent with the full dislocation allowance. Section 601 
     also would specify that payments made under new subsection 
     407(c) shall not be subject to a fiscal year limitation like 
     other DLA payments.
       Section 603 would provide the Service Secretaries with the 
     discretionary authority to pay the funeral honors duty 
     allowance to military retirees who volunteer to perform 
     honors at the funeral of a veteran. If authorized by the 
     Secretary concerned, the retiree would receive this allowance 
     without forfeiting any retired or retainer pay, disability 
     compensation, or any other compensation provided under titles 
     10, 37 and 38. This recognizes that military retirees are a 
     valuable personnel resource that can be employed to meet the 
     funeral honors mission. By using retirees to perform this 
     mission, it would allow active duty and reserve personnel to 
     continue to train for and perform other vital military 
     missions. It also recognizes that this minimal level of 
     compensation could be used to encourage retirees to volunteer 
     to perform this mission. Finally, by not requiring any offset 
     of their retired or retainer pay, or any other compensation, 
     Section 602 not only would reduce the administrative burden 
     placed on the Defense Finance and Accounting Service, but it 
     also would provide an incentive to retirees who, in the vast 
     majority of cases, would otherwise actually receive less 
     compensation than that provided by their retired or retainer 
     pay if they had to forfeit that pay in order to receive the 
     funeral honors duty allowance.
       Section 604 would authorize Reserve Component commissioned 
     officers in the pay grade of O-1, O-2 or O-3 who are not on 
     active duty, but have accumulated a minimum of 1460 points 
     (the equivalent of four years of active duty) as a warrant 
     officer or enlisted member, to be paid at the O-1E, O-2E or 
     O-3E rate. Currently, a company grade officer with at least 
     four years of prior active duty service as a warrant officer 
     or as an enlisted member is entitled to be paid at a slightly 
     higher rate. The increase in pay recognizes the additional 
     experience these officers have gained while serving as a 
     warrant officer or an enlisted member and rewards them 
     accordingly. A Reserve commissioned officer who has 
     accumulated at least 1,460 points-the equivalent of four 
     years of active duty-has gained significant military 
     experience similar to that of a member who qualifies for this 
     increase in pay because of prior active duty service. 
     Moreover, because of the part-time nature of their service, 
     these officers have gained that experience over a longer 
     period of time and are generally more mature. Allowing these 
     officers to receive this increase in pay recognizes and 
     rewards that experience on the same basis as officers who 
     gained their experience purely through active duty service.
       Section 605 would modify section 427 of title 37, United 
     States Code, to authorize the payment of a Family Separation 
     Allowance to those members who elect to serve an 
     unaccompanied--versus accompanied--tour because the member is 
     denied travel of the member's dependents due to certified 
     medical reasons. Currently, the law prescribes that a member 
     who elects to serve a tour of duty unaccompanied by his or 
     her dependents, at a permanent station to which the movement 
     of dependents is authorized, is not entitled to a Family 
     Separation Allowance. The law provides, however, that the 
     Secretary concerned may grant a waiver to that prohibition 
     when it would be inequitable to deny the allowance to the 
     member because of unusual family or operational 
     circumstances. Under existing waiver authority, the Services 
     approve waivers when a member chooses to serve an 
     unaccompanied tour because travel of the individual's 
     dependents to the new station is denied due to medical 
     reasons. This change would remove the statutory requirement 
     for the Secretary concerned to issue a waiver in these 
     circumstances before the Family Separation Allowance is 
     payable. This program efficiency would ease the 
     administration of the Family Separation Allowance program. In 
     addition, adoption of Section 604 would have no effect on 
     expenditures for the Family Separation Allowance program.
       Section 606 would amend section 4337 of title 10, United 
     States Code, to authorize a housing allowance for the 
     chaplain for the Corps of Cadets at the United States 
     Military Academy. The chaplain, who is a civilian employee of 
     the Academy, would receive the same allowance for housing as 
     is allowed to a lieutenant colonel. The chaplain would also 
     receive fuel and light for quarters in kind.
       Currently, section 4337 reads as follows: ``There shall be 
     a chaplain at the Academy, who must be a clergyman, appointed 
     by the President for a term of four years. The chaplain is 
     entitled to the same allowances for public quarters as are 
     allowed to a captain, and to fuel and light for quarters in 
     kind. The chaplain may be reappointed.'' Although section 
     4337, read literally, authorizes a quarters allowance for the 
     chaplain at the Academy with fuel and light in kind, the 
     Comptroller General has determined that this part of the 
     section has been effectively repealed.
       The source statute for section 4337 was enacted in 1896 and 
     codified as part of title 10 on 10 August 1956. The 
     Comptroller General issued an opinion on August 28, 1959, 
     which held that Congress intended the Classification Act of 
     1949 to supersede the source statute for section 4337. The 
     purpose of the Classification Act was to ensure that Federal 
     employees in like positions received equal pay. The 
     Comptroller General concluded that the provisions relating to 
     a quarters allowance for the academy chaplain were closely 
     related to compensation and, therefore, the reenactment of 
     the quarters provision as part of title 10 in 1956 was 
     ``erroneous. Ms. Comp Gen. B-140003. Consequently, the 
     military academy chaplain, although charged rent for 
     quarters, has not received a quarters allowance, despite the 
     plain language of section 4337.
       This situation has, over time, undermined the Army's 
     ability to attract, hire and retain appointees for the 
     position of chaplain at the Academy, a position mandated by 
     section 4331(b)(5) of title 10. Enactment of Section 605 
     would ameliorate this problem by providing clear authority to 
     update and restore the academy chaplain's housing allowance, 
     at a reasonable and appropriate pay grade level.
       The cost to implement Section 605 is estimated at $14,000 
     per year, although a portion of that expenditure would be 
     recouped as rent paid by the academy chaplain.
       Section 607 would amend section 18505(a) of title 10, 
     United States Code, by removing the language relating to 
     space-required travel on military aircraft by Reserve 
     component members when the purpose of that travel is to 
     perform ``annual training duty.'' A statutory authority for 
     Reserve component members to travel in a space required 
     status when performing active duty for training (including 
     annual training duty) is not necessary since these members 
     are already authorized by DoD regulation to travel in a 
     space-required status. Of particular concern with the 
     addition of annual training duty to section 18505 is the 
     applicability of section 18505(b) to members performing such 
     duty. Section 18505(b) prohibits a member from receiving 
     travel, transportation and per them allowances associated 
     with space-required travel--allowances to which the member 
     was previously entitled before section 18505 was amended by 
     section 384 of Public Law 106-398 (the National Defense 
     Authorization Act for Fiscal Year 2001) to add ``annual 
     training duty.''
       Since annual training is a requirement for satisfactory 
     participation in the Selected Reserve, the Services budget 
     for those training tours--this includes travel, 
     transportation and per diem allowances. While section 12305 
     of title 10 allows Reserve component members to consent to 
     perform active duty and active duty for training without pay, 
     it is not appropriate to use this authority in conjunction 
     with annual training. If this authority is being used in 
     conjunction with annual training duty for Reserve component 
     members who do not have an annual training requirement, the 
     Department can address this issue through policy guidance.
       If enacted, this proposal would have no cost or budgetary 
     effect.
       Section 611 would amend section 301c of title 37, United 
     States Code, to remove submarine duty incentive pay (SUBPAY) 
     rates from law, enabling the Secretary of the Navy to adjust 
     SUBPAY rates when changes are needed to support submarine 
     accession and retention requirements. Section 611 also would 
     establish a maximum monthly SUBPAY rate of $1,000. The 
     effective date for these changes would be 1 October 2002.
       Enlisted submarine Sailors receive SUBPAY while on shore 
     duty if they incur at least 14 months of obligated service 
     beyond their shore duty Projected Rotation Date, ensuring 
     they are assignable to future submarine sea duty. SUBPAY, 
     unlike Career Sea Pay or any other enlisted incentive or 
     special pay program, is a direct indicator of how well 
     submarines will be manned with experienced sea returnees as 
     much as three years into the future. Additionally, getting 
     experienced Sailors back to a submarine for 14 months 
     actually encourages experienced Sailors to stay past the 14-
     month minimum requirement: of those Sailors with between 10 
     and 14 years of service, who are currently serving on board a 
     submarine and who went back to sea for at least 14 months, 79 
     percent obligated themselves for at least a two-year minimum 
     activity tour on that submarine.
       In 1999, the decline in the propensity of enlisted 
     submarine personnel to incur additional obligated service 
     (and future sea duty service) equated to 776 lost man-years 
     of at-sea submarine service--enough manpower to operate 5 
     submarines for one year. Higher SUBPAY rates could be used to 
     stem this decline and entice undecided submarine Sailors at 
     the critical 10- to 12-year decision point to choose a 20-
     year or greater Navy career. In addition, higher SUBPAY rates 
     could help Navy meet submarine non-nuclear enlisted 
     recruiting goals, which have not been met in the last decade.
       The current statutory SUBPAY rate tables have been 
     duplicated in SECNAVINST 7220.80E, as well as in Tables 23-3 
     through 23-5 of Volume 7A, Chapter 23 of the Department of 
     Defense Financial Management Regulations. Thus, removing the 
     SUBPAY rates from law would provide the service secretary 
     with a timely, flexible and pay grade-targeted method to 
     address the looming personnel-related issues that are 
     probable given

[[Page 12536]]

     the uncertain future Submarine Force of Record, which could 
     add as many as 13 submarine crews by FY2004 and 19 crews by 
     FY2015.
       SUBPAY was last increased in 1988, when it was raised to 
     restore the approximate value that it had for submarine 
     Sailors when the SUBPAY program was previously revised in 
     1981. Since 1988, the value of SUBPAY has eroded by 
     approximately 47 percent (based on the Consumer Price Index--
     Urban Direct Index from 1988 to 1999 and projected to 2001). 
     If granted this new discretionary authority, Navy intends to 
     target first the most critically manned pay grades--mid grade 
     enlisted Sailors and junior to mid grade officers. This would 
     increase the maximum enlisted payment rate from $355 to $425, 
     but would maintain the maximum officer payment rate at $595. 
     Therefore, the budgetary impact of Section 611 would be a net 
     increase of $15.0 million in FY 2003 and a net increase of 
     approximately $14.5 million per year thereafter through FY 
     2007.
       Section 612 would extend the authority to employ accession 
     and retention bonuses for enlisted personnel, and 
     continuation pay for aviators, ensuring that adequate 
     staffing is provided for hard-to-retain and critical skills, 
     including occupations that are arduous or that feature 
     extremely high training and replacement costs. Experience 
     shows that retention in those skills would be unacceptably 
     low without these incentives, which in turn would generate 
     the substantially greater costs associated with recruiting 
     and developing a replacement. The Department and the Congress 
     have long recognized the cost-effectiveness of financial 
     incentives in supporting effective staffing in critical 
     military skills.
       Section 613 would extend the authority to employ accession 
     and retention incentives to support staffing for nurse and 
     dentist billets which have been chronically undersubscribed. 
     Experience shows that manning levels in the nursing and 
     dental fields would be unacceptably low without these 
     incentives, which in turn would generate substantially 
     greater costs associated with recruiting and developing a 
     replacement. The Department and Congress have long recognized 
     the cost-effectiveness of these incentives in supporting 
     effective personnel levels within these fields.
       Section 614 would extend the authority to employ accession 
     and retention incentives, ensuring adequate manning is 
     provided for hard-to-retain skills, including occupations 
     that are arduous or feature extremely high training costs. 
     Experience shows retention in those skills would be 
     unacceptably low without these incentives, which in turn 
     would generate the substantially greater costs associated 
     with recruiting and developing a replacement. The Department 
     and the Congress have long recognized the cost-effectiveness 
     of these incentives in supporting effective manning in these 
     occupations. In the case of the Nuclear Officer Incentive Pay 
     Program, a two-year extension demonstrates support to career-
     oriented officers.
       Nuclear officer accessions and retention continue to fall 
     below that required to safely sustain the post-drawdown force 
     structure. Fiscal Year (FY) 1999 retention for submarine 
     officers was 30 percent (required 29 percent); for nuclear-
     trained Surface Warfare Officers (SWO(N)s) it was 20 percent 
     (required 21 percent). FY 2000 retention for submarine 
     officers was 28 percent (required 34 percent); for SWO(N)s it 
     was 21 percent (required 21 percent). Although adequate for 
     now, nominal retention rates must improve by FY 2001 to 38 
     percent for submarine officers and 24 percent for SWO(N)s to 
     adequately meet growing manning requirements. Likewise, 
     current accession production must improve. Although nuclear 
     accession goals were met for FY 2000 (the first time meeting 
     submarine officer accessions since FY 1991), FY 2001 nuclear 
     officer accession goals have increased to meet the manning 
     requirements for an increased force size.
       Inadequate accessions in previous years and continued poor 
     retention only compound the sacrifices incurred by those 
     officers remaining, as demanding and stressful sea tours are 
     lengthened to meet safety and readiness requirements. If the 
     shortfall of officers due to both effects is sufficiently 
     severe, the entire sea/shore rotation plan becomes 
     unbalanced, and officers eventually must rotate directly from 
     one sea tour to the next. This was the case in the 1960s and 
     1970s when many officers spent as many as 16 or more of their 
     first 20 years in sea duty and nuclear or warfare-related 
     training and supervisory assignments. Eventually, many of 
     these remaining officers find the sacrifices too great and 
     resign from the service. History has shown retention erodes 
     further, requiring even more accessions, and the ``vicious 
     cycle'' repeats. The success of the Naval Nuclear Propulsion 
     Program is a direct result of quality personnel, rigorous 
     selection and training, and high standards that exceed those 
     of any other nuclear program in the world. Maintaining this 
     unparalleled record of safe and successful operations depends 
     on attracting and retaining the right quantity and highest 
     quality of officers in the Naval Nuclear Propulsion Program.
       Representing nearly half the Navy's major combatants and 60 
     percent of combat tonnage, nuclear-powered warships are 
     repeatedly called upon to protect our vital interests and 
     respond to crises around the world. They represent the 
     cornerstones of our continued maritime supremacy and are an 
     integral part of our national security posture. Adequate 
     manning with top quality individuals is key to the continued 
     safe operation of the program.
       The attraction of the civilian job market for nuclear-
     trained officers remains strong. These officers possess 
     special skills as a result of expensive and lengthy Navy 
     training. They also come predominantly from the very top of 
     their classes at some of the nation's best colleges and 
     universities. As a result, these officers are highly sought 
     for positions in career fields, both within and outside of 
     the nuclear power industry, due to their educational 
     background and management experience. The competition for 
     well-qualified, experienced technical personnel coupled with 
     the lowest unemployment rate in over two decades, indicate 
     that the marketability of nuclear-trained officers will 
     likely increase. Officers leaving the Navy after five years 
     of service can expect to transition to the civilian workforce 
     at about the same level of compensation, but with greatly 
     increased potential earnings and without the arduous 
     schedules and family separation.
       The Nuclear Officer Incentive Pay program, in its current 
     structure, remains the surest and most cost-effective means 
     of meeting current and future manning requirements. Long-term 
     program support through a four-year program extension is 
     strongly encouraged. The two-year extension would demonstrate 
     Congressional commitment commensurate with that made by Naval 
     officers who have chosen to reap the rewards and endure the 
     sacrifices of a career in the Nuclear Propulsion Program.
       Section 615 would extend the authorization for critical 
     recruiting and retention Reserve component incentive 
     programs. Recruiting has become increasingly more challenging 
     and the incentives provided by the Selected Reserve 
     affiliation and enlistment bonuses are a valuable part of the 
     overall recruiting effort. Absent these incentives, the 
     Reserve components may experience difficulty in meeting 
     skilled manning and strength requirements. Moreover, the 
     Reserve components rely heavily on being able to recruit 
     individuals with prior military service. The prior service 
     market is a high priority for the Reserve components since 
     assessing individuals with prior military experience reduces 
     training costs and retains a valuable, trained military asset 
     in the Total Force. The prior service enlistment bonus offers 
     an incentive to those individuals with prior military service 
     to transition to the Selected Reserve.
       Equally important to the recruiting effort is retaining 
     members of the Selected Reserve. The Selected Reserve 
     reenlistment bonus, which was increased last year from $5,000 
     to $8,000, is necessary to ensure the Reserve components 
     maintain the required manning levels by retaining members who 
     are already serving in the Selected Reserve. Moreover, the 
     special pay for enlisted members assigned to certain high 
     priority units provides the Services with an incentive 
     designed to reduce manning shortfalls in critical undermanned 
     units.
       The Reserve components have historically found it 
     challenging to meet the required manning in the health care 
     professions. The incentive that targets those healthcare 
     professionals who possess a skill that has been identified as 
     critically short is essential if the Reserve components are 
     to meet required manning levels in these skill areas.
       The expanded role of the Reserve components requires not 
     only a robust Selected Reserve force, but also a robust 
     manpower pools--the Individual Ready Reserve. Extending the 
     Individual Ready Reserve bonus authority would allow the 
     Reserve components to target this bonus at individuals who 
     possess skills that are under-subscribed, but are critical in 
     the event of mobilization.
       Combined, the Reserve component bonuses and special pays 
     provide a robust array of incentives that are necessary if 
     the Reserve components are to meet manning requirements. 
     Extending these authorities would ensure continuity of these 
     programs. Since these incentive programs are recurring 
     Service budget items, there is no additional cost for 
     extending these authorities.
       Section 616 would amend title 37, United States Code, by 
     establishing a broad authority for an Officer Critical Skill 
     Accession Bonus to provide needed flexibility for Service 
     Secretaries to recruit officers with critical skills. This is 
     intended to preclude the need to add future individual 
     statutory bonus provisions for specific officer career 
     categories experiencing an accession shortfall.
       Over the past several years, officers with certain critical 
     skills have separated from service at higher than historical 
     rates, and recruitment of officers into these critical 
     specialties has declined. This is, in large measure, likely a 
     result of higher compensation and benefits being offered for 
     these skills in the private sector. Recruitment shortages 
     among officer skills can be expected to further erode absent 
     enactment of statutory authority for monetary incentives that 
     can be utilized to offset the pull on these critical 
     specialties from the civilian

[[Page 12537]]

     marketplace. Examples of specialties currently short (and 
     which have no, or inadequate, statutory bonus authority for 
     use to target the shortages) include the Air Force's 
     declining cumulative continuation rates among officers in 
     communications-information systems (CIS) (35 percent in 
     1999), some electrical engineers (39 percent in 1999 for 
     developmental engineers, and 31 percent for civil engineers 
     in 1999), scientific (53 percent in 1999), and acquisitions 
     (averaged 38 percent from 1997-1999). Shortfalls in retention 
     in these skills are occurring while Air Force accession rates 
     have also continued to fall below the Air Force goal. As of 
     June 30, 2000, the Air Force accessed 74 percent of its goal 
     for weather officers, 69 percent for developmental engineers, 
     83 percent for air traffic control and combat operations, and 
     90 percent for CIS. Authority for the Air Force to offer a 
     financial incentive to boost manning in the Engineering and 
     Scientific career and CIS specialties is particularly 
     critical.
       Further, the Navy is experiencing shortages in their Civil 
     Engineer Corps (CEC) career field. The Navy has failed to 
     recruit the required number of CEC officers in the past three 
     fiscal years (1998 through 2000). In Fiscal Year 2000, the 
     Navy only accessed 54 percent of the CEC accession goal; it 
     projects to meet only 67 percent of the Fiscal Year 2001 CEC 
     accession goal, and projects to remain short in the out-
     years. Shortages of that magnitude translate to 
     undersupervision in an unusually sensitive mission area. 
     Authority to offer CEC officer-recruits an accession bonus is 
     critical if the Navy is to have the compensation tools it 
     needs to increase the number of CEC officer-recruits to 
     levels needed to man future CEC force structure requirements. 
     An accession bonus authority would give Navy the competitive 
     edge it needs to attract the most qualified candidates to the 
     Navy CEC.
       Rather than seeking additional individual statutory 
     authorities for these critical officer specialties, and any 
     others that may emerge in the future, this proposal seeks a 
     broad accession pay authority. Under such statutory 
     authority, the Departments would establish program parameters 
     and implementation strategies to ensure the Service 
     Secretaries are provided the flexibility they need to address 
     officer critical specialty shortfalls in a timely manner.
       Based on current projections, the net effect of adoption of 
     Section 616 would be an increase of $18.05M in Fiscal Year 
     2002 ($.05M for Navy and $18M for Air Force), Army and Marine 
     Corps do not anticipate they would utilize this authority in 
     Fiscal Year 2002.
       Section 617 would allow the Secretary concerned to target 
     this incentive to individuals who possess a skill that is 
     critically short to meet wartime requirements and who agree 
     to enlist, reenlist or voluntarily extend an enlistment in 
     the Individual Ready Reserve. The current statute authorizes 
     payment of this bonus to individuals who possess a skill that 
     is critically short in a combat or combat support mission. 
     However, this bonus is not authorized for individuals who 
     possess a critically short skill in a combat service support 
     mission. As a result of the drawdown and restructuring of the 
     force over the past decade, the Reserve components have 
     assumed a variety of new missions across the full range of 
     mission areas. Of particular concern is the ability to meet 
     the expanded combat service support mission requirements in 
     the Army Reserve. To meet manpower requirements in its 
     expanded combat support and combat service support role, the 
     Army Reserve must rely heavily on members of the Individual 
     Ready Reserve. Expanding this authority to allow the 
     Secretary concerned to target this bonus in those skill areas 
     that are critically short, regardless of the type of mission, 
     would help reduce critical mobilization manning shortages. 
     This proposed change is consistent with other active duty and 
     Selected Reserve bonus authorities, which provide the Service 
     Secretary with the authority to identify those skill areas 
     that are critically short and require added incentives to 
     achieve the necessary manning level to meet mission 
     requirements.
       Section 618 would amend section 301 of title 37, United 
     States Code, to authorize payment of hazardous duty incentive 
     pay for members of Visit Board Search and Seizure teams 
     conducting operations in support of maritime interdiction 
     operations.
       Boarding crews participating in these operations face 
     several hazards inherent to the duty involved. These include 
     the hazards of physically boarding a vessel at sea from a 
     small boat while carrying weapons, inspection gear, and 
     protective clothing. Further hazards exist in the actual 
     conduct of the inspections, such as hazards connected with 
     crew hostilities, pest infestations, and numerous unseen 
     dangers. For example, containers must be accessed, which 
     often requires climbing considerable distances above the 
     deck, balancing in precarious positions while opening the 
     container, and facing the risk the container contents may 
     have shifted during the transit. In addition, cargo may have 
     mixed, causing a hazard (for example, bulk cargo such as 
     fertilizer, when mixed with salt water or oil, can emit 
     hazardous fumes). Hazardous Duty Incentive Pay would provide 
     a financial recognition to personnel participating in these 
     operations for this unusually hazardous duty.
       The net effect of adoption would be an increase of $0.2 
     million for the Navy.
       Section 621 would amend section 430 of title 37, United 
     States Code, to extend the entitlement to funded student 
     dependent travel to members stationed outside the continental 
     United States with dependents under the age of 23 who are 
     enrolled in a school in the continental United States but are 
     attending a school outside the United States as part of a 
     school-sponsored exchange program. At present, members 
     stationed overseas are entitled to funding for this program, 
     but only if the student is physically located in the United 
     States. This creates an inequity for those members whose 
     dependents attend a school in the United States, but are part 
     of a temporary exchange program located outside the United 
     States. Both sets of members deserve equal treatment.
       Section 621 would reimburse travel expenses for student 
     dependents under the age of 23 of a member stationed outside 
     the continental United States when the dependents are 
     enrolled in a school in the continental United States but are 
     attending a school outside the United States as part of a 
     school sponsored-exchange program for less than a year. 
     Section 621 would further limit reimbursement in these cases 
     to the cost of travel between the school in the continental 
     United States where the student dependent is enrolled and the 
     member's overseas duty station.
       Section 622 would amend section 2634 of title 10, United 
     States Code, by adding a new subsection 2634(b)(4) 
     authorizing payment of vehicle storage costs in advance. 
     Section 2634 authorizes the Secretary concerned to store a 
     member's vehicle at government expense under certain 
     circumstances, but does not provide for advance payment of 
     these costs. Vehicle storage costs at a commercial facility 
     can range from $100 to $300 per month, and many of these 
     facilities require deposits equal to two or three times the 
     monthly storage rate. The Military Traffic Management Command 
     estimates there are approximately 20,000 vehicles that are 
     stored in commercial facilities annually.
       Having to pay for these advance payments out of pocket 
     comes at the worst possible time for the military member--
     during a permanent change of station move. The variety of 
     expenses associated with a move put a significant strain on 
     the financial condition of members, often requiring them to 
     acquire significant debt while they wait for government 
     reimbursement to catch up. At no additional cost to the 
     Government, Section 622 would eliminate one portion of this 
     burden, reducing to some degree the hardship associated with 
     a military life that requires frequent moves.
       Section 623 would amend section 411f of title 37, United 
     States Code; strike subsection (d) of section 1482 of title 
     10, United States Code; and repeal the Funeral Transportation 
     and Living Expense Benefits Act of 1974 (Public Law 93-257).
       Currently, the three statutes cited above authorize 
     allowances for family members and others to attend burial 
     ceremonies of deceased members of the armed forces. The 
     statutes differ in scope and application. For example, 
     section 1482(d) prohibits the payment of per diem, while per 
     diem may be paid under the other two sections. The purpose of 
     Section 622 is to establish uniform authority.
       Section 411f of title 37 authorizes round trip travel and 
     transportation allowances for ``dependents of a member who 
     dies while on active duty or inactive duty in order that such 
     dependents may attend the burial ceremonies of the deceased 
     member.'' Allowances under the section, including per diem, 
     are limited to travel and transportation to a location in the 
     United States, Puerto Rico, or United States possessions and 
     ``may not exceed the rates for two days.'' If a deceased 
     member was ordered to active duty from a place outside the 
     United States, allowances may be provided for travel and 
     transportation to and from such place and may be extended to 
     account for the time necessary for such travel. Dependents 
     include the surviving spouse, unmarried children under 21 
     years of age, unmarried children incapable of self-support, 
     and unmarried children enrolled in school and under 23 years 
     of age. Section 411f(c) provides that if no person qualifies 
     as a surviving spouse or unmarried child, the parents of a 
     member may be paid the travel and transportation allowances 
     authorized under the section.
       Section 1482(d) of title 10 applies when, as a result of a 
     disaster involving multiple deaths of members of the armed 
     forces, the Secretary of the military department has 
     possession of commingled remains that cannot be individually 
     identified and must be buried in a common grave in a national 
     cemetery. Under section 1482(d), the Secretary may pay the 
     expenses of round trip transportation to the cemetery for a 
     person who would have been authorized under section 1482(c) 
     to direct the disposition of the remains of the member if 
     individual identification had been made. Also, the Secretary 
     may pay the expenses of transportation for two additional 
     persons closely related to the decedent who are selected by 
     the person who would have been designated under section 
     1482(c). No per diem may be paid.

[[Page 12538]]

       The Funeral Transportation and Living Expense Benefits Act 
     of 1974 applies only to families of deceased members of the 
     armed forces who died while classified as a prisoner of war 
     or as missing in action during the Vietnam conflict and whose 
     remains are returned to the United States after January 27, 
     1973. Family members may be provided ``funeral transportation 
     and living expenses benefits.'' Benefits include round trip 
     transportation from the family member's residence to the 
     place of burial, ``living expenses, and other such allowances 
     as the Secretary shall deem appropriate.'' Eligible family 
     members include ``the deceased's widow, children, 
     stepchildren, mother, father, stepfather and stepmother.'' If 
     none of the family members in the preceding sentence ``desire 
     to be granted such benefits,'' then the benefits may be 
     granted to the deceased's brothers, sisters, half-brother, 
     and half sisters.
       For members of the armed forces during World War II and the 
     Korean War whose remains have recently been recovered and 
     identified, there may be no family members who can be 
     provided travel and transportation allowances to attend the 
     burial. As noted above, under section 411f, dependents who 
     may receive travel and transportation allowances include a 
     surviving spouse, certain ummarried children, primarily those 
     under 21 years of age, and parents if there is no surviving 
     spouse or qualifying child. However, in these cases, the 
     surviving spouse and parents may be deceased and no child may 
     qualify because of their age. Section 623 would amend section 
     411f and add a new provision similar to the provision in 
     section 1482(d) of title 10, concerning the burial of remains 
     that are commingled and cannot be identified. Under Section 
     623, if there is no surviving spouse, no qualified child, and 
     no parent, then the person designated to direct disposition 
     of the remains could receive travel and transportation 
     allowances along with two additional persons closely related 
     to the deceased member selected by the person who directs 
     disposition of the remains. In many cases, this would likely 
     include an adult child or children of the deceased member.
       Section 623 would also amend section 411f to authorize the 
     payment of travel and transportation allowances for a person 
     to accompany a family member who qualifies for travel and 
     transportation allowances but who is unable to travel alone 
     to the burial ceremonies because of age, physical condition, 
     or other justifiable reason as determined under uniform 
     regulations prescribed by the Secretaries concerned. 
     Allowances would be payable under these circumstances only if 
     there is no other person qualified for allowances available 
     to assist the family member.
       Section 623 would also amend section 411f to provide a new 
     basis for authorizing travel and transportation allowances 
     outside the United States, Puerto Rico, and United States 
     possessions. Currently, the only exception is when the member 
     was ordered to active duty from a place other than in the 
     United States, Puerto Rico, or the United States possessions. 
     Section 623 would amend section 411f(b) to authorize the 
     payment of travel and transportation allowances to a cemetery 
     maintained by the American Battle Monuments Commission 
     outside the United States.
       Section 623 would amend section 411f(b) to make uniform the 
     rule concerning the time period for which allowances may be 
     paid. Currently, section 411f(b) restricts the period to two 
     days for travel within the United States, Puerto Rico, and 
     United States possessions. For travel outside these areas, 
     the two-day period may be extended ``to accommodate the time 
     necessary for such travel.'' Under Section 623, all travel 
     and transportation allowances, regardless of where the travel 
     occurs, would be limited to two days and the time necessary 
     for travel.
       Section 623 would also strike subsection (d) from section 
     1482 of title 10, relating to the burial of commingled 
     remains in a common grave. Section 411f would be amended by 
     adding a new subsection (d) to define burial ceremonies as 
     including ``a burial of commingled remains that cannot be 
     individually identified in a common grave in a national 
     cemetery.'' Thus, the authority in section 411f would provide 
     the basis for travel and transportation allowances under 
     these circumstances. Unlike section 1482(d), this authority 
     would include the payment of per diem.
       Finally, Section 623 would repeal the Funeral 
     Transportation and Living Expense Benefits Act of 1974. The 
     Act, enacted in 1974, authorizes travel and transportation 
     allowances for the family of any deceased member of the armed 
     forces who died while classified as a prisoner of war or 
     missing in action during the Vietnam conflict. Section 411f 
     was enacted in 1985. Both statutes provide similar authority. 
     The Act's authority is somewhat broader because eligible 
     family members include the surviving spouse, all children 
     (regardless of age), parents, and siblings. The Act would be 
     repealed to provide uniform treatment among all family 
     members of persons who die while on active duty or inactive 
     duty.
       Section 624 would modify section 2634 of title 10, United 
     States Code, to authorize service members to ship a 
     privately-owned vehicle (POV) from the old Continental United 
     States (CONUS) duty station to the new CONUS duty station 
     when the cost of shipment and commercial transportation would 
     not exceed the cost of driving the POV to the new station as 
     is currently authorized.
       Currently, when executing a permanent change of station 
     move in CONUS, service members are allowed to ship POVs 
     between CONUS duty stations only when physically incapable of 
     driving, there is a change of a ship's homeport, or there is 
     insufficient time to drive. Members with dependents who 
     possess two POVs would be authorized to ship one POV and 
     drive the other if the cost of driving one POV and shipping 
     the other did not exceed the cost driving two POVs. Cost 
     comparisons would take into account mileage rates by the most 
     direct regularly traveled route, per diem, cost of commercial 
     transportation and the cost of shipping the car by commercial 
     car carrier. Section 624 would be cost-neutral, and enhance 
     force protection by minimizing the number of miles driven by 
     members making permanent changes of station, thereby limiting 
     exposure to accidents. Civilian employees of DoD are 
     currently authorized to ship POVs in CONUS when it is 
     determined to be more advantageous and cost-effective to the 
     Government.
       Section 631 would extend the maximum period that a member 
     of the Selected Reserve would be authorized to use the 
     educational benefits provided under the Montgomery GI Bill 
     for the Selected Reserve (MGIB-SR) from the current 10-year 
     limit to 14 years. With the increased use of the Reserve 
     components, members of the Selected Reserve are spending more 
     time performing military duties. The additional time spent 
     performing military service reduces the amount of time they 
     have available for other activities--be it a civilian job, 
     time with the family, other leisure activities, or civilian 
     education. Balancing a full-time civilian career and a 
     military career is becoming increasingly more challenging. 
     One area that is likely to suffer is the pursuit of civilian 
     education. Increasing the number of years that a member of 
     the Selected Reserve has to use this benefit would recognize 
     their increased commitment to military service and provide 
     them with an extended opportunity to use this benefit. 
     Additionally, since membership in the Selected Reserve is 
     required in order to use the MGIB-SR educational benefit, it 
     would also serve as a retention incentive for those who have 
     not been able to use the benefit by the current 10-year 
     limiting period.
       Section 632 would add overnight health care coverage when 
     authorized by regulations for Reserve Component members who, 
     although they may reside within a reasonable commuting 
     distance of their inactive duty training site, are required 
     to remain overnight between successive drills at that 
     training site because of mission requirements. Some Reserve 
     Component members are required to remain overnight in the 
     field when performing inactive duty training. Others may be 
     training late into the evening or performing duty early in 
     the morning, which could make commuting to and from their 
     residence impractical. On those occasions when it is not 
     feasible for members who live in the area to return to their 
     residence between successive drills because of mission 
     requirements, they are currently not protected should they 
     become injured or ill during that overnight stay. The 
     Secretary of Defense report to Congress on the means of 
     improving medical and dental care for Reserve Component 
     members, which was sent to Congress on November 5, 1999, 
     recognized this shortcoming and recommended that the law be 
     amended to provide medical coverage when the member remains 
     overnight between successive training periods, even if they 
     reside within reasonable commuting distance.
       Section 633. Section 2004 of title 10, United States Code, 
     authorizes the Secretary of a Military Department to detail 
     selected commissioned officers at accredited law schools for 
     training leading to the degree of bachelor of laws or juris 
     doctor. No more than 25 officers from each Military 
     Department may commence such training in any single year. 
     Officers detailed for legal training must agree to serve on 
     active duty following completion of the training for a period 
     of two years for each year of legal training. This service 
     obligation is in addition to any service obligation incurred 
     by the officer under any other provision of law or agreement.
       Section 2603 of title 10 authorizes any member of the Armed 
     Forces to accept a scholarship in recognition of outstanding 
     performance in the member's field, to undertake a project 
     that may be of value to the United States, or for development 
     of the member's recognized potential for future career 
     service. Section 2603(b) requires a member of the Armed 
     Forces who accepts a scholarship under section 2603 to serve 
     on active duty for a period at least three times the length 
     of the period of the education or training.
       Section 2004 does not specifically authorize an officer 
     attending law school under the Funded Legal Education Program 
     to accept a scholarship from the law school or other entity. 
     Also, section 2603 does not indicate that the authority to 
     accept a scholarship to

[[Page 12539]]

     obtain education or training under the section can be used in 
     conjunction with the authority in another section authorizing 
     education or training, such as section 2004. Moreover, if the 
     authority in section 2004 for a funded legal education can be 
     used in conjunction with the authority in section 2603 to 
     obtain training or education through a scholarship, the 
     resulting service obligation for an officer participating in 
     the Funded Legal Education Program who accepts a scholarship 
     is unclear. The statutes could be interpreted to require 
     consecutive service obligations in excess of twelve years or 
     concurrent service obligations of much less.
       An officer who accepts a scholarship would reduce the 
     expenditure of appropriated funds of the military department 
     concerned. Obtaining a scholarship may also benefit an 
     officer participating in the funded legal education program. 
     For example, in the Army, to minimize the costs associated 
     with the funded legal education program, an officer must 
     attend a law school in the officer's state of legal residency 
     that will permit the Army to pay in-state tuition rates or a 
     law school that will grant in-state tuition rates to out-of-
     state students. This effectively prohibits officers from 
     seeking admission into many of the most highly rated law 
     schools in the United States. If an officer could accept a 
     scholarship to cover all or part of the costs of attending 
     law school, it may be unnecessary to require the officer to 
     attend a school at which the officer qualifies for in-state 
     tuition rates.
       Section 633 would amend sections 2004 and 2603 to authorize 
     an officer detailed to law school for legal training under 
     section 2004 to accept a scholarship from the school or other 
     entity under section 2603, with the service obligations 
     incurred under both sections to be served consecutively.
       Section 701. As a result of studies done in response to 
     direction in Section 912 of the National Defense 
     Authorization Act for Fiscal Year 1998 (Pub. L. 105-85), 
     Defense Science Board reports, and General Accounting Office 
     reports, as well as a desire to implement best commercial 
     practices, the Department rewrote its acquisition policy 
     documents. The purpose of the rewrite was to focus on 
     providing proven technology to the warfighter faster, 
     reducing total ownership cost, and emphasizing affordability, 
     supportability, and interoperability. As part of the rewrite, 
     the Department created a new model of the acquisition process 
     that separates technology development from system 
     integration, allows multiple entry points into the 
     acquisition process, and requires demonstration of utility, 
     supportability, and interoperability prior to making a 
     commitment to production. As part of the model, milestone 
     names were changed to Milestone A (approval to begin analysis 
     of alternatives), Milestone B (approval to begin integrated 
     system development and demonstration), and Milestone C 
     (approval to begin low-rate production). The phases of 
     acquisition were changed to Concept and Technology 
     Development (in which alternative concepts are considered and 
     technology development is completed), System Development and 
     Demonstration (in which components are integrated into a 
     system and the system is demonstrated), and Production and 
     Deployment (in which the system is produced at a low-rate to 
     allow for initial operational test and evaluation, creation 
     of a production base, efficient ramp-up of production to 
     full-rate, and deployment). Within the Production and 
     Deployment phase is the Full-Rate Production Decision Review 
     at which the results of operational test and evaluation and 
     live-fire test are considered.
       The purpose of this proposed legislation is to make changes 
     in current statutes, which was based on the old milestone 0/
     I/II/III model, so that they correspond to similar events 
     based on the new milestone A/B/C model. There is no intent to 
     diminish congressional oversight or to change the content or 
     amount of reporting requirements to the Congress, although 
     the timing of some reports will change.
       Under the new milestone A/B/C model, program initiation 
     begins later than under the old milestone 0/I/II/III model. 
     The reason for this is that the new model anticipates more 
     extensive technology development before committing to a new 
     program using those technologies, while the old model 
     completed technology development after program initiation. 
     Approval to begin analysis of alternatives that previously 
     occurred at Milestone 0 (that now corresponds to Milestone A) 
     will continue to be done in Concept and Technology 
     Development. Work that was previously done in Demonstration 
     and Validation (or Program Development and Risk Reduction) is 
     split around Milestone B with the technology development work 
     being done in Concept and Technology Development (before 
     Milestone B) and the system prototyping and engineering and 
     manufacturing development being done in System Development 
     and Demonstration (after Milestone B).
       Requirements identified in law for Milestone I or prior to 
     Demonstration and Validation phase, intended to apply to an 
     initiated program, are changed to be required at Milestone B 
     or prior to System Development and Demonstration. Likewise, 
     requirements identified in law for Milestone II or prior to 
     Engineering and Manufacturing Development, intended to apply 
     to system engineering work, are changed to be required at 
     Milestone B or prior to System Development and Demonstration, 
     both of which encompass this work effort. All requirements 
     identified in the law for Milestone III or prior to 
     production would be required at the full rate production 
     decision.
       Sections 2366, 2400, 2432 and 2434, are essentially 
     unchanged in reporting requirements.
       Section 2435 of Title 10 requires an acquisition program 
     baseline be developed prior to entering work following each 
     of the milestone I, II, and III decisions. In the case of the 
     acquisition program baseline, a new baseline description will 
     be generated at program initiation, and at each major 
     transition point (from system development and demonstration 
     to low-rate production, and from low-rate production to full-
     rate production). The first and second program baselines will 
     be completed later than baselines generated under current 
     statute. The first baseline will continue to describe the 
     system concept at program initiation and will also serve to 
     describe the program through engineering development. The 
     second baseline will describe the system as engineered prior 
     to beginning production. There will be no change in the 
     description for the third baseline.
       Section 8102(b) of Public Law 106-259 and Section 811 (c) 
     of Public Law 106-398 require Information Technology 
     certification at each major decision point (i.e., milestone). 
     These requirements have been translated from the milestones 
     I/II/III of the old model to milestones A/B/C of the new 
     model.
       Section 702 conforms the nuclear aircraft carrier exclusion 
     from the statute to actual practice by specifying that the 
     exclusion from maintaining core logistics capabilities, with 
     respect to nuclear aircraft carriers under section 2464 of 
     title 10, United States Code, applies only to the nuclear 
     refueling of an aircraft carrier. The term ``core logistics 
     capabilities'' is used to define those maintenance and repair 
     standards which should be continually met by the Armed Forces 
     so that it will be able to maintain and repair, on its own, a 
     variety of military equipment. These requirements are adhered 
     to as an assurance that, in times of emergency, the military 
     can meet mobilization, training and operation requirements 
     without requiring outside (contractor) intervention or 
     hindrance.
       While the current law reads to exclude a nuclear aircraft 
     carrier, in its entirety (including all maintenance 
     processes), from a requirement to maintain a core logistics 
     capability, this revision intends to apply this exclusion 
     solely to the process of refueling. Nuclear aircraft carrier 
     work, other than nuclear refueling, is currently--and will 
     continue to be--a core logistics capability that is 
     maintained in accordance with the provisions of 10 U.S.C. 
     Sec. 2464. Furthermore, every other type of naval surface 
     combatant currently utilized is required to maintain core 
     logistics capabilities. To completely exclude these carriers 
     from the requirement to maintain these capabilities would be 
     to set the carrier apart from other naval surface combatants, 
     which was not the intention of the Navy in formulating its 
     original legislation.
       Therefore, this amendment is meant to both clarify the 
     original intent of the drafters for 10 U.S.C. Sec. 2464 and 
     to discourage situations which could result in future 
     problems, such as the privatization of unique carrier items 
     which were not meant to be excluded from the requirement for 
     maintaining core logistics capabilities.
       Section 703. The Department is committed to fully utilizing 
     its organic depots in order to maintain a core logistics 
     capability. There are circumstances, however, when a depot is 
     utilized to its maximum capability and, because of the 
     limitations imposed by 10 U.S.C. Sec. 2466, the Department is 
     prohibited from contracting out the work. The work must still 
     be performed by in-house depots, resulting in delays and 
     excess costs. This provision would expand the waiver 
     authority, permitting the Secretaries to waive the limitation 
     once a depot has achieved full utilization. This will result 
     in savings to the customers and in more timely accomplishment 
     of the work. In situations where multiple depots can perform 
     the same type of maintenance activity, it may not be 
     economical to transfer the work from a fully-utilized depot 
     to one that is operating at less than maximum capacity but in 
     a different geographic region. The Secretary may waive the 
     limitations if he makes a determination that it would be 
     uneconomical, due to reasons such as cost or logistical 
     constraints, to transfer such workload.
       Section 705 would clarify the intent of amendments to 
     section 1724 of title 10, United States Code, that were made 
     by Section 808 of the Floyd D. Spence National Defense 
     Authorization Act for Fiscal Year 2001 (Public Law 106-398; 
     114 Stat. 1654A-208). It would also establish a Contingency 
     Contracting Force, and authorizes the Secretary of Defense to 
     establish one or more developmental programs for contracting 
     officers, employees and applicants for the GS-1102 series, 
     and recruits and military personnel in similar occupational 
     specialties.
       Section 808 established strict minimum qualification 
     requirements for contracting officers and civilian employees 
     in GS-1102 positions. It also made these requirements

[[Page 12540]]

     applicable to military members in similar occupational 
     specialties. Section 808 also amended the exception provision 
     in section 1724 of title 10, United States Code, to except 
     from the new requirements persons ``for the purpose of 
     qualifying to serve in a position in which the person is 
     serving on September 30, 2000.'' The legislative history 
     accompanying this change stated that the new requirements 
     were intended to apply only to new entrants into the GS-1102 
     occupational series in the Department of Defense and to 
     contracting officers with authority above the simplified 
     acquisition threshold, but not to current employees. This 
     proposal would make clear this intent by excluding from the 
     new requirements military and civilian personnel who were 
     serving, or had served, as contracting officers, employees in 
     the GS-1102 series, or military personnel in similar 
     occupational specialties on or before September 30, 2000. 
     This proposal would also reinstate the qualifications 
     requirements that were previously contained in section 1724 
     for current employees that are excluded from the new 
     qualifications requirements.
       This proposal would also provide the Secretary with 
     flexibility to establish one or more developmental programs, 
     which would educate people to meet the statutory minimum 
     qualification requirements of a degree and 24 credit hours in 
     business. Their purpose would be to enable personnel to 
     obtain the education necessary to meet the performance 
     requirements of the future acquisition workforce. A 
     significant number of the Department's current, seasoned 
     acquisition workforce personnel will be eligible to retire 
     within five years. This makes it imperative that the 
     Department have access to the maximum number of superior 
     applicants. We anticipate that the Office of the Secretary of 
     Defense would establish one or more programs in which 
     candidates that meet some, but not all, of the minimum 
     requirements could be educated to meet the remaining 
     requirements within a specified period of time. For example, 
     a candidate may have a four-year degree, but not the twenty-
     four credit hours in business-related courses. Another 
     candidate may be close to a degree, including 24 credit hours 
     in business. Each would be provided a specified period of 
     time (in no case more than three years) to meet all of the 
     statutory requirements. We would anticipate that any person 
     who failed to meet all of the statutory requirements within 
     the time specified would be subject to separation from 
     federal service. This flexibility will give the Department 
     the necessary mechanisms for accessing the greatest number of 
     superior applicants, while retaining its goal of maintaining 
     a high-quality, professional contracting workforce.
       This proposal would also addresses the need to recognize a 
     contracting force whose mission is to deploy in support of 
     contingency operations and other Department of Defense 
     operations. This force, which consists primarily of enlisted 
     personnel, but which includes both military officers and 
     civilian employees, meets a unique need within the Department 
     and has unique training and qualification requirements.
       This proposal would maintain the requirement for 24 
     semesters hours of business-related course work or the 
     equivalent and give the Secretary flexibility to establish 
     other minimum requirements to meet the unique needs of 
     persons performing contracting in support of contingency and 
     other Department operations.
       Section 706. The current language in section 1734(a) of 
     title 10, United States Code, applies to the tenure 
     requirement of over 13,500 critical acquisition positions 
     (caps). This proposal would retain the qualifications to 
     occupy a CAP. The proposed change would require tenure only 
     for personnel in those critical acquisition positions where 
     continuity is especially important to the success of DoD's 
     acquisition programs. Ensuring the tenure of these 
     individuals assigned to program offices and the associated 
     system acquisition functions like systems engineering, 
     logistics, contracting, etc., therein provides the stability 
     originally sought by section 1734. This change would allow 
     more flexibility to meet organizational mission priorities; 
     enhance career development programs for those holding the 
     remaining critical acquisition positions who perform either 
     functions outside of a program office or functions not 
     related to systems acquisitions (such as procuring spare 
     parts or policy formulation); and would ensure DoD develops 
     the best-qualified individuals for CAPS in program offices 
     and systems acquisition functions.
       The current section 1734 undertakes to improve the quality 
     and professionalism of the DoD acquisition workforce in part 
     through a career development program for acquisition 
     professionals. This proposal would retain that intent, while 
     emphasizing the importance of specific job experience and 
     program continuity, responsibility, and accountability for 
     acquisition personnel working in program offices or 
     supporting system acquisition programs who are performing 
     critical acquisition functions. This proposal also would 
     expand career-broadening opportunities for personnel in other 
     CAPS and would result in a reduction of waiver reporting 
     requirements. The proposal balances the needs for program 
     continuity, responsibility, accountability, and career 
     development, while eliminating an unnecessary administrative 
     burden, increasing productivity, and allowing the workforce 
     to be responsive to changing organizational needs.
       Section 710 would amend section 2855 of title 10, United 
     States Code, to repeal a provision of law that prevents the 
     Department of Defense (DOD) from achieving its goal of 40 
     percent of the dollar value of architectural & engineering 
     (A&E) service contracts awarded to small businesses. This 
     goal was established by section 712(a) the Small Business 
     Competitiveness Demonstration Program Act of 1988 (15 U.S.C. 
     644 Note).
       The Small Business Competitiveness Demonstration Program 
     was established to see if small business concerns could 
     maintain a reasonable percentage of dollars awarded in four 
     Designated Industry Groups (digs) in an unrestricted 
     competitive environment. A&E services is one of the DIGS. The 
     Program establishes a small business participation goal of 40 
     percent of the dollars awarded in each of the aforementioned 
     DIGS. The statute further states that if small business 
     concerns fail to achieve the 40 percent goal during a twelve 
     month period, the agency shall re-establish set-aside 
     procedures to the extent necessary to achieve the 40 percent 
     goal (Section 712(a) of Pub. L. 100-656).
       Notwithstanding the authority of the Demonstration Program, 
     section 2855(b) generally prohibits DOD from using small 
     business set-aside procedures in the awarding of A&E service 
     contracts when the estimated award price is greater than 
     $85,000. Section 2855(b)(2) provides for revision of the 
     $85,000 threshold if the Secretary of Defense determines that 
     it is necessary to ensure that small business concerns 
     receive a reasonable share of A&E contracts. DOD estimates 
     that they would need to increase the threshold to over $1 
     million to accomplish this end. This would be so 
     disproportionate to the $85,000 statutory threshold that it 
     is more appropriate to seek a legislative change.
       Further, DOD would need to continually readjust the 
     threshold over time to reflect changes in small business 
     participation. For example, in fiscal year 1999, DOD achieved 
     a small business A&E participation rate of 16.4 percent, 
     significantly below the 40 percent goal established by the 
     Demonstration Program. Historically, approximately 30 percent 
     of A&E awards were made to small businesses. Continual 
     adjustments to the threshold to reflect such changes in small 
     business participation would be impractical and confusing to 
     both contracting officials and small businesses.
       Repealing section 2855(b) will eliminate the $85,000 
     threshold. As a result, A&E contracts for military 
     construction and military family housing projects could be 
     set aside exclusively for small businesses to achieve the 
     small business competitiveness demonstration A&E goal 
     mandated by 15 U.S.C. 644. Accordingly, this proposal would 
     eliminate conflicting statutory provisions that currently are 
     making it unnecessarily difficult for DOD to achieve the 
     small business goal for A&E contracts.
       Section 711. Section 2534 of title 10, United States Code 
     provides that ball and roller bearings must be acquired from 
     domestic sources even when such a restriction is not in the 
     Government's interest. This amendment would provide an 
     exception to this restriction if a determination is made that 
     the purchase amount is $25,000 or less; the precision level 
     of the ball or roller bearings is lower than Annual Bearing 
     Engineering Committee (ABC) 5 or Roller Bearing Engineering 
     Committee (RBC) 5, or their equivalent; at least two 
     manufacturers in the national technology and industrial base 
     capable of producing the required ball or roller bearings 
     decline to respond to a request for quotation for the 
     required items and the bearings are neither miniature or 
     instrument ball bearings as defined in section 252.225.7016 
     of title 48 of the Code of Federal Regulations. This 
     exception was developed in conjunction with the Department of 
     Commerce, the agency with primary oversight for this area.
       If enacted, this amendment would significantly reduce the 
     burdensome administrative process Department of Defense 
     purchasers must follow for small procurement that do not 
     impact the industrial base. It would also provide needed 
     flexibility for readiness concerns. The large procurement 
     that will have an impact on the industrial base remain 
     reserved for domestic suppliers.
       Section 712 relates to congressional interest in the Air 
     Force Contractor Operated Civil Engineering Supply Store 
     (CACAOS) program. This proposal would remove constraints on 
     the Air Force's ability to combine CACAOS with A-76 cost 
     comparisons.
     FY 98 & 97 Defense Authorization Acts, (Committee Reports 105 
         H Rpt. 132, 104 H. Rpt. 563)
       In the Committee Report to the 1998 Defense Authorization 
     Act, the House Committee on National Security specifically 
     directed the Secretary of the Air Force not to combine CACAOS 
     functions with other service functions when considering 
     multi-function service contracts until a thorough analysis is 
     conducted. Such analysis would include an economic analysis 
     that would assess the merits of combining these services to 
     increase efficiencies at Air Force installations.

[[Page 12541]]

     The committee also directed the Secretary of the Air Force 
     not to change the current operation of any CACAOS, or to 
     permit any combinations of supply and services functions in 
     upcoming procurement, that would violate or circumvent the 
     tenets of any current CACAOS contractual agreement. The 
     Committee had similar language in its report on the 1997 
     Defense Authorization Act (and also directed the Secretary of 
     the Army and the Secretary of the Navy to consider the 
     application of the CACAOS program as a means to further 
     reduce the cost of essentially non-governmental functions).
     FY 99 Defense Authorization Act
       Congressional concerns over CACAOS made its way into 
     section 345 of Public Law 10526 1, which, in addition to 
     extolling the virtues of CACAOS, established two requirements 
     if the Air Force wishes to combine a CACAOS with an A-76 
     study. First, the Secretary of Defense has to notify Congress 
     of the proposed combined competition or contract, the agency 
     has to explain why a combined competition or contract is the 
     best method by which to achieve cost savings and efficiencies 
     to the Government. The Act also established a mandatory GAO 
     Review of the Secretary of Defense's explanation of the 
     projected cost savings and efficiencies. The Comptroller 
     General reviews the report and submits to Congress a briefing 
     regarding whether the cost savings and efficiencies 
     identified in the report are achievable.
       The CACAOS law was based upon the assumption that the 
     government would be running an inefficient supply operation 
     for materials to be used in Government operations. The 
     environment today is entirely different. Due to A-76 
     emphasis, Civil Engineering (CE) is being competitively 
     source; hardware super stores and the International Merchant 
     Purchase Authorization Card (IMPACT) make it unnecessary to 
     maintain supply inventories; and greater competition is 
     obtained when the supply function is included in the CE 
     effort. CACAOS was designed to replace inefficient government 
     management of commercial supply inventories. As we contract 
     out CE and other base support functions, the users of these 
     supplies will be contractors instead of government 
     organizations. The Department will end up creating situations 
     where the CE contractor, or the Most Efficient Organization 
     (MFO), will be required to obtain supplies from the CACAOS 
     contractor in order to do their work. These common commercial 
     items would become Government Furnished Property (HFP) under 
     the contract and the CE contractor cannot be held fully 
     responsible for all aspects of project completion. If CACAOS 
     fails to provide suitable materials on schedule, the CE 
     contractor could be entitled to an equitable adjustment for 
     late or defective HFP.
       As a general rule, the Department should only provide HFP 
     when the government owns or has available unique or 
     specialized materials that the contractor would not be able 
     to obtain. CACAOS materials are common commercial items 
     readily available through multiple sources. The requirement 
     to provide these materials should be made a part of the CE 
     contract to keep the government out of the middle of two 
     separate contracts and avert the transfer of performance risk 
     to the government. Also, with the advent of today's hardware 
     super stores (Home Depot, HQ, etc.) with their large 
     inventories and low prices, it doesn't make sense to 
     establish a CACAOS-style operation. With the speed and 
     convenience of the IMPACT, even the MFO would not choose to 
     establish a large supply infrastructure for the common 
     commercial items.
       Section 345(b)(6) states that ``Ninety-five percent of the 
     cost savings realized through the use of contractor-operated 
     civil engineering supply stores is due to savings in the 
     actual cost of procuring supplies.'' This statement is no 
     longer accurate and seems to apply to Form 9 processing 
     costs, not IMPACT card costs.
       Section 713. The National Defense Authorization Act for 
     Fiscal Year 1996, included the Federal Acquisition Reform Act 
     of 1996 (FAR) and the Information Technology Management 
     Reform Act of 1996 (ITMRA). FARA and ITMRA were subsequently 
     renamed the Clinger-Cohen Act of 1996. This proposal would 
     modify section 4202 of the Clinger-Cohen Act to extend the 
     test program for certain commercial items.
       Section 2304(g) of title 10, United States Code, and 
     sections 253(g) and 427 of title 41, United States Code, 
     permit the use of special simplified procedures for purchases 
     of property and services for amounts not greater than the 
     simplified acquisition threshold (SAT). Section 4202 of the 
     Clinger-Cohen Act, Application of Simplified Procedures to 
     Certain Commercial Items, extended the authority to use 
     special simplified procedures to purchases for amounts 
     greater than the SAT but not greater than $5 million if the 
     contracting officer reasonably expects, based on the nature 
     of the supplies or services, and on market research, that 
     offers will include only commercial items. The purpose of 
     this test program is to vest contracting officers with 
     additional procedural discretion and flexibility, so that 
     commercial item acquisitions in this dollar range may be 
     solicited, offered, evaluated, and awarded in a simplified 
     manner that maximizes efficiency and economy and minimizes 
     burden and administration costs for both Government and 
     industry.
       The test program was enacted into law on February 10, 1996. 
     Final changes to the Federal Acquisition Regulation (FAR) to 
     implement the test program were issued on the statutory 
     deadline of January 1, 1997. The due date for the Comptroller 
     General report does not provide sufficient time to process a 
     legislative proposal that would prevent the test program from 
     expiring once the Comptroller General has submitted the 
     report. This proposal would extend the test program authority 
     to January 1, 2003, to provide sufficient time to assess this 
     potentially valuable acquisition reform authority based on 
     the GAO's findings and, if warranted, seek to make this 
     authority permanent.
       Section 714 eliminates the prohibition on using funds to 
     retire or dismantle Peacekeeper intercontinental ballistic 
     missiles below certain levels. This provision is in specific 
     support of the amended budget and will result in considerable 
     savings.
       Section 715. The proposed change would provide the Services 
     the flexibility to proceed with construction contracts 
     without disruption or delay by excluding the cost associated 
     with unforeseen environmental hazard remediation from the 
     limitation on cost increases. Unforeseen environmental hazard 
     remediation refers to asbestos removal, radon abatement, 
     lead-based paint removal or abatement, and any other 
     legislated environmental hazard remediation that could not be 
     reasonably anticipated at the time of budget submission.
       Currently, section 2853 of title 10, United States Code 
     only excludes the settlement of a contractor claim from the 
     limitation on cost increases. The Senate Appropriations 
     Committee Report (106-290) which accompanied the Military 
     Construction Appropriation Bill for Fiscal Year 2001 (S. 
     2521) allows the Services to exclude unforeseen environmental 
     remediation costs from the application of reprogramming 
     criteria for military construction and family housing 
     construction projects. However, this report language presents 
     a conflict with the unqualified language of the statute. A 
     reprogramming action is required when the cost increase for a 
     military construction or military family housing project will 
     exceed 25 percent of the amount appropriated for the project 
     or 200 percent of the minor construction project ceiling 
     specified in Section 2805 (a)(1), Title 10, United States 
     Code, whichever is less. A reprogramming action refers to the 
     requirement to provide an advance congressional report and 
     seek congressional approval before proceeding with the work.
       Section 716. The revised language raises the threshold on 
     unspecified minor construction projects performed with 
     operations and maintenance funding. Thresholds are increased 
     to $750,000 for general projects (from $500,000) and to 
     $1,500,000 for projects involving life safety issues (from 
     $1,000,000). The O&M unspecified minor construction 
     thresholds were last raised in 1997.
       The current thresholds limit the Services' ability to 
     complete projects in areas with high costs of construction, 
     such as overseas and in Alaska and Hawaii. The reality is 
     $500,000 does not buy much construction, even in ``normal'' 
     cost areas, at a time when the average regular military 
     construction (MilCon) project costs $12 million. On these 
     small construction projects, labor costs cut heavily into the 
     amount of tangible ``brick and mortar'' which any project 
     must deliver to make a facility usable to its customer. 
     Without this relief, there may be a two or three year delay 
     in completing needed small construction projects if MilCon 
     appropriations must be used, as unspecified minor 
     construction funds within this appropriation are very limited 
     and regular MilCon projects must be individually authorized 
     and appropriated in advance.
       Section 717. The proposed legislation seeks authority for 
     Federal tenants to obtain facility services and common area 
     maintenance directly from the local redevelopment authority 
     (LRA) or the LRA's assignee as part of the leaseback 
     arrangement rather than procure such services competitively 
     in compliance with Federal procurement laws and regulations. 
     This authority to pay the LRA or LRA's assignee for such 
     services under this authority would be allowed only when the 
     Federal tenant leases a substantial portion of the 
     installation; only so long as the facility services or the 
     specific type of common area maintenance are not of the type 
     that a state or local government is obligated by state law to 
     provide to all landowners in its jurisdiction for no 
     individual cost; and only when the rate charged to the 
     Federal tenant is no higher than that charged to non-Federal 
     entities. The proposed legislation also expands the 
     availability of using leaseback authority for property on 
     bases approved for closure in BRAC 1988.
       A leaseback is when the Department of Defense transfers 
     nonsurplus base closure (BRAC) property by deed or through a 
     lease in furtherance of conveyance to an LRA. The transfer 
     requires the LRA to lease the property back to the Federal 
     Department or Agency (Federal tenant) for no rent to satisfy 
     a Federal need for the property.
       Current leaseback legislation does not exempt Federal 
     tenants from Federal procurement laws and regulations when 
     they attempt to obtain facility services and common area 
     maintenance, such as janitorial,

[[Page 12542]]

     grounds keeping, utilities, capital maintenance, and other 
     services that are normally provided by a landlord. Compliance 
     with the procurement laws and regulations may result in a 
     third party contractor providing such services for facilities 
     leased from the LRA and for common areas shared by other 
     tenants of the LRA. In many cases, this may conflict with the 
     LRA's or its assignee's arrangements for providing such 
     services to the various tenants on property owned or held by 
     the LRA. The LRA usually prefers that its contractor perform 
     such services on behalf of the LRA's tenants. LRAs have been 
     hesitant in using leaseback arrangements due to the Federal 
     tenants' inability to obtain these services directly from the 
     LRAs or share the common area maintenance costs with other 
     tenants of the LRAs.
       Under current law, only property at BRAC '91, '93, and '95 
     closure installations can be transferred under the leaseback 
     authority. To help minimize small Federal land holdings 
     within larger parcels transferred to the LRA on BRAC '88 
     bases, the leaseback authority should be expanded to apply to 
     BRAC '88 installations.
       Section 718. The proposed change would allow the Military 
     Departments to reimburse the Military Personnel 
     appropriations from Military Construction, Family housing 
     appropriations during the first year of execution of a 
     military family housing privatization project. Members 
     occupying privatized housing are entitled to, and receive, 
     housing allowances. Since housing allowances are paid from 
     the Military Personnel appropriations, the Military 
     Department needs to reimburse these appropriations for the 
     increased housing allowance bill caused by privatization from 
     the funds previously programmed and budgeted in the Military 
     Construction, Family Housing appropriations. Providing the 
     flexibility to reimburse these funds at the time of execution 
     will enable the Services to accurately determine how much 
     should be reimbursed to meet housing allowance requirements.
       It is extremely difficult to predict when the project will 
     be awarded and therefore to program the correct amount of 
     funds at the correct time. Transferring funds into military 
     personnel appropriations early has proven to be premature and 
     led to shortfalls in the Family Housing appropriation. For 
     example, the Army estimates that Family Housing, Army will 
     lose approximately $100 million from FY98 through FY01 due to 
     the premature transfer of funds to Military Pay and 
     subsequent slippage in privatization awards. Such losses 
     cannot be reversed since there is no mechanism to reprogram 
     from Military Personnel appropriations back into Family 
     Housing following the passage of the respective appropriation 
     bills into law. This proposal precludes unnecessary 
     shortfalls in the family housing appropriations created when 
     premature transfers leave the Military Departments without 
     the resources to continue funding installations experiencing 
     privatization slippage.
       Section 719. The report requires an extensive manpower 
     effort. The Department's budget submission, budget testimony 
     and responses to other report and statutory requirements, 
     etc., provide Congress with much of the same information as 
     required in this report. The Services can provide specific 
     data more efficiently on an as-needed basis.
       In addition, this report was recommended for termination in 
     1995 based on survey data collected in response to the 
     Paperwork Reduction Act, with estimated cost savings of at 
     least $50,000 per year.
       Section 801 amends section 5038(a) of title 10, United 
     States Code, which requires that there be a Director for 
     Expeditionary Warfare within the Office of the Deputy Chief 
     of Naval Operations for Resources, Warfare Requirements and 
     Assessments.
       A recent organizational alignment split the functions of 
     the Deputy Chief of Naval Operations for Resources, Warfare 
     Requirements, and Assessments into two distinct Deputy Chiefs 
     of Naval Operations. In this alignment, the Director for 
     Expeditionary Warfare maintains the same role and 
     responsibilities but now falls under the Deputy Chief of 
     Naval Operations for Warfare Requirements and Programs.
       This proposal reflects that organizational change.
       Section 802 amends chapter 6 of title 10, United States 
     Code, by adding a new section 169 to consolidate the various 
     existing legal authorities governing the DoD Regional Centers 
     to ensure each of the Regional Centers can operate under the 
     same set of authorities, which will ensure they can operate 
     effectively.
       The Department of Defense Regional Centers for Security 
     Studies are an important national security initiative 
     developed by Secretary Cohen and his predecessor, William 
     Perry. These Centers, which serve as essential institutions 
     for bilateral and multilateral communication and military and 
     civilian exchanges, now exist for each major region--Europe, 
     Asia, Latin America, Africa and most recently for the Middle 
     East.
       The Regional Centers are very important tools for achieving 
     U.S. foreign and security policy objectives, both for the 
     Secretary of Defense and for the regional CINCS. The Centers 
     allow the Secretary and the CINCs to reach out actively and 
     comprehensively to militaries and defense establishments 
     around the world to lower regional tensions, strengthen 
     civil-military relations in developing nations and address 
     critical regional challenges. The Department has had 
     extremely good results with the Centers in each region. For 
     example, more than twenty Marshall Center graduates are now 
     ambassadors or defense attaches for their countries and 
     another twenty serve as service chiefs or in other similarly 
     influential positions.
       Currently the five Regional Centers operate under a 
     patchwork of existing legal authorities. As each new center 
     was established, new legislation was passed to govern each 
     center. As a result, no single center has the same set of 
     legal rules guiding how it can operate. The patchwork of 
     authorities hinders effective management and oversight of the 
     Centers, and provides broad authority for some Centers but 
     only limited authority for other Centers.
       A central component of the department's proposal would 
     ensure that all DoD Regional Centers are able to waive 
     reimbursement of the costs of conferences, seminars courses 
     of instruction and other activities associated with the 
     Centers. The proposal also would ensure that all Centers 
     could accept foreign and domestic gifts, hire faculty and 
     staff, including directors and deputy directors, and invite a 
     range of participants to the Centers. Without these 
     authorities, the Regional Centers will not be able to operate 
     at maximum effectiveness.
       Both the Marshall Center and the Asia-Pacific Center for 
     Security Studies, the oldest of the five Centers, have 
     specific authority to waive reimbursement of costs associated 
     with participating in center activities. The Center for 
     Hemispheric Defense Studies also has authority to waive 
     costs, but its authority falls under a different provision of 
     title 10, United States Code, than the similar authorities 
     for the Marshall Center and the Asia-Pacific Center. The 
     Africa Center for Strategic Studies and the Near East-South 
     Asia Center can waive some costs under section 1051 of title 
     10, but this authority is more limited than the authorities 
     under which the other three Centers operate.
       The ability to waive reimbursement of certain costs 
     associated with participating in center activities is 
     absolutely critical to the effectiveness of the Regional 
     Centers as engagement tools for both the Secretary of Defense 
     and the regional CINCS. Many participants in center 
     activities are from developing countries that cannot afford 
     to send personnel to institutions like the regional Centers. 
     Without the authority to waive reimbursement of certain 
     costs, most participants from developing countries would not 
     attend the Centers. In contrast, consistent with existing 
     authorities, most participants from developed nations, whose 
     contributions provide balance, shared regional leadership and 
     non-U.S. perspectives, pay for their own travel, lodging, 
     meals and expenses in connection with Center courses.
       Section 802 would provide the authority to waive 
     reimbursement of certain costs associated with the Centers to 
     all of the Regional Centers by repeating the diverse set of 
     existing authorities concerning cost issues and instead 
     providing a single legal provision concerning cost waivers 
     for all of the Centers.
       In addition to providing a single authority for the Centers 
     to waive reimbursement of costs, the proposal also ensures 
     that other existing authorities governing the Regional 
     Centers apply to all of the Centers. By ensuring that all of 
     the Centers can accept foreign and domestic gifts, hire 
     faculty and staff, and invite participants from defense-
     related government agencies and non-governmental 
     organizations, the proposal will improve the Centers in 
     several ways. First, by gaining the authority to accept 
     gifts, all Centers will be able to cover a greater percentage 
     of their operating costs using funds from outside the 
     Department budget. Allowing both public and private foreign 
     institutions to contribute to regional Centers operations 
     also will enhance the involvement of those donor countries in 
     the Centers and strengthen their commitment to the missions 
     of the Centers. In terms of participation, the Centers in 
     many cases are unique in their ability to bring together 
     participants from across the spectrum of the national 
     security establishment in their respective countries. 
     Broadening this pool to include participants from non-
     governmental organizations and legislative institutions will 
     further strengthen the quality of discussion at the Centers 
     and help establish additional important professional 
     relationships among participants from the various regions.
       Finally, enactment of section 802 would confirm the 
     authority of the Secretary of Defense to manage all the 
     Centers effectively. The combination of diverse legal 
     authorities and unique organizational structures has made 
     effective management and oversight of the Centers quite 
     challenging. To address this management challenge, the 
     Department created a Management Review Board last year 
     (2000). The MRB is comprised of the Assistant Secretary of 
     Defense (International Security Affairs) and the Director of 
     the Joint Staff, or their designees, and members from the 
     Comptroller, Program Analysis and Evaluation, General 
     Counsel, Joint Staff and the Services. The DoD proposal to 
     consolidate existing, legal authorities concerning the 
     Regional Centers and

[[Page 12543]]

     apply them to all of the Centers will further improve the 
     ability of the MRB to ensure that the Regional Centers are 
     thoroughly incorporated into the Department's broader 
     engagement strategy and funded appropriately.
       This proposal provides no new spending authority. No 
     additional resources are needed to implement these changes 
     and as the existing departmental management structure 
     matures, the Department expects to realize greater 
     efficiencies in the management of the Regional Centers.
       Section 803 would amend all references to the former 
     ``Military Airlift Command'' contained in title 10 and title 
     37 to refer to the command by its current designation as the 
     ``Air Mobility Command.'' By Special Order AMC GA-1, 1 June 
     1992, Air Mobility Command replaced the Military Airlift 
     Command as a United States Air Force Major Command. This 
     change was previously recognized to a certain extent in title 
     10, United States Code 130a (Management headquarters and 
     headquarters support activities personnel; limitation), 
     subparagraph (d) (Limitation on Management Headquarters and 
     Headquarters Support Personnel Assigned to United States 
     Transportation Command), which specifically identified Air 
     Mobility Command as a component command of United States 
     Transportation Command. That provision in section 130a was 
     deleted by section 921 of Public Law 106-65, 5 October 1999. 
     As Military Airlift Command no longer exists and Air Mobility 
     Command is not referenced in any statute, updating the listed 
     provisions of the United States Code is appropriate.
       Section 804 would amend section 1606 of title 10, United 
     States Code, to increase the number of Defense Intelligence 
     Senior Executive Service (DISES) positions authorized within 
     the Defense Civilian Intelligence Personnel System (DCIPS) 
     from 517 to 544. Enactment of the proposed amendment would 
     enable the Secretary of Defense to allocate the 27 additional 
     DISES positions to the National Imagery and Mapping Agency 
     (NIMA), as the Director of Central Intelligence (DCI) 
     simultaneously cuts 27 Senior Intelligence Service (SIS) 
     positions from the Central Intelligence Agency (CIA).
       When section 1606 was inserted into title 10, United States 
     Code, by section 1632(b) of the Department of Defense 
     Intelligence Personnel Policy Act of 1996 (Public Law 104-
     201; 110 Stat. 2745, 2747) the number of DISES positions was 
     set at 492. This ceiling, however, was raised to 517 
     positions by section 1142 of the Floyd D. Spence National 
     Defense Authorization Act for Fiscal Year 2001 (Public Law 
     106-398; 114 Stat. 1654).
       The conference report accompanying the Floyd D. Spence 
     National Defense Authorization Act for Fiscal Year 2001, 
     however, states that these ``25 additional positions are 
     authorized for the entire defense intelligence community and 
     are not intended to be allocated to any single agency within 
     the defense intelligence community.'' See H.R. Rep. No. 106-
     945 at 865 (2000). The report also directed ``the Secretary 
     of Defense to report to the Committees on Armed Services of 
     the Senate and the House of Representatives, not later than 
     March 15, 2001, on how the additional senior executive 
     service positions are allocated within the defense 
     intelligence community.'' H.R. Rep. No. 106-945 at 865 
     (2000).
       Based on this guidance, the 25 new DISES positions are 
     being reviewed for use and distribution within the DCIPS 
     community as a whole. This expansion of DISES positions 
     within the general DCIPS community, however, does not address 
     a pressing need to allocate an additional 27 DISES positions 
     to NIMA as part of a Congressionally mandated administrative 
     transfer intelligence positions from CIA to NIMA.
       Since DCIPS and NIMA were created in 1996, NIMA has been 
     staffed at senior levels by DISES personnel, Defense 
     Intelligence Senior Level (DISL) personnel, and SIS 
     personnel. It should be noted in this regard, however, that 
     when the initial DCIPS cap was set at 492, the 27 positions 
     that CIA filled with SIS personnel on temporary detail were 
     not included in the 492 figure.
       One of the complex aspects of the establishment of NIMA, 
     was the commingling of intelligence officials from the 
     Department and other federal agencies that was needed to 
     staff the new agency. But, in establishing NIMA the Congress 
     made it clear that this unique staffing arraignment would be 
     temporary. In section 1113 of the National Imagery and 
     Mapping Agency Act of 1996 (Public Law 104-201, 110 Stat. 
     2675, 2684) the Congress expressly provided that: ``Not 
     earlier than two years after the effective date of this 
     subtitle, the Secretary of Defense and the Director of 
     Central Intelligence shall determine which, if any, positions 
     and personnel of the Central Intelligence Agency are to be 
     transferred to the National Imagery and Mapping Agency. The 
     positions to be transferred, and the employees serving in 
     such positions, shall be transferred to the National Imagery 
     and Mapping Agency under the terms and conditions prescribed 
     by the Secretary of Defense and the Director of Central 
     Intelligence.''
       In keeping with this congressional mandate, the Secretary 
     and the DCI signed a Memorandum of Agreement (MOA) in 
     February 2000 that set the total number of positions to be 
     transferred from CIA to NIMA. Under the agreement, CIA 
     personnel that are currently temporarily detailed to NIMA 
     would be permanently detailed to NIMA; These employees, 
     however, would remain as CIA employees. Budget agreements 
     implementing the MOA also provide that the previously 
     discussed 27 SIS positions would be included in the total 
     number of 56 positions to be transferred from CIA to NIMA. 
     These agreements also provide that in conjunction with the 
     transfer of these 27 senior level positions to NIMA, CIA 
     would cut 27 SIS positions. Consequently, the enactment of 
     the proposed amendment would have no budgetary impact, 
     because the increase of the DISES ceiling is offset by the 
     corresponding reduction of SIS positions at CIA.
       Section 811 would amend section 10541 of title 10 
     concerning the annual report to Congress on National Guard 
     and Reserve Component equipment. During the preparation of 
     the budget year 2000 National Guard and Reserve Component 
     Equipment Report, it became clear that changes were needed to 
     both the report and process in order to make the report more 
     relevant to Congress. As a result, a joint working group was 
     commissioned from the Office of the Assistant Secretary of 
     Defense for Reserve Affairs to analyze the report and 
     process. Key changes were coordinated with all Services and 
     are included in the legislative proposal above.
       Specifically, subsection (a) would adjust the date of the 
     report from February 15th to March 1st of each year. This 
     would allow time to incorporate the President's budget 
     projections into the report, thus making the report a more 
     meaningful and up-to-date report during the Congressional 
     legislative process. It would also officially require data 
     from the U.S. Coast Guard Reserve, which has been provided in 
     past years but is not required by law.
       Subsection (b) would eliminate the requirement for data 
     that is no longer viable, such as the full wartime 
     requirement of equipment over successive 30-day periods and 
     non-deployable substitute equipment. It would also expand the 
     requirement for the current status of equipment compatibility 
     to all Reserve Components, instead of just for the Army. 
     Overall, the revised subsection (b) is written to expand the 
     scope and remove the restrictive nature of the language. This 
     would provide the Reserve Components the ability to present a 
     clearer and more complete picture of the Reserve Component 
     equipment needs.
       Section 812 would repeal subsection 153(b) of title 10 and 
     amend section 118(e) to consolidate redundant reporting 
     requirements related to the assessment of service roles and 
     missions. Subsection 153(b) requires the Chairman to submit 
     to the Secretary of Defense, a review of the assignment of 
     roles and missions to the armed forces. The review must 
     address changes in the nature of threats faced by the United 
     States, unnecessary duplication of effort among the armed 
     forces, and changes in technology that can be applied 
     effectively to warfare. The report must be prepared once 
     every three years, or upon the request of the President or 
     the Secretary.
       Section 118 of title 10 established a permanent requirement 
     for the Secretary to conduct a Quadrennial Defense Review 
     (QDR) in conjunction with the Chairman. The Department of 
     Defense has designed the QDR to be a fundamental and 
     comprehensive examination of America's defense needs from 
     1997-2015; to include assessments of potential threats, 
     strategy, force structure, readiness posture, military 
     modernization programs, defense infrastructure, and other 
     elements of the defense program. Amending subsection 118(e) 
     would explicitly require the Chairman's review of the QDR to 
     include an assessment of service roles and missions and 
     recommendations for change that would maximize force 
     efficiency and resources.
       Simultaneously preparing the QDR and the roles and missions 
     study requires the concentrated efforts of many Joint Staff 
     action officers for a period of more than eighteen months. 
     Eliminating this duplication of effort, however, will 
     significantly enhance the Joint Staff's ability to meet an 
     expanding list of congressionally or Department of Defense 
     mandated reporting requirements on a wide variety of 
     sensitive defense topics. These topics include joint 
     experimentation, training, and integration of the armed 
     forces, examination of new force structures, operational 
     concepts, and joint doctrine; global information operations; 
     and homeland defense, particularly with regard to managing 
     the consequences of the use of weapons of mass destruction 
     within the United States, its territories and possessions.
       Section 813 would change the due date for the Commercial 
     Activities Report to Congress, required by section 12461(g), 
     title 10, United States Code, from February 1st of each 
     fiscal year to June 30th of each fiscal year. The Commercial 
     Activities Report is developed using the same in-house 
     inventory database as the Department's Federal Activities 
     Inventory Reform Act (FAIR Act) submission. Under the FAIR 
     Act, the Department is required to submit an inventory of 
     commercial functions each Fiscal Year. That inventory is 
     subject to challenges by interested parties. In order to 
     ensure that the Commercial Activities Report is as accurate

[[Page 12544]]

     as possible and consistent with other reports submitted to 
     Congress covering the same Fiscal Year, it is necessary to 
     consider the FAIR inventory challenges when compiling it. 
     This process is normally not complete until April or May of 
     each year. In past years, the Department has submitted an 
     interim response to Congress regarding the Commercial 
     Activities Report indicating that the report would not be 
     submitted until June.
       Section 821 would amend section 2572 of title 10. Section 
     2572(a) authorizes the Secretary of a military department to 
     lend or give certain types of property described in section 
     2572(c) that are not needed by the department to specified 
     entities, such as municipal corporations, museums, and 
     recognized war veterans' associations. Section 2572(b) 
     authorizes the Secretary of a military department to exchange 
     the items described in section 2572(c) with any individual, 
     organization, institution, agency, or nation if the exchange 
     will directly benefit the historical collection of the armed 
     forces.
       Section 821 would expand the categories of property that 
     the military departments may exchange under section 2572(b). 
     Currently, the military departments may exchange books, 
     manuscripts, drawings, plans, models, works of art, 
     historical artifacts and obsolete or condemned combat 
     materiel for similar items. Property may also be exchanged 
     for conservation supplies, equipment, facilities, or systems; 
     search, salvage, and transportation services; restoration, 
     conservation, and preservation systems; and educational 
     programs. The amendment would expand the current authority to 
     exchange ``condemned or obsolete combat material'' and 
     authorize the military departments to exchange any ``obsolete 
     or surplus material'' of a military department for ``similar 
     items'' and for the enumerated services if the items or 
     services will directly benefit the historical collection of 
     the armed forces.
       Section 822 would amend section 2640 of title 10, United 
     States Code. This section requires the Department of Defense 
     to meet safety standards established by the Secretary of 
     Transportation under section 44701 of title 49, United States 
     Code and requires air carriers to allow the Department of 
     Defense to perform technical safety evaluation inspections of 
     a representative number of their aircraft. This amendment 
     would require the same safety standards be applied to foreign 
     air carriers as to the domestic air carriers in an effort to 
     provide better protection to members of the armed forces.
       Section 822(2) would require ``check-rides'' to be 
     accomplished on carriers. As DOD personnel conducting the 
     inspection are usually not qualified pilots in all the 
     various types of aircraft they are required to inspect, the 
     term ``cockpit safety observations'' more accurately describe 
     the process involved.
       Section 822(3) of the proposal would designate authority 
     within the Department of Defense to delegate a representative 
     to make determinations to leave unsafe aircraft. This change 
     is a technical change to update the command name from 
     ``Military Airlift Command'' to its successor ``Air Mobility 
     Command''.
       Section 822(4) of the proposal would authorize the 
     Secretary of Defense to waive the requirements of the statute 
     in an emergency, based on the recommendation of the 
     Commercial Airlift Review Board. As paragraph (1) would 
     extend the inspection requirements to foreign air carriers, 
     there may be instances that do not constitute an emergency 
     but because of operational necessity a waiver may be 
     appropriate. An example would be where there is only one 
     carrier available in a foreign country but the host 
     government will not allow an inspection on sovereignty 
     principals. If all other information available to the 
     Commercial Airlift Review Board indicate a safe air carrier, 
     a waiver may be appropriate.
       Section 822(5) would amend subsection (j) of section 2640 
     title 10 United States Code that states certain terms listed 
     therein have the same meanings as given by section 40102(a) 
     of title 49 of the United States Code. ``Air Carrier'' is 
     listed in subsection (j) and is defined in title 49 as a 
     ``citizen of the United States undertaking by any means, 
     directly or indirectly, to provide air transportation.'' 
     Deleting ``air carrier'' from the definition section in 
     addition to the change in paragraph (1) will allow the safety 
     standards to be applied equally to foreign and domestic 
     carriers.
       If enacted, this proposal will not increase the budgetary 
     requirements of the Department of Defense.
       Section 901 would amend title 10 by adding a new section 
     23501 to authorize the Secretary of Defense, with the 
     concurrence of the Secretary of State, to enter agreements, 
     at reasonable cost, with eligible countries and international 
     organizations, for the reciprocal use of ranges and other 
     facilities where testing may be conducted. As military 
     equipment becomes more complex, so does the need for more 
     advanced, complex, and costly test and evaluation 
     capabilities. In this environment, it is increasingly 
     difficult and expensive for one nation to fulfill all of its 
     legitimate research, development, test and evaluation (RDT&E) 
     requirements at ranges and facilities under its control.
       One way to reduce the cost of developing the next 
     generation of U.S. weapons, and those of our friends and 
     allies, is to take full advantage of the unique test 
     capabilities available here and abroad. For example, the 
     United Kingdom has a unique Artillery Recovery Range in 
     Shoeburyness where we may recover rounds undamaged after 
     firing for engineering evaluation. This uniqueness of the 
     range comes from its geography. Shoeburyness lies on a gently 
     sloping shoreline that extends for several miles before 
     terminating in a large tidal basin from which undamaged spent 
     rounds may be recovered with ease. No other facility in the 
     world provides this capability. Similarly, the United States 
     has unique test capabilities not available in other 
     countries. The 8+ Mach test track at Holloman Air Force Base 
     in N.M. is unequaled anywhere in the world. Unfortunately, 
     under current authority, it is often cost-prohibitive for the 
     United States and the United Kingdom, for example, to reach 
     an agreement that would allow each country to use the other's 
     facilities to develop superior weapons to meet 21st Century 
     challenges.
       To obtain access to foreign ranges and facilities at 
     reasonable rates, the Department needs new authority to 
     provide eligible countries or international organizations 
     reciprocal access, at reasonable rates, to U.S. facilities; 
     and the enactment of this proposal would provide that new 
     authority.
       As the Secretary of Defense observed in a memorandum dated 
     March 23, 1997: ``International Armaments Cooperation is a 
     key component of the Department of Defense Bridge to the 21st 
     Century. We already do a good job of international 
     cooperation at the technology end of the spectrum; we need to 
     extend this track record of success across the remainder of 
     the spectrum.''
       Reciprocal use of test and evaluation ranges and facilities 
     is the next step in this process, and one that will expand 
     long-standing international partnerships the United States 
     has enjoyed in the equipment acquisition process. In this 
     regard, the Department notes that the Congress ``has 
     supported a number of [Department of Defense] initiatives to 
     help offset the growing burden of [RDT&E] infrastructure 
     support cost.'' See S. Rep. No. 104-12, at 176-77 (1995). It 
     is also worthy of note that the Congress has encouraged the 
     Department to engage in such cooperative ventures by stating 
     in the same report: ``our allies are showing a much greater 
     interest in using U.S. test ranges and facilities because of 
     encroachment problems overseas, and the Department should be 
     more aggressive in encouraging and facilitating such 
     request.'' See S. Rep. No. 104-12, at 177 (1995).
       Enactment of the authority granted in subsection (a) of 
     this proposal would also enhance interoperability at all 
     weapon system and force levels; and interoperability is the 
     cornerstone of Joint Vision 2020. It is axiomatic, that 
     interoperability between U.S. forces, and coalition or allied 
     forces, enhances the effectiveness of the combined force to 
     act in concert to deter or defeat aggression. Accordingly, 
     continued success in regional conflicts depends on continuous 
     improvement of U.S. interoperability with our friends and 
     allies around the globe.
       No additional funds are required to implement the authority 
     granted in subsection (a) of this proposal. Testing services 
     will be paid for by customers according to the principles and 
     provisions prescribed in the proposal and negotiated in a 
     Memorandum of Understanding. Pricing principles call for 
     reasonable and equitable charges between partner countries. 
     Matters concerning security, liability and similar issues 
     will be fully addressed in Memorandums of Understanding (or 
     other formal agreements) entered based on this proposal.
       Section 901(c) would amend Section 2681 of title 10, United 
     States Code, ``Use of Test and Evaluation Installations by 
     Commercial Entities.'' Section 2681 was enacted in 1994 to 
     provide greater access for commercial users to the Major 
     Range and Test Facility Base Installations. The section 
     requires a commercial entity to reimburse the Department of 
     Defense for all direct costs associated with the test and 
     evaluation activities. In addition, commercial entities can 
     be charged indirect costs related to the use of the 
     installation, as deemed appropriate.
       The Major Range and Test Facility Base (MRTFB) is a set of 
     installations and organizations operated by the Military 
     Departments principally to provide T&E support to defense 
     acquisition programs. Historically, defense acquisition 
     programs used the MRTFB for testing, with the Department of 
     Defense component serving as the actual customer. The 
     acquisition program approved the work statement and provided 
     funding through a funding document issued directly to the 
     test organization. In response to acquisition reform 
     initiatives, most program managers now leave the decision of 
     where to perform (developmental) testing to the contractor. 
     Nonetheless, many contractors choose to test at MRTFB 
     activities because of the facilities and expertise available. 
     In other cases, technical requirements drive them to the 
     MRTFB as the only source of adequate T&E support. Under 
     section 2681, defense contractors are charged as commercial 
     entities, even though the use of the range is in direct 
     support of the Department of Defense component.

[[Page 12545]]

       In the past, MRTFB Installations did not charge defense 
     contractors a fully burdened rate to use their facilities 
     when conducting test in association with a defense contract. 
     A Service audit finding opined that the MRTFB installations 
     had misapplied the law and determined defense contractors to 
     be commercial users, thereby requiring them to be charged the 
     fully burdened rate. However, weapons programs have prepared 
     their budgets under the assumption that the fully burdened 
     rate would not be charged to the defense contractors acting 
     on their program's behalf. The amendment proposed in 
     subsection (c) of this proposal would make MRTFB test and 
     evaluation services available to defense contractors under 
     the same access and user charge policies as applied to the 
     sponsoring Department of Defense component. This would assure 
     that the MRTFB is able to perform its fundamental role of 
     support to defense acquisition programs under the same 
     policies as existed prior to section 2681, while continuing 
     to leave the choice of ``where to test'' to the defense 
     contractor. In addition, the amendment proposed in subsection 
     (c) of this proposal would extend this concept to the 
     contractors of other U.S. government agencies. If section 
     901(c) is not enacted, there may be a cost increase to 
     specific research and development programs.
       Section 902 would amend 10 U.S.C. Sec. 2350a to improve the 
     Department's ability to enter into cooperative research and 
     development projects with other countries. This amendment 
     would incorporate references to the term: ``Major non-NATO 
     ally'' to allow countries like Australia, South Korea or 
     Japan to be recognized, not just as other friendly foreign 
     countries, but as major allies.
       Section 903 would amend chapter 53 of title 10, United 
     States Code, to provide the Secretary of Department the 
     authority to recognize superior noncombat achievements or 
     performance by members of friendly foreign forces and other 
     foreign nationals that significantly enhance or support the 
     National Security Strategy of the United States.
       Currently, the Department's authority to recognize superior 
     achievements and performance by foreign nationals is limited 
     to awarding military decorations to military attaches and 
     other foreign nationals for individual acts of heroism, 
     extraordinary achievement or meritorious achievement, when 
     such acts have been of significant benefit to the United 
     States or materially contributed to the successful 
     prosecution of a military campaign of the Armed Forces of the 
     United States. See sections 1121, 3742, 3746, 3749, 6244-46, 
     8746, and 8749-50, of title 10, United States Code, and 
     Executive Orders 11046 and 11448.
       The vast majority of engagement programs conducted by the 
     Department of Defense, in support of the national Security 
     Strategy, however, do not involve diplomatic contacts, or 
     heroic acts, but unit-level engagement and cooperation 
     between U.S. servicemembers and foreign nationals, in a 
     variety of training, exercise, and peacetime operational 
     settings. In these instances, many of these expenses that 
     would be authorized by this proposal are currently being paid 
     out of the pockets of soldiers, sailors, airmen, Marines, and 
     members of the Coast Guard.
       One of many examples of how this gap in legislative 
     authority adversely impacts on American servicemembers is the 
     experience of the United States Army Special Forces Command 
     (Airborne). Since the first Special Forces unit was activated 
     on June 19, 1952, Special Forces personnel have routinely 
     deployed overseas to: train U.S. allies to defend themselves 
     and counter the threat of dangerous insurgents, in so doing, 
     Special Forces personnel often serve as teachers and 
     ambassadors. As a result, the Special Forces Command is often 
     called upon by regional combatant commanders, American 
     Ambassadors, and other agencies to participate in a wide 
     variety of peacetime engagement events, because of its global 
     reach, regional focus, cultural awareness, language skills 
     and military expertise.
       During Fiscal Year 2000, the command had 2,102 personnel 
     deployed on 81 missions in 51 countries. The activities 
     conducted during these deployments included peace operations 
     in the Balkans, humanitarian demining operations worldwide, 
     deployments in support of the Department of State, African 
     Crisis Response Initiative, joint and combined exercise 
     training, counterdrug operations, and mobile training team 
     deployments. In addition, elements of the command host annual 
     marksmanship and other international competitions involving 
     military skills.
       During this period of time members of the Special Forces 
     Command participated in 328 deployments that required the 
     purchase or production of plaques, trophies, coins, 
     certificates of appreciation or commendation and other 
     suitable mementos for presentation to foreign nationals. 
     These items were used to recognize achievements such as 
     placing first, second or third in competitions, graduating at 
     the top of formal training courses, and other acts meriting 
     recognition by U.S. officials. Since the authority to present 
     military awards for valor, heroism or meritorious service as 
     outlined above generally does not apply to such expenses, the 
     men and women of the command have a long tradition of paying 
     such expenses out of their own pockets, or from funds 
     received from private organizations such as the Special 
     Forces Association.
       Assuming that the expenditures for such items during the 
     328 deployments conducted by the Special Forces Command in 
     fiscal year 2000, averaged $260.00 per deployment (the 
     current ``minimal value'' threshold set by section 7342(a)(5) 
     of title 5, United States Code), the men and women of that 
     command would have spent $85,280.00 out of their own pockets, 
     or obtained donations from private organizations such as the 
     Special Forces Association, in order to carry out these 
     missions.
       Enactment of this proposal would enhance the execution of 
     Department engagement programs, by providing another means of 
     establishing goodwill today that will contribute to improved 
     security relationships tomorrow. But most importantly, it 
     would relieve servicemembers from the need to pay such 
     expenses out of pocket, by authorizing commanders to pay for 
     these expenses from the budgets allocated to them to conduct 
     these critical missions.
       Section 904 would give the Department of Defense (DoD) the 
     personal service contract authority currently exercised by 
     other agencies with overseas activities, It would allow DoD 
     to hire the in-country support personnel necessary to carry 
     out its national security mission, particularly in the newly 
     independent states.
       In those countries where the DoD does not have a Status of 
     Forces Agreement or does not have a major military presence 
     including a program for civilian personnel administration of 
     local national employees, that service has traditionally been 
     performed on a reimbursable basis by the Department of State 
     (DOS). DOS has used its personal service contract authority 
     to provide workers for DoD units such as Defense Attache 
     Offices, Security Assistance Offices, and Military Liaison 
     Teams, that are frequently co-located with the U.S. Embassy 
     and may come under Chief of Mission authority. DoD does not 
     have personal service contract authority and DOS counsel 
     recently determined DOS is prohibited from using its personal 
     service contract authority to provide workers for an agency 
     that does not have such authority.
       DOS has begun terminating personnel service contracts that 
     support DoD requirements. DoD units have been faced with the 
     need to either use a non-personal service contract or obtain 
     Full-Time Equivalent (FTE) authority. Use of non-personal 
     service contracts may be inappropriate for the type of work 
     performed, cause security and access problems at the Embassy, 
     and be in violation of local labor law. FTE has not been 
     readily available to support time-limited programs such as 
     the Partnership for Peace and Military Liaison Teams. FTE has 
     been particularly difficult to obtain for overseas units that 
     are under headquarters constraints such as for the OUSD 
     (Policy) office that supports arms control delegations in 
     Geneva.
       Section 911 would amend section 1153 of the Floyd D. Spence 
     National Defense Authorization Act for Fiscal Year 2001 
     (NDAA) to limits on the use of voluntary early retirement 
     authority and voluntary separation incentive pay for fiscal 
     years 2002 and 2003. Section 1153 authorized the Department 
     to use Voluntary Separation Incentive Pay (VSIP) and 
     Voluntary Early Retirement Authority (VERA) for workforce 
     restructuring for three years. In the past, VERA and VSIP 
     could only be used in conjunction with reduction in force. 
     Under this new authority, it is no longer necessary to 
     abolish a position in order to grant early retirement or pay 
     the incentive. The vacant position may be refilled with an 
     employee with skills critical to the Department. This is 
     necessary to shape the Defense workforce of the future.
       Section 1153 authorized these programs to be carried out 
     for workforce restructuring in FY 2002 and FY 2003 ``only to 
     the extent provided in a law enacted by the One Hundred 
     Seventh Congress.'' This provision would satisfy that 
     requirement.
       Section 912 would amend section 1044a title 10 to clarify 
     the status of civilian attorneys to act as notaries. Section 
     1044a(b)(2) authorizes ``civilian attorneys serving as legal 
     assistance officers'' to perform notarial services. Civilian 
     attorneys have no designation under Office of Personnel 
     Management position descriptions as legal assistance 
     ``officers.'' Within Department of Defense documents, 
     civilian attorneys providing legal assistance services are 
     referred to as legal assistance attorneys. For this and other 
     reasons related to the efficient management of legal 
     assistance offices, subsection (b) would amend section 
     1044a(b)(2) to refer to legal assistance attorneys.
       Section 912(b) would amend section 1044a(b)(4) of title 10 
     to expand a category of persons who may perform notarial acts 
     under the section. Section 1044a(b)(4) authorizes members of 
     the armed forces who are designated by regulation to perform 
     notarial acts. As amended, subsection (b)(4) would authorize 
     civilian employees of the armed forces to perform notarial 
     acts if they are designated by regulations of the armed 
     forces to have notarial powers. This would alleviate a 
     particular problem overseas, where military notaries are not 
     always available. The change would allow the Service 
     Secretaries, and the Secretary of Transportation with respect 
     to the Coast Guard, to

[[Page 12546]]

     extend notary authority to civilian nonlawyer assistants, 
     e.g., 64 paralegals and legal assistance office in-take 
     personnel.
       Section 913 would amend section 2461 of title 10 concerning 
     the conversion of commercial or industrial type functions to 
     contractor performance. Federal agencies may convert 
     commercial activities to contract or interservice support 
     agreement without cost comparison under Office of Management 
     and Budget Circular A-76 (A-76) when all directly affected 
     Federal employees serving on permanent appointments are 
     reassigned to other comparable Federal positions for which 
     they are qualified. This revision would make the statutory 
     requirements inapplicable under these same circumstances.
       The analysis requirements of section 2461 of title 10, 
     United States Code, are met using the commercial activities 
     study procedures of A-76 and the Revised Supplemental 
     Handbook, Such studies typically take two to four years to 
     reach an initial decision. When the result of the study is a 
     conversion of a function to contract performance, affected 
     Federal employees may be subject to reduction-in-force 
     procedures. The proposed statutory revision would permit 
     Department of Defense activities to convert a function to 
     contract performance without incurring the potential length 
     and cost of an A-76 study. This revision would not alter the 
     requirements of section 2641 where an A-76 study is 
     undertaken. It would not alter the rights of employees who 
     are sub9ect to an A-76 study.
       Section 914 clarifies that former Defense Mapping Agency 
     personnel transferred into the National Imagery and Mapping 
     Agency pursuant to the National Defense Authorization Act for 
     Fiscal Year 1997, Public Law 104-201, retain third party 
     appeal rights under chapter 75 for such time as they remain 
     Department of Defense employees employed without a break in 
     service in the National Imagery and Mapping Agency. The 
     section also permits the employees so affected to waive the 
     provisions of this section. However, by doing so, the 
     employee forfeits his or her rights under this section. 
     Personnel who have those rights and who are assigned or 
     detailed by NIMA to positions of the CIA or other agencies 
     would retain those rights vis-a-vis NIMA while assigned or 
     detailed to those positions.
       Section 915 would allow the Secretary of Defense to provide 
     the Director, NIMA the authority to set up a critical skills 
     undergraduate training program parallel to those authorized 
     to NSA, DIA, CIA, and the military departments. These 
     programs are intended to further the goal of enhanced 
     recruitment of minorities for careers in the Intelligence and 
     Defense Communities. Under these programs agencies recruit 
     high school graduates who otherwise would not qualify for 
     employment and then send them to obtain undergraduate degrees 
     in critical skills areas such as computer science. These 
     employees are required to commit to remaining in the 
     Government for specified payback periods. No costs are 
     anticipated in fiscal year 2002. Fiscal year 2003 costs are 
     currently estimated at less than $1,000,000. This proposal 
     imposes no costs on other organizations.
       Section 916 would add a new section to title 10, United 
     States Code, and would establish a three-year pilot program 
     permitting payment of retraining expenses for DoD employees 
     scheduled to be involuntarily separated from DoD due to 
     reductions-in-force or transfers of function. In the National 
     Defense Authorization Act for Fiscal Year 1995, a pilot 
     program of this nature was established for employees affected 
     by BRAC. (See Public Law 103-337, Section 348.)
       The program, which may be created at the discretion of the 
     Secretary of Defense, focuses on permitting a company to 
     recoup the costs it incurs in training an employee for a job 
     with that company. The purpose of this incentive is to 
     encourage non-Federal employers to hire and retain 
     individuals whose employment with DoD is terminated. To be 
     eligible for the reimbursement, a company must have employed 
     the former DoD employee for at least 12 months. In short, 
     this proposal allows payment for training for a specific job; 
     it is not designed towards generic, non-job specific 
     training.
       Expanded use of incentives such as contained in this 
     proposal would provide DoD with an enhanced management tool 
     to reduce adverse impacts on employees. Availability of this 
     option would also reduce costs associated with VSIP payments 
     and the placement of employees through the DoD Priority 
     Placement Program.
       Section 921 responds to section 1051 of the Strom Thurmond 
     National Defense Authorization Act for Fiscal year 1999 
     (Public Law 105-261), which identified the need for improved 
     procedures for demilitarizing excess and surplus defense 
     property. The proposal would amend Title 10, United States 
     Code, to permit the United States to recover Significant 
     Military Equipment (SME) that has been released by the 
     Government without proper demilitarization. In recent years, 
     the possession of improperly demilitarized Department of 
     Defense property by individuals and business entities has 
     caused grave concern both in the media and in Congress and 
     has been a topic of study for the Defense Science Board.
       Questions on the amount of compensation due a possessor of 
     these materials have arisen in those cases where confiscation 
     has been permitted. This proposal, if enacted, would provide 
     needed clarification on several issues. First, it would 
     codify in law the type of material subject to recovery by 
     specifically adopting the definition of SME as is contained 
     in the Code of Federal Regulations. Second, it would permit a 
     possessor to be compensated in an amount covering purchase 
     cost, if any, and reasonable administrative costs, such as 
     transportation and storage costs, assuming the possessor 
     obtained the property through legitimate channels. Note that 
     exceptions are provided for certain categories, including 
     museums and the Civilian Marksmanship program.
       Section 922 would revise section 2634 of title 10, and 
     section 5727 of title 5, United States Code, by exempting 
     motor vehicles shipped by members of the armed forces and 
     federal employees from the provisions of the Anti Car Theft 
     Act of 1992, as amended. The Anti Car Theft Act of 1992, (the 
     ``Act''), codified at Sections 1646b and 1646c of title 19, 
     United States Code, requires customs officers to conduct 
     random inspections of automobiles and shipping containers 
     that may contain automobiles that are being exported, for the 
     purpose of determining 66 whether such automobiles are 
     stolen. In addition, the Act requires that all persons or 
     entities exporting used automobiles, including those exported 
     for personal use, provide the vehicle identification number 
     (V.I.N.) and proof of ownership information to the Customs 
     Service at least 72 hours before the automobile is exported. 
     The Customs Service is also required, consistent with the 
     risk of stolen automobiles being exported, to randomly select 
     used automobiles scheduled for export and check the V.I.N. 
     against information in the National Crime Information Center 
     to determine if the automobile has been reported stolen. 
     Customs Service regulations implementing the Act are at 
     Section 192.2 of title 19 of the Code of Federal Regulations.
       Motor vehicles shipped under the authority of section 2634 
     of title 10 and section 5727 of title 5 are owned or leased 
     by members of the armed forces or federal employees and are 
     being transported out of the country pursuant to the member's 
     or employee's change of permanent station orders. The vast 
     majority of motor vehicles shipped under these two provisions 
     of law belong to Department of Defense personnel, and are for 
     personal use while the member or employee is abroad. In most 
     cases, these motor vehicles are returned to the United States 
     along with the member or employee upon completion of duty 
     overseas. These motor vehicles are not being exported for the 
     purpose of entering into the commerce of a foreign country 
     and normally may not be sold to foreign nationals in the 
     country to which the military member or employee is assigned. 
     Their shipment is arranged and normally paid for by the 
     United States government. In addition, in the case of 
     military members and Department of Defense civilian 
     employees, regulations promulgated by the Department of 
     Defense pursuant to authority granted in Section 2634 of 
     title 10, require that the member produce adequate proof of 
     ownership prior to shipment and, in the case of leased 
     vehicles, proof that the lease has at least 12 months 
     remaining. Under the circumstances, the chance that any such 
     motor vehicle may be stolen is extremely remote. In over 
     fifty years of shipping such motor vehicles overseas, there 
     have been few, if any, documented cases in which a stolen 
     vehicle has been shipped overseas by a military member or 
     federal employee.
       Application of the Act to motor vehicles transported under 
     these sections has had an adverse impact on shipment times 
     and has resulted in additional expense to the U.S. government 
     in the form of delayed shipments and costs associated with 
     random inspections. In addition, it has imposed a burden on 
     military members and federal employees by requiring 
     unnecessary and duplicative documentation, and delaying the 
     transit times of their motor vehicles. Although these costs 
     and burdens are not extraordinary on an individual basis, 
     they are unwarranted and wasteful in light of the extremely 
     remote chance that stolen vehicles may be shipped.
       This proposal would exempt shipments of motor vehicles 
     under these sections from the Act, and provide the authority 
     to continue to regulate such shipments in a manner that is 
     consistent with the needs of the various agencies affected. 
     The revision would also eliminate an ambiguity caused by 
     section 2634(b) and the new Customs Service regulations. The 
     refusal to ship a member's vehicle because of the Customs 
     regulation would entitle the member to government paid 
     storage for the duration of the overseas tour.
       With regard to section 2634 of title 10, Subsection (1) 
     would delete the word ``surface'' as a limiting factor in 
     allowing shipment of vehicles by the cheapest form of 
     transportation if US owned or US flag vessels are not 
     reasonably available. This deletion will also align section 
     2634 of title 10 closer to the provisions of section 5727 of 
     title 5, which does not have such a limitation. 
     Transportation provided to military members would still be 
     limited to a cost no higher than the cost of surface 
     transportation.
       If enacted, this proposal will not increase the budgetary 
     requirements of the Department of Defense or other federal 
     agencies,

[[Page 12547]]

     and may result in savings from not having to store the 
     vehicles at government expense.
       Section 923 concerns Department of Defense gift 
     initiatives. The amendments would clarify items which may be 
     loaned or given under section 7545 of title 10, United States 
     Code, and give the Secretary express authority to donate 
     portions of the hull or superstructure of a vessel stricken 
     from the Naval Vessel Register to a qualified organization. 
     Amendments to section 7545(a) of title 10 would clarify that 
     the Secretary may donate either obsolete ordinance material 
     or obsolete combat material under this section. The proposed 
     new language is consistent with the Secretary's existing 
     authority to lend, give or exchange ``obsolete combat 
     materiel'' to qualified organizations under section 10 U.S.C. 
     2572, a statute which is similar, but not identical, to 
     section 7545. Addition of the term ``obsolete shipboard 
     material''covers items such as anchors and ship propellers, 
     which are frequently sought from the Navy for use as display 
     items.
       The deletion of ``World War I or World War II'' and 
     replacement with ``a foreign war'' would allow coverage of 
     other wars, such as the Korean, Vietnam, and Persian Gulf 
     wars as well as any future war. The deletion of ``soldiers'' 
     and replacement with ``servicemen's'' would clarify that 
     associations related to any branch of military service are 
     qualified organizations.
       A new subsection (d) is added because currently no federal 
     statute expressly addresses the loan or gift of a major 
     portion of the hull or superstructure of a Navy submarine or 
     surface combatant. The Navy has received two requests for 
     large portions of vessels currently slated for scrapping. 
     These requests pertain to the sail of a Navy submarine (the 
     uppermost part of a submarine), and the island of the USS 
     America (the uppermost part of this decommissioned aircraft 
     carrier). The America's island stands several stories above 
     its flight deck. The Navy anticipates receiving more 
     requests, particularly for submarine sails because the Los 
     Angeles class nuclear submarines, all but one of which are 
     named after particular American cities, are now being 
     decommissioned and scrapped. If a vessel can be donated in 
     its entirety, the Navy should have the authority to donate a 
     portion of the vessel for use solely as a permanent memorial. 
     Also, if there is a reason that a vessel cannot be donated in 
     its entirety (e.g., removal of a reactor compartment), this 
     new subsection would authorize the Secretary to donate any 
     part of the remainder of the vessel to a qualified 
     organization.
       The Secretary of the Navy has existing authority under 10 
     U.S.C. Sec. 7306 to donate 68 vessels stricken from the Naval 
     Vessel Register. The Secretary also has existing authority to 
     donate material and historical artifacts described in 10 
     U.S.C. 2572 and 7545. A large portion of a vessel does not 
     fall squarely within the parameters of any of these three 
     statutes, and thus the new subsection (d) authorizes the 
     Secretary to lend, give or otherwise transfer portions of a 
     vessel stricken from the Naval Vessel Register to an 
     organization listed under subsection (a). Terms and 
     conditions of any agreement for the transfer of a portion of 
     a vessel shall include a requirement that the transferee 
     maintain the material in a condition that will not diminish 
     the historical value of the material or bring discredit upon 
     the Navy. Any donation authorized pursuant to this subsection 
     remains subject to all applicable environmental laws and 
     regulations. In accordance with section 7545(a), no expense 
     would be incurred by the United States in carrying out this 
     section.
       The amendments to section 2572 of title 10 would clarify 
     the eligibility requirements for political subdivisions of a 
     state to reccive condemned or obsolete combat material for 
     static display purposes. The operating instruction for the 
     Aircraft Management and Regeneration Center (AMARC) notes 
     that aircraft for display purposes cannot ordinarily be given 
     or loaned to a county without further administrative 
     paperwork. Since many airports are operated by counties and 
     other state political subdivisions that are not municipal 
     corporations, the law as currently written presents a 
     substantial limitation on the Air Force's ability to provide 
     aircraft and other historical material for static display at 
     such county entities.
       AMARC's role in donating or loaning military property for 
     static displays is to be transitioned to the United States 
     Air Force Museum. Clarifying section 2572(a)(1) to include 
     counties and other political subdivisions of a state as 
     permissible recipients of loans and donations would expand 
     the Museum's ability to foster good will and civic pride in 
     the United States Air Force and its history through static 
     displays.
       There are several statutes which do treat counties 
     differently from municipal corporations, particularly with 
     regard to taxes and services. Section 5520 of title 10 does 
     list separate definitions for cities and counties for the 
     purpose of withholding income or employment taxes. The 
     proposed legislation would not affect these other statutes 
     nor the distinctions they draw between goverm-nental 
     entities.
       Section 924 would repeal section 916 to resolve an 
     incongruous and burdensome reporting requirement for the 
     Chairman of the Joint Chiefs of Staff. The reporting 
     requirements demanded by this language-particularly 
     subsection (c)(3), which the Department is unable to comply 
     with-runs counter to the responsibilities of the CJCS as the 
     Chairman of the JROC, and will prove to be overly burdensome 
     without necessarily producing a positive or desired result.
       Section 153 of title 10 establishes the CJCS responsibility 
     to advise the Secretary of Defense on requirements, programs, 
     and budgets. The JROC, established in section 181 of title 
     10, assists the CJCS in fulfilling these advisory 
     responsibilities and this section further establishes that 
     ``the functions of the CJCS, as chairman of the Council, may 
     only be delegated to the Vice Chairman of the Joint Chiefs of 
     Staff.'' Other members of the JROC provide inputs to the JROC 
     Chairman in the form of opinions, advice, and 
     recommendations, which represent extremely useful 
     information. However, having received the JROC member's 
     inputs (including those from the combatant commanders-in-
     chief) the CJCS is singularly accountable to provide the best 
     military advice on joint requirements to the Secretary.
       Appearing before the SASC Subcommittee on Emerging Threats 
     and Capabilities on April 4, 2000, the Commander-in-Chief of 
     U.S. Joint Forces Command amplified the point that the JROC 
     is an advisory body. He provided explicit testimony that his 
     input to the JROC and attendance at selected JROC meeting is 
     what matters--not his vote--since the JROC is not a voting 
     body. Additionally, since JROC deliberations are 
     characteristically conducted in executive session, there is 
     no mechanism to collect the specific advice by individual 
     members.
       The CJCS has directed the JROC to refocus on examination of 
     a broader spectrum of future joint warfighting requirements 
     and fully to integrate joint experimentation activities into 
     the requirements, capabilities, and acquisition process. The 
     raw facts required in the semi-annual report that document a 
     brief series of today's decisions will not capture the 
     profound implications of framing operational architectures 
     and operational concepts on which future decisions will be 
     judged. Furthermore, in an era in which the Department is 
     seeking opportunities to reduce the size of management 
     headquarters, the significant workloads driven by these 
     reporting requirements will drive workforce requirements in 
     the wrong direction--and for little return on the investment. 
     In sum, the reporting requirements will likely prove to be 
     overly burdensome without meeting Congressional intent. The 
     intent of this reporting requirement may be met through CJCS, 
     VCJCS, and others' annual or special testimony, and 
     occasional specific reports to Congress.
       Section 925 would authorize limited access of sensitive 
     unclassified information for administrative support 
     contractors. Pursuant to the authority granted in section 
     129a of title 10, United States Code, the Secretary of 
     Defense has promulgated personnel policies that promote the 
     downsizing and outsourcing of administrative support (e.g., 
     secretarial or clerical services, mail room operation, and 
     management of computer or network resources). By employing 
     such measures, the Department has realized substantial 
     savings, as often contracting out these services is the least 
     costly way to perform them consistent with military 
     requirements and the needs of the Department. In many cases, 
     however, additional savings must be forgone, because such 
     duties may require contractors to be exposed to, or require 
     substantive access to, sensitive unclassified information 
     such as third party trade secrets, proprietary information, 
     and personal information protected by the Privacy Act.
       Section 926 will allow Andersen AFB to use the sale of 
     water rights located off the main installation as an 
     incentive to pay for a new water system located on Andersen 
     AFB. The authority this proposal would provide to the Air 
     Force could only be used in conjunction with existing utility 
     privatization authority under 10 U.S.C. 2688. Subject to the 
     specific provisions of this proposal, the rules governing a 
     conveyance under 10 U.S.C. 2688 would apply to the 
     transaction, including those for competition, fair market 
     value, and reporting to Congress. The Air Force desires to 
     obtain offers to replace the current well system with new 
     wells located on Andersen AFB (the Main Base or Northwest 
     Field). But this is contingent on there being adequate 
     potable groundwater on Andersen AFB (Main Base or Northwest 
     Field). If there is not sufficient groundwater on Andersen 
     AFB (Main Base or Northwest Field) to allow use of this 
     authority, subsection (d) authorizes the Secretary to allow 
     sale of excess water from the existing wells to help pay for 
     modernization and operation of a new water system.
       Andersen AFB's Main Base and Northwest Field properties 
     cover an area roughly 8 miles wide and 2-4 miles long (24.5 
     square miles). Andersen AFB currently also includes several 
     noncontiguous properties: The two largest are the Harmon 
     Annex, which cover 2.8 square miles and is located along the 
     west side of the Island about 4 miles south of Northwest 
     Field; and Andy South, which includes the Andersen South 
     housing area and dormitories, covers 3.8 square miles, and is 
     located about 8 miles south of

[[Page 12548]]

     the Main Base. The water system at Andersen AFB is currently 
     owned, operated, and maintained by the Air Force. Andersen 
     AFB wells satisfy the base's total water requirements. 
     Andersen's water utility system includes 9 ground water wells 
     (identified as Tumon Maui Well and Wells # 1, 2, 3, 5, 6, 7, 
     8, and 9), chlorination and fluoridation equipment, air 
     strippers, several ground level storage tanks, several 
     booster pump stations, approximately 481,000 linear feet of 
     piping ranging in size from less than 2-inches to 30-inches 
     in diameter, 353 building services, 48 air relief valves, 717 
     main valves, 11 post indicator valves, 439 fire hydrants, and 
     13 meters.
       Andersen AFB's nine wells (and associated system 
     components) are located several miles off the Main Base. 
     There is one well at ``Tumon'' (900 gallons per minute (gpm)) 
     and eight wells at the ``Andy South'' area (149-440 gpm each, 
     2090 gpm total). The water is pumped from the wells to the 
     Main Base several miles away crossing non-federal properties. 
     The Air Force's Andy South property is in the process of 
     being declared excess property pursuant to the Federal 
     Property Act, but neither the water rights nor the wells are 
     part of that action.
       A new water system needs to be built due to the advancing 
     age (35-50+ years) and corrosive environment that has 
     deteriorated the system components. The logistics involved in 
     performing the maintenance and repair work off-base make it 
     difficult for the mechanics to control the deterioration. As 
     a result, more pipes, valves and pumps are failing. In 1999, 
     the 16'' main to the base leaked at a rate of 200-250 gallons 
     per minute and was repaired under pressure. The tank 
     isolation valves are so old they are not used because of fear 
     the valves might break. A major failure to the transmission 
     line or the 50+ year old Santa Rosa Tank could leave the Main 
     Base with only 250,000 gallons of available water (less than 
     15% of the average daily demand.) This amount is insufficient 
     for fire protection and normal operations.
       The base estimates it costs about $800,000 per year for 
     electricity just to produce and transmit water to the Main 
     Base from the off-base wells. Savings of 20-40% are expected 
     if wells on the Main Base or the contiguous Northwest Field 
     are constructed.
       Anti-Terrorism and Force Protection would improve if wells 
     were located on the Main Base or Northwest Field. Well House 
     No. 3 already experienced a break-in and theft of electrical 
     parts. Furthermore, there is no control over groundwater 
     contamination from non-Air Force sources. The Tumon Maui well 
     and Well No. 2 are currently not in operation due to 
     groundwater contamination. Current requirements are about 55 
     million gallons per month. In the past two years, Andersen 
     used up to 100 million gallons per month.
       This provision further will provide an opportunity to meet 
     long term water needs with no USAF capital investment, reduce 
     short range modernization/rehabilitation costs for the aged 
     and reconfigured off-base water supply system (Tumon Maui 
     well and Wells 1-3 were originally built to support off-base 
     sites, for example the old Andy South), eliminate the need to 
     retain real property in Andy South, greatly enhance force 
     protection needs for vital water resources, and increase 
     system reliability and redundancy. Guam is chronically short 
     of potable water supplies. The water from Andy South and 
     Andersen Water Supply Annex, if available for commercial 
     sale, would be of substantial value. The Air Force believes 
     that value would be more than sufficient to pay the cost of 
     installation of a new series of wells on Andersen AFB, either 
     the Main Base or Northwest Field, and repair the existing 
     system on the base.
       Section 927 would repeal the requirement for a separate 
     budget request for procurement of reserve equipment by 
     repealing section 114(e) of title 10, United States Code.
       Section 928 would repeal the requirement for a two-year 
     budget cycle for the department of defense by repealing 
     section 1405 of the department of defense authorization act, 
     1986 (31 U.S.C. 1105 note).
                                 ______
                                 
      By Mr. SMITH of Oregon:
  S. 1156. A bill to amend the Consumer Product Safety Act to provide 
that low-speed electric bicycles are consumer products subject to such 
Act; to the Committee on Commerce, Science, and Transportation.
  Mr. SMITH of Oregon. Mr. President, today I rise to introduce the 
Electric Bike Safety Act of 2001. This bill will encourage and provide 
more opportunities for Americans to enjoy the leisure and healthful 
benefits of riding bicycles. This legislation would amend the Consumer 
Product Safety Act CPSA, to provide that low-speed electric bicycles 
are consumer products subject to such Act. As the CPSA is now written, 
low-speed electric bicycles are not considered consumer products, but 
rather a motorized vehicle subject to all regulations set by the 
National Transportation Safety Administration, NTSA, which regulates 
automobiles and motorcycles.
  As a result of low-speed electric bicycles being treated as 
motorcycles, they are required to meet burdensome and unnecessary 
standards, making low-speed electric bicycles much more costly than 
they need to be. Subjecting electric bicycles to motor vehicle 
requirements would mean the addition of a large array of costly and 
unnecessary equipment, brake lights, turn signals, automotive grade 
headlights, and rearview mirrors.
  Making electric bicycles accessible for more Americans will benefit 
the lives of thousands of Americans. Electric bicycles provide disabled 
riders the freedom of mobility without the cost or stigma of an 
electric wheelchair. Electric bicycles provide older riders with 
increased lifestyle flexibility due to increased mobility that electric 
bicycles allow them. Electric bicycles provide law enforcement officers 
a practical way to patrol neighborhoods and towns in a manner 
consistent with the highly successful emphasis on ``Community 
Policing''. Electric bicycles provide short and medium distance 
commuters an environmentally friendly and healthy way to get to work. 
In short, this bill is pro-Americans with disabilities, pro-elderly, 
pro-safety, and pro-environment. Electric bicycles will prove 
beneficial to many more Americans if we in Congress do our part to make 
electric bicycles affordable.
  In my home State of Oregon, there are thousands of people who ride 
bicycles each day, whether as a means of transportation, exercise, or 
recreation. The City of Corvallis, OR, has 63 miles of bike lanes and 
paths and as a result has a very high number of people who commute to 
work on their bicycles. Area companies such as Hewlett-Packard and 
CH2M-Hill even offer changing areas and showers as a way to encourage 
their employees to ride bicycles to work. The Corvallis Police 
Department is also able to utilize electric bikes as a community 
friendly way to patrol the city.
  I believe that placing electric bicycles under the regulation of the 
Consumer Product Safety Commission will be only ensure the safety of 
electric bicycles, but will promote their use by making electric 
bicycles an affordable alternative form of transportation to millions 
of Americans.
                                 ______
                                 
      By Mr. SPECTER (for himself, Ms. Landrieu, Ms. Collins, Mr. 
        Schumer, Ms. Snowe, Mr. Leahy, Mr. Cochran, Mr. Breaux, Mr. 
        Allen, Mr. Biden, Mr. Bond, Mrs. Carnahan, Mr. Carper, Mr. 
        Chafee, Mr. Cleland, Mrs. Clinton, Mr. Dodd, Mr. Edwards, Mr. 
        Frist, Mr. Gregg, Mr. Helms, Mr. Hollings, Mr. Jeffords, Mr. 
        Kennedy, Mr. Kerry, Mr. Lieberman, Mrs. Lincoln, Ms. Mikulski, 
        Mr. Miller, Mr. Reed, Mr. Rockefeller, Mr. Sarbanes, Mr. 
        Sessions, Mr. Shelby, Mr. Smith of New Hampshire, Mr. Thompson, 
        Mr. Thurmond, Mr. Torricelli, and Mr. Warner):
  S. 1157. A bill to reauthorize the consent of Congress to the 
Northeast Interstate Dairy Compact and to grant the consent of Congress 
to the Southern Dairy Compact, a Pacific Northwest Dairy Compact, and 
an Intermountain Dairy Compact; to the Committee on the Judiciary.
  Mr. SPECTER. Mr. President, I join today with thirty-eight of my 
colleagues to introduce legislation authorizing interstate dairy 
compacts. Members of the U.S. House of Representatives have introduced 
similar legislation with 162 cosponsors, including 17 members of the 
Pennsylvania delegation.
  This legislation will create a much needed safety net for dairy 
farmers in the Northeast and other regions and will bring greater 
stability to the prices paid to farmers. The bill authorizes an 
Interstate Compact Commission to take such steps as necessary to assure 
consumers of an adequate local supply of fresh fluid milk and to assure 
the continued viability of dairy farming within the compact region. 
Specifically, states that choose to join a compact would enter into a 
voluntary agreement to create a minimum farm-price for milk within the 
compact region to form a safety net for dairy

[[Page 12549]]

farmers when farm milk prices fall below the established compact price. 
This price would take into account the regional differences in the 
costs of production for milk, thereby providing dairy farmers with a 
fair and equitable price for their product.
  Specifically, the bill would authorize Pennsylvania, New Jersey, 
Delaware, New York, Maryland, and Ohio to join the existing Northeast 
Interstate Dairy Compact, which has been in operation since July 1997. 
Most of these States have already agreed to join the Compact with 
strong support from their governors and legislatures. In the 
Commonwealth of Pennsylvania, Governor Ridge has been a very strong 
supporter and advocate of the Compact. The Pennsylvania Senate and 
House of Representatives have sent a clear signal to Congress by voting 
with overwhelming majorities of 44 to 6 and 181 to 20, respectively, to 
authorize the Commonwealth's participation in the Northeast Dairy 
Compact.
  In addition to expanding the current Northeast Interstate Dairy 
Compact, the bill would authorize southern States to form a similar 
compact to provide price stability in their region. I am pleased to 
join so many of my colleagues from the South in introducing this 
legislation. Finally, the legislation would allow formation of other 
compacts in the Pacific Northwest and Intermountain region within three 
years. We have included language in this bill to recognize the efforts 
in these States to support dairy compacts and to avoid their exclusion 
if these efforts lead to passage of compact legislation by their State 
governments.
  In total, twenty-five States have already approved dairy compact 
legislation. This is a broad mandate from States that are attempting to 
meet the needs of dairy farmers, producers, consumers and other 
citizens concerned with the future of their milk supply. These States 
recognize the many positive aspects of dairy compacts. The benefits 
include providing dairy farmers with a fairer and more stable price 
structure; providing consumers with price stability and a steady, 
reliable source of local milk for their consumption; enhancement of 
conservation efforts in areas threatened by sprawl; and maintenance of 
rural economies that have been suffering for quite some time from the 
loss of income-generating farmers.
  Over the past several years, I have worked closely with my colleagues 
in the Senate in order to provide a more equitable price for our 
nation's milk producers. I supported amendments to the Farm Bills of 
1981 and 1985, the Emergency Supplemental Appropriations Bill of 1991, 
the Budget Resolution of 1995 and the most recent Farm Bill in 1996 in 
an effort to ensure that dairy farmers receive a fair price. As a 
member of the U.S. Senate Agriculture Appropriations Subcommittee, I 
have worked to ensure that dairy programs have received the maximum 
possible funding, including high quality dairy research conducted at 
Penn State University. I have also been a leading supporter of the 
Dairy Export Incentive Program which facilitates the development of an 
international market for United States dairy products.
  In recent years, however, dairy farmers have faced low prices for 
dairy products. Prices have fluctuated greatly over the past several 
years, thereby making any long-term planning impossible for farmers. 
These economic conditions have placed our Nation's dairy farmers in an 
all but impossible position and this is borne out in dairy farmers' 
declining ranks.
  Our Nation's farmers are some of the hardest working and most 
dedicated individuals in America. During my tenure as a United States 
Senator, I have visited numerous small dairy farms in Pennsylvania. I 
have seen these hard working men and women who have dedicated their 
lives to their farms. The downward trend in dairy prices is an issue 
that directly affects all of us. We have a duty to ensure that our 
Nation's dairy farmers receive a fair price for their milk. If we do 
nothing, many small dairy farmers will be forced to sell their farms 
and leave the agriculture industry. This will not only impact the lives 
of these farmers, but will also have a significant negative impact on 
the rural economies that depend on the dairy industry for support. 
Further, the large-scale departure of small dairy farmers from 
agriculture could place our nation's steady supply of fresh fluid milk 
in jeopardy, thereby affecting every American.
  We must recognize the importance of this problem and take prompt 
action. Twenty-five States have asked us to pass this legislation and 
provide a necessary tool for their dairy farmers. I urge my colleagues 
to cosponsor and support this legislation as we continue to work in 
Congress to bring greater stability to our Nation's dairy industry.
  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. 1157

       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 ``Dairy Consumers and 
     Producers Protection Act of 2001''.

     SEC. 2. NORTHEAST INTERSTATE DAIRY COMPACT.

       Section 147 of the Agricultural Market Transition Act (7 
     U.S.C. 7256) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``States'' and all that follows through ``Vermont'' and 
     inserting ``States of Connecticut, Delaware, Maine, Maryland, 
     Massachusetts, New Hampshire, New Jersey, New York, 
     Pennsylvania, Rhode Island, and Vermont'';
       (2) by striking paragraphs (1), (3), and (7);
       (3) in paragraph (2), by striking ``Class III-A'' and 
     inserting ``Class IV'';
       (4) by striking paragraph (4) and inserting the following:
       ``(4) Additional state.--Ohio is the only additional State 
     that may join the Northeast Interstate Dairy Compact.'';
       (5) in paragraph (5), by striking ``the projected rate of 
     increase'' and all that follows through ``Secretary'' and 
     inserting ``the operation of the Compact price regulation 
     during the fiscal year, as determined by the Secretary (in 
     consultation with the Commission) using notice and comment 
     procedures provided in section 553 of title 5, United States 
     Code''; and
       (6) by redesignating paragraphs (2), (4), (5), and (6) as 
     paragraphs (1), (2), (3), and (4), respectively.

     SEC. 3. SOUTHERN DAIRY COMPACT.

       (a) In General.--Congress consents to the Southern Dairy 
     Compact entered into among the States of Alabama, Arkansas, 
     Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, 
     North Carolina, Oklahoma, South Carolina, Tennessee, 
     Virginia, and West Virginia, subject to the following 
     conditions:
       (1) Limitation of manufacturing price regulation.--The 
     Southern Dairy Compact Commission may not regulate Class II, 
     Class III, or Class IV milk used for manufacturing purposes 
     or any other milk, other than Class I, or fluid milk, as 
     defined by a Federal milk marketing order issued under 
     section 8c of the Agricultural Adjustment Act (7 U.S.C. 
     608c), reenacted with amendments by the Agricultural 
     Marketing Act of 1937 (referred to in this section as a 
     ``Federal milk marketing order'') unless Congress has first 
     consented to and approved such authority by a law enacted 
     after the date of enactment of this joint resolution.
       (2) Additional states.--Florida, Nebraska, and Texas are 
     the only additional States that may join the Southern Dairy 
     Compact, individually or otherwise.
       (3) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a Compact price 
     regulation is in effect, the Southern Dairy Compact 
     Commission shall compensate the Commodity Credit Corporation 
     for the cost of any purchases of milk and milk products by 
     the Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (4) Milk marketing order administrator.--At the request of 
     the Southern Dairy Compact Commission, the Administrator of 
     the applicable Federal milk marketing order shall provide 
     technical assistance to the Compact Commission and be 
     compensated for that assistance.
       (b) Compact.--The Southern Dairy Compact is substantially 
     as follows:

 ``ARTICLE I. STATEMENT OF PURPOSE, FINDINGS AND DECLARATION OF POLICY

     ``Sec. 1. Statement of purpose, findings and declaration of 
       policy

       ``The purpose of this compact is to recognize the 
     interstate character of the southern dairy industry and the 
     prerogative of the states under the United States 
     Constitution to form an interstate commission for the 
     southern region. The mission of the commission is to take 
     such steps as are necessary to

[[Page 12550]]

     assure the continued viability of dairy farming in the south, 
     and to assure consumers of an adequate, local supply of pure 
     and wholesome milk.
       ``The participating states find and declare that the dairy 
     industry is an essential agricultural activity of the south. 
     Dairy farms, and associated suppliers, marketers, processors 
     and retailers are an integral component of the region's 
     economy. Their ability to provide a stable, local supply of 
     pure, wholesome milk is a matter of great importance to the 
     health and welfare of the region.
       ``The participating states further find that dairy farms 
     are essential and they are an integral part of the region's 
     rural communities. The farms preserve land for agricultural 
     purposes and provide needed economic stimuli for rural 
     communities.
       ``In establishing their constitutional regulatory authority 
     over the region's fluid milk market by this compact, the 
     participating states declare their purpose that this compact 
     neither displace the federal order system nor encourage the 
     merging of federal orders. Specific provisions of the compact 
     itself set forth this basic principle.
       ``Designed as a flexible mechanism able to adjust to 
     changes in a regulated marketplace, the compact also contains 
     a contingency provision should the federal order system be 
     discontinued. In that event, the interstate commission is 
     authorized to regulate the marketplace in replacement of the 
     order system. This contingent authority does not anticipate 
     such a change, however, and should not be so construed. It is 
     only provided should developments in the market other than 
     establishment of this compact result in discontinuance of the 
     order system.
       ``By entering into this compact, the participating states 
     affirm that their ability to regulate the price which 
     southern dairy farmers receive for their product is essential 
     to the public interest. Assurance of a fair and equitable 
     price for dairy farmers ensures their ability to provide milk 
     to the market and the vitality of the southern dairy 
     industry, with all the associated benefits.
       ``Recent, dramatic price fluctuations, with a pronounced 
     downward trend, threaten the viability and stability of the 
     southern dairy region. Historically, individual state 
     regulatory action had been an effective emergency remedy 
     available to farmers confronting a distressed market. The 
     federal order system, implemented by the Agricultural 
     Marketing Agreement Act of 1937, establishes only minimum 
     prices paid to producers for raw milk, without preempting the 
     power of states to regulate milk prices above the minimum 
     levels so established.
       ``In today's regional dairy marketplace, cooperative, 
     rather than individual state action is needed to more 
     effectively address the market disarray. Under our 
     constitutional system, properly authorized states acting 
     cooperatively may exercise more power to regulate interstate 
     commerce than they may assert individually without such 
     authority. For this reason, the participating states invoke 
     their authority to act in common agreement, with the consent 
     of Congress, under the compact clause of the Constitution.

          ``ARTICLE II. DEFINITIONS AND RULES OF CONSTRUCTION

     ``Sec. 2. Definitions

       ``For the purposes of this compact, and of any supplemental 
     or concurring legislation enacted pursuant thereto, except as 
     may be otherwise required by the context:
       ``(1) `Class I milk' means milk disposed of in fluid form 
     or as a fluid milk product, subject to further definition in 
     accordance with the principles expressed in subdivision (b) 
     of section three.
       ``(2) `Commission' means the Southern Dairy Compact 
     Commission established by this compact.
       ``(3) `Commission marketing order' means regulations 
     adopted by the commission pursuant to sections nine and ten 
     of this compact in place of a terminated federal marketing 
     order or state dairy regulation. Such order may apply 
     throughout the region or in any part or parts thereof as 
     defined in the regulations of the commission. Such order may 
     establish minimum prices for any or all classes of milk.
       ``(4) `Compact' means this interstate compact.
       ``(5) `Compact over-order price' means a minimum price 
     required to be paid to producers for Class I milk established 
     by the commission in regulations adopted pursuant to sections 
     nine and ten of this compact, which is above the price 
     established in federal marketing orders or by state farm 
     price regulations in the regulated area. Such price may apply 
     throughout the region or in any part or parts thereof as 
     defined in the regulations of the commission.
       ``(6) `Milk' means the lacteral secretion of cows and 
     includes all skim, butterfat, or other constituents obtained 
     from separation or any other process. The term is used in its 
     broadest sense and may be further defined by the commission 
     for regulatory purposes.
       ``(7) `Partially regulated plant' means a milk plant not 
     located in a regulated area but having Class I distribution 
     within such area. Commission regulations may exempt plants 
     having such distribution or receipts in amounts less than the 
     limits defined therein.
       ``(8) `Participating state' means a state which has become 
     a party to this compact by the enactment of concurring 
     legislation.
       ``(9) `Pool plant' means any milk plant located in a 
     regulated area.
       ``(10) `Region' means the territorial limits of the states 
     which are parties to this compact.
       ``(11) `Regulated area' means any area within the region 
     governed by and defined in regulations establishing a compact 
     over-order price or commission marketing order.
       ``(12) `State dairy regulation' means any state regulation 
     of dairy prices, and associated assessments, whether by 
     statute, marketing order or otherwise.

     ``Sec. 3. Rules of construction

       ``(a) This compact shall not be construed to displace 
     existing federal milk marketing orders or state dairy 
     regulation in the region but to supplement them. In the event 
     some or all federal orders in the region are discontinued, 
     the compact shall be construed to provide the commission the 
     option to replace them with one or more commission marketing 
     orders pursuant to this compact.
       ``(b) The compact shall be construed liberally in order to 
     achieve the purposes and intent enunciated in section one. It 
     is the intent of this compact to establish a basic structure 
     by which the commission may achieve those purposes through 
     the application, adaptation and development of the regulatory 
     techniques historically associated with milk marketing and to 
     afford the commission broad flexibility to devise regulatory 
     mechanisms to achieve the purposes of this compact. In 
     accordance with this intent, the technical terms which are 
     associated with market order regulation and which have 
     acquired commonly understood general meanings are not defined 
     herein but the commission may further define the terms used 
     in this compact and develop additional concepts and define 
     additional terms as it may find appropriate to achieve its 
     purposes.

                 ``ARTICLE III. COMMISSION ESTABLISHED

     ``Sec. 4. Commission established

       ``There is hereby created a commission to administer the 
     compact, composed of delegations from each state in the 
     region. The commission shall be known as the Southern Dairy 
     Compact Commission. A delegation shall include not less than 
     three nor more than five persons. Each delegation shall 
     include at least one dairy farmer who is engaged in the 
     production of milk at the time of appointment or 
     reappointment, and one consumer representative. Delegation 
     members shall be residents and voters of, and subject to such 
     confirmation process as is provided for in the appointing 
     state. Delegation members shall serve no more than three 
     consecutive terms with no single term of more than four 
     years, and be subject to removal for cause. In all other 
     respects, delegation members shall serve in accordance with 
     the laws of the state represented. The compensation, if any, 
     of the members of a state delegation shall be determined and 
     paid by each state, but their expenses shall be paid by the 
     commission.

     ``Sec. 5. Voting requirements

       ``All actions taken by the commission, except for the 
     establishment or termination of an over-order price or 
     commission marketing order, and the adoption, amendment or 
     rescission of the commission's by-laws, shall be by majority 
     vote of the delegations present. Each state delegation shall 
     be entitled to one vote in the conduct of the commission's 
     affairs. Establishment or termination of an over-order price 
     or commission marketing order shall require at least a two-
     thirds vote of the delegations present. The establishment of 
     a regulated area which covers all or part of a participating 
     state shall require also the affirmative vote of that state's 
     delegation. A majority of the delegations from the 
     participating states shall constitute a quorum for the 
     conduct of the commission's business.

     ``Sec. 6. Administration and management

       ``(a) The commission shall elect annually from among the 
     members of the participating state delegations a chairperson, 
     a vice-chairperson, and a treasurer. The commission shall 
     appoint an executive director and fix his or her duties and 
     compensation. The executive director shall serve at the 
     pleasure of the commission, and together with the treasurer, 
     shall be bonded in an amount determined by the commission. 
     The commission may establish through its by-laws an executive 
     committee composed of one member elected by each delegation.
       ``(b) The commission shall adopt by-laws for the conduct of 
     its business by a two-thirds vote, and shall have the power 
     by the same vote to amend and rescind these by-laws. The 
     commission shall publish its by-laws in convenient form with 
     the appropriate agency or officer in each of the 
     participating states. The by-laws shall provide for 
     appropriate notice to the delegations of all commission 
     meetings and hearings and of the business to be transacted at 
     such meetings or hearings. Notice also shall be given to 
     other agencies or officers of participating states as 
     provided by the laws of those states.
       ``(c) The commission shall file an annual report with the 
     Secretary of Agriculture of the United States, and with each 
     of the participating states by submitting copies to the 
     governor, both houses of the legislature, and

[[Page 12551]]

     the head of the state department having responsibilities for 
     agriculture.
       ``(d) In addition to the powers and duties elsewhere 
     prescribed in this compact, the commission shall have the 
     power:
       ``(1) To sue and be sued in any state or federal court;
       ``(2) To have a seal and alter the same at pleasure;
       ``(3) To acquire, hold, and dispose of real and personal 
     property by gift, purchase, lease, license, or other similar 
     manner, for its corporate purposes;
       ``(4) To borrow money and issue notes, to provide for the 
     rights of the holders thereof and to pledge the revenue of 
     the commission as security therefor, subject to the 
     provisions of section eighteen of this compact;
       ``(5) To appoint such officers, agents, and employees as it 
     may deem necessary, prescribe their powers, duties and 
     qualifications; and
       ``(6) To create and abolish such offices, employments and 
     positions as it deems necessary for the purposes of the 
     compact and provide for the removal, term, tenure, 
     compensation, fringe benefits, pension, and retirement rights 
     of its officers and employees. The commission may also retain 
     personal services on a contract basis.

     ``Sec. 7. Rulemaking power

       ``In addition to the power to promulgate a compact over-
     order price or commission marketing orders as provided by 
     this compact, the commission is further empowered to make and 
     enforce such additional rules and regulations as it deems 
     necessary to implement any provisions of this compact, or to 
     effectuate in any other respect the purposes of this compact.

                 ``ARTICLE IV. POWERS OF THE COMMISSION

     ``Sec. 8. Powers to promote regulatory uniformity, 
       simplicity, and interstate cooperation

       ``The commission is hereby empowered to:
       ``(1) Investigate or provide for investigations or research 
     projects designed to review the existing laws and regulations 
     of the participating states, to consider their administration 
     and costs, to measure their impact on the production and 
     marketing of milk and their effects on the shipment of milk 
     and milk products within the region.
       ``(2) Study and recommend to the participating states joint 
     or cooperative programs for the administration of the dairy 
     marketing laws and regulations and to prepare estimates of 
     cost savings and benefits of such programs.
       ``(3) Encourage the harmonious relationships between the 
     various elements in the industry for the solution of their 
     material problems. Conduct symposia or conferences designed 
     to improve industry relations, or a better understanding of 
     problems.
       ``(4) Prepare and release periodic reports on activities 
     and results of the commission's efforts to the participating 
     states.
       ``(5) Review the existing marketing system for milk and 
     milk products and recommend changes in the existing structure 
     for assembly and distribution of milk which may assist, 
     improve or promote more efficient assembly and distribution 
     of milk.
       ``(6) Investigate costs and charges for producing, hauling, 
     handling, processing, distributing, selling and for all other 
     services performed with respect to milk.
       ``(7) Examine current economic forces affecting producers, 
     probable trends in production and consumption, the level of 
     dairy farm prices in relation to costs, the financial 
     conditions of dairy farmers, and the need for an emergency 
     order to relieve critical conditions on dairy farms.

     ``Sec. 9. Equitable farm prices

       ``(a) The powers granted in this section and section ten 
     shall apply only to the establishment of a compact over-order 
     price, so long as federal milk marketing orders remain in 
     effect in the region. In the event that any or all such 
     orders are terminated, this article shall authorize the 
     commission to establish one or more commission marketing 
     orders, as herein provided, in the region or parts thereof as 
     defined in the order.
       ``(b) A compact over-order price established pursuant to 
     this section shall apply only to Class I milk. Such compact 
     over-order price shall not exceed one dollar and fifty cents 
     per gallon at Atlanta, Ga., however, this compact over-order 
     price shall be adjusted upward or downward at other locations 
     in the region to reflect differences in minimum federal order 
     prices. Beginning in nineteen hundred ninety, and using that 
     year as a base, the foregoing one dollar fifty cents per 
     gallon maximum shall be adjusted annually by the rate of 
     change in the Consumer Price Index as reported by the Bureau 
     of Labor Statistics of the United States Department of Labor. 
     For purposes of the pooling and equalization of an over-order 
     price, the value of milk used in other use classifications 
     shall be calculated at the appropriate class price 
     established pursuant to the applicable federal order or state 
     dairy regulation and the value of unregulated milk shall be 
     calculated in relation to the nearest prevailing class price 
     in accordance with and subject to such adjustments as the 
     commission may prescribe in regulations.
       ``(c) A commission marketing order shall apply to all 
     classes and uses of milk.
       ``(d) The commission is hereby empowered to establish a 
     compact over-order price for milk to be paid by pool plants 
     and partially regulated plants. The commission is also 
     empowered to establish a compact over-order price to be paid 
     by all other handlers receiving milk from producers located 
     in a regulated area. This price shall be established either 
     as a compact over-order price or by one or more commission 
     marketing orders. Whenever such a price has been established 
     by either type of regulation, the legal obligation to pay 
     such price shall be determined solely by the terms and 
     purpose of the regulation without regard to the situs of the 
     transfer of title, possession or any other factors not 
     related to the purposes of the regulation and this compact. 
     Producer-handlers as defined in an applicable federal market 
     order shall not be subject to a compact over-order price. The 
     commission shall provide for similar treatment of producer-
     handlers under commission marketing orders.
       ``(e) In determining the price, the commission shall 
     consider the balance between production and consumption of 
     milk and milk products in the regulated area, the costs of 
     production including, but not limited to the price of feed, 
     the cost of labor including the reasonable value of the 
     producer's own labor and management, machinery expense, and 
     interest expense, the prevailing price for milk outside the 
     regulated area, the purchasing power of the public and the 
     price necessary to yield a reasonable return to the producer 
     and distributor.
       ``(f) When establishing a compact over-order price, the 
     commission shall take such other action as is necessary and 
     feasible to help ensure that the over-order price does not 
     cause or compensate producers so as to generate local 
     production of milk in excess of those quantities necessary to 
     assure consumers of an adequate supply for fluid purposes.
       ``(g) The commission shall whenever possible enter into 
     agreements with state or federal agencies for exchange of 
     information or services for the purpose of reducing 
     regulatory burden and cost of administering the compact. The 
     commission may reimburse other agencies for the reasonable 
     cost of providing these services.

     ``Sec. 10. Optional provisions for pricing order

       ``Regulations establishing a compact over-order price or a 
     commission marketing order may contain, but shall not be 
     limited to any of the following:
       ``(1) Provisions classifying milk in accordance with the 
     form in which or purpose for which it is used, or creating a 
     flat pricing program.
       ``(2) With respect to a commission marketing order only, 
     provisions establishing or providing a method for 
     establishing separate minimum prices for each use 
     classification prescribed by the commission, or a single 
     minimum price for milk purchased from producers or 
     associations of producers.
       ``(3) With respect to an over-order minimum price, 
     provisions establishing or providing a method for 
     establishing such minimum price for Class I milk.
       ``(4) Provisions for establishing either an over-order 
     price or a commission marketing order may make use of any 
     reasonable method for establishing such price or prices 
     including flat pricing and formula pricing. Provision may 
     also be made for location adjustments, zone differentials and 
     for competitive credits with respect to regulated handlers 
     who market outside the regulated area.
       ``(5) Provisions for the payment to all producers and 
     associations of producers delivering milk to all handlers of 
     uniform prices for all milk so delivered, irrespective of the 
     uses made of such milk by the individual handler to whom it 
     is delivered, or for the payment of producers delivering milk 
     to the same handler of uniform prices for all milk delivered 
     by them.
       ``(A) With respect to regulations establishing a compact 
     over-order price, the commission may establish one 
     equalization pool within the regulated area for the sole 
     purpose of equalizing returns to producers throughout the 
     regulated area.
       ``(B) With respect to any commission marketing order, as 
     defined in section two, subdivision three, which replaces one 
     or more terminated federal orders or state dairy regulations, 
     the marketing area of now separate state or federal orders 
     shall not be merged without the affirmative consent of each 
     state, voting through its delegation, which is partly or 
     wholly included within any such new marketing area.
       ``(6) Provisions requiring persons who bring Class I milk 
     into the regulated area to make compensatory payments with 
     respect to all such milk to the extent necessary to equalize 
     the cost of milk purchased by handlers subject to a compact 
     over-order price or commission marketing order. No such 
     provisions shall discriminate against milk producers outside 
     the regulated area. The provisions for compensatory payments 
     may require payment of the difference between the Class I 
     price required to be paid for such milk in the state of 
     production by a federal milk marketing order or state dairy 
     regulation and the Class I price established by the compact 
     over-order price or commission marketing order.

[[Page 12552]]

       ``(7) Provisions specially governing the pricing and 
     pooling of milk handled by partially regulated plants.
       ``(8) Provisions requiring that the account of any person 
     regulated under the compact over-order price shall be 
     adjusted for any payments made to or received by such persons 
     with respect to a producer settlement fund of any federal or 
     state milk marketing order or other state dairy regulation 
     within the regulated area.
       ``(9) Provision requiring the payment by handlers of an 
     assessment to cover the costs of the administration and 
     enforcement of such order pursuant to Article VII, Section 
     18(a).
       ``(10) Provisions for reimbursement to participants of the 
     Women, Infants and Children Special Supplemental Food Program 
     of the United States Child Nutrition Act of 1966.
       ``(11) Other provisions and requirements as the commission 
     may find are necessary or appropriate to effectuate the 
     purposes of this compact and to provide for the payment of 
     fair and equitable minimum prices to producers.

                   ``ARTICLE V. RULEMAKING PROCEDURE

     ``Sec. 11. Rulemaking procedure

       ``Before promulgation of any regulations establishing a 
     compact over-order price or commission marketing order, 
     including any provision with respect to milk supply under 
     subsection 9(f), or amendment thereof, as provided in Article 
     IV, the commission shall conduct an informal rulemaking 
     proceeding to provide interested persons with an opportunity 
     to present data and views. Such rulemaking proceeding shall 
     be governed by section four of the Federal Administrative 
     Procedure Act, as amended (5 U.S.C. Sec. 553). In addition, 
     the commission shall, to the extent practicable, publish 
     notice of rulemaking proceedings in the official register of 
     each participating state. Before the initial adoption of 
     regulations establishing a compact over-order price or a 
     commission marketing order and thereafter before any 
     amendment with regard to prices or assessments, the 
     commission shall hold a public hearing. The commission may 
     commence a rulemaking proceeding on its own initiative or may 
     in its sole discretion act upon the petition of any person 
     including individual milk producers, any organization of milk 
     producers or handlers, general farm organizations, consumer 
     or public interest groups, and local, state or federal 
     officials.

     ``Sec. 12. Findings and referendum

       ``(a) In addition to the concise general statement of basis 
     and purpose required by section 4(b) of the Federal 
     Administrative Procedure Act, as amended (5 U.S.C. 
     Sec. 553(c)), the commission shall make findings of fact with 
     respect to:
       ``(1) Whether the public interest will be served by the 
     establishment of minimum milk prices to dairy farmers under 
     Article IV.
       ``(2) What level of prices will assure that producers 
     receive a price sufficient to cover their costs of production 
     and will elicit an adequate supply of milk for the 
     inhabitants of the regulated area and for manufacturing 
     purposes.
       ``(3) Whether the major provisions of the order, other than 
     those fixing minimum milk prices, are in the public interest 
     and are reasonably designed to achieve the purposes of the 
     order.
       ``(4) Whether the terms of the proposed regional order or 
     amendment are approved by producers as provided in section 
     thirteen.

     ``Sec. 13. Producer referendum

       ``(a) For the purpose of ascertaining whether the issuance 
     or amendment of regulations establishing a compact over-order 
     price or a commission marketing order, including any 
     provision with respect to milk supply under subsection 9(f), 
     is approved by producers, the commission shall conduct a 
     referendum among producers. The referendum shall be held in a 
     timely manner, as determined by regulation of the commission. 
     The terms and conditions of the proposed order or amendment 
     shall be described by the commission in the ballot used in 
     the conduct of the referendum, but the nature, content, or 
     extent of such description shall not be a basis for attacking 
     the legality of the order or any action relating thereto.
       ``(b) An order or amendment shall be deemed approved by 
     producers if the commission determines that it is approved by 
     at least two-thirds of the voting producers who, during a 
     representative period determined by the commission, have been 
     engaged in the production of milk the price of which would be 
     regulated under the proposed order or amendment.
       ``(c) For purposes of any referendum, the commission shall 
     consider the approval or disapproval by any cooperative 
     association of producers, qualified under the provisions of 
     the Act of Congress of February 18, 1922, as amended, known 
     as the Capper-Volstead Act, bona fide engaged in marketing 
     milk, or in rendering services for or advancing the interests 
     of producers of such commodity, as the approval or 
     disapproval of the producers who are members or stockholders 
     in, or under contract with, such cooperative association of 
     producers, except as provided in subdivision (1) hereof and 
     subject to the provisions of subdivision (2) through (5) 
     hereof.
       ``(1) No cooperative which has been formed to act as a 
     common marketing agency for both cooperatives and individual 
     producers shall be qualified to block vote for either.
       ``(2) Any cooperative which is qualified to block vote 
     shall, before submitting its approval or disapproval in any 
     referendum, give prior written notice to each of its members 
     as to whether and how it intends to cast its vote. The notice 
     shall be given in a timely manner as established, and in the 
     form prescribed, by the commission.
       ``(3) Any producer may obtain a ballot from the commission 
     in order to register approval or disapproval of the proposed 
     order.
       ``(4) A producer who is a member of a cooperative which has 
     provided notice of its intent to approve or not to approve a 
     proposed order, and who obtains a ballot and with such ballot 
     expresses his approval or disapproval of the proposed order, 
     shall notify the commission as to the name of the cooperative 
     of which he or she is a member, and the commission shall 
     remove such producer's name from the list certified by such 
     cooperative with its corporate vote.
       ``(5) In order to insure that all milk producers are 
     informed regarding the proposed order, the commission shall 
     notify all milk producers that an order is being considered 
     and that each producer may register his approval or 
     disapproval with the commission either directly or through 
     his or her cooperative.

     ``Sec. 14. Termination of over-order price or marketing order

       ``(a) The commission shall terminate any regulations 
     establishing an over-order price or commission marketing 
     order issued under this article whenever it finds that such 
     order or price obstructs or does not tend to effectuate the 
     declared policy of this compact.
       ``(b) The commission shall terminate any regulations 
     establishing an over-order price or a commission marketing 
     order issued under this article whenever it finds that such 
     termination is favored by a majority of the producers who, 
     during a representative period determined by the commission, 
     have been engaged in the production of milk the price of 
     which is regulated by such order; but such termination shall 
     be effective only if announced on or before such date as may 
     be specified in such marketing agreement or order.
       ``(c) The termination or suspension of any order or 
     provision thereof, shall not be considered an order within 
     the meaning of this article and shall require no hearing, but 
     shall comply with the requirements for informal rulemaking 
     prescribed by section four of the Federal Administrative 
     Procedure Act, as amended (5 U.S.C. Sec. 553).

                       ``ARTICLE VI. ENFORCEMENT

     ``Sec. 15. Records; reports; access to premises

       ``(a) The commission may by rule and regulation prescribe 
     record keeping and reporting requirements for all regulated 
     persons. For purposes of the administration and enforcement 
     of this compact, the commission is authorized to examine the 
     books and records of any regulated person relating to his or 
     her milk business and for that purpose, the commission's 
     properly designated officers, employees, or agents shall have 
     full access during normal business hours to the premises and 
     records of all regulated persons.
       ``(b) Information furnished to or acquired by the 
     commission officers, employees, or its agents pursuant to 
     this section shall be confidential and not subject to 
     disclosure except to the extent that the commission deems 
     disclosure to be necessary in any administrative or judicial 
     proceeding involving the administration or enforcement of 
     this compact, an over-order price, a compact marketing order, 
     or other regulations of the commission. The commission may 
     promulgate regulations further defining the confidentiality 
     of information pursuant to this section. Nothing in this 
     section shall be deemed to prohibit (i) the issuance of 
     general statements based upon the reports of a number of 
     handlers, which do not identify the information furnished by 
     any person, or (ii) the publication by direction of the 
     commission of the name of any person violating any regulation 
     of the commission, together with a statement of the 
     particular provisions violated by such person.
       ``(c) No officer, employee, or agent of the commission 
     shall intentionally disclose information, by inference or 
     otherwise, which is made confidential pursuant to this 
     section. Any person violating the provisions of this section 
     shall, upon conviction, be subject to a fine of not more than 
     one thousand dollars or to imprisonment for not more than one 
     year, or to both, and shall be removed from office. The 
     commission shall refer any allegation of a violation of this 
     section to the appropriate state enforcement authority or 
     United States Attorney.

     ``Sec. 16. Subpoena; hearings and judicial review

       ``(a) The commission is hereby authorized and empowered by 
     its members and its properly designated officers to 
     administer oaths and issue subpoenas throughout all signatory 
     states to compel the attendance of witnesses and the giving 
     of testimony and the production of other evidence.
       ``(b) Any handler subject to an order may file a written 
     petition with the commission stating that any such order or 
     any provision

[[Page 12553]]

     of any such order or any obligation imposed in connection 
     therewith is not in accordance with law and praying for a 
     modification thereof or to be exempted therefrom. He shall 
     thereupon be given an opportunity for a hearing upon such 
     petition, in accordance with regulations made by the 
     commission. After such hearing, the commission shall make a 
     ruling upon the prayer of such petition which shall be final, 
     if in accordance with law.
       ``(c) The district courts of the United States in any 
     district in which such handler is an inhabitant, or has his 
     principal place of business, are hereby vested with 
     jurisdiction to review such ruling, provided a complaint for 
     that purpose is filed within thirty days from the date of the 
     entry of such ruling. Service of process in such proceedings 
     may be had upon the commission by delivering to it a copy of 
     the complaint. If the court determines that such ruling is 
     not in accordance with law, it shall remand such proceedings 
     to the commission with directions either (1) to make such 
     ruling as the court shall determine to be in accordance with 
     law, or (2) to take such further proceedings as, in its 
     opinion, the law requires. The pendency of proceedings 
     instituted pursuant to this subdivision shall not impede, 
     hinder, or delay the commission from obtaining relief 
     pursuant to section seventeen. Any proceedings brought 
     pursuant to section seventeen, except where brought by way of 
     counterclaim in proceedings instituted pursuant to this 
     section, shall abate whenever a final decree has been 
     rendered in proceedings between the same parties, and 
     covering the same subject matter, instituted pursuant to this 
     section.

     ``Sec. 17. Enforcement with respect to handlers

       ``(a) Any violation by a handler of the provisions of 
     regulations establishing an over-order price or a commission 
     marketing order, or other regulations adopted pursuant to 
     this compact shall:
       ``(1) Constitute a violation of the laws of each of the 
     signatory states. Such violation shall render the violator 
     subject to a civil penalty in an amount as may be prescribed 
     by the laws of each of the participating states, recoverable 
     in any state or federal court of competent jurisdiction. Each 
     day such violation continues shall constitute a separate 
     violation.
       ``(2) Constitute grounds for the revocation of license or 
     permit to engage in the milk business under the applicable 
     laws of the participating states.
       ``(b) With respect to handlers, the commission shall 
     enforce the provisions of this compact, regulations 
     establishing an over-order price, a commission marketing 
     order or other regulations adopted hereunder by:
       ``(1) Commencing an action for legal or equitable relief 
     brought in the name of the commission of any state or federal 
     court of competent jurisdiction; or
       ``(2) Referral to the state agency for enforcement by 
     judicial or administrative remedy with the agreement of the 
     appropriate state agency of a participating state.
       ``(c) With respect to handlers, the commission may bring an 
     action for injunction to enforce the provisions of this 
     compact or the order or regulations adopted thereunder 
     without being compelled to allege or prove that an adequate 
     remedy of law does not exist.

                         ``ARTICLE VII. FINANCE

     ``Sec. 18. Finance of start-up and regular costs

       ``(a) To provide for its start-up costs, the commission may 
     borrow money pursuant to its general power under section six, 
     subdivision (d), paragraph four. In order to finance the 
     costs of administration and enforcement of this compact, 
     including payback of start-up costs, the commission is hereby 
     empowered to collect an assessment from each handler who 
     purchases milk from producers within the region. If imposed, 
     this assessment shall be collected on a monthly basis for up 
     to one year from the date the commission convenes, in an 
     amount not to exceed $.015 per hundredweight of milk 
     purchased from producers during the period of the assessment. 
     The initial assessment may apply to the projected purchases 
     of handlers for the two-month period following the date the 
     commission convenes. In addition, if regulations establishing 
     an over-order price or a compact marketing order are adopted, 
     they may include an assessment for the specific purpose of 
     their administration. These regulations shall provide for 
     establishment of a reserve for the commission's ongoing 
     operating expenses.
       ``(b) The commission shall not pledge the credit of any 
     participating state or of the United States. Notes issued by 
     the commission and all other financial obligations incurred 
     by it, shall be its sole responsibility and no participating 
     state or the United States shall be liable therefor.

     ``Sec. 19. Audit and accounts

       ``(a) The commission shall keep accurate accounts of all 
     receipts and disbursements, which shall be subject to the 
     audit and accounting procedures established under its rules. 
     In addition, all receipts and disbursements of funds handled 
     by the commission shall be audited yearly by a qualified 
     public accountant and the report of the audit shall be 
     included in and become part of the annual report of the 
     commission.
       ``(b) The accounts of the commission shall be open at any 
     reasonable time for inspection by duly constituted officers 
     of the participating states and by any persons authorized by 
     the commission.
       ``(c) Nothing contained in this article shall be construed 
     to prevent commission compliance with laws relating to audit 
     or inspection of accounts by or on behalf of any 
     participating state or of the United States.

  ``ARTICLE VIII. ENTRY INTO FORCE; ADDITIONAL MEMBERS AND WITHDRAWAL

     ``Sec. 20. Entry into force; additional members

       ``The compact shall enter into force effective when enacted 
     into law by any three states of the group of states composed 
     of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, 
     Maryland, Mississippi, North Carolina, Oklahoma, South 
     Carolina, Tennessee, Texas, Virginia and West Virginia and 
     when the consent of Congress has been obtained.

     ``Sec. 21. Withdrawal from compact

       ``Any participating state may withdraw from this compact by 
     enacting a statute repealing the same, but no such withdrawal 
     shall take effect until one year after notice in writing of 
     the withdrawal is given to the commission and the governors 
     of all other participating states. No withdrawal shall affect 
     any liability already incurred by or chargeable to a 
     participating state prior to the time of such withdrawal.

     ``Sec. 22. Severability

       ``If any part or provision of this compact is adjudged 
     invalid by any court, such judgment shall be confined in its 
     operation to the part or provision directly involved in the 
     controversy in which such judgment shall have been rendered 
     and shall not affect or impair the validity of the remainder 
     of this compact. In the event Congress consents to this 
     compact subject to conditions, said conditions shall not 
     impair the validity of this compact when said conditions are 
     accepted by three or more compacting states. A compacting 
     state may accept the conditions of Congress by implementation 
     of this compact.''.

     SEC. 4. PACIFIC NORTHWEST DAIRY COMPACT.

       Congress consents to a Pacific Northwest Dairy Compact 
     proposed for the States of California, Oregon, and 
     Washington, subject to the following conditions:
       (1) Text.--The text of the Pacific Northwest Dairy Compact 
     shall be identical to the text of the Southern Dairy Compact, 
     except as follows:
       (A) References to ``south'', ``southern'', and ``Southern'' 
     shall be changed to ``Pacific Northwest''.
       (B) In section 9(b), the reference to ``Atlanta, Georgia'' 
     shall be changed to ``Seattle, Washington''.
       (C) In section 20, the reference to ``any three'' and all 
     that follows shall be changed to ``California, Oregon, and 
     Washington.''.
       (2) Limitation of manufacturing price regulation.--The 
     Dairy Compact Commission established to administer the 
     Pacific Northwest Dairy Compact (referred to in this section 
     as the ``Commission'') may not regulate Class II, Class III, 
     or Class IV milk used for manufacturing purposes or any other 
     milk, other than Class I, or fluid milk, as defined by a 
     Federal milk marketing order issued under section 8c of the 
     Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
     amendments by the Agricultural Marketing Act of 1937 
     (referred to in this section as a ``Federal milk marketing 
     order'').
       (3) Effective date.--Congressional consent under this 
     section takes effect on the date (not later than 3 year after 
     the date of enactment of this Act) on which the Pacific 
     Northwest Dairy Compact is entered into by the second of the 
     3 States specified in the matter preceding paragraph (1).
       (4) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a price regulation is in 
     effect under the Pacific Northwest Dairy Compact, the 
     Commission shall compensate the Commodity Credit Corporation 
     for the cost of any purchases of milk and milk products by 
     the Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (5) Milk marketing order administrator.--At the request of 
     the Commission, the Administrator of the applicable Federal 
     milk marketing order shall provide technical assistance to 
     the Commission and be compensated for that assistance.

     SEC. 5. INTERMOUNTAIN DAIRY COMPACT.

       Congress consents to an Intermountain Dairy Compact 
     proposed for the States of Colorado, Nevada, and Utah, 
     subject to the following conditions:
       (1) Text.--The text of the Intermountain Dairy Compact 
     shall be identical to the text of the Southern Dairy Compact, 
     except as follows:
       (A) In section 1, the references to ``southern'' and 
     ``south'' shall be changed to ``Intermountain'' and 
     ``Intermountain region'', respectively.
       (B) References to ``Southern'' shall be changed to 
     ``Intermountain ''.

[[Page 12554]]

       (C) In section 9(b), the reference to ``Atlanta, Georgia'' 
     shall be changed to ``Salt Lake City, Utah''.
       (D) In section 20, the reference to ``any three'' and all 
     that follows shall be changed to ``Colorado, Nevada, and 
     Utah.''.
       (2) Limitation of manufacturing price regulation.--The 
     Dairy Compact Commission established to administer the 
     Intermountain Dairy Compact (referred to in this section as 
     the ``Commission'') may not regulate Class II, Class III, or 
     Class IV milk used for manufacturing purposes or any other 
     milk, other than Class I, or fluid milk, as defined by a 
     Federal milk marketing order issued under section 8c of the 
     Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
     amendments by the Agricultural Marketing Act of 1937 
     (referred to in this section as a ``Federal milk marketing 
     order'').
       (3) Effective date.--Congressional consent under this 
     section takes effect on the date (not later than 3 year after 
     the date of enactment of this Act) on which the Intermountain 
     Dairy Compact is entered into by the second of the 3 States 
     specified in the matter preceding paragraph (1).
       (4) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a price regulation is in 
     effect under the Intermountain Dairy Compact, the Commission 
     shall compensate the Commodity Credit Corporation for the 
     cost of any purchases of milk and milk products by the 
     Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (5) Milk marketing order administrator.--At the request of 
     the Commission, the Administrator of the applicable Federal 
     milk marketing order shall provide technical assistance to 
     the Commission and be compensated for that assistance.

  Ms. LANDRIEU. Mr. President, today I rise, along with thirty-eight of 
my colleagues, to introduce legislation which would reauthorize the 
Northwest Dairy Compact and establish the Southern, Pacific and Inter-
mountain Compacts.
  State officials and dairy producers across the country are concerned 
that the current Federal milk marketing order pricing system does not 
fully account for regional differences in the costs of producing milk. 
As a result, 25 States, including my State of Louisiana, have passed 
legislation requesting that Congress approve their right to form 
regional compacts. The compact, when ratified by Congress, authorizes 
creation of an interstate compact commission which would guide the 
pricing of fluid milk sold in the region. Consumers, processors, 
producers, State officials and the public all participate in 
determining Class I fluid milk prices.
  The Northeast Dairy Compact, enacted in 1996, and due to expire this 
year, has proven extremely successful in balancing the interests of 
consumers, dairy farmers, processors and retailers by maintaining milk 
price stability and doing so at no cost to taxpayers.
  By ratifying the Southern Dairy Compact we have the opportunity to 
assure consumers an adequate, affordable and fresh milk supply while 
preserving the health of farms, whose social and economic contributions 
remain so critical to the vitality of our country's rural communities.
  In my State of Louisiana, over four hundred dairy farms help maintain 
economic stability in one of our Nation's poorest regions. In the past 
ten years, nearly a quarter of the dairy farms in my State have gone 
out of business, and many more are in danger of shutting down unless we 
authorize the return of milk pricing power back to the States. Had 
Louisiana been a member of a Southern Dairy Compact last year, its 468 
dairy farms would have received $11.9 million in compact payments, 
increasing income for the average Louisiana dairy farmer by nearly 
thirteen percent. This, at a time when dairy farmers are faced with 
depressed prices not seen in the last 25 years.
  There are those in Congress who have opposed dairy compacts since the 
day the idea was introduced. However, dairy compacts are not antitrade, 
do not increase milk production and milk from outside the compact 
region is not excluded from sale in the compact region. Over the past 
five years, New England's dairy farmers have put into practice the 
compact's promise of providing stable prices for farmers and consumers, 
strengthening rural communities and preserving our environment. It is 
time to allow the States the opportunity to provide their farmers the 
stability they so desperately need.
  Ms. COLLINS. Mr. President, I rise with my colleagues today to 
introduce the Dairy Consumers and Producers Protection Act. Our 
legislation reauthorizes the Northeast Interstate Diary Compact and 
allows other regions of the country to form compacts as well. In doing 
so, our bill extends to additional consumers and producers the benefits 
we enjoy in the Northeast.
  The Northeast Dairy Compact has proven successful in balancing the 
interests of processors, retailers, consumers and dairy farmers by 
maintaining milk price stability. Last year, 458 dairy farmers in Maine 
received payments under the compact totaling $4.8 million. The payments 
averaged approximately $10,500 per farmer, or enough to help farmers 
maintain viable operations, sustain rural communities, and ensure a 
reliable supply of wholesome dairy products for consumers.
  The Northeast Dairy Compact is an innovative approach to promoting 
stability in the New England dairy industry. The Compact provides for a 
commission, comprised of delegates from each State, which is granted 
the authority to set a minimum farm price for Class I (fluid) milk. The 
difference between the compact price and the Federal milk order price, 
or the ``over-order obligation,'' is paid to the commission by the 
processors. The commission then redistributes these funds to compact 
producers based on the volume of milk sold by the farmer within the 
region.
  The success of the Northeast Dairy Compact in promoting the viability 
of dairy farming and sustaining rural communities in New England has 
not gone unnoticed. Nineteen additional State legislatures have 
overwhelmingly passed compact legislation. Our legislation recognizes 
this strong support for compacts on the state level and provides 
Congressional consent for these States to join the Northeast compact or 
form compacts of their own.
  For all that the Compact accomplishes for farmers in the Northeast, 
one might think that it puts farmers from other parts of the country at 
a competitive disadvantage. However, this is not the case. The Compact 
Commission has instituted safeguards, as required by the authorizing 
legislation, that prevents the overproduction of milk. Incentive 
payments are provided to farmers who do not increase production and 
have actually led to a decrease of 0.6 percent in the amount of milk 
produced in the region. Consequently, we can be sure that surplus milk 
from the Northeast is not impacting milk markets in other regions of 
the country. It is important to note that our legislation includes the 
overproduction protections included in the original Dairy Compact 
legislation.
  The Northeast Dairy Compact is set to expire on September 30, 2001. 
While the saying goes that all good things must come to an end, I do 
not believe that ought to be the case with the Compact. Dairy farmers 
in my State agree and have written, e-mailed, and called to express to 
me their hope that Congress will extend the authorization of the 
Northeast Dairy Compact. I have appreciated hearing just how important 
the Compact is to my constituents, and I look forward to working with 
my colleagues in the Senate to see that the Diary Consumers and 
Producers Protection Act is enacted.
  Mr. JOHNSON. Mr. President, I rise today to strongly support the 
extension and the expansion of the Northeast Dairy Compact as a 
reasonable and proven way to help dairy farmers in New England and 
beyond.
  Dairy farms are truly the agricultural heart of New York State. Their 
survival is vital to the economic, social, and cultural well-being of 
the State. I am such an enthusiastic advocate for the Compact because, 
it offers the means to maintain not only healthy dairy farms in my 
State, but the rural settings and communities upon which so much of New 
York and the rest of the country depend.
  Historically, dairy prices have been subject to unpredictable and 
unacceptable fluctuations in prices. In the face

[[Page 12555]]

of such uncertainty, the current Federal price support system was 
designed to provide basic levels of assistance to dairy producers. 
Unfortunately, the support provided, while helpful, is often 
inadequate. Many dairy farmers in New York and elsewhere are unable to 
operate at a profit. As a remedy, the Dairy Compact was designed to 
provide producers with supplemental support, through assessments to 
processors, when the Marketing Order price is low. Most importantly, 
the price stability afforded by the Compact is especially important to 
farmers as a planning tool.
  As originally implemented, the Dairy Compact did not include New 
York. The Bill that has been introduced would allow New York State and 
other States in the Northeast, Southeast and elsewhere to join the 
Compact. The New York Legislature, like 25 other State Legislatures, 
has voted to join the Compact. Why? Because over the 4 years that the 
Compact has been in existence it has made the difference for many 
family farmers between surviving as a dairy producer or selling their 
land for development which is slowly decimating our rural landscape. It 
has helped us maintain a local supply of affordable milk for consumers 
including women and children throughout the Compact region at no cost 
to the government and without placing an undue burden on consumers.
  New York is an important dairy producing and consuming State. As of 
the year 2000, we had about 7,200 dairy herds and produced 11.9 billion 
pounds of milk. That year, New York ranked third behind California and 
Wisconsin in both the number of milk cows and total milk produced. The 
viability of dairy farms is very, very important to my State. If New 
York had been a member of compact that year when dairy prices were at 
rock bottom, they would have received an average payment per farm of 
$18,200. While that size payment will not lead to prosperity, it will 
help keep the farm going. Several New York dairy farms sell milk to the 
Compact, and thus receive some of these benefits. I want to ensure that 
all dairy farms are in the State can participate, and the only way to 
do that is to expand the Compact.
  Opponents of the Compact claim that if it were to be expanded, 
farmers in the Compact region would overproduce fluid milk thus driving 
prices down in other parts of the country. This is not the case. The 
Compact legislation that we propose today specifically acts to prevent 
such an over production through a supply management feature that 
rewards dairy producers in the Compact who maintain relatively stable 
levels of production. If needed, this tool could be used to control 
over-production from an expanded Compact and thus minimize negative 
impacts elsewhere.
  Other important features of the Compact that are important to 
remember include the following: It has been fully reviewed and found to 
be legal. It includes a feature to protect disadvantaged women, infant 
and children, and in fact, in the year 2000, the Compact paid the WIC 
program close to $1.8 million to reimburse WIC for any extra expense 
the program incurred under the Compact. Approximately 1 percent of 
Compact payments are similarly set aside to reimburse school lunch 
programs.


  I am concerned about the move towards consolidation in the dairy 
industry. While some concentration is to be expected, recent trends 
indicate that a few very large dairy operations and processing plants 
are grabbing up more and more. Many dairy operations are also 
succumbing to unplanned sprawl. By helping small at-risk farms stay 
afloat, the Compact is a hedge against unhealthy amounts of 
consolidation. It also helps to preserve the rural life style, the 
countryside settings with open spaces, and the economic core of 
communities that are so important to my New York and so many others.
  In sum, the Dairy Compact is an effective way for States, New York 
and others, to obtain from Congress the regulatory authority over the 
region's interstate markets for milk. It offers a price stability that 
is incredibly helpful, and it helps to slow the demise of a tradition 
that our country holds dear, the family farm.
  Ms. SNOWE. Mr. President, I rise today to join Senator Specter of 
Pennsylvania in support of the Dairy Consumers and Producers Protection 
Act of 2001. We are joined by 37 of our colleagues from New England and 
throughout the Mid-Atlantic and the Southeast.
  This legislation reauthorizes the very successful Northeast 
Interstate Dairy Compact which allows the producers of milk to, as a 
dairy farmer from York Country, ME, recently said, set a little higher 
bottom for the price of locally produced fresh milk. The current 
Compact only adds a small incremental cost to the current Federal milk 
marketing order system that already sets a floor price for fluid milk 
in New England. The bill also gives approval for States contiguous to 
the participating New England States to join, in this case, 
Pennsylvania, New York, New Jersey, Delaware, and Maryland.
  The legislation also grants Congressional approval for a new Southern 
Dairy Compact, made up of 14 States: Alabama, Arkansas, Georgia, 
Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, 
Oklahoma, South Carolina, Tennessee, Virginia, and West Virginia.
  This issue is really a State rights issue more than anything else, 
Mr. President, as the only action the Senate needs to take is to give 
its congressional consent under the Compact Clause of the United States 
Constitution, Article I, section 10, clause 3, to allow the 25 States 
to proceed with their two independent compacts.
  All of the legislatures in these twenty-five States have ratified 
legislation that allows their individual States to join a Compact, and 
the Governor of every State has signed a compact bill into law. Half of 
the States in this country, await our Congressional approval to address 
farm insecurity by stabilizing the price of fresh fluid milk on grocery 
shelves and to protect consumers against volatile price swings.
  All of the Northeast and Southern Compact States together make up 
about 28 percent of the Nation's fluid milk market--New England 
production is only about 31/2 percent of this. This is somewhat 
comparable to Minnesota and Wisconsin which together make up to 24 
percent of the fluid milk market. California makes up another 20 
percent.
  Over ninety-seven percent of the fluid milk market in New England is 
contained within the area, and fluid milk markets are local due to the 
demand for freshness and because of high transportation costs, so any 
complaints raised in other areas about unfair competition simply does 
not hold water. The existence of the Northeast Dairy Compact does not 
threaten or financially harm any other dairy farmer in the country. Nor 
is there one penny of Federal funds involved--not one cent.
  Only the consumers and the processors in the New England region pay 
to support the minimum price to provide for a fairer return to the 
area's family dairy farmers and to protect a way of life important to 
the people of the Northeast. Importantly, under the Compact, New 
England retail milk prices have been among the lowest and the most 
stable in the country. No wonder other States want to follow our lead.
  When Congress wants to try something new, it often sets up a pilot 
program to test out an idea in a particular locality or region, and 
then appraises the outcome to see if the project was successful. This 
is how the Northeast Dairy Compact originated as it was included in the 
1996 Farm bill as a three year pilot program--to sunset on April 4, 
1999--at the same time as the adoption of the required consolidation of 
Federal milk marketing orders. The milk marketing orders were extended 
until October 1, 1999 in the Omnibus Appropriations of FY 1999, which 
also automatically extended the Compact until October 1, 1999.
  Because of efforts by myself and other Compact supporters, we fought 
to receive a two-year extension of the Northeast Compact, which was 
incorporated in the Omnibus spending bill funding several government 
agencies

[[Page 12556]]

for FY 2000. The Compact will expire on September 30 of this year if no 
further action is taken by this body.
  I want to make it clear to my colleagues how important the 
continuation of the Northeast Dairy Compact is to me and the dairy 
farmers and consumers in Maine. I stand here not with my hand 
outstretched for federal farm dollars for Maine--of all income received 
by farmers in my State, only about 9 percent comes from Federal 
funding, unlike other States whose income received through Federal 
dollars is well over 75 percent--rather to urge you to support a very 
successful program that does not cost the federal government one 
penny--not one cent, and is supported by the very people who are 
affected by it.
  I plan to use every avenue open to me to make sure the Compact 
continues to operate as, once the Compact Commission is shut down even 
temporarily, it cannot magically be brought back to life again. It 
would take many months if not a year to restore the successful process 
that is now in place. I will not gamble with the livelihoods of the 
dairy farmers of Maine in that irresponsible fashion.
  All during the time of the Northeast Compact, fluid milk prices in 
New England have been among the lowest and have reflected great price 
stability. The consumers of New England have been spending a few extra 
pennies for fresh fluid milk--a recent University of Connecticut report 
recently estimated no more than 4.5 cents a gallon--to ensure a safety 
net for dairy farmers so that they can continue a historic way of life 
that is helpful to the regional economy.
  I have been pleasantly surprised that, while my mail certainly 
reflects discontent when gasoline prices rise by pennies, I have not 
received any swell of outrage of consumer complaints about milk prices 
over the last 31/2 years that the Compact has been in place. The 
reality is that the initial pilot Compact project we so thoughtfully 
created has been a huge success.
  In 2000, dairy farmers in Maine received on average, $10,500 per 
dairy farm from the Compact Commission, the governing body set up to 
keep overproduction of fluid milk in check, and among other duties, 
ensure that the Federal nutrition programs, such as the Women, Infants, 
and Children Program, or WIC, are held harmless under the Compact. In 
fact, the advocates of these federal nutrition programs support the 
Compact and serve on its commission.
  The Northeast Interstate Dairy Compact has provided the very safety 
net that we had hoped for when the Compact passed as part of the 
omnibus farm bill of 1996. The Dairy Compact has helped farmers 
maintain a stable price for fluid milk during times of volatile swings 
in farm milk prices.
  Also, consider what has happened to the number of dairy farms staying 
in business since the formation of the Dairy Compact. It is now known 
that, throughout New England, there has been a decline in the number of 
dairy farmers going out of business. In Maine, for instance, the loss 
of dairy farms was 16 percent from 1993 to 1997. The Compact then went 
into effect and from that time until now, the loss of dairy farms has 
dropped to 9 percent.
  The Compact has given dairy farmers a measure of confidence in the 
near term for the price of their milk so they have been willing to 
reinvest in their operations by upgrading and modernizing facilities, 
acquiring more efficient equipment, purchasing additional cropland and 
improving the genetic base of their herds. Without the Compact, farmers 
would not have had the courage to do these things and their lenders 
would not have had the willingness to meet their capital needs.
  The Compact has also protected future generations by helping local 
milk remain in the region and preventing dependence on milk a single 
source of milk that can lead to higher milk prices through increased 
transportation costs and increased vulnerability to natural 
catastrophes.
  The bottom line is, the Compact has helped the economies of the New 
England States. The presence of farms are protecting open spaces 
critical to every State's recreational, environmental and conservation 
interests. These open spaces also serve as a buffer to urban sprawl and 
boost tourism so important to my home state of Maine.
  Through its bylaws, the Compact has also preserved State sovereignty 
by adopting the principle of ``one state--one vote,'' requiring that 
any pricing change be approved by two-thirds of the participating 
states in the Compact.
  There are compensation procedures that are implemented by the New 
England Dairy Commission specifically to protect against increased 
production of fresh milk. The Compact requires that the Compact 
Commission take such action as necessary to ensure that a minimum price 
set by the commission for the region over the Federal milk marketing 
order floor price does not create an incentive for producers to 
generate additional supplies of milk. When there has been a rise in the 
Federal floor price for Class I fluid milk, the Compact has 
automatically shut itself off from the pricing process. Since there is 
no incentive to overproduce, there has been no rush to increase milk 
production in the Northeast as was feared by Compact opponents. No 
other region should feel threatened by a dairy compact for fluid milk 
produced and sold mainly at home.
  The consumers in the Northeast Compact area, the now in the Mid-
Atlantic area and the Southeast area, have shown their willingness to 
pay a few pennies more for their milk if the additional money is going 
directly to the dairy farmer. Environmental organizations have also 
supported dairy compacting as Compacts help to preserve dwindling 
agricultural land and open spaces.
  I urge my colleague not to look success in the face and turn the 
other way, but to support us in passing this legislation that half of 
our states have requested.
  Mrs. CLINTON. Mr. President. I am pleased to join with my colleagues 
today as an original cosponsor of the Dairy Consumers and Producers 
Protection Act of 2001. This legislation is vitally important to New 
York dairy farmers, New York's economy, and rural communities around 
the country.
  From Watertown and Glen Falls to Ithaca and Jamestown, NY farmers and 
New York farms are an invaluable part of our State's economy and its 
landscape. Agriculture is one of New York's top industries. What is 
grown in our State makes its way to homes and kitchen tables across the 
country, and around the world.
  In particular, the dairy industry is a pillar of New York's economy. 
Milk is New York's leading agricultural product, creating almost $2 
billion in receipts. And New York ranks third in the country in terms 
of the value of dairy products sold, surpassed only by California and 
Wisconsin.
  Yet, as I travel throughout New York State, I meet dairy farmers who 
are working harder, but still struggling to make ends meet. Volatile 
milk prices make it very difficult for New York dairy farmers to 
negotiate loans, to invest in expansion, and to plan for the future.
  That is why it is so important that we join with our colleagues from 
other States to expand the Northeast Dairy Compact to include New York. 
If New York had been a member of the Northeast Dairy Compact last year, 
the over 7,000 dairy farms in New York would have received an estimated 
$132.6 million in payments, an average of $18,200 for each farm, 
thereby increasing income for the average New York dairy farm by 
approximately eight percent.
  In addition, New York farmland and farms have become prime land for 
development and sprawl. We must make sure that farmers all across New 
York and around the country get the help that they need to hold onto 
their farms, and to preserve our fields and open spaces. They are an 
important part of what makes New York so unique and so beautiful.
  Helping to preserve New York's dairy farms by expanding the Northeast 
Diary Compact is the right thing to do. Not only does it ensure the 
security of our dairy farmers in New York and in other parts of the 
country, it guarantees an adequate supply of fresh milk

[[Page 12557]]

at reasonable prices and helps to preserve precious open space.
  Mr. JEFFORDS. Mr. President, today, I rise today to express my 
support for the Dairy Consumers and Producers Protection Act of 2001, 
important legislation that would re-authorized and expand the Northeast 
Dairy Compact, and ratify a Southern Compact. Growing support and 
recognition of the effectiveness and ingenuity of the Northeast Dairy 
Compact has led twenty-five States to enact compact legislation. These 
States now look to Congress to grant them the right to join the 
Northeast Compact, or to form a Southern Compact.
  It is critical that we keep pace with the demands of State 
governments, and provide them with the authority to develop a regional 
pricing mechanism for Class I (fluid) milk. Farmers across our Nation 
face radically different conditions and factors of production. 
Differences in climate, transportation, feed, energy and land value 
validate the need for regional pricing. Compacts allow States to 
address these differences and create a price level that is appropriate 
for producers, processors, retailers, and consumers.
  The Northeast Dairy Compact was originally authorized as a three-year 
pilot program in the 1996 Farm Bill. Sine July of 1997, when the 
Compact Commission first set the Class I over-order price at $16.94, 
the Northeast Dairy Compact has proven to be a great success, providing 
farmers with a fair price for their milk, protecting consumers from 
price spikes, reducing market dependency upon milk from a single 
source, controlling excess supply, and helping to preserve rural 
landscapes by strengthening farm communities. And, unlike so many of 
our country's agricultural programs, the benefits of the dairy compact 
are realized at no cost to the Federal Government.
  The Northeast Dairy Compact is managed by the Compact Commission. The 
Commission, comprised of 26 delegates from the six New England member 
States, includes producers, processors, retailers and consumer 
representatives. Each State governor appoints three or five delegates 
to represent their State's vote on the Commission. The Commission meets 
monthly to evaluate and establish the current Compact over-order price 
for Class I (fluid) milk. Using a formal rule-making process, the 
Commission hears testimony to establish a price that takes into account 
the purchasing power of the public, and the price necessary to yield a 
reasonable return to producers and distributors. Any price change 
proposed by the Commission is subject to a two-thirds vote by the State 
delegations as well as a producer referendum.
  The Compact Commission's price regulation works in conjunction with 
the Federal Government's pricing program, which establishes minimum 
prices paid to dairy farmers for their raw milk. Under the Compact, 
processors pay the difference between the Compact over-order price for 
fluid milk, currently $16,94, and the price established monthly by 
federal regulation for the same milk. The over-order premium is paid on 
class I (fluid) milk, and is only paid when the Compact over-order 
price is higher than the price set by the Federal milk marketing 
orders. Processors purchasing milk for other dairy products such as 
cheese or ice cream are not subject to the Compact's pricing 
regulations, although all farmers producing milk in the region, for any 
purpose, share equally in the Compact's benefits.
  In order to protect low-income consumers from any increases in cost 
caused by the Compact, the Compact legislation imposes regulations on 
the Commission requiring that the Women, Infants and Children, WIC 
program, as well as School Lunch Programs, must be reimbursed for any 
additional costs they may incur as a result of compact activity. Three 
percent of the pooled proceeds are set aside to fulfill these 
obligations.
  Compact legislation also contains a clause that holds the Commission 
responsible for any purchases of milk or milk products by the Commodity 
Credit Corporation, CCC, that result from the operation of the Compact. 
The Secretary of Agriculture has the authority to determine those costs 
and ensure that the Commission honors its obligations.
  After money is withheld for the WIC and School Lunch programs, as 
well the CCC, the Compact Commission makes disbursements to farmer 
cooperatives and milk handlers. These entities then make payments to 
individual farmers based on their level of production. These payments 
are only made when the Federal market order price falls below the price 
set by the Compact Commission, effectively creating a floor for milk 
prices. This, in turn, decreases price volatility in the region.
  The stability created by the Compact pricing mechanism is important 
for several reasons. It guarantees farmers a fair price for their 
product and allows them to plan for the future. Farmers, knowing that 
they can count on a fair price, can allocate money to purchase and 
repair machinery, improve farming practices, and above all, stay in 
business.
  Throughout our great Nation, the family farm continues to be a vital 
part of our rural community and agricultural infrastructure. In New 
England, and across our country, farms continue to support our rural 
economies. Farms create economic stability by supporting local 
businesses such as feed stores, farm equipment suppliers and local 
banks. The continuing disappearance of small farms is making life very 
difficult for agri-businesses and disrupting the overall rural economic 
infrastructure.
  The importance of the family farm extends well beyond the rural 
economy, however. Preservation of the family farm has important 
environmental consequences as well. Numerous environmental 
organizations have expressed their support for dairy compacts. They 
recognize the ability of compacts to protect our farms and preserve our 
dairy industry. These organizations include the Sierra Club, the 
Conservation Law Foundation and the National Trust for Historic 
Preservation. These groups, as well as numerous other environmentally 
conscious organizations, recognize farmers as good stewards of the 
land, and value the ability of farms to sustain productive use of the 
land, while preserving open space.
  Even though compacts enjoy widespread support across much of our 
country, opponents have worked tirelessly to discredit the merits of 
dairy compacts. These critics, however, must contend with the strong 
record of success that the Northeast Dairy Compact has put forth.
  During its first four years, the Northeast Compact has stood up to 
numerous legal challenges. Courts have ruled in favor of the Compact on 
every level, including the U.S. Supreme Court. The courts have 
recognized the Compact as a proper and constitutional grant of 
congressional authority, permitted under the Commerce and Compact 
clauses of the U.S. Constitution. These decisions have upheld the 
Commission's authority to regulate milk within the region, as well as 
milk produced outside of the region.
  Concerns have also been raised about the Compact's effect on 
interstate trade. Opponents of the Northeast Compact argue that 
compacts restrict the movement of milk between States that are in the 
Compact, and States that lie outside the Compact. Compacts, however, do 
not restrict the movement of milk into the region. For example, 
producers in eastern New York State benefit from the Northeast Compact. 
By shipping their milk in the region, farmers are eligible to receive 
the Compact price for their products.
  Another common misconception is that the Compact leads to 
overproduction. The Northeast Dairy Compact, however, has not led to 
overproduction during its first four years. In fact, during 2000, the 
Northeast Dairy Compact states produced 4.7 billion pounds of milk, a 
0.6 percent reduction from 1999. Since the Northeast Dairy Compact has 
been in effect, milk production in the region has risen by just 2.2 
percent. Nationally, milk production rose 7.4 percent from 1997 to 
2000. Over this same period, California, the largest

[[Page 12558]]

milk producing Sate in the country, increased its milk production by 
16.9 percent.
  To protect against overproduction, the Compact Commission has 
developed a supply management program that rewards farmers who do not 
increase production. Under the program, 7.5 cents per hundred-weight is 
withheld by the Commission. This money is refunded to producers that 
have not increased their production by more than 1 percent during the 
given year. While this program has only been in place since 2000, we 
believe that it will be a useful tool in preventing overproduction.
  Finally, opponents argue that compacts are harmful to consumers, 
especially low-income consumers. The facts show that this not the case. 
On May 2, 2001, an independent study out of the University of 
Connecticut's Food Marketing Policy Center offers new evidence 
regarding the impact of the Northeast Dairy Compact on consumer prices. 
The Food Marketing Policy Center performed a four-year analysis of 
retail milk prices using supermarket scanner data from 18 months prior 
to Compact implementation, up through July of 2000. This period of time 
captured the volatile prices preceding Compact implementation, as well 
as the pricing behavior that followed. The study found that the 
Northeast Dairy Compact was responsible for only 4.5 cents of the 29-
cent increase in retail prices following Compact implementation. The 
study concludes that wider profit margins by processors and retailers 
account for 11 cents of the 29-cent increase. Since the Compact went 
into effect, these wider profit margins have drawn nearly $50 million 
out of the pockets of New England consumers.
  The study suggests that retail stores and processors have used price 
gouging and ``tacitly collusive price conduct'' to lock in wider profit 
margins. The study states: ``Leading firms in the supermarket-marketing 
channel have used their dominant market positions to elevate retail 
prices in the Northeast Compact Region.'' In conclusion, the study 
contends: ``The major policy now facing New England consumers of fluid 
milk is not the Northeast Dairy Compact. It is the exercise of market 
power by the region's leading retailers and milk processor.'' While 
this study raises some serious concerns regarding the New England dairy 
industry, it illustrates that the effects of the Compact on consumers 
have been benign.
  A May 11, 2001 article in Cheese Market News written by Jim Tillison, 
Chairman of the Alliance of Western Producers, further addresses the 
consumer issue. Mr. Tillison writes:

       ``Now, unless I am wrong, in every dairy state there are 
     many times more consumers than dairy farmers. It would seem 
     that it would be very difficult to get compact legislation 
     passed if consumers were strongly opposed to it. That must 
     not have been the case if some 25 state legislatures have 
     passed compact legislation. What's more, 25 governors who 
     have had the power to veto state compact legislation haven't. 
     (Cheese Market News, May 11, 2001)

  Tillison continues by examining the reasons why consumers support the 
Compact. These include decreases in retail price volatility and the 
need for a fresh supply of milk. Tillison states, ``Consumers like the 
idea of milk for their kids being produced locally. Even though the 
milkman delivering ``fresh'' milk to the consumer's doorstep is a thing 
of the past, that doesn't mean that consumers don't want fresh milk.'' 
At this time, I would ask unanimous consent that Jim Tillison's 
article, ``Let's Talk About Compacts'' be submitted for the Record.
  Under our legal system, individual states have the authority to 
establish their own dairy pricing mechanism. Because of the nature and 
size of the dairy industries in the Northeast and South, states in 
these regions are better served by coming together to form a unified 
pricing mechanism. By supporting the rights of states to form dairy 
compacts, we maintain the safety and continuity of our milk supply, 
protect consumers from volatile milk prices, and conserve open land.
  Originally created as a three-year pilot program, the Northeast Dairy 
Compact has been extremely successful in demonstrating the merits of 
compacts. We no longer need to speculate about the potential effects of 
compacts. We now have the hard evidence, they are good for farmers, 
good for consumers, and good for the environment. I ask that the Senate 
recognize this by extending and expanding the Northeast Dairy Compact, 
and ratifying a Southern Compact.
  In closing, I urge the Senate to support this important legislation. 
Our States have come to us, and asked us to grant them the right to 
regulate the minimum farm price of milk, the right to save their family 
farms. We must grant them that right.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Cheese Market News, May 11, 2001]

                       Let's Talk About Compacts

                           (By Jim Tillison)

       Here we go again. The issue of dairy compacts is ``heating 
     up'' once again. Studies have been done and to now one's 
     surprise they are biased depending on which aide you are on. 
     Let's try to look past all the rhetoric to what is causing 
     all the stir and discuss the stir that is being caused.
       First, let us review the process involved in putting a 
     dairy compact in place.
       Essentially, the compact process result in negating 
     interstate commerce laws. In other words, it allows the dairy 
     producers in a number of states to regulate the price of milk 
     paid by fluid processors in those states. Any milk brought 
     into the state for fluid purposes is subject to the compact.
       The process starts with the state legislatures in each 
     state in which interested producers reside passing 
     legislation supporting putting a compact in place. Now, 
     unless I am wrong, in every dairy state there are many times 
     more consumers than dairy farmers. It would seem that it 
     would be very difficult to get compact legislation passed if 
     consumers were strongly opposed to it. That must not be the 
     case if some 25 state legislatures have passed compact 
     legislation. What's more, 25 governors who have had the power 
     to veto state compact legislation haven't.
       Arguably, this is proof that consumers are not opposed to 
     dairy compacts even though it can result in higher milk 
     prices. One reason could be that the extra revenue the 
     compact price generates over and above the federal order 
     price (when, and only when, it is higher than the set compact 
     price) goes directly to the dairy farmers.
       Another reason could be that a compact minimum Class I 
     price removes much of the volatility from consumer prices. 
     Just as there was a lot less volatility in milk prices when 
     the support price was $13.10, there is a lot less volatility 
     when Class I has a minimum price, too.
       Still another reason could be that consumers like the idea 
     of milk for their kids being produced ``locally.'' Milk isn't 
     orange juice. It has a different mystique. Even though the 
     milkman delivering ``fresh'' milk to the consumer's doorstep 
     is a thing of the past, that doesn't mean that consumers 
     don't want fresh milk. The lack of success that UHT milk and 
     powdered milks have had here as compared to Europe, one could 
     argue, is because of consumers' desire for (and the 
     availability of) fresh milk.
       One can sort of understand fluid processors opposing dairy 
     compacts. It certainly can result in higher average milk 
     costs for processors. Fortunately for the processor, the 
     consumer is apparently willing to accept the slight increase. 
     And, if one study reported on is correct, processors and 
     retailers are taking advantage of the consumer's willingness 
     as well.
       What is difficult to understand is the opposition to 
     compacts by some producers. This opposition seems to be based 
     on the fear that it will negatively affect them. This fear 
     appears to have been generated more by economic theory than 
     fact.
       The theory was based on a single premise--money makes milk, 
     more money makes more milk. A dairy compact will give 
     producers in compact states more money. This will result in 
     them producing more milk. This additional milk will go into 
     manufactured products which will hurt producers in states 
     where the majority of milk goes into cheese. At least that's 
     the theory.
       The fact is that more money hasn't brought on more milk in 
     the one compact area currently in existence. Only one of the 
     Northeast compact states, Vermont, is in the top 20 milk-
     producing states. And, the total area has not seen milk 
     production rise faster there than the national average.
       Has the Northeast Compact hurt producers in other areas of 
     the country? The answer is no. Will a Southeast Compact bring 
     on a surge of milk production? Again, the answer is no. Just 
     take a look at what happened after Class I differentials were 
     raised $1.00 per hundred weight in the Southeast in 1986. Did 
     milk production boom? Did it outstrip demand? Did cheese 
     plants spring up from Arkansas to Florida? No, no, no.
       Finally, the argument that really makes me knuckle is that 
     the Northeast Compact passage and implementation was 
     political. It wasn't mandated by Congress. It didn't stand on 
     its own two feet. Congress never got to

[[Page 12559]]

     vote on the compact on its own. It was only supposed to be a 
     transition program while federal order reform was taking 
     place. Secretary of Agriculture Dan Glickman didn't have to 
     implement it.
       Don't ask me to respond to those kind of comments. What 
     hearing was ever held or separate vote taken on forward 
     contracting? I don't recall any serious discussion of the 
     portion of a recent budget bill that exempted one county in 
     Nevada from federal order Class I differentials. Of course 
     Glickman had to implement it . . . the pet project of a 
     Vermont Democratic senior senator in an election year. Think 
     about it.
       The dairy industry has many more important issues to spend 
     political capital on. Issues that really are having, or will 
     have, an impact on it. Instead of fighting over compacts, it 
     should be working together to improve our potential for 
     growth in world markets by really pushing for fair trade, 
     dealing with environmental and food safety issues and 
     developing programs that will allow all segments of the 
     industry to continue to flourish in the 21st century.
       The views expressed by CMN's guest columnists are their own 
     opinions and do not necessarily reflect those of Cheese 
     Market News.

                          ____________________