[Congressional Record (Bound Edition), Volume 149 (2003), Part 18]
[Senate]
[Pages 25450-25462]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENT ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. LEAHY (for himself, Ms. Snowe, Mr. Burns, Mr. Jeffords, 
        Mr. Lautenberg, and Mr. Dodd):
  S. 1766. A bill to amend the Food Security Act of 1985 to prohibit 
the use of certain conservation funding to provide technical assistance 
under the conservation reserve program; to the Committee on 
Agriculture, Nutrition, and Forestry.
  Mr. LEAHY. Mr. President, today I am pleased to introduce bipartisan 
legislation with Senators Snowe, Burns, Jeffords, Lautenberg and Dodd 
to restore the conservation funding commitment Congress and the 
administration made to farmers and ranchers in the 2002 farm bill.
  Despite the historic conservation funding levels in the 2002 farm 
bill, family farmers and ranchers offering to restore wetlands, or 
offering to change the way they farm to improve air and water quality, 
continue to be rejected when they seek U.S. Department of Agriculture 
(USDA) conservation assistance. Producers are being turned away due to 
USDA's decision earlier this year to divert $158.7 million from working 
lands conservation programs to pay for the cost of administering the 
Conservation Reserve Program (CRP) and the Wetlands Reserve Program 
(WRP) despite a clear directive in the 2002 farm bill that the USDA use 
mandatory funds from the Commodity Credit Corporation (CCC) to pay for 
CRP and WRP technical assistance. In particular, USDA diverted $107.9 
million from the Environmental Quality Incentives Program (EQIP), $27.6 
from the Farmland and Ranchland Protection Program (FRPP), $14.6 
million from the Grasslands Reserve Program, and $8.6 million from the 
Wildlife Habitat Incentives Program (WHIP) to pay for CRP and WRP 
technical assistance.
  Although the 2002 farm bill clearly intended USDA to use CCC funds to 
pay for CRP and WRP technical assistance, USDA continues to ignore 
Congress's intent. The plain language of the statute and the 
legislative history, including a relevant colloquy, support this 
interpretation of the farm bill, and the General Accounting Office 
(GAO) concurred in a recent memo. I ask unanimous consent the GAO's 
memo and the text of the bill be printed in the Record following my 
remarks.
  Our legislation would override USDA's decision and prevent funds from 
working lands incentive programs like EQIP and WHIP from being diverted 
to pay for the technical assistance costs of CRP. The House Agriculture 
Subcommittee on Conservation has already approved similar legislation, 
H.R. 1907, requiring each program to pay for its own technical 
assistance needs. Our legislation parallels that effort, by requiring 
CRP to pay for its own technical assistance needs. Simply put, our 
amendment would require the Administration to honor the 2002 Farm Bill 
and mandate that technical assistance for each program is derived from 
funds provided for that program.
  By providing more than $6.5 billion for working lands programs like 
EQIP and WHIP in the 2002 farm bill, Congress dramatically increased 
funds to help farmers manage working lands to produce food and fiber 
and simultaneously enhance water quality and wildlife habitat. For 
example, EQIP helps share the cost of a broad range of land management 
practices that help the environment, include more efficient use of 
fertilizers and pesticides, and innovative technologies to store and 
reuse animal waste. In combination, these working lands programs will 
provide farmers the tools and incentives they need to help meet our 
major environmental challenges.

  Full funding for working lands incentive programs like EQIP and WHIP 
is vital to helping farmers and ranchers improve their farm management 
and meeting America's most pressing environmental challenges. Because 
70 percent of the American landscape is private land, farming 
dramatically affects the health of America's rivers, lakes and bays and 
the fate of America's rare species. Most rare species depend upon 
private lands for their survival, and many will become extinct without 
help from private landowners. When farmers and ranchers take steps to 
help improve air and water quality or assist rare species, they can 
face new costs, new risks, or loss of income. Conservation programs 
help share these costs, underwrite these risks, or offset these losses 
of income. Unless Congress provides adequate resources for these 
programs, there is little reason to hope that our farmers and ranchers 
will be able to help to meet these environmental challenges.

  In addition, USDA conservation programs promote regional equity in 
farm spending. More than 90 percent of USDA spending flows to a handful 
of large farmers in 15 midwestern and southern States. As a result, 
many farmers and ranchers who are not eligible for traditional 
subsidies--including dairy farmers, ranchers, and fruit and vegetable 
farmers--rely upon conservation programs to boost farm and ranch income 
and to ease the cost of environmental compliance. Unlike commodity 
subsidies, conservation payments flow to all farmers and all regions. 
But the farmers and ranchers who depend upon these programs--farmers 
and ranchers who already receive a disproportionately small share of 
USDA funds--have faced a disproportionately large cut in spending this 
year.

  It is time for Congress and the administration to honor the intent of 
the 2002 farm bill, by fully funding working lands conservation 
programs. The failure to adequately fund these working lands 
conservation programs is having a dramatic impact on both farmers and 
the farm economy and could become worse in future years if Congress 
does not address this matter. I urge my colleagues to support this 
important legislation.

  There being no objection, the additional material was ordered to be 
printed in the Record, as follows:

[[Page 25451]]



 Funding for Technical Assistance for Conservation Programs Enumerated 
            in Section 2701 of the 2002 Farm Bill, B-291241

                                                  October 8, 2002.
     Hon. Herb Kohl,
     Chairman.
     Hon. Thad Cochran,
     Ranking Minority Member, Subcommittee on Agriculture, Rural 
         Development, & Related Agencies, Committee on 
         Appropriations, U.S. Senate.
     Hon. Henry Bonilla,
     Chairman, Subcommittee on Agriculture, Rural Development, FDA 
         & Related Agencies, Committee on Appropriations, House of 
         Representatives.
       Subject: Funding for Technical Assistance for Conservation 
     Programs Enumerated in Section 2701 of the 2002 Farm Bill
       This responds to your letters of August 30, 2002 (form 
     Chairman Bonilla) and September 16, 2002 (from Chairman Kohl 
     and Ranking Minority Member Cochran) requesting our opinion 
     on several issues relating to funding technical assistance 
     for the wetlands reserve program (WRP) and the farmland 
     protection program (FPP). You asked for our views on the 
     following issues:
       (1) Does the annual limit on fund transfers imposed by 15 
     U.S.C. Sec. 714i (known as the section 11 cap) apply to 
     Commodity Credit Corporation (CCC) funds used for technical 
     assistance provided the WRP and FPP as authorized by the Farm 
     Security and Rural Investment Act of 2002 (2002 Farm Bill)?
       (2) Is the Department of Agriculture's Conservation 
     Operations appropriation available for technical assistance 
     for the WRP and the FPP? and
       (3) Did the Office of Management and Budget's (OMB) July 
     18, 2002, decision not to apportion funds for technical 
     assistance for the WRP and the FPP violate the Impoundment 
     Control Act. [1]
       For the reasons given below, we conclude that:
       (1) the section 11 cap does not apply to funds for 
     technical assistance provided for the conservation programs 
     enumerated in section 3841, title 16, U.S.C., as amended by 
     section 2701 of the 2002 Farm Bill;
       (2) the Conservation Operations appropriations is not an 
     available funding source for the WRP and the FPP operations 
     and associated technical assistance; and
       (3) OMB's failure to initially apportion WRP and FPP funds 
     was a programmatic delay and did not constitute an 
     impoundment under the Impoundment Control Act. Further, since 
     OMB has approved recently submitted apportionments for these 
     two programs, and since budget authority for both the WRP and 
     the FPP was made available for obligation, there was no 
     impoundment of funds in fiscal year 2002.


                               background

       Section 2701 of the 2002 Farm Bill, Pub. L. No. 107-171, 
     116 Stat. 278, 279 (enacted on May 13, 2002) (codified at 16 
     U.S.C. Sec. Sec. 3841 and 3842) amended section 1241 of the 
     Food Security Act of 1985, 16 U.S.C. Sec. 3841, to provide 
     that the Secretary of Agriculture (Secretary) shall use the 
     funds of the CCC to carry out seven conservation programs, 
     including the provision of technical assistance to, or on 
     behalf of, producers. The WRP and the FPP are among the 
     conservation programs named in the 2002 Farm Bill that are to 
     be funded with CCC funds.
       In its June 19, 2002, apportionment request, the Department 
     of Agriculture (Agriculture) asked OMB to apportion a total 
     of $587,905,000 in CCC funds to the Natural Resources 
     Conservation Service (NRCS) for both financial and technical 
     assistance related to section 3841 conservation programs. SF 
     132, Apportionment and Reapportionment Schedule for Farms 
     Security and Rural Investment Programs, Account No. 1221004, 
     July 18, 2002. Of the amount requested, Agriculture 
     designated $68.7 million for technical assistance to be 
     provided under the conservation programs. In its July 18, 
     2002, apportionment, OMB apportioned all of the funds for 
     financial and technical assistance requested for the 
     conservation programs, except $22.7 million designated for 
     WRP and FPP technical assistance. Id. OMB reports that it did 
     not apportion funds for WRP and FPP technical assistance at 
     that time, because OMB believed that the section 11 cap, 15 
     U.S.C. Sec. 714i, limited the amount of funds that could be 
     transferred from CCC to other government agencies for 
     technical assistance associated with the section 3841 
     conservation programs, and that CCC funding of WRP and FPP 
     technical assistance would exceed the section 11 cap. Letter 
     from Philip J. Perry, General Counsel, OMB, to Susan A. 
     Poling, Managing Associate General Counsel, GAO, September 
     16, 2002. In discussions with Agriculture regarding the use 
     of CCC funds in excess of the section 11 cap for section 3841 
     technical assistance, OMB indicated to Agriculture that 
     either CCC funds subject to the section 11 cap or 
     Agriculture's Conservation Operations appropriation could be 
     used to fund this technical assistance. Id.[2]
       OMB reports that Agriculture recently submitted a new 
     apportionment request for $5.95 million for WRP technical 
     assistance (as well as the Conservation Reserve Program) 
     which OMB approved on September 3, 2002. Id. OMB also reports 
     that Agriculture submitted a new apportionment request for an 
     additional $2 million in FPP financial assistance, which OMB 
     approved on September 11, 2002, bringing the total 
     apportionment for the FPP to the $50 million authorized by 
     section 381. Id.


                               discussion

                           1. Section 11 Cap

       The question whether the section 11 cap (15 U.S.C. 
     Sec. 714i) applies to technical assistance provided through 
     the conservation programs authorized by 16 U.S.C. 
     Sec. Sec. 3481, 3482, is one of statutory construction. It is 
     a well-established rule of statutory construction that 
     statutes should be construed harmoniously so as to give 
     maximum effect to both whenever possible. B-259975, Sept. 18, 
     1995, 96-1 CPD para.124; B-258163, Sept. 29, 1994. Based upon 
     the language of the relevant statutes, we can read the 
     statutes in a harmonious manner, and, in doing so, we 
     conclude that the section 11 cap does not apply to technical 
     assistance provided under the section 3841 conservation 
     programs.
       The section 11 cap is set forth in 15 U.S.C. Sec. 714i, 
     which states, in pertinent part:
       ``The Corporation may, with the consent of the agency 
     concerned, accept and utilize, on a compensated or 
     uncompensated basis, the officers, employees, services, 
     facilities, and information of any agency of the Federal 
     Government, including any bureau, office, administration, or 
     other agency of the Department of Agriculture . . . . The 
     Corporation may allot to any bureau, office, administration, 
     or other agency of the Department of Agriculture or transfer 
     to such other agencies as it may request to assist it in the 
     conduct of its business any of the funds available to it for 
     administrative expenses. . . . After September 30, 1996, the 
     total amount of all allotments and fund transfers from the 
     Corporation under this section (including allotments and 
     transfers for automated data processing or information 
     resource management activities) for a fiscal year may not 
     exceed the total amount of the allotments and transfers made 
     under this section in fiscal year 1995.''
       (Emphasis added.) We note that the section 11 funding 
     limitation applies only to funds transferred by the CCC to 
     other agencies under the authority of section 11.
       The 2002 Farm Bill, which amended subsection (a) of section 
     3841, directs the Secretary to use CCC funds to carry out the 
     WRP and the FPP and five other conservation programs, 
     including the provision of technical assistance as part of 
     these programs. As amended, 16 U.S.C. Sec. 3841 provides, in 
     pertinent part, as follows:
       ``For each of fiscal years 2002 through 2007, the Secretary 
     shall use the funds, facilities, and authorities of the 
     Commodity Credit Corporation to carry out the following 
     programs under subtitle D (including the provision of 
     technical assistance):

                           *   *   *   *   *

       (2) The wetlands reserve program under subchapter C of 
     chapter 1.

                           *   *   *   *   *

       (4) The farmland protection program under subchapter B of 
     chapter 2, using, to the maximum extent practicable--(A) 
     $50,000,000 in fiscal year 2002 * * * ''
       16 U.S.C. Sec. 3841(a) (emphasis added). Section 3841 
     provides independent authority for the provision of technical 
     services to these programs.
       The 2002 Farm Bill also added a new subsection (b) to 
     section 3841. It is this provision that has generated the 
     current dilemma: ``Nothing in this section affects the limit 
     on expenditures for technical assistance imposed by section 
     11 of the Commodity Credit Corporation Charter Act (15 U.S.C. 
     714i).'' 16 U.S.C. Sec. 3841(b). When read in the context of 
     section 11, section 3841(b) makes clear that the section 11 
     cap applies only to funds transferred under section 11. 
     Section 11 specifically imposes the cap on ``fund transfers . 
     . . under this section.'' Section 11 by its terms clearly 
     does not apply to amounts transferred under other authority, 
     such as section 3841(a). And we read section 3841(b) to make 
     plain that, while the section 11 cap continues to apply to 
     amounts transferred under section 11, it does not apply to 
     amounts transferred by section 3841(a).
       Accordingly, reading the above provisions harmoniously, we 
     conclude that: (1) the section 11 cap by its own terms 
     applies only to CCC funds transferred to other agencies under 
     section 11; (2) 16 U.S.C. Sec. 3841(a) provides independent 
     authority for the Secretary to fund the seven conservation 
     programs named in that section out of CCC funds; and (3) 16 
     U.S.C. Sec. 3841(b) makes it clear that, while the section 11 
     cap still applies to funds transferred by the CCC to other 
     government agencies for work performed pursuant to the 
     authority of section 11, the section 11 cap does not apply to 
     the seven conservation programs that are funded with CCC 
     funds under the authority of 16 U.S.C. Sec. 3841(a).
       Our conclusion that the section 11 cap does not apply to 
     the seven conservation programs of section 384(a) is 
     confirmed by a review of the legislative history of the 2002 
     Farm Bill, which shows that the Congress was attempting to 
     make clear that section 3841 technical assistance was not 
     affected by the section 11 cap. The legislative history to 
     the 2002 Farm Bill unambiguously supports the view that the 
     Congress did not intend the

[[Page 25452]]

     section 11 cap to limit the funding for technical assistance 
     provided under the section 3841 conservation programs. In 
     discussing the cap the Conference Committee stated: ``The 
     Managers understand the critical nature of providing adequate 
     funding for technical assistance. For that reason, technical 
     assistance should come from individual program funds.'' H.R. 
     Conf. Rep. No. 107-424 at 497 (May 1, 2002) (emphasis added). 
     In discussing administration and funding of these 
     conservation programs, the Conference Committee further 
     explained that:
       The Managers provide that funds for technical assistance 
     shall come directly from the mandatory money provided for 
     conservation programs under Subtitle D. (Section 2701).
       In order to ensure implementation, the Managers believe 
     that technical assistance must be an integral part of all 
     conservation programs authorized for mandatory funding. 
     Accordingly, the Managers have provided for the payment of 
     technical assistance from program accounts. The Managers 
     expect technical assistance for all conservation programs to 
     follow the model currently used for the EQIP whereby the 
     Secretary determines, on an annual basis, the amount of 
     funding for technical assistance. Furthermore, the Managers 
     intend that the funding will cover costs associated with 
     technical assistance, such as administrative and overhead 
     costs.''
       H.R. Conf. Rep. No. 107-424 at 48-499 (2002) (Emphasis 
     added).
       The ``EQIP model'' that the conferees referred to was 
     established in the Federal Agriculture Improvement and Reform 
     Act of 1996, Pub. L. No. 104-127, Subtitle E, Sec. 341, 110 
     Stat. 888, 1007 (1996) (1996 Farm Bill). For fiscal years 
     1996 through 2002, the Secretary was to use CCC funds to 
     carry out the CRP, WRP and the Environmental Quality 
     Incentives programs (EQIP). [3] Id. (Former 16 U.S.C. 
     Sec. 3841(a)). More specifically, the 1996 Farm Bill 
     authorized the Secretary to use CCC funds for technical 
     assistance (as well as cost-share payments, incentive 
     payments, and education) under the EQIP program. 16 U.S.C. 
     Sec. 3841(b). Id. [4] While the 1996 Farm Bill authorized the 
     use of CCC funds to carry out the CRP and WRP programs, it 
     did not specifically authorize the funding of technical 
     assistance out of program funds as it did for EQIP.
       Importantly, five days before enactment of the 2002 Farm 
     Bill when the Senate was considering the Conference Report on 
     the Farm Bill, a colloquy among Senators Harkin, Chairman, 
     Senate Agriculture, Nutrition and Forestry Committee, Lugar, 
     its Ranking Republican Member, and Cochran, an Agriculture 
     Committee member, [5] makes it unmistakably clear that the 
     section 11 cap was not meant to apply to the provision of 
     technical assistance with respect to any of the conservation 
     programs named in 16 U.S.C. Sec. 3841(a):
       ``Mr. LUGAR. Mr. President, I wish to engage in a colloquy 
     with the distinguished Senators from Iowa and Mississippi. 
     Mr. President, the 1996 farm bill contained a provision which 
     led to serious disruption in the delivery of conservation 
     programs. Specifically, the 1996 act placed a cap on the 
     transfers of Commodity Credit Corporation funds to other 
     government entities. Is the distinguished Senator from Iowa 
     aware of the so-called ``section 11 cap?''
       Mr. HARKIN. I thank the Senator from Indiana for raising 
     this issue, because it is an important one. The Section 11 
     cap prohibited expenditures by the Commodity Credit 
     Corporation beyond the Fiscal Year 1995 level to reimburse 
     other government entities for services. Unfortunately, in the 
     1996 farm bill, many conservation programs were 
     unintentionally caught under the section 11 cap. As a result, 
     during the past 8 years, conservation programs have had 
     serious shortfalls in technical assistance. There was at 
     least one stoppage of work on the Conservation Reserve 
     Program. The Appropriations Committees have had to respond to 
     the problem ad hoc by redirecting resources and providing 
     emergency spending to deal with the problem. This has been a 
     problem not just in my state of Iowa or in your states of 
     Indiana and Mississippi; it has been a nationwide constraint 
     on conservation.
       Mr. COCHRAN. I thank the Chairman for the clarification, 
     and I would inquire whether the legislation under 
     consideration here today will fix the problem of the section 
     11 cap for conservation programs.
       Mr. HARKIN. I thank the Senator from Mississippi for his 
     attention to this important issue. Section 2701 [16 U.S.C. 
     Sec. 3841] of the Farm Security and Rural Investment Act of 
     2002 recognizes that technical assistance is an integral part 
     of each conservation program. Therefore, technical assistance 
     will be funded through the mandatory funding for each program 
     provided by the bill. As a result, for directly funded 
     programs, such as the Conservation Security Program (CSP) and 
     the Environmental Quality Incentives Program (EQIP), funding 
     for technical assistance will come from the borrowing 
     authority of the Commodity Credit Corporation, and will no 
     longer be affected by section 11 of the CCC Charter Act.
       For those programs such as the CRP, WRP, and the Grasslands 
     Reserve Program (GRP), which involve enrollment based on 
     acreage, the technical assistance funding will come from the 
     annual program outlays apportioned by OMB again, from the 
     borrowing authority of the CCC. These programs, too, will no 
     longer be affected by section 11 of the CCC Charter Act. This 
     legislation will provide the level of funding necessary to 
     cover all technical assistance costs, including training; 
     equipment; travel; education, evaluation and assessment, and 
     whatever else is necessary to get the programs implemented.
       Mr. LUGAR. I thank the Chairman for that clarification. 
     With the level of new resources and new workload that we are 
     requiring from the Department, and specifically the Natural 
     Resources Conservation Service, I hear concerns back in my 
     state that program delivery should not be disrupted, and the 
     gentleman has reassured me that it will not.''
       148 Cong. Rec. S3979, 4020 (daily ed. May 8, 2002) 
     (emphasis added). In our view, the Congress intended all 
     funding for the seven conservation programs authorized in 
     section 3841 (Sec. 2701 of the 2002 Farm Bill), including 
     funding for technical assistance, to be mandatory funding 
     drawn from individual program funds, rather than from CCC's 
     administrative funds that are subject to the section 11 cap. 
     Accordingly, based on the language of 3841, we conclude that 
     the section 11 cap does not apply to funds for technical 
     assistance provided under the conservation programs 
     enumerated in section 3841.
       2. Availability of the Conservation Operations 
     Appropriation. The next issue is whether the Department of 
     Agriculture's Conservation Operations appropriation is 
     available for technical assistance for the WRP and the FPP. 
     As noted above, this issue arose when OMB advised Agriculture 
     that its Conservation Operations appropriation could be used 
     to fund this technical assistance. For the reasons that 
     follow, we conclude that Agriculture may not use its 
     Conservation Operations appropriation to fund the WRP and 
     FPP.
       The fiscal year 2002 Appropriation for the Conservation 
     Operations account provides in pertinent part:


     Natural Resources Conservation Service Conservation Operations

       ``For necessary expenses for carrying out the provisions of 
     the Act of April 27, 1935 (16 U.S.C. 590a-f), including 
     preparation of conservation plans and establishment of 
     measures to conserve soil and water (including farm 
     irrigation and land drainage and such special measures for 
     soil and water management as may be necessary to prevent 
     floods and the siltation of reservoirs and to control 
     agricultural related pollutants); operation of conservation 
     plant materials centers; classification and mapping of soil; 
     dissemination of information; acquisition of lands, water, 
     and interests therein for use in the plant materials program 
     by donation, exchange, or purchase. . . .''
       Pub. L. No. 107-76, 115 Stat. 704 at 717, 718 (2001). In 
     addition to its availability to carry out the provisions of 
     the Act of April 27, 1935 (16 U.S.C. Sec. 590a-f), the fiscal 
     year 2002 Conservation Operations appropriation is also 
     available to carry out a variety of other specified programs 
     such as those authorized by 7 U.S.C. Sec. 428a, 7 U.S.C. 
     Sec. 2209b, 7 U.S.C. Sec. 2250a, Sec. 202(c) of title II of 
     the Colorado River Basin Salinity Control Act of 1974 (43 
     U.S.C. Sec. 1592(c)): section 706(a) of the Organic Act of 
     1944 (7 U.S.C. Sec. 2225), for employment under 5 U.S.C. 
     Sec. 3109 and 16 U.S.C. Sec. 590e-2.
       OMB asserts that the language of the Conservation 
     Operations appropriation and the Act of April 27, 1935 cited 
     therein are broad enough to encompass the technical 
     assistance that Agriculture will provide under the WRP, the 
     FPP and the other section 3841 conservation programs. Since 
     the technical services provided by Agriculture under the WRP 
     and the FPP (and other section 3841 conservation programs) 
     fall within the general purposes articulated in the fiscal 
     year 2002 Conservation Operations appropriation, OMB 
     considers the Conservation Operations appropriation as an 
     additional available source of funding for technical 
     assistance provided as part of the section 3841 conservation 
     programs. In other words, the Conservation Operations 
     appropriation is available to continue financing for the FPP 
     and the WRP, when, in OMB's view, the section 11 cap limits 
     the availability of CCC funds for those programs. We do not 
     agree.
       First, the Conservation Operations appropriation identifies 
     specific programs that it is available to fund, including the 
     authority to carry out the provisions of the Act of April 27, 
     1935 (16 U.S.C. Sec. 590a-f) cited by OMB above. However, 
     none of the specific statutory programs identified in the 
     Conservation Operations appropriation include the FPP or the 
     WRP found in 16 U.S.C. Sec. Sec. 3838h-3838i and 3837-3737f, 
     respectively. The FPP and the WRP were authorized by Title 
     XII of the Food Security Act of 1985, as amended, and the 
     provisions of the Food Security Act of 1985 are not among the 
     statutes listed in the Conservation Operations appropriation 
     as an object of that appropriation. Thus, the Conservation 
     Operations appropriation by its own terms does not finance 
     Agriculture programs and activities under the Food Security 
     Act. [6] [7]
       Second, even if the language of the Conservation Operations 
     appropriation could reasonably be read to include the WRP and 
     the FPP, section 3841, as amended by the 2002 Farm Bill, very 
     specifically requires that funding for technical assistance 
     will come

[[Page 25453]]

     from the ``funds, facilities, and authorities'' of the CCC. 
     Indeed, the statute is unequivocal--the Secretary ``shall use 
     the funds'' of the CCC to carry out the seven conservation 
     programs, including associated technical assistance. It is 
     well settled that even an expenditure that may be reasonably 
     related to a general appropriation may not be paid out of 
     that appropriation where the expenditure falls specifically 
     within the scope of another appropriation. 63 Comp. Gen. 422, 
     427-28, 432 (1984); B-290005, July 1, 2002.[8]
       Third, this view is supported by the Senate colloquy on the 
     2002 Farm Bill Conference report:
       ``Mr. COCHRAN. It is then my understanding that, under the 
     provisions of this bill, the technical assistance necessary 
     to implement the conservation programs will not come at the 
     expense of the good work already going on in the countryside 
     in conservation planning, assistance to grazing lands, and 
     other activities supported within the NRCS conservation 
     operations account. And, further, this action will relieve 
     the appropriators of an often reoccurring problem.
       Mr. HARKIN. Both gentlemen are correct. The programs 
     directly funded by the CCC-EQIP, FPP, WHIP, and the CSP--as 
     well as the acreage programs--CRP, WRP, and the GRP--include 
     funding for technical assistance that comes out of the 
     program funds. And this mandatory funding in no way affects 
     the ongoing work of the NRCS Conservations Operations 
     Program.''
       148 Cong. Rec. S3979, 4020 (daily ed. May 8, 2002) 
     (emphasis added). This colloquy underscores the understanding 
     that the 2002 Farm Bill specifically requires that funding 
     for technical assistance will come from the borrowing 
     authority of the CCC and will not interfere with other 
     activities supported by the Conservation Operations 
     appropriation.
       Furthermore, before passage of the 1996 Farm Bill, which 
     made a number of conservation programs, including the WRP, 
     mandatory spending programs, the WRP received a separate 
     appropriation for that purpose. In other words, before the 
     1996 farm bill provided CCC funding to run the program, the 
     WRP was not funded out of the Conservation Operations 
     appropriation. Pub. L. No. 103-330, 108 Stat. 2453 (1994); 
     Pub. L. No. 102-142, 105 Stat. 897 (1991). Moreover, 
     Agriculture has previously concluded that the Conservation 
     Operations appropriation is not available to fund technical 
     assistance with respect to programs authorized under 
     provisions of the Food Security Act. Their reasoning tracks 
     ours--the provisions of the Food Security Act are not among 
     the statutes cited in the Conservation Operations 
     appropriation. Memorandum from Stuart Shelton, Natural 
     Resources Division to Larry E. Clark, Deputy Chief for 
     Programs, Natural Resources Conservation Service and P. 
     Dwight Holman, Deputy Chief for Management, Natural Resources 
     Conservation Service, October 7, 1998 (Conservation 
     Operations appropriation is not available to fund technical 
     assistance for the Conservation Reserve Program); GAO/RCED-
     99-247R, Conservation Reserve Program Technical Assistance, 
     at 9 (Aug. 5, 1999).
       Thus, the Conservation Operations appropriation is not an 
     available funding source for WRP and FPP operations and 
     associated technical assistance. To the extent that 
     Agriculture might have used the Conservation Operations 
     appropriation for WRP, Agriculture would need to adjust its 
     accounts accordingly, deobligating amounts it had charged to 
     the Conservation Operations appropriation and charging those 
     amounts to the CCC funds. We note that in this event OMB 
     would need to apportion additional amounts from CCC funds to 
     cover such obligations.
       3. Impoundment Control Act
       The last question is whether OMB's July 18, 2002, decision 
     not to apportion funds for technical assistance for the WRP 
     and the FPP constitutes an impoundment under the Impoundment 
     Control Act of 1974. Based upon the most recent information 
     provided by OMB, to the extent OMB did not initially 
     apportion funds for the FPP or the WRP, the delay was 
     programmatic and did not constitute an impoundment of funds. 
     Also, based on information recently provided by OMB, no 
     impoundment of funds is occurring with respect to the FPP or 
     the WRP.
       We generally define an impoundment as any action or 
     inaction by the President, the Director of OMB or any federal 
     agency that delays the obligation or expenditure of budget 
     authority provided in law. Glossary or Terms Used in the 
     Federal Budget Process, Exposure Draft, GAO/AFMD-2.1.1, Page 
     52 (1993).[9] However, our decisions distinguish between 
     programmatic withholdings outside the reach of the 
     Impoundment Control Act and withholdings of budget authority 
     that qualify as impoundments subject to the Act's 
     requirements. B-290659, July 24, 2002. Sometimes delays are 
     due to legitimate program reasons. Programmatic delays 
     typically occur when an agency is taking necessary steps to 
     implement a program even if funds temporarily go unobligated. 
     Id. Such delays do not constitute impoundments and do not 
     require the sending of a special message to the House of 
     Representatives and the Senate under 2 U.S.C. Sec. 684(a). 
     Id.
       Here, OMB initially did not apportion funds for WRP and FPP 
     technical assistance because it believed the section 11 cap 
     was applicable and would be exceeded. OMB's General Counsel 
     states that OMB reserved apportioning budget authority to 
     discuss its funding concerns with Agriculture. These funding 
     concerns generated a ``vigorous and healthy internal legal 
     discussion'' between the Department of Agriculture and OMB. 
     Letter from Nancy Bryson, General Counsel, Department of 
     Agriculture to the Honorable Tom Harkin, Chairman, Senate 
     Committee on Agriculture, Nutrition and Forestry, September 
     24, 2002. Since OMB delayed apportionment of technical 
     assistance funds because of uncertainty concerning the 
     applicability of statutory restrictions and since OMB 
     approved Agriculture's subsequent apportionment requests, we 
     conclude that OMB did not impound funds under the Impoundment 
     Control Act. See B-290659, July 24, 2002 (delay in obligating 
     funds because of uncertainty whether statutory conditions 
     were met did not constitute an impoundment).
       As noted above, according to OMB, Agriculture recently 
     submitted revised apportionment requests for technical 
     assistance for both the FPP and the WRP, and OMB has approved 
     the revised apportionments. For the FPP, Agriculture 
     requested an additional apportionment for financial 
     assistance of $2 million, bringing the total amount available 
     for obligation to $50 million. Thus, the entire $50 million 
     in FPP funds authorized by section 3841 have been 
     apportioned. Since OMB advises that it has apportioned the 
     full funding amount and that is available for obligation, 
     these funds were not impounded for the FPP.
       As for the WRP funding, as noted above, on June 19, 2002, 
     Agriculture asked OMB to apportion a total of $20,655,000 for 
     WRP technical assistance. OMB did not apportion this amount. 
     SF 132, Apportionment and Reapportionment Schedule for Farms 
     Security and Rural Investment Programs, Account No. 1221004, 
     July 18, 2002. On August 30, 2002, Agriculture requested an 
     apportionment of WRP (and CRP) technical assistance for 
     totaling $5,950,000. SF 132, Apportionment and 
     Reapportionment Schedule for Commodity Credit Corporation 
     Reimbursable Agreements and Transfers to State and Federal 
     Agencies, Account No. 12X4336. On September 3, 2002, OMB 
     approved this request and apportioned $5,950,000. Id. Since 
     OMB apportioned the budget authority for the WRP and it was 
     made available for obligation, there was no impoundment of 
     funds in fiscal year 2002.
       While the present record does not establish an impoundment 
     of the fiscal year 2002 funds appropriated for the WRP and 
     the FPP, we will continue to monitor this situation to ensure 
     that any impoundment that might occur in fiscal year 2003 for 
     conservation programs is timely reported.
       We hope you find this information useful. If you have any 
     questions, please contact Susan Poling, Managing Associate 
     General Counsel, or Thomas Armstrong, Assistant General 
     Counsel, at 202-512-5644. We are sending copies of this 
     letter to the Secretary of Agriculture, Director of the 
     Office of Management and Budget, the Chairman and Ranking 
     Minority Members of the House and Senate Agriculture 
     Committees and other interested Congressional Committees. 
     This letter will also be available on GAO's home page at 
     http://www.gao.gov.
                                                Anthony H. Gamboa,
                                                  General Counsel.

                            B-291241 Digests

       1. 15 U.S.C. Sec. 724i authorizes the Commercial Credit 
     Corporation (CCC) to use employees from other agencies, and, 
     subject to a maximum limitation set at the fiscal year 1995 
     level (the ``section 11 cap''), CCC may make transfers from 
     its funds available for administrative purposes to those 
     agencies to reimburse them for their assistance to CCC in the 
     conduct of its business. 16 U.S.C. Sec. 3841 (as amended by 
     section 2701 of the 2002 Farm Bill, enacted May 13, 2002) 
     specifically provides that the Secretary of Agriculture 
     ``shall use the funds'' of the CCC to carry out seven 
     conservation programs (including the wetlands reserve program 
     and the farm protection program) named therein, including 
     technical assistance. Based upon the language of the 
     statutes, we conclude that the section 11 cap does not apply 
     to technical assistance provided under the section 3841 
     conservation programs.
       2. 16 U.S.C. Sec. 3841 specifically provides that the 
     Secretary of Agriculture ``shall use the funds'' of the 
     Commercial Credit Corporation (CCC) to carry out seven 
     conservation programs (including the wetlands reserve program 
     and the farm protection program) named therein, including 
     technical assistance. Therefore, the Secretary is required to 
     see CCC funds for the conservation programs named in section 
     3841, including for technical assistance, rather than funds 
     from the Department of Agriculture's more general 
     Conservation Operations appropriation.
       3. Where the Office of Management and Budget (OMB) 
     initially did not apportion funds for technical assistance 
     for the wetlands reserve program (WRP) and the farm 
     protection program (FPP) because of OMB's uncertainty 
     concerning applicability of statutory funding restrictions, 
     and where OMB subsequently approved the Department of 
     Agriculture's revised apportionment requests for the WRP and 
     the FPP, the delay

[[Page 25454]]

     in apportioning funds was programmatic and did not constitute 
     an impoundment of funds.


                                 notes

       [1] In addition to the WRP and the FPP, Chairman Kohl and 
     Senator Cochran asked about the Conservation Reserve Program 
     (CRP) as one of the programs for which OMB had failed to 
     apportion funds. The letter arrived after we had already 
     received a response to a detailed set of inquiries sent to 
     OMB and Agriculture regarding the WRP and the FPP. In the 
     interest of time, we did not send a second letter asking OMB 
     to address the CRP program. However, the CRP is covered by 
     the same general authorities applicable to the WRP and the 
     FPP. The CRP is also a program authorized by the Food 
     Security Act of 1985, as amended. Therefore, to the extent 
     funds were not apportioned for the CRP under the same 
     circumstances as the FPP and the WRP, the same legal 
     principles outlined herein should apply.
       [2] The Department of Agriculture concurred with OMB's 
     responses to our substantive questions regarding these 
     issues. Letter from Nancy Bryson, General Counsel, Department 
     of Agriculture to Susan A. Poling, Managing Associate General 
     Counsel, GAO, September 16, 2002.
       [3] EQIP is a voluntary conservation program for farmers 
     and ranchers that promotes agricultural production and 
     environmental quality as compatible national goals. EQIP 
     offers financial and technical help to assist eligible 
     participants install or implement structural and management 
     practices on eligible agricultural land. http://
www.nrcs.usda.gov/programs/eqip.
       [4] The 1996 Farm Bill required that for fiscal years 1996 
     through 2002, 50 percent of the funding available for 
     technical assistance, cost-share payments, incentive 
     payments, and education under EQIP be targeted at practices 
     relating to livestock production.
       [5] Chairman Harkin and Senator Cochran were Managers on 
     the part of the Senate for the Conference Committee on the 
     2002 Farm Bill.
       [7] For fiscal year 1999, the Natural Resources 
     Conservation Service sought to add language to the 
     Conservation Operations appropriation to provide authority to 
     expand the use of Conservation Operations funds to support 
     the technical assistance activities of other programs 
     administered by NRCS such as EQIP, WRP and CRP. Hearings 
     before the House Committee on Appropriations, Subcommittee on 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies Appropriations for Fiscal Year 1999, 
     105th Cong., 2nd Sess., Part 3 at 776 (1998). The language 
     was not included in the final version of the Agriculture 
     Appropriations Act for fiscal year 1999.
       [8] OMB cites language in the legislative history of the 
     Fiscal Year 2002 appropriations act that appears to support 
     the use of the Conservation Operations appropriation for 
     conservation technical assistance, and in particular WRP and 
     CRP assistance. Our own review of the legislative history 
     finds language that indicates a congressional intent that 
     technical assistance for the conservation programs in 
     question must be funded from CCC funds. However, in view of 
     the subsequent enactment of the 2002 Farm Bill, which 
     specifically and unequivocally requires that funding for 
     technical assistance for conservation programs named in 16 
     U.S.C. Sec. 3841 shall come from CCC funds, we do not 
     consider the legislative history controlling.
       [9] There are two types of impoundment actions--deferrals 
     and rescissions. A deferral is a temporary withholding or 
     delay in obligating or any other type of executive action 
     which effectively precludes the obligation or expenditure of 
     budget authority. Glossary of Terms Used in the Federal 
     Budget Process, Exposure Draft, GAO/AFMD-2.1.1, Page 38 
     (1993). Deferrals are authorized only to provide for 
     contingencies, to achieve savings made possible by changes in 
     requirements or greater efficiency of operations, or as 
     otherwise specifically provided by law. See 2 U.S.C. 
     Sec. 684. A rescission involves the cancellation of budget 
     authority previously provided by Congress (before that 
     authority would otherwise expire) and can be accomplished 
     only through legislation enacted by Congress that cancels the 
     availability of budgetary resources previously provided by 
     law. See Glossary of Terms Used in the Federal Budget 
     Process, Exposure Draft, GAO/AFMD-2.1.1, Page 70 (1993).
                                  ____


                                S. 1766

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

     SECTION 1. PROHIBITION ON USE OF CERTAIN CONSERVATION FUNDING 
                   FOR TECHNICAL ASSISTANCE FOR CONSERVATION 
                   RESERVE PROGRAM.

       Section 1241(b)(1) of the Food Security Act of 1985 (16 
     U.S.C. 3841(b)(1)) is amended by inserting before the period 
     at the end the following: ``(other than the conservation 
     reserve program under subchapter B of chapter 1)''.

  Ms. SNOWE. Mr. President, I rise today to join my colleagues, Senator 
Leahy and Senator Burns, in cosponsoring the Conservation Technical 
Assistance Act to preserve funding for our Nation's working lands 
conservation programs. Through these valuable programs, farmers across 
the country are able to participate in voluntary farmland, grassland, 
environmental and wildlife conservation programs that balance 
stewardship goals with on-farm production. For many States that do not 
receive large crop subsidies, including Maine, conservation programs 
are the principal source of Federal assistance and are a valuable tool 
for helping small and specialty crop growers enhance their production 
while caring for the land.
  This legislation does not set new policy, rather it reinforces the 
mandates Congress made in the 2002 farm bill. Congress recognized the 
importance of conservation in agriculture by significantly increasing 
funding for the working lands conservation programs in the 2002 farm 
bill. Under the new farm law, the U.S. Department of Agriculture (USDA) 
should have expanded the opportunity for farmers to practice 
environmental stewardship.
  Unfortunately, the USDA has not followed through on congressional 
intent. Over the past year, the USDA has diverted $158 million from the 
Environmental Quality Incentives Program (EQIP), the Farm and Ranchland 
Protection Program (FRPP), the Wildlife Habitat Improvement Program 
(WHIP), and the Grassland Reserve Program (GRP) to pay for technical 
assistance of the Conservation Reserve Program (CRP). As a result of 
these actions, countless numbers of farmers were prevented from 
participating in working lands conservation programs.
  Without corrective action, farmers' conservation options will be 
curtailed even more severely as the USDA transfers funding to other 
programs in the Department. I join my distinguished colleagues today 
because I believe it is high time that Congress intervene with a 
solution.
  The northeast is home to an incredible array of agricultural products 
grown by producers both large and small, and, in some cases, sold 
locally or nationally. In northern Maine, fields of potatoes stretch 
for miles along the rolling hills of Aroostook County. Along the 
eastern coast, wild blueberry barrens dot the maritime horizon. Diary 
farms populate much of inland Maine, and nearly every other type of 
speciality crop is grown in farms across the State. Despite the unique 
needs of each grower, the one common thread between these farmers is 
their nearly unanimous support for the additional commitment Congress 
made to working lands conservation programs in the 2002 farm bill.
  These programs are the State's most effective and substantial source 
of Federal agricultural support. EQIP, FRPP, WHIP, and GRP make up the 
lion's share of funding for many States that do not grow traditionally 
subsidized row crops. Maine, with its diverse agricultural sector, is a 
prime example of a State that relies on working lands conservation 
programs to both enhance production and conserve our natural resources. 
Funds from these programs can be used for projects such as irrigation 
assistance, water quality, soil erosion control, crop rotation, and 
other practices. Yet, we are finding these very programs and the 
benefit they provide being cut by the very department that is tasked 
with funding them, the U.S. Department of Agriculture.
  In fiscal year 2003, the USDA diverted over $158 million from key 
working lands conservation programs to pay for technical assistance for 
CRP. The funding shortfall created by this diversion has dramatically 
reduced the available resources for EQIP, FRPP, WHIP, and GRP and led 
our States to have to deny assistance to countless willing farmers. As 
more acres become available to be enrolled in CRP in future years and 
the program's technical assistance costs rise, the impact on working 
lands conservation programs will become more severe.
  It would have been unnecessary to raid working lands conservation 
programs to pay for CRP had the Department adhered to the specific 
language in the 2002 farm bill. In fact, Congress anticipated the need 
to fund technical

[[Page 25455]]

assistance for CRP and provided specific language in the 2002 farm bill 
directing the Department to use mandatory funding to pay for CRP 
technical assistance.
  Until we can reach a broader agreement on implementation of the 2002 
farm bill provision on conservation technical assistance, it is 
imperative that we take steps to hold our working lands conservation 
programs harmless. This legislation does this by simply, but 
explicitly, stating that the USDA may not take funding from working 
lands conservation programs to pay for CRP technical assistance. This 
clarification will allow EQIP, FRPP, WHIP, and GRP to retain the 
funding that Congress provides. It does not add or subtract funding 
from an account, rather it makes sure that the funds are used by the 
program for which Congress intended.
  Maine's farmers and our farm community cannot afford to be short 
changed for another year. In fiscal year 2003, my state received a 
little more than $8 million in conservation funding compared with the 
promise for $12 million as required by the regional equity provision of 
the 2002 farm bill. This short-fall in funding not only meant less 
direct assistance to farmers, but it led the USDA to propose cutting 20 
Natural Resource Conservation Service staff positions throughout Maine. 
While I am pleased that the USDA decided against laying off these NRCS 
workers, the specter of further conservation shortfalls in the future 
does not bode well for my State. I cannot allow both farmers and the 
professionals who support them to suffer because of USDA's actions.
  In closing, I would like to again thank the Senator from Vermont and 
the Senator from Montana for working to craft a temporary solution to 
the conservation technical assistance problem. I believe that this is 
the right step to take and I hope to continue working with my 
colleagues to address the problem down the road. I urge my colleagues 
to support this measure.
                                 ______
                                 
      By Mr. LEVIN (for himself, Mr. McCain, and Mr. Baucus):
  S. 1767. A bill to prevent corporate auditors from providing tax 
shelter services to their audit clients; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. LEVIN. Mr. President, today I am introducing with the 
cosponsorship of Senator McCain and Senator Baucus the Auditor 
Independence and Tax Shelters Act, a bill designed to strengthen 
auditor independence by prohibiting audit companies from selling tax 
shelter services to the publicly traded companies they audit and to the 
officers and directors of those companies.
  Last year, Senators McCain, Baucus and I each participated in 
investigations conducted by our respective Committees, the Committees 
on Commerce, Finance, and Governmental Affairs, into corporate 
misconduct by Enron and other major U.S. companies, including 
participation in misleading accounting and tax practices. These 
investigations led each of us to focus on the role of accounting firms 
in, not only going along with publicly traded companies' using abusive 
tax shelters, but also selling them the very tax shelters they used to 
overstate their earnings on their financial statements.
  In fact, the Permanent Subcommittee on Investigations, on which I am 
the Ranking Minority Member, has spent the last year investigating the 
roles played by accounting firms and other professional organizations 
such as banks, investment advisors and law firms, in developing, 
marketing and implementing abusive tax shelters. The Finance Committee 
held a hearing today on this same topic.
  Tax shelters have become a huge business in this country. An 1998 
article in Forbes magazine--five years ago--described how tax shelter 
use was growing even then:

       Pay attention. These letters are prime evidence of a 
     thriving industry that has received scant public notice: the 
     hustling of corporate tax shelters. These shelters are being 
     peddled, sometimes in cold-call pitches, to thousands of 
     companies. Will the shelters hold up in court? Maybe yes, 
     maybe no, but many schemes capitalize on the fact that 
     neither the tax code nor the IRS can keep up with the exotica 
     of modern corporate finance. Hesitant at first to 
     participate, respectable accounting firms, law offices and 
     public corporations have lately succumbed to competitive 
     pressures and joined the loophole frenzy.

  A March 2003 article in BusinessWeek magazine states that U.S. 
corporations are some of the biggest players in the tax shelter game:

       The federal tax rate for corporations is 35%, but few pay 
     that much. . . . Many have achieved the Holy Grail of 
     corporate finance: steadily growing profits coupled with a 
     dramatically shrinking tax burden. . . . [I]n the late 1990s, 
     the hunt for tax breaks became a much bigger business. . . . 
     Tax avoidance became a competitive sport, with even blue-chip 
     companies aggressively benchmarking their effective tax rates 
     against those of rivals. According to a recent Harvard 
     University study, U.S. companies avoided paying tax on nearly 
     $300 billion in income in 1998.

  Recently, the New York Times reported that a consultant's report 
prepared for the IRS but not released to the public until now will show 
that ``corporate tax cheating in 2000 cost the government $14 billion 
to $18 billion'' in revenues during that one year alone.
  Accounting firms are in the thick of the tax shelter activity, 
earning tens of millions of dollars in fees. According to Bowman's 
Accounting Report, the Big Four accounting firms, Pricewater-
houseCoopers, Deloitte & Touche, KPMG, and Ernst & Young, brought in 
$5.6 billion of U.S. tax practice revenues in 2001, more than twice the 
tax-related revenues these companies posted in 1995. While some of 
these fees are the result of tax return preparation work, our 
Subcommittee investigation indicates that significant fees were 
generated by tax shelter services provided to wealthy individuals and 
corporations.
  Increased tax shelter activity has not only led to substantial U.S. 
tax revenue loss, it has complicated U.S. tax enforcement efforts and 
undermined taxpayer confidence in the federal tax compliance system, 
leading the IRS to designate abusive tax shelters as an enforcement 
priority.
  The IRS has accordingly begun a major effort to combat this form of 
tax avoidance. In 2002, for example, the IRS issued about 200 summonses 
seeking tax shelter related information from 30 accounting firms and 
other tax shelter promoters, and filed suit against two major 
accounting firms, KPMG and BDO Seidman, and two major law firms, 
Jenkens & Gilchrist and Sidley Austin Brown & Wood, to obtain 
information about their tax shelter activities. In addition, the 
Securities Exchange Commission and the new Public Company Accounting 
Oversight Board have expressed serious concerns about accounting firms 
that audit publicly traded companies while wearing two hats: those of 
the tax shelter promoter and those of the auditor auditing the same tax 
shelters it has promoted.
  That issue is the focus of our legislation.
  Auditors of publicly traded companies are supposed to be independent 
watchdogs charged with determining whether a company's financial 
statements are accurate and fairly report the company's finances. But 
multiple accounting scandals involving billions of dollars at companies 
like Enron, Tyco, Healthsouth, Aldelphia, and MCI-WorldCom have rocked 
investor confidence in auditors and severely damaged the reputation of 
the U.S. accounting profession. These accounting scandals showed again 
and again that our laws and financial systems were insufficient to 
ensure that U.S. auditors were doing their jobs.
  In response, Congress passed the Sarbanes-Oxley Act of 2002. A 
primary purpose of that law was to strengthen auditor independence and 
restore investor confidence in U.S. financial statements. Among other 
measures, it established the new Public Company Accounting Oversight 
Board to strengthen auditing standards, investigate and discipline 
auditor wrongdoing, and oversee auditing practices to ensure adequate 
financial statement reviews. While the Sarbanes-Oxley Act is a landmark 
piece of legislation--replacing decades of self-policing in the 
accounting industry with independent oversight--a number of reform 
issues remain unresolved.

[[Page 25456]]

  One key, longstanding issue that continues to compromise auditor 
independence is the role played by accounting firms in developing and 
selling tax shelters to public companies they audit.
  As part of their review of public company financial statements, 
auditors are supposed to review the company's tax practices to ensure 
that the company is not understating its tax liability and overstating 
its earnings. But in some cases, the same accounting firm is also 
pitching tax shelters to that client, many of which rely on aggressive 
and novel interpretations of tax law. If a company buys one of these 
tax shelters from its accounting firm, the unacceptable result is that 
the accounting firm can then turn around and audit the company's 
financial statements and, in effect, audit its own work, a situation 
that strikes at the heart of auditor independence.
  In some cases, the accounting firm may have even negotiated ``success 
fees'' which are contingent upon a tax shelter's success in reducing a 
client's tax burden. In such cases, accounting firms will audit tax 
transactions in which they have a direct financial interest, creating a 
conflict of interest between the firm's income and auditing 
responsibilities, and making it highly unlikely that questions will be 
raised about a tax shelter that the firm itself sold to its client.
  Similar conflicts may arise when accounting firms offer tax shelter 
services to the officers and directors of the companies they audit. One 
case extensively discussed in the media involves a major accounting 
firm which not only audited Sprint Corporation, a publicly traded 
company, but also sold tax shelters to the Sprint CEO and other Sprint 
executives. These tax shelters supposedly eliminated taxes owed on 
millions of dollars in personal compensation from stock options given 
by Sprint to its executives. When the value of the stock options later 
fell, the accounting firm apparently analyzed strategies that could 
have lowered the individuals' taxes but increased the company's taxes, 
pitting the individual against the company, with the same accountant on 
both sides of the equation. Sprint eventually fired several of the 
executives and recently announced it was also changing auditors. In 
addition, Sprint has instituted a new policy barring its auditor from 
providing any financial services to its executives.
  Investors, our markets, and the American public deserve better. The 
legislation we are introducing today would end these auditor conflicts 
by prohibiting auditors from providing tax shelter services to both the 
publicly traded companies they audit and to those companies' officers 
and directors. In addition, the bill would codify four common-sense 
principles of auditor independence that would assist public companies 
in analyzing what services may compromise auditor independence.
  Our bill would build upon the Sarbanes-Oxley Act which took the first 
step last year to address the conflict of interest problems that arise 
when accounting firms provide tax services to the companies they audit. 
Seeking to limit a wide range of possible conflicts of interest, the 
Act broadly prohibited auditors from providing any tax service to an 
audit client without first obtaining the approval of the audit 
committee of the company's board of directors.
  The SEC took the next step when it proposed regulations to implement 
the Sarbanes-Oxley Act. The SEC issued a draft proposal that 
essentially would have prohibited auditors from selling any tax 
shelters to their audit clients. The draft SEC proposal also contained 
the four principles that would have helped company audit committees 
evaluate whether other tax services proffered by auditors would impair 
auditor independence. Unfortunately, under heavy lobbying pressure from 
accounting firms in the tax shelter business, the SEC dropped both of 
these important provisions from the final regulation.
  So we need to legislate. Our bill would, first, prohibit accounting 
firms that audit publicly held companies in the United States from 
providing tax shelter services either to the companies they audit or to 
the companies' officers and directors. The bill defines tax shelter 
services by referring to existing law, using language in an existing 
definition of tax shelters in section 6111(d) of the tax code. The bill 
would prohibit auditors from providing to their audit clients those 
services related to designing, promoting or executing tax transactions 
which have tax avoidance or evasion as a significant purpose and which 
generate fees for the auditing firm exceeding $100,000. It is intended 
that questions about whether particular tax-related services fall 
within this definition would be resolved by corporate audit committees 
when asked by their accounting firm to approve the company's paying for 
the particular services. The audit committee could consult with the 
IRS, SEC, or other experts in reaching its decision.
  If an audit committee were to approve tax shelter services that 
should have been barred, the bill does not provide new penalties or 
enforcement authority, but makes use of the existing oversight 
authority of the SEC and Public Company Accounting Oversight Board to 
enforce compliance with federal law. That means, for example, if an 
audit committee were to allow its auditor to provide prohibited tax 
shelter services, the SEC or Public Company Accounting Oversight Board 
could use their existing oversight authority to require the company to 
``cease and desist'' paying for the services or to prohibit the 
accounting firm from providing the services. If appropriate, the SEC 
could also order the public company, the accounting firm, or both, to 
pay a monetary penalty for violating the tax shelter services 
prohibition.
  The legislation would further reduce potential conflicts by codifying 
four principles of auditor independence that public company audit 
committees would be required to apply when determining what non-audit 
services an auditor can provide. These principles have been repeatedly 
cited in SEC efforts to strengthen auditor independence and were also 
cited during debate on the Sarbanes-Oxley Act. They provide that 
auditor independence is compromised when auditors: 1. audit their own 
work; 2. perform management functions for their clients; 3. act as 
advocates on behalf of their clients; or 4. act as promoters of their 
clients' stock or other financial interests.
  To better ensure auditor independence, our bill would require audit 
committees to apply these four principles when considering what 
services, not otherwise prohibited, an auditor may provide to their 
company. If an audit committee were to find that the proposed auditor 
service would reasonably result in a violation of one of the above 
principles, the audit committee would have to disallow the proffered 
service.
  Experts in the financial and accounting industries agree that 
auditors should not be permitted to provide tax shelter services to 
their audit clients. In January of this year, The Conference Board's 
blue-ribbon Commission on Public Trust and Private Enterprise, co-
chaired by John Snow before he became Secretary of the Treasury, 
concluded the following:

       [P]ublic accounting firms should limit their services to 
     their clients to performing audits and to providing closely 
     related services that do not put the auditor in an advocacy 
     position, such as novel and debatable tax strategies and 
     products that involve income tax shelters and extensive off-
     shore partnerships or affiliates. . . . The Commission 
     believes that any work performed by the company's outside 
     auditors [should] be closely related to the audit. Auditors' 
     development and recommendations of new tax strategies for 
     their clients is not closely related to the audit, and, in 
     our opinion, removes focus from their audit work and poses a 
     potential conflict of interest. Furthermore, the development 
     and recommendations of these strategies have often been 
     accompanied by ``success fees.'' In turn these strategies, if 
     implemented, were often then subject to an audit by the firm. 
     This practice, in our opinion, is highly undesirable. The 
     firm's need for impartiality in conduct of the audit is in 
     direct conflict with the financial incentives to provide tax 
     strategies which themselves must be audited.

  William McDonough, Chairman of the Public Company Accounting 
Oversight Board, has indicated that the Board is also considering 
whether to

[[Page 25457]]

ban auditors from providing tax shelter services to their audit clients 
and will be closely monitoring how accounting firms audit a company's 
tax liabilities and any company use of tax shelters. In testimony 
before the Finance Committee earlier today, Mr. McDonough stated:

       While the SEC made clear that it did not consider 
     conventional tax compliance and planning to be a threat to 
     auditor independence, it distinguished such traditional 
     services from the marketing of novel, tax-driven, financial 
     products, which the SEC noted raise some serious issues. . . 
     . [T]he AICPA has also suggested that ``advice on tax 
     strategies having no business purpose other than tax 
     avoidance is an appropriate dividing line for activities that 
     should be prohibited to auditing firms registered under the 
     Sarbanes-Oxley Act.'' Thus, there appears to be consensus 
     that auditors ought not to be selling abusive tax shelters to 
     audit clients.

  In an unrelated Wall Street Journal interview, Mr. McDonough was 
described as saying that ``[w]hat he finds problematic is `very 
creative tax work' . . . . `There is no way you can do that and claim 
to be independent,' he said.''
  The Sarbanes-Oxley Task Force formed by the American Bar 
Association's Section of Taxation, has also expressed support for 
barring auditors from providing tax shelter services to their audit 
clients. In a comment letter supporting the proposed ban in the SEC 
regulations on auditor independence, the Task Force wrote:

       We believe that tax shelter products raise particular 
     auditor independence concerns. Companies purchasing tax 
     shelter products are exposed to a variety of risks over and 
     above the calculation of tax liability. An accounting firm 
     that markets a tax shelter product to a registrant should be 
     prohibited from conducting the audit of the registrant 
     because it cannot be expected to fairly evaluate the risks 
     inherent in the tax shelter product.

  Our legislation has been endorsed by a number of public interest 
groups working to strengthen auditor integrity, renew investor and 
consumer confidence in the financial statements of U.S. publicly traded 
companies, and curb abusive tax shelters. The Consumer Federation of 
America, Consumers Union, Consumer Action, U.S. Public Interest 
Research Group, and Common Cause have stated in a letter of 
endorsement: ``Passage of this bill is one of the most important steps 
Congress could take to ensure that last year's corporate reform efforts 
have their intended effect of restoring real independence to the 
'independent' audit and, with it, a reasonable level of reliability to 
public companies' financial disclosures.''
  Our bill's reforms are straightforward. Auditors should not audit 
their own work, including evaluating a tax shelter that the auditor 
itself sold to its audit client. Auditors should not sell personal tax 
shelters to the officers and directors of its audit clients, due to the 
conflicts of interest that can arise. Publicly traded companies ought 
to have explicit guidance to help them avoid auditor conflicts of 
interest, and the best guidance we can give them is the four auditor 
independence principles that have long guided SEC and Congressional 
action in this area.
  Together, a ban on auditors providing tax shelter services to their 
audit clients and a codification of the four auditor independence 
principles to guide public companies away from auditor conflicts of 
interest could go a long way to restoring the confidence of investors 
in the U.S. auditing profession, financial reporting system, and 
capital markets. I urge my colleagues to support this common-sense and 
much-needed legislation.
  I ask unanimous consent that the full text of the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1767

       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 ``Auditor Independence and Tax 
     Shelters Act''.

     SEC. 2. PROHIBITION ON AUDITORS PROVIDING TAX SHELTER 
                   SERVICES TO AUDIT CLIENTS.

       Section 10A of the Securities Exchange Act of 1934 (15 
     U.S.C. 78j-1) is amended--
       (1) in subsection (f)--
       (A) in the first sentence, by striking ``section, the 
     term'' and inserting the following: ``section--
       ``(1) the term'';
       (B) by striking ``law. As used in this section, the term'' 
     and inserting the following: ``law;
       ``(2) the term''; and
       (C) by striking the period at the end and inserting the 
     following: ``; and
       ``(3) the term `tax shelter services' means services 
     provided by a registered public accounting firm (or by an 
     associated person of that firm) to an issuer, or an officer 
     or director of an issuer, to design, organize, promote, 
     assist, or execute any investment, entity, plan, arrangement, 
     or transaction for which a significant purpose is the 
     avoidance or evasion of Federal income tax by such issuer, or 
     an officer or director of such issuer, whether acting as a 
     direct or indirect participant, and for which such firm may 
     receive fees in excess of $100,000 in the aggregate.'';
       (2) in subsection (g)--
       (A) in paragraph (8), by striking ``and'' at the end;
       (B) by redesignating paragraph (9) as paragraph (10); and
       (C) by inserting after paragraph (8) the following:
       ``(9) tax shelter services; and'';
       (3) in subsection (h)--
       (A) by inserting ``other than tax shelter services'' after 
     ``tax services''; and
       (B) by striking ``(9)'' and inserting ``(10)''; and
       (4) in subsection (i)(1)--
       (A) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (B) by inserting after subparagraph (A) the following:
       ``(B) Assurance of auditor independence.--Before 
     preapproving a non-audit service that is not otherwise 
     prohibited under this section, the audit committee of an 
     issuer shall--
       ``(i) determine whether there is a reasonable likelihood 
     that provision of the non-audit service would impair the 
     independence of the registered public accounting firm by 
     resulting in the firm--

       ``(I) auditing its own work for the issuer;
       ``(II) performing a management function for the issuer;
       ``(III) advocating in a public forum for the issuer; or
       ``(IV) promoting the stock or other financial interest of 
     the issuer; and

       ``(ii) if the audit committee determines that such a 
     reasonable likelihood exists, the audit committee shall not 
     provide advance approval of such service under this 
     section.''.

     SEC. 3. EFFECTIVE DATE.

       This Act, and the amendments made by this Act, shall take 
     effect on the date of enactment of this Act, and shall apply 
     to any tax shelter service, as defined in section 10A of the 
     Securities Exchange Act of 1934, as amended by this Act, that 
     is submitted for preapproval to the audit committee of an 
     issuer or is provided by a registered public accounting firm 
     to an issuer in accordance with that section 10A on or after 
     the date of enactment of this Act.

  Mr. McCAIN. Mr. President, I am pleased to join my colleague from 
Michigan, Senator Levin, in sponsoring the Auditor Independence and Tax 
Shelters Act.
  While the Sarbanes-Oxley Act and Securities and Exchange Commission 
rules rightly prohibit accounting firms from providing certain non-
auditing services to the publicly traded companies they audit, auditors 
are not prohibited from providing tax shelter services to their audit 
clients.
  The Auditor Independence and Tax Shelters Act is intended to address 
this gap in the law by prohibiting audit firms from providing such 
services to their audit clients. It would thereby significantly 
strengthen auditor independence and eliminate a fundamental conflict of 
interest that is adverse to the best interest of investors.
  Although I believe that any firm that serves as an auditor of a 
company should generally be prohibited from providing any non-audit 
service to that company, I strongly support this bill because it is a 
significant step toward achieving true auditor independence.
  I urge my colleagues to support this important bill to further 
protect investor confidence in our capital markets.
                                 ______
                                 
      By Mr. CAMPBELL (for himself, Mr. Inouye, and Mr. Domenici):
  S. 1770. A bill to establish a voluntary alternative claims 
resolution process to reach a settlement of pending class action 
litigation, to the Committee of Indian Affairs.
  Mr. CAMPBELL. Mr. President, today I am pleased to be joined by 
Senators Inouye, Domenici and Stabenow in submitting a Senate 
Resolution urging settlement of the 8-year old Indian trust funds 
lawsuit, and by Senators Inouye and Domenici in introducing a

[[Page 25458]]

bill that I hope and believe will accomplish that goal, the ``Indian 
Money Claims Satisfaction Act of 2003''.
  The saga of Cobell v. Norton did not start in 1996 with the filing of 
the lawsuit, it began long before any of us were born. In 1887 Congress 
enacted the General Allotment Act to break up the tribal landmass and 
teach Indians to be ``civilized''.
  The legacy of that failed policy is still with us in the form of 
horribly fractionated Indian lands and the class action case filed in 
1996 that is still ongoing.
  The remedy the plaintiffs in the Cobell case are seeking is an 
accounting by the United States of funds that are or should be in the 
hundreds of thousands of individual Indian money accounts (IIMs) 
managed and maintained by the Federal Government.
  Eight long years have passed without an accounting, and without a 
single penny being paid to an account holder. Last month, Judge 
Lamberth issued a 400-page decision and order that guarantees at least 
5 more years of litigation, hundreds of millions and maybe billions 
more spent, with no end in sight to the lawsuit.
  Those who insist that a decision by the Judge would mean the 
beginning of the end of this case are wrong: with likely appeals, 
Congressional squabbling over money spent on this effort, and 
additional lawsuits aimed at securing money damages, this case is just 
beginning.
  The U.S. claims that pennies on the dollar are owed the plaintiffs 
but, without billions more spent on accounting activity, it cannot say 
for sure how much is in the accounts or should be in the accounts.
  Preliminary cost estimates from the Interior Department suggest that 
it will take $10 billion or more to comply with Judge Lamberth's order 
on historic accounting. This money will be spent year after year 
through Fiscal Year 2008 at least.
  I believe this money is better spent on re-constituting the Indian 
land base and building a forward-looking, state-of-the-art trust 
management system, and providing more dollars to Indian health care and 
education, which we know are underfunded.
  The plaintiffs claim more than $175 billion dollars should be in 
these accounts, a number the Department has vigorously contested.
  Today I am introducing a bill that I believe will end this lawsuit in 
a way to provide justice to individual Indian account holders and 
restore some sense of normalcy to the Interior Department.
  Just as the Indian Claims Commission, the Trust Resolution 
Corporation, and the Volcker Committee on Swiss Bank Accounts helped 
resolve cases of highly complex, historical-based litigation, the bill 
I am introducing will establish a 9-member, expert-filled ``Indian 
Money Claims Satisfaction Task Force'' to develop alternative 
methodologies to arrive at account balances.
  The bill also establishes the ``Indian Money Claims Tribunal'' to 
provide binding arbitration for any IIM holder that contests the 
account balance provided by the Task Force.
  I look forward to the swift enactment of this bill and with it, an 
honorable conclusion to this sad and destructive chapter of Federal-
Indian relations.
  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. 1770

       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 ``Indian Money Account Claim 
     Satisfaction Act of 2003''.

     SEC. 2. FINDINGS; PURPOSE.

       (a) Findings.--Congress finds that--
       (1) since the 19th century, the United States has held 
     Indian funds and resources in trust for the benefit of 
     Indians;
       (2) in 1996, a class action was brought against the United 
     States seeking a historical accounting of balances of 
     individual Indian money accounts;
       (3) after 8 years of litigation and the expenditure of 
     hundreds of millions of dollars of Federal funds, it is clear 
     that the court-ordered historical accounting will require 
     significant additional resources and years to accomplish and 
     will not result in significant benefits to the members of the 
     class; and
       (4) resolving the litigation in a full, fair, and final 
     manner will best serve the interests of the members of the 
     class and the United States.
       (b) Purpose.--The purpose of this Act is to provide a 
     voluntary alternative claims process to reach settlement of 
     the class action litigation in Cobell v. Norton (No. 
     96cv01285, D.D.C.).

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Accounting.--The term ``accounting''--
       (A) with respect to funds in an individual Indian money 
     account that were deposited or invested on or after the date 
     of enactment of the Act of June 24, 1938 as provided in the 
     first section of that Act (25 U.S.C. 162a), means a 
     demonstration, to the maximum extent practicable, of the 
     monthly and annual balances of funds in the individual Indian 
     money account; and
       (B) with respect to funds in an individual Indian money 
     account that were deposited or invested between 1887 and the 
     day before the date of enactment of the Act of June 24, 1938, 
     means a demonstration of the probable balances of funds in an 
     individual Indian money account that were deposited or 
     invested.
       (2) Claim.--
       (A) In general.--The term ``claim'' means a legal or 
     equitable claim that has been brought or could be brought, 
     asserting any duty claimed to be owed by the United States 
     under any statute, common law, or any other source of law to 
     an individual Indian money account holder that pertains in 
     any way to the account holder's account, including the duty 
     to--
       (i) collect and deposit funds in the account;
       (ii) invest funds in the account;
       (iii) make disbursements from the account;
       (iv) make and maintain records of activity in the account;
       (v) provide an accounting; and
       (vi) value, compromise, resolve, or otherwise dispose of 
     claims relating to the account.
       (B) Inclusion.--The term ``claim'' includes a claim for 
     damages or other relief for failure to perform, or for 
     improper performance of, any duty described in subparagraph 
     (A).
       (3) Class action.--The term ``class action'' means the 
     civil action Cobell v. Norton (No. 96cv01285, D.D.C.).
       (4) De minimis individual indian money account.--The term 
     ``de minimis individual Indian money account'' means an 
     individual Indian money account that contains less than $100.
       (5) Eligible individual.--The term ``eligible individual'' 
     means--
       (A) a living individual who is or has been an individual 
     Indian money account holder, except any such individual whose 
     account holds or held funds only from the distribution of a 
     judgment fund or a per capita distribution; and
       (B) the estate of a deceased individual who--
       (i) was living on the date of enactment of the American 
     Indian Trust Fund Management Reform Act of 1994 (25 U.S.C. 
     4001 et seq.); and
       (ii) held an individual Indian money account on that date 
     or at any time subsequent to that date, except any such 
     individual whose account holds or held funds only from the 
     distribution of a judgment fund or a per capita distribution.
       (6) IMACS task force.--The term ``IMACS Task Force'' means 
     the Indian Money Account Claim Satisfaction Task Force 
     established by section 4.
       (7) Individual indian money account.--The term ``individual 
     Indian money account'' means an account that contains funds 
     held in trust by the United States, established and managed 
     by the United States on behalf of an individual Indian.
       (8) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (9) Tribunal.--The term ``Tribunal'' means the Indian Money 
     Claims Tribunal established by section 5.

     SEC. 4. INDIAN MONEY ACCOUNT CLAIM SATISFACTION TASK FORCE.

       (a) Establishment.--There is established the Indian Money 
     Account Claim Satisfaction Task Force.
       (b) Membership.--
       (1) In general.--The IMACS Task Force shall be comprised of 
     not fewer than 9 members, appointed jointly by the majority 
     leader and minority leader of the Senate and the Speaker and 
     minority leader of the House of Representatives.
       (2) Qualifications.--
       (A) Background.--Members of the IMACS Task Force shall be 
     selected from private enterprise and academia and shall not 
     be employees of the United States.
       (B) Expertise.--Of the members appointed to the IMACS Task 
     Force--
       (i) 2 shall have expertise in the field of forensic 
     accounting;
       (ii) 2 shall have expertise in the field of Federal Indian 
     law;
       (iii) 2 shall have expertise in the field of commercial 
     trusts;
       (iv) 1 shall have expertise in the field of mineral 
     resources;
       (v) 1 shall have expertise in the field of economic 
     modeling and econometrics; and

[[Page 25459]]

       (vi) 1 shall have expertise in the field of complex civil 
     litigation.
       (3) IMACS task force leader.--An IMACS Task Force Leader 
     shall be chosen by majority vote of the members of the IMACS 
     Task Force.
       (c) Compensation and Travel Expenses.--A member of the 
     IMACS Task Force shall be entitled to--
       (1) compensation, at a rate that does not exceed the daily 
     equivalent of the annual rate of basic pay prescribed under 
     level V of the Executive Schedule under section 5316 of title 
     5, United States Code, for each day the member is engaged in 
     the performance of duties the IMACS Task Force; and
       (2) travel expenses, including per diem in lieu of 
     subsistence, in the same manner as persons employed 
     intermittently in Government service under section 5703 of 
     title 5, United States Code.
       (d) Information and Support.--The Secretary of the Interior 
     shall provide the IMACS Task Force--
       (1) access to all records and other information in the 
     possession of or available to the Secretary relating to 
     individual Indian money accounts; and
       (2) such personnel, office space and other facilities, 
     equipment, and other administrative support as the IMACS Task 
     Force may reasonably request.
       (e) Confidential Information.--Section 10(b) of the Federal 
     Advisory Committee Act (5 U.S.C. App.) shall not apply to the 
     IMACS Task Force.
       (f) Duties.--
       (1) In general.--The IMACS Task Force shall--
       (A) not later than 1 year after the date of enactment of 
     this Act, complete an analysis of records, data, and other 
     historical information with regard to the conduct of an 
     historical accounting submitted by the parties in the class 
     action to the district court in January 2003; and
       (B) not later than 60 days after completing the analysis 
     under subparagraph (A), hold meetings with representatives 
     of--
       (i) the plaintiffs in that civil action;
       (ii) the Department of Justice and the Department of the 
     Interior; and
       (iii) any other parties that, in the discretion of the 
     IMACS Task Force, are necessary to allow the IMACS Task Force 
     to carry out its duties under this Act.
       (2) Account balances.--
       (A) Methodologies or models.--The IMACS Task Force shall 
     develop 1 or more appropriate methodologies or models to 
     conduct an accounting of the individual Indian money 
     accounts.
       (B) Determination.--Using methodologies or models developed 
     under subparagraph (A), the IMACS Task Force shall conduct an 
     accounting to determine in current dollars the balances of--
       (i) first, all individual Indian money accounts opened in 
     or after 1985;
       (ii) second, all individual Indian money accounts opened on 
     or after the date of enactment of the first section of the 
     Act of June 24, 1938 (25 U.S.C. 162a), and before 1985; and
       (iii) third, all individual Indian money accounts opened 
     before the date of enactment of the first section of the Act 
     of June 24, 1938 (25 U.S.C. 162a).
       (C) Notice of determination.--On making a determination of 
     the balance in the individual Indian money account of an 
     eligible individual, the IMACS Task Force shall provide 
     notice of the determination to the eligible individual and 
     the Secretary.
       (g) Acceptance or Nonacceptance by Eligible Individual.--
       (1) Acceptance.--If an eligible individual accepts the 
     determination by the IMACS Task Force of the balance in the 
     individual Indian money account of the eligible individual--
       (A) not later than 60 days after the date on which the 
     eligible individual receives notice of the determination, the 
     eligible individual shall submit to the Secretary a notice 
     that the eligible individual accepts the determination of the 
     balance;
       (B) not later than 30 days after the Secretary receives the 
     notice of acceptance under subparagraph (A), the Secretary 
     shall make any adjustment in the records of the Secretary to 
     reflect the determination;
       (C) based on the adjustment made pursuant to paragraph (B), 
     the Secretary shall make full payment to the eligible 
     individual of the balance in the individual Indian money 
     account of the eligible individual in satisfaction of any 
     claim that the individual may have;
       (D) the eligible individual shall provide the Secretary an 
     accord and satisfaction of all claims of the eligible 
     individual, which shall be binding on any heirs, transferees, 
     or assigns of the eligible individual; and
       (E) the eligible individual shall be dismissed from the 
     class action.
       (2) Nonacceptance.--If an eligible individual does not 
     accept the determination by the IMACS Task Force of the 
     balance in the individual Indian money account of the 
     eligible individual, the eligible individual may--
       (A) have the amount of the balance determined through 
     arbitration by the Tribunal; or
       (B) remain a member of the class in the class action.

     SEC. 5. INDIAN MONEY CLAIMS TRIBUNAL.

       (a) Establishment.--There is established the Indian Money 
     Claims Tribunal.
       (b) Membership.--The Tribunal shall be comprised of 5 
     arbitrators drawn from the list of arbitrators maintained by 
     the Attorney General.
       (c) Election to Arbitrate.--If an eligible individual 
     elects to have the amount of the balance in the individual 
     Indian money account determined through arbitration by the 
     Tribunal--
       (1) not later than 60 days after receiving the notice of 
     determination under section 4(f)(2)(C), the eligible 
     individual shall submit to the Tribunal, in such form as the 
     Tribunal may require, all claims of the eligible individual, 
     with an agreement to be bound by any determination made by 
     the Tribunal; and
       (2) the United States shall be bound by any determination 
     made by the Tribunal.
       (d) Representation.--
       (1) In general.--An eligible individual may be represented 
     by an attorney or other representative in proceedings before 
     the Tribunal.
       (2) Attorney's fee.--No legal representative retained by an 
     eligible individual for purposes of proceedings before the 
     Tribunal may collect any fee, charge, or assessment that is 
     greater than 25 percent of the amount of the balance in the 
     individual Indian money account of the eligible individual 
     determined by the Tribunal.
       (e) Timing.--To the extent practicable, the Tribunal 
     shall--
       (1) schedule any proceedings necessary to determine a claim 
     to occur not later than 180 days after the date on which the 
     eligible individual submits the claim; and
       (2) make a determination of the claim, and provide the 
     eligible individual and the Secretary notice of the 
     determination, not later than 30 days after the conclusion of 
     the proceedings.
       (f) Action Following Determination.--Not later than 30 days 
     after the Secretary receives the notice of determination 
     under subsection (e)(2)--
       (1) the Secretary shall make any adjustment in the records 
     of the Secretary to reflect the determination;
       (2) based on the adjustment made pursuant to paragraph (1), 
     the Secretary shall make full payment to the eligible 
     individual of the balance in the individual Indian money 
     account of the eligible individual in satisfaction of any 
     claim that the eligible individual may have;
       (3) the individual Indian money account of the eligible 
     individual shall be closed;
       (4) the eligible individual shall provide the Secretary an 
     accord and satisfaction of all claims of the eligible 
     individual, which shall be binding on any heirs, transferees, 
     or assigns of the eligible individual; and
       (5) the eligible individual shall be dismissed from the 
     class action.

     SEC. 6. JUDGMENT FUND AVAILABILITY.

       The funds for any payment made pursuant to section 
     4(g)(1)(C) or 5(f)(2) shall be derived from the permanent 
     judgment appropriation under section 1304 of title 31, United 
     States Code (commonly known as the ``Judgment Fund''), 
     without further appropriation.

     SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated--
       (1) to carry out section 4, $10,000,000 for each of fiscal 
     years 2004 and 2005; and
       (2) to carry out section 5, $10,000,000 for each of fiscal 
     years 2006 and 2007.
                                 ______
                                 
      By Ms. SNOWE (for herself and Mr. Conrad):
  S. 1771. A bill to amend title XIX of the Social Security Act to 
permit States to obtain reimbursement under the Medicaid program for 
care or services required under the Emergency Medical Treatment and 
Active Labor Act that are provided in a nonpublicly owned or operated 
institution for mental diseases; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today to introduce the Medicaid 
Psychiatric Fairness Act of 2003, which will serve to improve access to 
mental health treatment and remove an unfunded mandate on our private 
mental health treatment centers. I am particularly pleased to introduce 
this bill with my good friend and colleague, Senator Conrad, who like 
me believes we must improve access to treatment for many of the 18.5 
million Americans who are afflicted with a mental health disorder.
  Moving one step closer to achieving this laudable goal, our bill will 
require the Medicaid program to provide reimbursement to private mental 
health facilities that receive patients under the Emergency Medical 
Treatment and Labor Act, known as EMTALA. EMTALA requires hospitals to 
provide emergency care to patients, regardless of their ability to pay. 
However, this stands in conflict with Medicaid law, which in most cases 
prohibits payment for psychiatric treatment for people between the age 
of 21 to 65 years. Our bill takes the critically important step

[[Page 25460]]

to provide Medicaid coverage for emergency treatment, which will expand 
access for acute care and will ensure that Americans receive the 
assistance they vitally need in a timely fashion.
  Under current law, Medicaid payment for psychiatric treatment for 
patients between the age of 21 and 65 years is restricted to hospitals 
that have an in-house psychiatric ward. If a patient seeks care from a 
private psychiatric hospital or is transferred to a private facility 
from a community hospital that does not have a psychiatric treatment 
ward, Medicaid payment is not provided. In comparison, if that same 
patient seeks care under EMTALA from a hospital because of a physical 
ailment, Medicaid provides coverage regardless of the type of facility 
that provides the treatment. By introducing this bill, we are taking a 
vitally important step toward removing an unfunded mandate on private 
providers that has served to limit access to care for millions of 
Medicaid recipients.
  It also is important to note that the current situation is 
jeopardizing Medicaid recipients' access to emergency treatment, and 
ultimately is overwhelming our emergency rooms and in many cases the 
criminal justice system. The U.S. Department of Justice estimates that 
on average 16 percent of inmates in local jails suffer from a mental 
illness and in Maine, NAMI, a state advocacy group for persons with 
mental illness, estimates that figure is as high as 50 percent. This is 
the result of a severe shortage of psychiatric beds in Maine, and as a 
result many people go without treatment. Action must be taken to 
provide access to care and we must start by ensuring that Medicaid 
reimburses facilities that provide treatment.
  Senator Conrad and I have joined together in introducing our 
legislation that will require Medicaid to pay for the cost of care 
associated with psychiatric treatment necessary to comply with EMTALA. 
No longer will private entities be required to shoulder the burden of 
this federal mandate, and no longer will Medicaid eligible 
beneficiaries go without access to necessary emergency treatments.
  In my home State of Maine, 65,000 people have a severe mental illness 
and could benefit from this bill. Ensuring that our community treatment 
facilities are appropriately paid, we will be able to open access to 
vitally important treatment options.
  This bill has been carefully crafted with input from both the 
provider and beneficiary communities to ensure assistance is directed 
to those who are most in need and to ensure that the coverage only 
extends to people who require emergency treatment. We have tied the 
legislation to the EMTALA statute to ensure that this new requirement 
cannot be exploited.
  Demonstrating the importance of this legislation, we have received 
support from a number of leading national mental health and medical 
associations, including NAMI, the National Association of County 
Behavioral Health Directors, the American Psychiatric Association, the 
American Hospital Association and the National Association of 
Psychiatric Health Systems. I am especially pleased to have also 
received endorsements from a number of Maine organizations, including 
the Maine Hospital Association, Maine chapter of NAMI, the State 
Department of Behavioral and Development Services and the Spring Harbor 
Hospital.
  This legislative change is vitally important to ensure Medicaid 
patients have access to emergency mental health treatment. I want to 
thank Senator Conrad for his help in crafting this policy and urge my 
colleagues to join us as cosponsors.
  I ask unanimous consent that letters of support be printed in the 
Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:
                                                 National Alliance


                                         for the Mentally Ill,

                                 Arlington, VA, September 8, 2003.
     Hon. Olympia Snowe,
     Hon. Kent Conrad,
     U.S. Senate,
     Washington, DC.
       Dear Senators Snowe & Conrad: On behalf of the 210,000 
     members and 1,200 affiliates of the National Alliance for the 
     Mentally Ill (NAMI), I am writing to express support for your 
     legislation to addressing the growing crisis in access to 
     acute care services for non-elderly adults living with severe 
     mental illness. As the nation's largest organization 
     representing individuals with severe mental illness and their 
     families, NAMI is pleased to support this important measure.
       As NAMI's consumer and family membership knows first-hand, 
     the acute care crisis for inpatient psychiatric care is 
     growing in this country. This disturbing trend was identified 
     in the recently released Bush Administration New Freedom 
     Initiative Mental Health Commission report. Over the past 15-
     20 years, states have closed inpatient units and drastically 
     reduced the number of acute care beds. Also, general 
     hospitals, due to severe budget constraints, have had to 
     close psychiatric units or reduce the number of beds. This 
     has resulted in a growing shortage of acute inpatient 
     psychiatric beds in many communities.
       Your proposed legislation would address an important 
     conflict in federal policy that has contributed to restricted 
     access to needed inpatient services--the Medicaid Institution 
     for Mental Disease (IMD) Exclusion and the Emergency Medical 
     and Labor Treatment Act (EMTALA). EMTALA requires hospitals 
     to stabilize patients in an emergency medical condition, 
     while the IMD exclusion prevents certain hospitals 
     (psychiatric hospitals) from receiving Medicaid reimbursement 
     for Medicaid beneficiaries between the ages of 21-64 in these 
     circumstances.
       Your legislation would allow Medicaid funding to be 
     directed to non-publicly owned and operated psychiatric 
     hospitals (IMDs) for Medicaid beneficiaries between the ages 
     of 21-64 who require stabilization in these settings as 
     required by EMTALA. Today, these hospitals are denied payment 
     for care required under the EMTALA rules. The result is that 
     psychiatric hospitals are forced to absorb these added costs 
     of care to their already growing un-reimbursed care even 
     though these patients have insurance through Medicaid.
       This legislation will go a long way in addressing the 
     growing psychiatric acute inpatient crisis, while creating 
     fairness in the reimbursement structure for psychiatric 
     hospitals under the limited circumstances required by the 
     EMTALA law. Your leadership in carefully crafting and 
     introducing this targeted legislation addressing a critical 
     problem for persons with serious mental illnesses is much 
     appreciated. NAMI looks forward to working with you and your 
     Senate colleagues to ensure passage of this important 
     legislation.
           Sincerely,
                                                Richard E. Birkel,
     Executive Director.
                                  ____

         The National Association of County Behavioral Health 
           Directors,
                                Washington, DC, September 5, 2003.
     Hon. Olympia Snowe,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: The National Association of County 
     Behavioral Health Directors (NACBHD), which is the behavioral 
     health affiliate of the National Association of Counties 
     (NACo), is writing to strongly support the legislation you 
     are introducing to alleviate the crisis in access to acute 
     hospital inpatient psychiatric services. A lack of acute 
     inpatient services was recently highlighted in President 
     Bush's New Freedom Commission on Mental Health report and is 
     a problem in many counties. In twenty of the most populous 
     States, counties have the designated responsibility to plan 
     and implement mental health services.
       Over the past 20 years most states have closed many of 
     their state hospitals and returned these patients to the 
     community for care. General hospitals have over the past 10-
     15 years begun to close psychiatric inpatient units due to 
     cost restraints and the fact that general medical/surgical 
     beds are more profitable. Freestanding psychiatric hospitals 
     have been significantly reduced due to the reduction in 
     reimbursements brought about with the advent of managed care. 
     Over all, the availability of acute psychiatric beds, in many 
     states, has decreased dramatically in the last 10 years. 
     Given the shortage of inpatient acute beds, many individuals 
     with serious psychiatric disorders end up in county jails or 
     homeless rather than receiving basic psychiatric services in 
     hospital.
        Your legislation specially addresses the conflict in 
     Federal between the Medicaid Institution for Mental Disease 
     Exclusion (IMD) and the Emergency Medical and Labor Treatment 
     Act (EMTALA). EMTALA requires hospitals to stabilize patients 
     with emergency medical conditions. However, if freestanding 
     psychiatric hospitals receive direct admissions of Medicaid 
     eligible patients or if receive transfers from general 
     hospitals whose psychiatric units are full under EMTALA 
     regulations, they can't receive reimbursement under Medicaid 
     because of the IMD exclusion.
        The Snowe-Conrad legislation would allow Medicaid funding 
     to non-publicly owned and operated psychiatric hospitals 
     (IMD's) for Medicaid beneficiaries between the ages of

[[Page 25461]]

     21-64 who require medical stabilization in these settings as 
     required by EMTALA. Currently, these hospitals are denied 
     payment for care required under the EMTALA rules and clearly 
     represents an unfunded mandate to these hospitals.
       The IMD exclusion also prevents counties from contracting 
     with psychiatric hospitals, which are considerably less 
     expensive, for care for the seriously mentally ill. This 
     legislation would assist in creating fairness in the 
     reimbursement structure for psychiatric hospitals under the 
     current EMTALA law.
        The National Association of County Behavioral Health 
     Directors appreciates your leadership in introducing this 
     specific legislation that will address this inherent conflict 
     in Federal requirements and will assist in promoting access 
     to acute psychiatric inpatient services. We look forward to 
     working with you and your colleagues in getting this 
     legislation passed through this Congress.
           Sincerely,
                                                 Thomas E. Bryant,
     Executive Director.
                                  ____



                             American Psychiatric Association,

                                  Arlington, VA, October 17, 2003.
     Hon. Olympia Snowe,
     Russell Senate Office Building,
     U.S. Senate, Washington, DC.
       Dear Senator Snowe: On behalf of the 38,000 physician 
     members of the American Psychiatric Association (APA), and 
     most particularly on behalf of the patients they treat, 
     please accept my thanks for your Senate sponsorship of the 
     Medicaid Psychiatric Hospital Fairness Act of 2003.
       The Emergency Medical and Labor Treatment Act, which 
     requires hospitals to stabilize patients in an emergency 
     medical condition, directly conflicts with the Medicaid 
     Institution for Mental Diseases (IMD) exclusion. The IMD 
     exclusion prevents non-public psychiatric hospitals from 
     receiving Medicaid reimbursement for Medicaid patients 
     between the ages of 21-64 that have required stabilization as 
     a result of EMTALA regulations.
       Your legislation will allow non-public psychiatric 
     hospitals to receive appropriate reimbursement for Medicaid 
     beneficiaries between the ages of 21-64 who require emergency 
     treatment and stabilization as required by EMTALA.
       Thank you for your foresight and leadership in your 
     sponsorship of the Medicaid Psychiatric Hospital Fairness Act 
     of 2003. Thanks are also due to the outstanding work by 
     Catherine Finley, who ably represents you. The APA looks 
     forward to working with you to make your bill a reality this 
     year.
           Sincerely,
                                                      Marcia Goin,
     President.
                                  ____



                                American Hospital Association,

                                 Washington, DC, October 17, 2003.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senator Snowe: On behalf of the American Hospital 
     Association's (AHA) nearly 5,000 member hospitals, health 
     care systems, networks and other providers of care, I am 
     writing to express our support for your bill, the Medicaid 
     Psychiatric Hospital Fairness Act of 2003.
       The Emergency Medical and Labor Treatment Act (EMTALA) 
     requires hospitals to stabilize patients in an emergency 
     medical condition including psychiatric hospitals. At the 
     same time the Medicaid program, through the Institution for 
     Mental Diseases (IMD) exclusion, prevents non-public 
     psychiatric hospitals from receiving Medicaid reimbursement 
     for Medicaid patients between the ages of 21-64 that require 
     stabilization. These hospitals are burdened with an unfunded 
     mandate in fulfilling their EMTALA obligations for this 
     patient population.
       Your legislation will allow non-public psychiatric 
     hospitals to receive appropriate reimbursement for Medicaid 
     beneficiaries between the ages of 21-64 who require emergency 
     treatment and stabilization as required by EMTALA. This will 
     relieve overcrowding in emergency departments and provide the 
     appropriate care these patients deserve in a more timely 
     manner.
       Thank you for addressing this important issue. We support 
     the Medicaid Psychiatric Fairness Act of 2003 and look 
     forward to working with you and your colleagues to ensure 
     swift passage of this legislation.
           Sincerely,
                                                     Rick Pollack,
     Executive Vice President.
                                  ____

                                           National Association of


                                    Psychiatric Health Systems

                               Washington, DC, September 10, 2003.
     Hon. Olympia Snowe,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: The National Association of Psychiatric 
     Health Systems (NAPHS) strongly supports your legislation to 
     alleviate the crisis in acute hospital services for persons 
     with mental illnesses. NAPHS represents provider systems that 
     are committed to the delivery of responsive, accountable, and 
     clinical effective prevention, treatment, and care for 
     children, adolescents, adults, and older adults with mental 
     and substance use disorders. Members are behavioral 
     healthcare provider organizations, including 300 specialty 
     hospitals, general hospital psychiatric and addiction 
     treatment units, residential treatment centers, youth 
     services organizations, partial hospital services, behavioral 
     group practices, and other providers of a full continuum of 
     care.
       Mental illness ranks first among all illnesses that cause 
     disability in the United States, with about 5% to 7% of 
     adults suffering from a severe mental illness in any given 
     year. For those who are acutely ill, short-term psychiatric 
     care provides stabilization and is a critical component of 
     community-based care.
       After reviewing reports and listening to testimony over the 
     past year, the President's New Freedom Commission on Mental 
     Health identified the lack of acute care as a serious 
     concern. The Commission noted that many communities are 
     experiencing severe problems with access to short-term 
     inpatient care--with some areas reporting that the shortage 
     has risen to crisis proportions. the result is that many 
     emergency rooms are overwhelmed with patients in extreme 
     psychiatric distress who have nowhere to go. I am attaching a 
     report prepared by NAPHS on acute care that provides 
     additional details on this issue for your review.
       Your legislation will resolve an unintended and unfair 
     conflict in federal law that has negatively impacted access 
     to acute care. Currently, the Emergency Medical Treatment and 
     Labor Act (EMTALA) provides that hospitals stabilize patients 
     in an emergency medical condition, while Medicaid's 
     Institution for Mental Disease (IMD) provision prohibits 
     psychiatric hospitals from seeking reimbursement for services 
     for beneficiaries between the ages of 21 to 64. General 
     hospitals with psychiatric beds are not subject to the IMD 
     exclusion.
       The Snowe-Conrad legislation would increase access to acute 
     care by allowing psychiatric hospitals to bill Medicaid for 
     reimbursement just as general hospitals do for EMTALA 
     patients who are Medicaid-eligible. We look forward to 
     working with you and your colleagues on this important and 
     timely piece of legislation.
           Sincerely,
                                                      Mark Covall,
     Executive Director.
                                  ____



                                   Maine Hospital Association,

                                    Augusta, ME, October 20, 2003.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the Maine Hospital 
     Association's 28 acute-care and specialty hospitals, I am 
     writing in support of your bill, the Medicaid Psychiatric 
     Hospital Fairness Act of 2003.
       As you know, the Medicaid program, through the Institution 
     for Mental Diseases (IMD) exclusion, prevents non-public 
     psychiatric hospitals from receiving Medicaid reimbursement 
     for Medicaid patients between the ages of 21-64 who require 
     stabilization. When the Federal Government created Medicaid 
     they prohibited Medicaid funding for services at IMDs because 
     Washington viewed mental health services to be the 
     responsibility of the State--particularly since at that time 
     most psychiatric hospitals were State-owned hospitals. The 
     Federal Government did provide funding through the DSH-IMD 
     (Disproportionate Share Hospital Fund for Institutes for 
     Mental Disease). Initially these funds were used solely by 
     the private IMDs, however, in 1991, Maine, in response to a 
     severe budget shortfall, began to shift costs associated with 
     Augusta Mental Health Institute (AMHI) and Bangor Mental 
     Health Institute (BMHI) into the Federal DSH-IMD pool rather 
     than funding those costs with all general fund dollars.
       In the mid-1990s the State passed a rule that entitled AMHI 
     and BMHI to be paid first out of the DSH-IMD pool leaving the 
     remainder for the two private hospitals. With a declining 
     Federal cap on the DSH-IMD pool and increasing hospital 
     expenses, there was less and less money with which to 
     reimburse the two private psychiatric hospitals for services 
     provided to this indigent population.
       Maine has two private psychiatric hospitals: Spring Harbor 
     Hospital in South Portland and The Acadia Hospital in Bangor. 
     For fiscal year 2000, Acadia had inpatient admissions of 
     1,731 and Spring Harbor had 2,047. Both hospitals also 
     provide a significant amount of outpatient services.
       The two private hospitals play a pivotal role in the 
     delivery of mental health services especially for low-income 
     individuals. As the State has desired to encourage greater 
     behavior services within communities, the Department of 
     Behavioral and Developmental Services worked with both of 
     these hospitals to increase the number of beds and services 
     available to allow for certain patients to be placed in these 
     hospitals rather than the State institutes. The inability of 
     these two hospitals to effectively meet these patient needs 
     would have a detrimental impact throughout the State 
     especially because communities are already stressed 
     attempting to develop needed community-based services.

[[Page 25462]]

       Your legislation will allow non-public psychiatric 
     hospitals to receive appropriate reimbursement for Medicaid 
     beneficiaries between the ages of 21-64 who require emergency 
     treatment and stabilization as required by EMTALA. This will 
     relieve overcrowding in emergency departments and provide the 
     appropriate care these patients deserve in a more timely 
     manner.
       Thank you for addressing this important issue. We support 
     the Medicaid Psychiatric Hospital Fairness Act of 2003 and 
     look forward to working with you and your colleagues to 
     ensure swift passage of this legislation.
           Sincerely,
                                                   Steven Michaud,
     President, Maine Hospital Association.
                                  ____



                                                   NAMI Maine,

                                     August 29, 2003. Augusta, ME,
     Senator Olympia Snowe,
     U.S. Senate,
     Portland, ME
       Dear Senator Snowe: I am pleased to write this letter in 
     support of legislation that would allow Spring Harbor 
     Hospital to receive reimbursement for emergency psychiatric 
     stabilization services to Medicaid-eligible patients between 
     the ages of 21 and 64 under the Emergency Medical Treatment 
     and Labor Act (EMTALA).
       Chronic metal illness is a disease of impoverishment. 
     Chronic mental health patients who need psychiatric 
     stabilization within an acute-care setting usually are 
     eligible for either charity care of Medicaid funding. Since 
     Spring Harbor Hospital serves a population that by virtue of 
     its illness is financially challenged, it strikes me as 
     inequitable that they should also be denied reimbursement for 
     acute stabilization services provided to Medicaid-eligible 
     adults under EMTALA. Often during the last three years, I 
     have trained Maine's jails to understand EMTALA laws and send 
     suicide inmates to the hospital, rather than admit them to 
     jail. With 30-50% of Maine's jail inmates having mental 
     illness, this places an additional burden on hospitals like 
     Spring Harbor Hospital.
       I understand that care for this population in 2002 
     represented nearly 30% of Spring Harbor's adult psychiatric 
     treatment at a cost of close to $7 million. I also know that 
     Spring Harbor is increasingly viewed by the community as the 
     place where Medicaid-eligible adults who cannot afford to pay 
     for their acute psychiatric stabilization can referred--no 
     question asked. And this is where the benefits of EMTALA turn 
     problematic.
       No business--and certainly not a nonprofit organization--
     can provide $7 million in non-reimbursable services without 
     eventually jeopardizing its financial viability. And this is 
     what concerns NAMI the most: that there will be an even 
     greater lack of acute impatient stabilization services in 
     Maine for the chronic and severely mentally ill individuals 
     who most need-but can least afford--them.
       I am hopeful that a legislative solution can be passed that 
     will support Spring Harbor's ability to continue serving 
     people with mental illness, both in keeping with EMTALA and 
     yet without the inequitable financial burden that threatens 
     the long term availability of these services in Maine. Please 
     let me know what more I can do to support this legislation.
           Sincerely,
                                                  Carol Carothers,
     Executive Director,
                                  ____

         State of Maine, Department of Behavioral and 
           Developmental Services,
                                     Augusta, ME, August 29, 2003.
     Senator Olympia J. Snowe, 
     Russell Office Building,
     Washington, DC.
       Dear Senator Snowe: I would like to thank you for your 
     insight and understanding of one of the problems confronting 
     Maine's Mental Health System, reflected in your drafting 
     legislation to amend Title XIX of the Social Security Act 
     permitting Medicaid reimbursement to IMD's for services 
     required under EMTALA.
       Currently, as you know, non-public community hospitals, 
     designated as Institutes for Mental Disease (IMD), cannot 
     receive Medicaid reimbursement if a patient (age 22-64) is 
     admitted under the EMTALA Laws. This prohibition is, I 
     believe, inconsistent with the intent of the EMTALA 
     regulations, places the IMD's in some financial jeopardy, and 
     fails to recognize the critical role the non-public IMDs play 
     in Maine's Mental Health System of care.
       The State of Maine has 2 non-public designated IMD 
     facilities; Spring Harbor Hospital located in South Portland; 
     and Acadia Hospital, located in Bangor. These two facilities 
     in partnership with the 2 State Psychiatric facilities, 
     contain most of the high acuity psychiatric inpatient beds in 
     Maine and as such, provide the safety net for Maine's 
     Community mental health system. These 4 IMDs are constantly 
     being called upon to take clients who can no longer be 
     stabilized within the existing network of community 
     hospitals. Yet those community hospitals, under current 
     EMTALA law, get reimbursed (rightfully) for services under 
     Medicaid. The IMD's however, cannot access Medicaid 
     reimbursement for that same service and hence a financial 
     inequity and burden is placed on these non-public IMD's. Your 
     proposed draft legislation, which I have had the opportunity 
     to review, alleviates that unfairness and will provide some 
     financial support for Maine's 2 IMD hospitals.
       I want to offer you my support in helping pass this bill. 
     Please let me know if there is something I can do or 
     information I can provide that would be helpful to get this 
     bill passed.
           Sincerely,
                                                 Sabra C. Burdick,
     Acting Commissioner.
                                  ____

         Spring Harbor Hospital, Maine's Comprehensive Mental 
           Health Network,
                              South Portland, ME, August 26, 2003.
     Hon. Olympia J. Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of both Spring Harbor 
     Hospital in Maine and the National Association for 
     Psychiatric Healthcare Systems, I would like to thank you for 
     supporting legislation to enable freestanding private 
     psychiatric hospitals in the US to receive payment for the 
     emergency stabilization services they provide each year to 
     thousands of Medicaid-eligible adult clients under the 
     Emergency Medical Treatment and Labor Act (EMTALA).
       As you know, it is becoming increasingly difficult for 
     freestanding private psychiatric facilities to absorb the 
     cost of treating Medicaid-eligible adults between the ages of 
     21 and 64 who are referred to them for emergency 
     stabilization under EMTALA. At Spring Harbor alone, the cost 
     of serving this population last year was close to $7 million.
       Faced with both diminishing reimbursement streams and a 
     concurrent rise in demand for inpatient stabilization 
     services from overflowing emergency rooms across the country, 
     private freestanding psychiatric facilities are quite 
     literally caught between a rock and a hard place. In Maine 
     and in many other places, freestanding private psychiatric 
     hospitals are protecting their financial health by offering 
     fewer and fewer adult psychiatric services in the inpatient 
     setting. This tactic simply skirts the issue and creates a 
     further void of services for individuals with acute mental 
     illness, precisely at a time when it is widely accepted that 
     the availability of mental health services in this country is 
     substandard.
       When all is said and done, these financial figures pale in 
     comparison to the ultimate cost to our society when these 
     adults fail to receive the treatment they deserve. It has 
     been estimated that the lifetime cost of providing for an 
     individual with an untreated serious mental illness is $10 
     million. Though this figure includes the financial impact of 
     lost work days and the cost of providing Social Security 
     disability benefits, it does not even begin to speak to the 
     emotional toll of mental illness on friends or the scars 
     mental illness can have on loved ones for generations to 
     come. If we could quantify these numbers adequately, I am 
     certain that I would not need to be writing to you today.
       In closing, I would like to acknowledge the receptiveness 
     of your office and that of Senator Collins to issues 
     concerning the plight of the one in four adults and one in 
     ten children in the US who will experience a mental illness 
     this year. It is high time that the issues surrounding this 
     illness were addressed with understanding, compassion, and a 
     concern for our country's long-term mental health. I am both 
     pleased and proud that the Maine congressional delegation is 
     leading the way on these critical issues.
           Best regards,

                                               Dennis P. King,

                          Chief Executive Officer/President, Natl.
     Assoc. of Psychiatric Healthcare Systems.

                          ____________________