[Congressional Record (Bound Edition), Volume 150 (2004), Part 5]
[Senate]
[Pages 6881-6910]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. EDWARDS:
  S. 2303. A bill to help American families save, invest, and build a 
better future, and for other purposes; to the Committee on Finance.
  Mr. EDWARDS. Mr. President, I rise to introduce the Better Future for 
American Families Act. Today's legislation will strengthen progressive 
tax credits to help middle-class families save, invest, and get ahead.
  For more than 200 years, our country has been propelled by this 
single, powerful idea: All Americans should have the opportunity to 
rise as far as their hard work and God-given potential can take them. 
In the last generation, however, the American Dream of building 
something better has been replaced with the hope of just getting by.
  Due to the rising costs of housing, health care, and other 
necessities, many families are no longer saving for the future. In 
fact, they need to borrow to get through the present. Personal 
bankruptcies reached an all-time high of 1.6 million a year in 2002. 
Almost one in five households approaching retirement can expect to 
retire in poverty, and this rate is even higher for African American 
and Hispanic households. The middle-class--the foundation of this 
country--is sinking.
  If we want to create new wealth in this country, we should start by 
rewarding the work and responsibility of America's families. What's 
right for our economy, our democracy, and our society is consistent 
with our values as well: Every American should have the chance to be an 
owner--to buy a home, save for college, invest in America, or put money 
aside for a secure retirement.
  In current law, there is a Saver's Credit that matches retirement 
savings of low-income families up to dollar-for-dollar. The credit has 
been a success, but it does suffer from some limitations.
  First, the Saver's Credit will expire in 2006. The Republican budget 
plan fails to extend it, even as it extends other tax cuts enacted in 
2001. My legislation would make it permanent.
  Second, the credit phases out rapidly, providing only a small benefit 
to many middle-income families and creating high marginal tax rates for 
millions of savers. My legislation would expand benefits for families 
earning less than $50,000.
  Finally, although 57 million taxpayers are eligible for the maximum 
credit on paper, 80 percent of them cannot actually benefit from it 
because they lack income tax liability. These are families that need 
help as much as anyone, and my legislation would make them eligible for 
the credit.
  This legislation would make a real difference for American families. 
A family that saves the maximum under this plan every year from age 25 
to retirement will have a nest egg of $200,000 on top of any other 
savings, pensions, and Social Security.
  Here in Congress, it is our responsibility to make sure that families 
working for a living have the tools they need to move forward. My 
legislation is not about creating another government program to protect 
families; it is about helping families help themselves.
  If we help families save, we can unleash a new era of possibilities 
with a stronger economy because we're saving and investing more; with 
families at ease because they have financial security; and with our 
children prospering because they have a strong foundation on which to 
build. I urge all of my colleagues to join me in supporting this 
effort.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2303

       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 ``Better Future for American 
     Families Act''.

     SEC. 2. MODIFICATIONS TO SAVER'S CREDIT.

       (a) Saver's Credit.--Section 25B of the Internal Revenue 
     Code of 1986 is amended by striking the heading thereof and 
     inserting ``THE SAVER'S CREDIT.''.

[[Page 6882]]

       (b) Modifications to Applicable Percentage.--Subsection (b) 
     of section 25B of the Internal Revenue Code of 1986 is 
     amended to read as follows:
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The applicable percentage is 50 percent 
     reduced (but not below zero) by 1 percentage point for each 
     phaseout amount by which the taxpayer's adjusted gross income 
     for the taxable year exceeds the threshold amount.
       ``(2) Phaseout amount; threshold amount.--The phaseout 
     amount and the threshold amount shall be determined as 
     follows:

 
  In the case of an individual   The phaseout amount     The threshold
            filing:                      is:              amount is:
 
A joint return.................          $400               $30,000
A head of household return.....          $300               $22,500
Any other return...............          $200              $15,000.''.
 


       (c) Repeal of Termination.--Section 25B of the Internal 
     Revenue Code of 1986 is amended by striking subsection (h).
       (d) Credit refundable.--
       (1) In general.--Section 25B of the Internal Revenue Code 
     of 1986, as amended by this Act, is hereby moved to subpart C 
     of part IV of subchapter A of chapter 1 of such Code 
     (relating to refundable credits) and inserted after section 
     35.
       (2) Conforming amendments.--
       (A) Section 24(b)(3)(B) of the Internal Revenue Code of 
     1986 is amended by striking ``and 25B''.
       (B) Section 25(e)(1)(C) of such Code is amended by striking 
     ``, 25B''.
       (C) Section 26(a)(1) of such Code is amended by striking 
     ``24, and 25B'' and inserting ``and 24''.
       (D) Section 25B of such Code, as moved by paragraph (1), is 
     redesignated as section 36.
       (E) Section 904(h) of such Code is amended by striking 
     ``24, and 25B'' and inserting `` and 24''.
       (F) Section 1400C of such Code is amended by striking ``24, 
     and 25B'' and inserting `` and 24''.
       (G) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the item relating to section 36 and inserting the following:

``Sec. 36. The Saver's Credit.
``Sec. 37. Overpayments of tax.''.

       (H) The table of sections for subpart A of part IV of such 
     Code is amended by striking the item relating to section 25B.
       (I) Section 1324 of title 31, United States Code, is 
     amended by inserting ``, or enacted by the Better Future for 
     American Families Act'' before the period at the end.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.
                                 ______
                                 
      By Mr. HAGEL (for himself and Mr. Lieberman):
  S. 2305. A bill to authorize programs that support economic and 
political development in the Greater Middle East and Central Asia and 
support for three new multilateral institutions, and for other 
purposes; to the Committee on Foreign Relations.
  Mr. HAGEL. Mr. President, I rise today to introduce The Greater 
Middle East and Central Asia Development Act of 2004 with my colleague, 
Senator Lieberman. This bill supports economic and private sector 
development in the countries of the Greater Middle East and Central 
Asia.
  The terrorist attacks of September 11, 2001 signaled a turning point 
in United States foreign policy. Al-Qaida and affiliated groups have 
established a terrorist network with linkages in Afghanistan, Pakistan, 
throughout the Greater Middle East and Central Asia, and around the 
world. The war on terrorism requires that the United States consider 
the Greater Middle East and Central Asia as a strategic region with its 
own political, economic and security dynamics. While rich in cultural, 
geographic and language diversity, the Greater Middle East and Central 
Asia face common impediments to economic development and political 
freedom. Although poverty and economic underdevelopment alone do not 
``cause'' terrorism, the expansion of economic growth, free trade, and 
private sector development can contribute to an environment that 
undercuts radical political tendencies that give rise to terrorism.
  The economic problems of the Greater Middle East and Central Asia 
cannot be considered in isolation. We must work with the governments 
and peoples of the region on a cohesive program of political and 
economic reforms that builds a better future. We cannot lose the next 
generation to hopelessness and despair. Our initiatives must support 
progress toward market economies, enhanced trade, the development of 
democratic institutions, expansion of citizen-to-citizen contacts, 
educational reform, and private sector development. UN Secretary 
General Kofi Annan has said that we cannot reach the UN's goals for 
improving health, education, and living standards over the next 12 
years ``without a strong private sector in the developing countries 
themselves, to create jobs and bring prosperity.'' This region needs 
more jobs, economic growth, a vibrant private sector, and good 
governance practices to help stabilize societies and lead to a stronger 
foundation for political reform and conflict prevention.
  President Bush has committed the United States to a ``forward 
strategy of freedom'' in the Greater Middle East to combat terrorism 
and encourage reform in these countries. This is a multi-layered 
strategy, including increased spending and support for the National 
Endowment for Democracy, greater emphasis on public diplomacy, and 
initiating programs that support political liberalization and free 
markets. The G-8 summit in June and other forthcoming multi-lateral 
forums will provide opportunities to consult with our allies on many of 
these issues. Similarly, Senator Dick Lugar, chairman of the Senate 
Foreign Relations Committee, has called for a Greater Middle East 
Twenty First Century Trust as part of a program of greater engagement 
with this region, and Senator Joseph Biden, ranking member on the 
committee, has proposed a Middle East Foundation to support political 
participation and civil society in the Middle East.
  Our bill deepens and expands America's commitment to economic reform 
and private sector development in the Greater Middle East and Central 
Asia by authorizing $1 billion per year for five years and creating 
three new multilateral mechanisms: a Greater Middle East and Central 
Asia Development Bank to promote private sector development; a Greater 
Middle East and Central Asia Development Foundation to implement and 
administer economic and political programs; and a Trust for Democracy 
to provide small grants to promote development of civil society.
  These are not traditional foreign aid programs. Our legislation seeks 
to help stimulate private sector development, promote strong market 
economies, invigorate trade relations within the region, and empower 
states to rebuild and open their economies. Through a combination of 
government initiative and flexible private sector financing, we can 
bring the resources and expertise needed to launch a new beginning for 
economic development to the Greater Middle East and Central Asia. Our 
bill also encourages the State Department and other relevant government 
agencies to consider new and creative approaches to coordination of 
political and economic support for the region.
  Over the past 2 years, the United States has spent at least $120 
billion on our military efforts in Iraq and Afghanistan. Investing in 
political and economic development is equally important in order to 
achieve stability in the Greater Middle East and Central Asia. 
Promoting trade and economic growth in the region complements our 
political and diplomatic objectives in the war on terrorism. People 
need hope for better lives. We cannot succeed in our war on terrorism 
until hope replaces despair among the next generation in the Greater 
Middle East and Central Asia.
  Just this week, the editorial page of the Omaha World-Herald, my 
State's leading newspaper, supported the Bush administration's efforts 
to encourage economic openness among Muslim nations. Our bill today 
complements these worthy initiatives. Working with our allies to 
encourage free market development and political liberalization in the 
Muslim countries of the Greater Middle East and Central Asia would 
create, in the World-Herald's words, ``a win-win situation'' for the 
United States and those Muslim countries.
  I ask unanimous consent that the text of the bill be printed in the 
Record.

[[Page 6883]]

  There being no objection, the bill was ordered to be printed in the 
Record, as follows;

                                S. 2305

       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 ``Greater Middle East and 
     Central Asia Development Act of 2004''.

     SEC. 2. PURPOSE.

       The purpose of this Act is to authorize assistance for 
     political freedom and economic development, particularly 
     through private sector development, in the Greater Middle 
     East and Central Asia, including contributions to and 
     participation in 3 new entities: a Trust for Democracy, a 
     Development Foundation, and a Development Bank.

     SEC. 3. FINDINGS.

       Congress makes the following findings:
       (1) The terrorist attacks of September 11, 2001, signaled a 
     turning point in United States foreign policy.
       (2) Al Qaeda and affiliated groups have established a 
     terrorist network with linkages in Afghanistan, Pakistan, 
     throughout the Greater Middle East and Central Asia, and 
     around the world.
       (3) The war on terrorism requires that the United States 
     consider the Greater Middle East and Central Asia as a 
     strategic region with its own political, economic, and 
     security dynamics.
       (4) While rich in cultural, geographic, and language 
     diversity, the Greater Middle East and Central Asia face 
     common impediments to economic development and political 
     freedom.
       (5) Although poverty and economic underdevelopment do not 
     alone cause terrorism, the expansion of economic growth, free 
     trade, and private sector development can contribute to an 
     environment that undercuts radical political tendencies that 
     give rise to terrorism.
       (6) Given the relationship between economic and political 
     development and winning the global war on terror, America's 
     support for freedom in the Greater Middle East and Central 
     Asia must be matched with expanded and new programs of 
     partnership with the people and governments of the region to 
     promote good governance, political freedom, private sector 
     development, and more open economies.
       (7) The United States and other donors should support those 
     citizens of the Greater Middle East and Central Asia who 
     share our desire to undertake reforms that result in more 
     open political and economic systems.
       (8) Turkey, which should be supported in its aspirations 
     for membership in the European Union, plays a pivotal and 
     unique role in efforts to bring economic development and 
     stability to the Greater Middle East and Central Asia.
       (9) The President should seek new mechanisms to work 
     together with European and other nations, as well as with the 
     countries of the Greater Middle East and Central Asia to 
     promote political and economic development in the Greater 
     Middle East and Central Asia.
       (10) Because the dynamics of the Greater Middle East and 
     Central Asia have a serious impact on global security, the 
     North Atlantic Treaty Organization (NATO) should now shift 
     its strategic focus to the region, including expanded roles 
     in Iraq, Afghanistan, and the Mediterranean.

     SEC. 4. DEFINITION; SPECIAL RULE.

       (a) Greater Middle East and Central Asia Defined.--In this 
     Act, the term ``Greater Middle East and Central Asia'' means 
     the 22 members of the Arab League (Algeria, Bahrain, Comoros, 
     Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, 
     Mauritania, Morocco, Oman, the Palestinian Authority, Qatar, 
     Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab 
     Emirates, and Yemen), Afghanistan, Iran, Israel, Kazakhstan, 
     Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan, and 
     Uzbekistan.
       (b) Special Rule.--A country listed in subsection (a) may 
     not receive assistance under this Act if such country is 
     identified as a country supporting international terrorism 
     pursuant to section 6(j)(1)(A) of the Export Administration 
     Act of 1979 (as in effect pursuant to the International 
     Emergency Economic Powers Act; 50 U.S.C. 1701 et seq.), 
     section 40(d) of the Arms Export Control Act (22 U.S.C. 
     2780(d)), section 620A of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2371), or any other provision of law.

     SEC. 5. AUTHORIZATION OF ASSISTANCE.

       Notwithstanding any other provision of law, the President 
     is authorized to provide assistance to representatives from 
     the Greater Middle East and Central Asia for the purpose of 
     promoting economic and political freedoms, free trade, and 
     private sector development, including the programs described 
     in the following paragraphs:
       (1) United states contribution to and membership in a 
     greater middle east and central asia development bank.--The 
     President is authorized to work with other donors and the 
     countries of the Greater Middle East and Central Asia to 
     establish a Greater Middle East and Central Asia Development 
     Bank to promote private sector development, trade, including 
     intra-regional trade, and investment in the Greater Middle 
     East and Central Asia.
       (2) Creation of a greater middle east and central asia 
     development foundation.--The President is authorized to work 
     with other donors and representatives from the Greater Middle 
     East and Central Asia to establish a multilateral Greater 
     Middle East and Central Asia Development Foundation to assist 
     in the administration and implementation of assistance 
     programs, including public-private programs, pursuant to this 
     Act, with specific emphasis on programs at the grass-roots 
     level, to include volunteer-based organizations and other 
     nongovernmental organizations that support private sector 
     development, entrepreneurship, and development of small- and 
     medium-size enterprises and exchanges.
       (3) Creation of trust for democracy.--The President is 
     authorized to establish, together with other donors and 
     private sector and nongovernmental leaders from the Greater 
     Middle East and Central Asia, a multilateral, public-private 
     Trust for Democracy to support grass-roots development of 
     civil society, democratic reform, good governance practices, 
     and rule of law reform in the Greater Middle East and Central 
     Asia. Private foundations shall be encouraged to participate 
     in the Trust through the provision of matching funds.

     SEC. 6. SENSE OF CONGRESS REGARDING COORDINATION OF 
                   ASSISTANCE TO THE GREATER MIDDLE EAST AND 
                   CENTRAL ASIA.

       Recognizing the importance of coordination of assistance to 
     the Greater Middle East and Central Asia, and the strategic 
     imperatives required by the war on terrorism, it is the sense 
     of Congress that--
       (1) the Secretary of State and the heads of other relevant 
     Government agencies should consider new approaches to the 
     coordination of the provision of political and economic 
     support for the Greater Middle East and Central Asia; and
       (2) the Secretary of State should consider appointing a 
     Coordinator for Assistance to the Greater Middle East and 
     Central Asia.

     SEC. 7. PROGRAM REPORTS.

       (a) Requirement for Reports.--Beginning on January 31, 
     2005, and annually thereafter, the President shall submit to 
     Congress a report on the progress of the Greater Middle East 
     and Central Asia, the Greater Middle East and Central Asia 
     Development Bank, the Greater Middle East and Central Asia 
     Development Foundation, and the Trust for Democracy in 
     developing more open political and economic systems and the 
     degree to which United States assistance has been effective 
     at promoting these changes.
       (b) Content.--The reports required by subsection (a) shall 
     include general information regarding such progress and 
     specific information on the progress of each of the Greater 
     Middle East and Central Asia Development Bank, the Greater 
     Middle East and Central Asia Development Foundation, and the 
     Trust for Democracy in--
       (1) encouraging entrepreneurial development and supporting 
     growth of small- and medium-size enterprises in the Greater 
     Middle East and Central Asia;
       (2) promoting private sector development, democratic 
     political reform, good governance building, rule of law 
     reform, and other appropriate goals in the Greater Middle 
     East and Central Asia;
       (3) fostering intra-regional trade and investment by United 
     States businesses and financial institutions in the Greater 
     Middle East and Central Asia;
       (4) developing public-private partnerships to carry out the 
     purpose of this Act; and
       (5) encouraging the involvement of the Greater Middle East 
     and Central Asia, and other donors in each institution.

     SEC. 8. ENTERPRISE FUNDS REPORTS TO CONGRESS.

       Not later than 1 year after the date of enactment of this 
     Act, the President shall submit to Congress a comprehensive 
     report evaluating the appropriateness of the establishment of 
     enterprise funds in the Greater Middle East and Central Asia. 
     The report shall evaluate whether and to what extent 
     enterprise funds might be an effective mechanism for 
     promoting economic reform and investment in the Greater 
     Middle East and Central Asia.

     SEC. 9. REPORT ON COORDINATION OF ASSISTANCE TO THE GREATER 
                   MIDDLE EAST AND CENTRAL ASIA.

       Not later than 1 year after the date of enactment of this 
     Act, the President shall submit to Congress a report that 
     describes the measures that have been employed, and the 
     measures that are planned to be employed, to improve the 
     coordination within the Department of State and among the 
     heads of the relevant Government agencies of the provision of 
     support to the Greater Middle East and Central Asia.

     SEC. 10. NOTIFICATIONS TO CONGRESS REGARDING ASSISTANCE.

       Section 634A of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2394-1) (relating to reprogramming notifications) 
     shall apply with respect to obligations of funds made 
     available to carry out this Act.

     SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

       (a) Authorization of Appropriations.--In addition to funds 
     otherwise available for

[[Page 6884]]

     such purpose and for the countries to which this Act applies, 
     there are authorized to be appropriated to the Department of 
     State to carry out the provisions of this Act, $1,000,000,000 
     for each of the fiscal years 2005 through 2009.
       (b) Availability of Funds.--Amounts appropriated pursuant 
     to subsection (a) shall remain available until expended.

  Mr. LIEBERMAN. Madam President, I rise today, along with my friend 
and colleague from Nebraska, Senator Hagel, to introduce the Greater 
Middle East and Central Asia Development Act of 2004. This would be a 
Marshall Plan for the Greater Middle East.
  Let me put it in the context of the news we are receiving from Iraq 
today. While public opinion surveys that have been taken by independent 
groups have shown recently that the substantial majority of the people 
of Iraq, quite understandably, are grateful that Saddam Hussein is no 
longer in power, and while a majority of them are optimistic about 
their future--a better life for themselves and their children--it is 
clear, of course, every day there is a growing group of Saddam 
loyalists left over from the previous regime, and terrorists, fanatical 
jihadists, insurgents who will attack and kill Americans and Iraqis to 
stop the forward movement of progress and freedom and prosperity in 
Iraq.
  We clearly have to respond to that with force in defense of our 
values, of liberty, of freedom for the Iraqis. We have, if you will 
allow me to use Scriptural words, to employ our swords. But it is also 
true in Iraq and throughout the world that we will only win the war on 
terrorism if we use not just our swords but plowshares as well. That is 
what this piece of legislation Senator Hagel and I are introducing 
today is all about.
  I want to speak for a few moments about it. Senator Hagel will be 
over later in the day to offer his remarks on the bill.
  Madam President, a half century ago, at the dawn of the cold war, 
Congress authorized the Marshall Plan for Europe--a bold initiative 
inspired by Secretary of State George Marshall and premised on a simple 
but transformational idea: that to stop communism, we had to rebuild 
and democratize Europe. The Marshall Plan offered monetary aid, of 
course, but it offered much more. It was a national commitment of 
American values to transform the future of Europe by offering the 
Europeans the blessings of liberty and prosperity, and thereby linking, 
in the deepest way, Europe's future with our own. The same ideals and 
goals of the Marshall Plan can and must now be applied to the people of 
the Greater Middle East.
  The predominantly Muslim countries of the Middle East and Central 
Asia have, unfortunately, emerged at this moment in history as the 
cradle of fanatical Islamic jihadist terrorism. There is a great civil 
war being fought in the Arab world between the peace-loving, law-
abiding majority of Muslims and the minority of jihadists. This civil 
war unleashed the violent terrorist forces that led to September 11, 
2001, the attacks on America; March 11, 2004, the attacks on Spain; and 
the repeated attacks in places such as Fallujah in Iraq that are 
occurring almost every day. The outcome of our war against Islamic 
terrorists will be determined by the way in which we use our swords and 
our plowshares to determine the outcome of the civil war in the Muslim 
world.
  To stop al-Qaida and other terrorist groups from expanding this civil 
war and recruiting a new generation of killers, we must use all of our 
military power to capture and kill the enemy. We must drain the swamps 
of terrorists in Iraq and wherever they grow.
  At the same time we must combat the conditions that fuel terrorism 
and drive recruits to al-Qaida and hate and despair. To do this we must 
seed the garden, not just drain the swamp, with freedom, hope, and 
economic opportunity. If we invest in the political and economic future 
of the Middle East and Central Asia in our time, as we did in Europe 
with the Marshall plan after the end of the Second World War and at the 
beginning of the cold war, we will expand democracy's reach, choke off 
the terrorists, strengthen our own national security, and move the 
world toward greater peace.
  That is the underlying premise of the legislation Senator Hagel and I 
are introducing today. It is designed to complement our swords in the 
war against terrorism with the plowshares of political and economic 
assistance.
  Our legislation is not soft. It is not welfare. It is in fact a 
different kind of warfare on the battlefield of ideas and ideologies, 
visions for the future. Although there are compelling humanitarian 
reasons for offering assistance to the people of the Greater Middle 
East, there are also compelling American national security reasons for 
doing so. The political and economic assistance Senator Hagel and I are 
proposing might be though of as additional weapons in America's arsenal 
in the fight against terrorists.
  Let me summarize what our legislation contains. We advocate making a 
major financial investment in the future of the Middle East and Central 
Asia. How we propose making this investment is in some ways as 
significant as how much we propose investing. The key to the success of 
our Marshall plan for the Middle East, as it was of the Marshall plan 
for Europe, is it is not a detailed list of programs. It is a statement 
of values and purposes. It is the creation of a structure to carry out 
those values and purposes, and it is a commitment of American and 
international resources to realize those purposes.
  Our legislation would create three new international institutions 
that will support economic and political development in the Greater 
Middle East and Central Asia, open institutions that will require 
participation by representatives of the countries benefiting from this 
support, a partnership. Institutionalizing involvement of a wide group 
of donors and recipients will promote better cooperation and give 
ownership and accountability to the impacted nations and to the private 
reformers in those nations--key ingredients to successful foreign 
assistance.
  The first new institution Senator Hagel and I would create is a trust 
for democracy for the Middle East that would support the development of 
civil society in the region, not unlike efforts we made to help those 
who had the dream of freedom and opportunity in countries of the former 
Soviet Union, now living to experience that dream. Modeled on the 
Balkan Trust for Democracy, this institution we propose would marshal 
the support of civic leaders and reformers as well as private 
foundations to provide grants to worthy grassroots projects that 
support free association and promote civic responsibility, the building 
blocks of democracy.
  Second, Senator Hagel and I would build a multilateral development 
foundation that would provide a second track for assistance, together 
with other donors, assistance that would be additional to that already 
being provided bilaterally by the U.S. and other international donors. 
This foundation will be a public place where we and other donors can 
come together with the countries of the region to set priorities 
together, to work together for the greater good of this troubled 
region. Many countries in the Greater Middle East are richer than they 
are developed, meaning their wealth has not translated to economic 
progress for most of the people. We would invite all governments in the 
region to sit on the board of this foundation, and we would ask all to 
contribute financially and programmatically to it.
  Finally, our legislation would establish a new Middle East and 
Central Asia development bank, like the European Bank for 
Reconstruction and Development. This bank would include private sector 
participation and would underwrite large-scale infrastructure projects 
in the region. It would also have a microcredit lending facility and a 
project development facility.
  We also believe it is important and necessary to make American 
assistance more effective. That is why we are calling for the 
establishment of an office of the coordinator for Greater Middle East 
and Central Asia at our Department of State. The creation of such an 
office would help ensure all assistance provided by any government

[[Page 6885]]

agency of ours is in line with the overarching goals and objectives of 
our foreign policy. It would also give other donors and countries of 
the region a simple place to go when seeking information about the 
programs we would create.
  With this collaborative structure in place, Senator Hagel and I would 
authorize $5 billion in assistance over the next 5 years. That is no 
small sum. But it is in fact small in comparison to the tens of 
billions of dollars in today's money that were spent on the Marshall 
plan in Europe 50 years ago and the hundreds of billions of dollars we 
are spending now and will continue to have to spend for the military 
side of the war against terror. That figure, we believe, is the minimum 
required to have a positive, measurable impact in the region and to 
signal the seriousness of our intentions.
  Earlier this month, civil society leaders from all over the Arab 
world gathered in Alexandria, Egypt to discuss an Arab reform agenda. 
At that meeting participants agreed on a declaration that calls for 
significant reforms that encompass the ``political, economic, social, 
and cultural aspects'' of society. The fact is the reforms those Arab 
world reformers seek are at least as far-reaching as those that are 
being suggested by others from the outside, including from the United 
States. I know there are similar reform efforts underway in Central 
Asia. They deserve our support.
  In introducing this legislation today, Senator Hagel and I hope to 
give new impetus to the discussions taking place in Washington and 
elsewhere about what we collectively can do to support political and 
economic reform in the Greater Middle East and to give the people in 
those great regions an alternative to a better life than the hatred and 
suicidal death al-Qaida offers.
  The Bush administration has put forward serious proposal along the 
same lines as ours. It certainly has the same goals. This bill Senator 
Hagel and I are introducing today is intended to build on that effort. 
We hope it helps shape the debate of the best method to implement, 
which should be one of partnership and collaboration along with a 
serious commitment of American resources.
  In June, the United States will host the G-8 summit in Sea Island, 
GA. That summit will be followed by the U.S.-EU and NATO summits also 
in June. The future of the Greater Middle East will be placed high on 
the agenda of all those important meetings.
  By introducing this legislation today, Senator Hagel and I hope to 
enable our Government to go into these summits with the bipartisan 
support of the Congress and also to provide some direction as to what 
we believe should be done and how it might best be done. Senator Hagel 
and I hope our colleagues will take a look at this proposal and join us 
in cosponsoring it and sending thereby a message no less profound and 
no less necessary than the message of the Marshall plan half a century 
ago, that the United States is serious about improving the lives and 
expanding the freedoms of the millions of people who live in the 
Greater Middle East and Central Asia.
  Today, that is our most urgent international imperative. At the dawn 
of the cold war, America answered the challenge of communism by seeding 
a garden of peace, hope, and prosperity in Europe. Today, at the dawn 
of our current war against terrorism, it is equally essential that we 
answer the inhumane, barbaric threats of terrorism and acts of 
terrorism with all necessary force, but also by seeding the same kind 
of garden of peace, hope, and prosperity in the Greater Middle East.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Sununu):
  S. 2306. A bill to reauthorize, restructure, and reform the intercity 
passenger rail service program; to the Committee on Commerce, Science, 
and Transportation.
  Mr. McCAIN. Mr. President, today, joined by Senator Sununu, I am 
introducing legislation to fundamentally reform our Nation's intercity 
rail passenger program. The proposal adopts the core concepts for 
reform advanced by the administration in its Amtrak legislation--cost-
sharing with the States, a network of trains that makes economic sense, 
and fair and open competition for Amtrak. However, in recognition of 
the magnitude and complexity of the task of restructuring Amtrak, the 
legislation takes a more moderate, realistic approach to reform. While 
I would prefer to see more accomplished in the next 6 years, enactment 
of the restructuring and reforms we are proposing today would represent 
meaningful progress toward creating an intercity passenger rail program 
that makes economic sense and meets the needs of the traveling public.
  It is past time for Congress to come to terms with Amtrak's problems 
and why it is largely a failure. Year after year, for more than 3 
decades, Congress has funded an essentially nationalized passenger 
railroad, that in most areas of the country neither meets a market 
demand nor provides needed public transportation. After 34 years and 
$27 billion in taxpayer subsidies, Amtrak still serves less than 1 
percent of intercity travelers.
  My colleagues and I may not agree on exactly how Amtrak should be 
restructured, but we should agree that what exists today is far from 
ideal. Amtrak loses over $1 billion annually. Its debt stands at almost 
$5 billion, a legacy the taxpayers will bear for years to come. It has 
mortgaged nearly every asset it owns, including a portion of New's 
York's Penn Station, to avoid bankruptcy. It operates routes, many of 
them in the middle of the night, that lose hundreds of dollars per 
passenger. And despite a Federal investment of $3.2 billion for high-
speed service on the Northeast Corridor, the Acela service has been 
plagued by equipment and operating problems. In a report prepared at my 
request, the General Accounting Office recently found that Amtrak 
mismanaged the project, blatantly ignoring the Federal master plan and 
failing to complete 51 of the project's 72 work elements.
  It is past time to end the status quo. If the collective wisdom of 
Congress is to continue to fund intercity passenger rail service, then 
we should do so in a manner that makes economic sense. The legislation 
we are introducing today would restructure the passenger rail program 
in a realistic way and provide responsible funding for existing service 
and new corridor development.
  First, the legislation would make cost-sharing on shorter-distance 
corridor routes more equitable. Today, California, Washington, Oregon, 
and a number of other States play an active role in funding and 
managing passenger service on corridor routes in their States, while 
other States pay nothing. This legislation would require equitable 
cost-sharing for all corridor trains. By the end of the 6-year 
reauthorization period, States would be required to fund 70 percent of 
the operating losses on corridor services, the level of contribution 
already being made by California, the Pacific Northwest, Oklahoma, 
Missouri, and several other States. Furthermore, the Federal share of 
operating subsidies would be payable as grants to the States. Where 
States have taken an active role in managing Amtrak service, there has 
been more accountability, better customer service, and a higher level 
of efficiency.
  Second, the legislation would restructure Amtrak's long distance 
routes. I am not proposing, as many of my colleagues would expect, to 
``whack'' every long distance train. In fact, closure and consolidation 
would be a last resort under my proposal. The ultimate goal would be to 
reduce the annual operating subsidy required for these routes by at 
least 50 percent whether by restructuring the route, reducing operating 
expenses, contracting out service to a private operator, or securing 
State financial support. Amtrak operates 16 long distance trains, 
including the Sunset Limited, a train that runs through Arizona on its 
3-day odyssey from Los Angeles to Orlando and loses over $400 per 
passenger. Reducing the burden of these trains on the taxpayer is one 
of my top priorities.
  This proposal would also establish fair and open competition for 
Amtrak. If, after 34 years of being told by Amtrak that profitability 
is just a few

[[Page 6886]]

years away or, more recently, that it is on a ``glide-path'' to self-
sufficiency, we are now to conclude that Amtrak will always run 
operating and capital deficits. Our duty to the taxpayers is to ensure 
that service is operated as efficiently as possible to minimize 
subsidies. To achieve this goal, there must be fair and open 
competition for Amtrak from private sector companies and commuter 
authorities.
  Some of my colleagues contend that the private sector would not be 
interested in operating passenger service, noting that Amtrak was 
created because the freight railroads did not wish to continue 
providing what had become unprofitable service with the development of 
air travel and the Interstate Highway System. But times have changed. 
Norfolk Southern recently told transportation officials in Georgia that 
it wants to be considered to run the State's planned commuter service 
between Atlanta and Macon. Herzon, a private company headquarted in 
Missouri, operates commuter services in Texas and California, and has 
been trying to bid against Amtrak to operate the ``Mules'' service 
between St. Louis and Kansas City. Further, 14 private corporations 
expressed interest in operating service following a Commerce Committee 
hearing in which the question of private sector interest was posed.
  Fourth, this legislation would establish a process for corridor 
development modeled after the transit ``new starts'' program. Many 
States have expressed interest in developing new conventional or high-
speed intercity passenger service in highly-traveled corridors. My 
proposal would evaluate new intercity services on a competitive basis 
and require that projects meet planning and design requirements similar 
to those that apply to the well-respected new starts program 
administered by the Federal Transit Administration. As the States 
assume more responsibility for operating subsidies, the amount of 
funding available for corridor development would increase. By year 6 of 
the reauthorization period, $800 million would be authorized for 
corridor development.
  This legislation also addresses ownership, management, and 
maintenance of Northeast Corridor. As recommended by the 
administration, the bill proposes that the Federal Government assume 
ownership of the Northeast Corridor and implement a plan to restore the 
Corridor to a state of good repair. The Northeast Corridor States would 
be encouraged to adopt an interstate compact within 5 years and assume 
responsibility for the Corridor's management. Other States would be 
expected to manage their corridor services, and the Northeast Corridor 
should be no exception. Moreover, over 1,000 of the 1,200 or so trains 
operated daily on the Corridor are commuter trains, not intercity 
services. Until the interstate compact is in place, Amtrak would 
continue to operate and maintain the Corridor.
  Finally, the legislation institutes reforms at Amtrak. Amtrak would 
be required to perform its services under contract with the Federal 
Government or States, and would be required to develop a more accurate 
and transparent cost accounting system. As recommended by the DOT 
Inspector General, an effort would be made to restructure Amtrak's debt 
to reduce the cost to the taxpayers.
  We encourage our colleagues to support this legislation. Reforming 
Amtrak and the way our intercity passenger rail program is now 
organized must be accomplished before Congress considers expanding 
intercity service. Simply throwing billions more at Amtrak as some of 
my colleagues propose--whether through appropriations, bonds, or some 
other funding scheme--will not solve the fundamental problems. We can 
and must do better.
  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. 2306

       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 ``Rail Passenger Service 
     Restructuring, Reauthorization, and Development Act''.

     SEC. 2. TABLE OF CONTENTS; AMENDMENT OF TITLE 49, UNITED 
                   STATES CODE.

       (a) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents; amendment of title 49, United States Code.

            Title I--Network Restructuring and Cost-sharing

                       Subtitle A--Restructuring

Sec. 101. Findings, purpose, and goals.
Sec. 102. Passenger rail service restructuring.
Sec. 103. Definitions.
Sec. 104. Operating grants for corridor routes.
Sec. 105. Operating grants for long distance routes
Sec. 106. Long distance route restructuring commission.
Sec. 107. Criteria for restructuring.
Sec. 108. Implementation of restructuring plan.
Sec. 109. Redemption of common stock.
Sec. 110. Retirement of preferred stock; transfer of assets.
Sec. 111. Real estate and asset sales; other.

                     Subtitle B--Northeast Corridor

Sec. 131. Interstate compact for the Northeast Corridor.
Sec. 132. Shut-down of commuter or freight operations.
Sec. 133. Capital grants for the Northeast Corridor.

                      Subtitle C--Related Matters

Sec. 151. Fair and open competition.
Sec. 152. Access to other railroads.
Sec. 153. Limitations on rail passenger transportation liability.
Sec. 154. Train operations insurance pool.
Sec. 155. Collective bargaining arrangements.

                       Title II--Rail Development

Sec. 201. Capital assistance for intercity passenger rail service.
Sec. 202. Regulations

                           Title III--Reforms

Sec. 301. Management of secured debt.
Sec. 302. Employee transition assistance.
Sec. 303. Termination of authority for GSA to provide services to 
              Amtrak.
Sec. 304. Amtrak reform board of directors.
Sec. 305. Limitations on availability of grants.
Sec. 306. Repeal of obsolete and executed provisions of law.
Sec. 307. Establishment of financial accounting system.
Sec. 308. Restructuring of long-term debt and capital leases.
Sec. 309. Authorization of appropriations.
       (b) Amendment of Title 49.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or a repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of title 49, 
     United States Code.

            TITLE I--NETWORK RESTRUCTURING AND COST-SHARING

                       Subtitle A--Restructuring

     SEC. 101. FINDINGS, PURPOSE, AND GOALS.

       Section 24101 is amended to read as follows:

     ``Sec. 24101. Findings, purpose, and goals

       ``(a) Findings.--
       ``(1) It is in the public interest of the United States to 
     encourage and promote the development of various modes of 
     transportation and transportation infrastructure to 
     efficiently maximize the mobility of passengers and goods.
       ``(2) Despite Federal subsidies of nearly $27 billion over 
     the past 34 years, intercity rail passenger service still 
     accounts for less than 1 percent of all intercity travel.
       ``(3) Intercity rail passenger service can be competitive 
     with other modes of transportation and achieve a significant 
     share of the travel market in short-distance corridors 
     connecting metropolitan areas.
       ``(4) Rail passenger transportation can help alleviate 
     overcrowding of airways and airports, and can provide needed 
     intermodal connections to airports, bus terminals, and mass 
     transit services.
       ``(5) Corridor routes account for approximately 85 percent 
     of Amtrak's ridership but only one-third of Amtrak's 
     operating losses, excluding depreciation.
       ``(6) A number of Amtrak's long-distance routes may be more 
     efficiently operated and attract higher ridership as 
     connected corridors.
       ``(7) Long-distance routes that cannot be restructured as 
     connected corridors, do not receive State financial support, 
     cannot be operated on a for-profit basis, or are not an 
     essential link to the rest of the intercity passenger rail 
     network, should be consolidated or discontinued.
       ``(8) Some States with corridor services provide 
     significant financial support for such services, while other 
     States with routes and all States with long-distance routes 
     contribute nothing for such services. More equitable cost-
     sharing is needed to justify Federal investment in intercity 
     rail passenger service.

[[Page 6887]]

       ``(9) The need to invest taxpayer dollars in intercity rail 
     passenger service demands that fair and open competition be 
     permitted for the provision of such services to ensure that 
     service is provided in the most efficient manner without 
     jeopardizing the safety of such operations.
       ``(10) A greater degree of cooperation is necessary among 
     intercity passenger service operators, freight railroads, 
     State, regional, and local governments, the private sector, 
     labor organizations, and suppliers of services and equipment 
     to achieve the performance sufficient to justify the 
     expenditure of additional public money on intercity rail 
     passenger service.
       ``(11) Transportation services provided by the private 
     freight railroads are vital to the economy and national 
     defense and should not be disadvantaged by the operation of 
     intercity passenger rail service over their rights-of-way.
       ``(12) The Northeast Corridor is a valuable resource of the 
     United States used by intercity and commuter rail passenger 
     transportation and freight transportation and should be 
     restored to a state of good repair.
       ``(b) Purpose.--The purpose of this part is to assist in 
     the preservation and development of conventional and high-
     speed intercity rail passenger services where such services 
     can play an important role in facilitating passenger mobility 
     in the United States.
       ``(c) Goals.--The goals of this part are--
       ``(1) to move toward a national network of interconnected 
     short-distance passenger rail corridor services;
       ``(2) to return the Northeast Corridor to a state of good 
     repair;
       ``(3) to establish a framework for the development of new 
     conventional and high-speed rail services;
       ``(4) to allow for train services to be operated under 
     contract to a State or group of States, with the operator of 
     the service selected by the State or group of States;
       ``(5) to establish equitable cost-sharing for capital 
     expenses and operating losses with the States; and
       ``(6) to encourage greater participation in the provision 
     of intercity rail passenger services by the private 
     sector.''.

     SEC. 102. PASSENGER RAIL SERVICE RESTRUCTURING.

       (a) In General.--Chapter 243 is amended by inserting before 
     section 24301 the following:

     ``Sec. 24300. Restructuring mandate

       ``(a) In General.--Within 6 months after the date of 
     enactment of the Rail Passenger Service Restructuring, 
     Reauthorization, and Development Act, the Amtrak Reform Board 
     shall restructure Amtrak as 2 independent entities, as 
     follows:
       ``(1) The national railroad passenger corporation.--One 
     entity shall be the National Railroad Passenger Corporation, 
     otherwise known as Amtrak, that shall provide overall 
     supervision of the restructuring of the intercity passenger 
     rail program.
       ``(2) The american passenger railway corporation.--The 
     other entity shall be a for profit corporation, to be known 
     as the American Passenger Railway Corporation, that shall be 
     responsible for conducting the passenger operations, 
     infrastructure maintenance, and related services, including 
     operation of reservation centers and ownership and 
     maintenance of rolling stock.
       ``(b) Articles of Incorporation and Other Documentation.--
     Within 6 months after the date of enactment of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act, the Amtrak Reform Board shall--
       ``(1) file appropriate articles of incorporation under 
     State law for the American Passenger Railway Corporation; and
       ``(2) amend the articles of incorporation and bylaws of the 
     National Railroad Passenger Corporation to reflect its 
     changed functions and responsibilities.
       ``(c) Roles and Responsibilities of the American Passenger 
     Railway Corporation.--
       ``(1) Railroad activities.--Consistent with the business 
     corporation law of the State of incorporation of the American 
     Passenger Railway Corporation, the Corporation shall be 
     qualified to undertake railroad activities of an operational 
     or infrastructure nature.
       ``(2) Rail operations and related functions.--The American 
     Passenger Railway Corporation--
       ``(A) shall have the exclusive right, until October 1, 
     2005, to continue to provide the intercity passenger services 
     provided by Amtrak on the date of enactment of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act;
       ``(B) shall, beginning October 1, 2005, operate intercity 
     passenger service only on a contractual basis under 
     negotiated terms and conditions;
       ``(C) shall operate a national reservations system; and
       ``(D) subject to fulfillment of its contractual 
     obligations, shall have the exclusive right, until management 
     of the mainline of the Northeast Corridor between Boston, 
     Massachusetts, and Washington, District of Columbia, is 
     transferred to the interstate compact created under section 
     131 or to another entity, to provide the train operations, 
     dispatching, maintenance, and infrastructure services that 
     are being provided by Amtrak on the date of enactment of the 
     Rail Passenger Service Restructuring, Reauthorization, and 
     Development Act, but may provide such services beginning 
     October 1, 2005, only on a contractual basis with the 
     National Railroad Passenger Corporation under negotiated 
     terms and conditions.
       ``(3) Status of corporation.--
       ``(A) The American Passenger Railway Corporation--
       ``(i) is a railroad carrier under section 20102(2) and 
     chapters 261 and 281 of this title;
       ``(ii) shall be operated and managed as a for-profit 
     corporation; and
       ``(iii) is not a department, agency, or instrumentality of 
     the United States Government nor a Government corporation (as 
     defined in section 103 of title 5).
       ``(B) Chapter 105 of this title does not apply to the 
     American Passenger Railway Corporation, except that laws and 
     regulations governing safety, employee representation for 
     collective bargaining purposes, the handling of disputes 
     between carriers and employees, employee retirement, annuity, 
     and unemployment systems, and other dealings with employees 
     apply to the American Passenger Railway Corporation to the 
     same extent as they applied to Amtrak before the 
     restructuring required by this section.
       ``(C) Subsections (c), (d), and (f) through (l) of section 
     24301 of this title shall apply to the Corporation.
       ``(4) Chief executive officer.--Subject to further action 
     by the board of directors of the American Passenger Railway 
     Corporation, the individual who, on the date of enactment of 
     the Rail Passenger Service Restructuring, Reauthorization, 
     and Development Act, is President of Amtrak shall be offered 
     the position of chief executive officer of the American 
     Passenger Railway Corporation as soon as practicable after 
     the corporation is established.
       ``(5) Issuance of stock and assumption of debt.--The 
     Corporation may not issue stock or incur debt without the 
     express approval of the Secretary of Transportation.

     ``Sec. 24300A. American Passenger Railway Corporation board 
       of directors

       ``(a) In General.--
       ``(1) Membership.--The American Passenger Railway 
     Corporation shall be governed by a board of directors 
     consisting of 7 members appointed by the President, by and 
     with the advice and consent of the Senate.
       ``(2) Qualifications.--
       ``(A) In general.--Members of the board shall be chosen 
     from among individuals who have technical qualifications, 
     professional standing, and demonstrated expertise in the 
     field of transportation, corporate management, or financial 
     management.
       ``(B) Federal employees disqualified.--No individual who is 
     an officer or employee of the United States may serve as a 
     member of the board.
       ``(3) Term of office.--Each member shall serve for a term 
     of 5 years. An individual may not serve for more than 2 
     terms.
       ``(4) Quorum.--A majority of the board members who have 
     been lawfully appointed and qualified at any moment shall 
     constitute a quorum for the conduct of business.
       ``(b) Bylaws.--The board of directors shall adopt bylaws 
     governing the corporation consistent with the provisions of 
     this section and its articles of incorporation, and may 
     amend, repeal, and otherwise modify the bylaws from time to 
     time as necessary or appropriate.
       ``(c) Transition Board Members.--Individuals who are 
     serving as members of the Amtrak Reform Board on the day 
     before the date on which the American Passenger Railway 
     Corporation is established, with the exception of the 
     Secretary of Transportation, shall serve as members of the 
     board of directors of the American Passenger Railway 
     Corporation until 4 members of that board have been appointed 
     and qualified.

     ``Sec. 24300B. National Railroad Passenger Corporation board 
       after restructuring

       ``(a) In General.--After the American Passenger Railway 
     Corporation is established, the Reform Board established 
     under section 24302(a) shall be dissolved, and the National 
     Railroad Passenger Corporation shall be governed by a board 
     of directors consisting of--
       ``(1) the Secretary of Transportation;
       ``(2) the Federal Railroad Administrator or another officer 
     of the United States within the Department of Transportation 
     compensated under the Executive Schedule under title 5, 
     United States Code, who is designated by the Secretary; and
       ``(3) the Federal Transit Administrator or another officer 
     of the United States within the Department of Transportation 
     compensated under the Executive Schedule under title 5, who 
     is designated by the Secretary.
       ``(b) Roles and Responsibilities.--
       ``(1) Supervision and management.--After the board of 
     directors described in subsection (a) takes office, the 
     National Railroad Passenger Corporation shall--
       ``(A) provide overall supervision of the restructuring of 
     the intercity passenger rail program;
       ``(B) manage residual Amtrak responsibilities; and
       ``(C) retain and manage Amtrak's legal rights, including 
     its legal right of access to

[[Page 6888]]

     other railroads, and ownership of Amtrak's real property, 
     until that property is transferred to the Secretary of 
     Transportation under section 110 of the Rail Passenger 
     Service Restructuring, Reauthorization, and Development Act.
       ``(2) Contracts for service.--The National Railroad 
     Passenger Corporation shall, by contract, permit an operator 
     to provide intercity passenger rail service over any route 
     operated by Amtrak on the date prior to the date the 
     restructuring required by section 24300 becomes effective, at 
     the frequencies in effect on that date, on its behalf and to 
     use its right of access to any segment of rail line owned by 
     another rail carrier needed for the operation of that train. 
     The operator may be the American Passenger Railway 
     Corporation or another operator, but there shall be no more 
     than 1 intercity passenger rail operator at a time over any 
     segment of rail line owned by another rail carrier, except in 
     terminal areas as determined by the Secretary or as may 
     otherwise be provided by agreement among the National 
     Railroad Passenger Corporation, the operators, and the owner 
     of the rail line.
       ``(3) Use of amtrak name.--
       ``(A) In general.--The National Railroad Passenger 
     Corporation shall retain all legal rights pertaining to the 
     name `Amtrak,' and may, at its option, license or otherwise 
     make the name `Amtrak' commercially available in connection 
     with intercity passenger rail and related services.
       ``(B) Use by american passenger railway corporation.--
     Amtrak shall by contract, permit the American Passenger 
     Railway Corporation to market its services under the Amtrak 
     name.
       ``(4) Amtrak personnel.--All Amtrak employees shall become 
     American Passenger Railway Corporation employees unless 
     retained by the National Railroad Passenger Corporation. The 
     American Passenger Railway Corporation shall succeed to the 
     collective bargaining agreements in effect between Amtrak and 
     labor organizations that are in effect on the day before the 
     date on which that Corporation is established. An employee 
     who elects employment with National Railroad Passenger 
     Corporation shall become an employee of that Corporation, 
     with only such rights regarding pay and benefits as that 
     Corporation shall determine.
       ``(5) Freight and commuter operations.--The National 
     Railroad Passenger Corporation shall ensure that the 
     implementation of the restructuring required by section 24300 
     gives due consideration to the needs of freight and commuter 
     operations that, as of the date of enactment of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act, operate on the Northeast Corridor using 
     Amtrak rights-of-way.
       ``(6) Rolling stock.--The National Railroad Passenger 
     Corporation shall set the terms under which the American 
     Passenger Railway Corporation must make available to any 
     replacement operator the legacy equipment associated with any 
     intercity passenger rail service provided as of the date of 
     the restructuring required by section 24300.''.
       (b) Spinning-off of Reservations System.--Not later than 2 
     years after the date of enactment of the Rail Passenger 
     Service Restructuring, Reauthorization, and Development Act, 
     the Inspector General of the Department of Transportation 
     shall submit to the Secretary of Transportation, the Senate 
     Committee on Commerce, Science, and Transportation, and the 
     House of Representatives Committee on Transportation and 
     Infrastructure recommendations on the feasibility, 
     advantages, and disadvantages of spinning off the national 
     reservations system as a private for-profit entity.
       (c) Conforming Amendment.--The chapter analysis for chapter 
     243 is amended by inserting the following after the item 
     relating to section 24309:

  ``24300. Restructuring mandate
  ``24300A. American Passenger Railway Corporation board of directors
  ``24300B. Amtrak board after restructuring''.

     SEC. 103. DEFINITIONS.

       Section 24102 is amended--
       (1) by striking paragraph (2) and redesignating paragraphs 
     (3) through (9) as paragraphs (2) through (8), respectively;
       (2) by redesignating paragraphs (3) through (8), as 
     redesignated, as paragraphs (4) through (9), respectively, 
     and inserting after paragraph (2) the following:
       ``(3) `corridor route' means--
       ``(A) a train route operated by Amtrak with a route length 
     of 750 miles or less as of January 1, 2004; or
       ``(B) a new conventional or high-speed route eligible for 
     funding under chapter 244 of this title.'';
       (3) by redesignating paragraphs (6) through (9), as 
     redesignated, as paragraphs (8) through (11), respectively, 
     and inserting after paragraph (5) the following:
       ``(6) `long distance route' means a train route operated by 
     Amtrak with a route length greater than 750 miles as of 
     January 1, 2004.
       ``(7) `legacy equipment' means the rolling stock required 
     to provide intercity passenger rail service owned or leased 
     by Amtrak on the day prior to the date on which the 
     restructuring required by section 24300 is completed (as such 
     date is determined by the Secretary).''.

     SEC. 104. OPERATING GRANTS FOR CORRIDOR ROUTES.

       (a) In General.--Chapter 243 is amended by adding at the 
     end the following:

     ``Sec. 24316. Operating grants for corridor routes

       ``(a) In General.--
       ``(1) Operating grant authority.--Beginning on October 1, 
     2005, the Secretary of Transportation may make grants to 
     States for operating assistance under the authority of this 
     section, and not under any other provision of law, to 
     reimburse operators of the corridor routes operated by Amtrak 
     on the day before the date on which the restructuring 
     required by section 24300 is completed (as determined by the 
     Secretary) for a portion of the operating subsidies required 
     to operate those routes with the same train frequencies.
       ``(2) Conditions.--A grant under this section shall be 
     subject to the terms, conditions, requirements, and 
     provisions the Secretary decides are necessary or appropriate 
     for the purposes of this section, including limitations on 
     what operating expenses are eligible for reimbursement.
       ``(b) Federal Share of Operating Losses.--
       ``(1) Reimbursable amount.--A grant to a State under this 
     section for any fiscal year may not exceed an amount equal to 
     the lower of--
       ``(A) the applicable percentage of the Federal operating 
     subsidy for that fiscal year; or
       ``(B) the percentage of the operating subsidy for a route 
     not borne by a State during the last fiscal year ending 
     before the date of enactment of the Rail Passenger Service 
     Restructuring, Reauthorization, and Development Act.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage of the operating subsidy for a 
     fiscal year is--
       ``(A) 70 percent for fiscal year 2006;
       ``(B) 60 percent for fiscal year 2007;
       ``(C) 50 percent for fiscal year 2008;
       ``(D) 40 percent for fiscal year 2009; and
       ``(E) 30 percent for fiscal year 2010.
       ``(c) Determination of Expenses Eligible for 
     Reimbursement.--
       ``(1) Annual determination of subsidy.--On an annual basis, 
     the Inspector General for the Department of Transportation 
     shall analyze and advise the Secretary of Transportation as 
     to the operating subsidy required on each corridor route 
     operated by the American Passenger Railway Corporation under 
     contract with a State without competitive bid. The operating 
     loss on such routes shall--
       ``(A) reflect the fully allocated costs of operating the 
     route, including an appropriate share of overhead expenses, 
     including general and administrative expenses; and
       ``(B) exclude depreciation and interest expense on long-
     term debt.
       ``(2) Aggregation of northeast corridor profits and 
     losses.--Operating profits and losses on corridor routes 
     operated exclusively on the mainline of the Northeast 
     Corridor extending from Washington, D.C. to Boston, MA may be 
     aggregated for purposes of determining the operating subsidy 
     required on the routes.
       ``(3) Determination with competitive bidding.--Expenses 
     eligible for Federal support pursuant to paragraph (b)(2) for 
     reimbursement for a corridor route that has been 
     competitively bid shall consist of the operating subsidy 
     agreed upon by the State, group of States, or other entity 
     and the operator.
       ``(d) Exception to Date Cost-sharing Required.--For any 
     State whose legislature has not convened in regular session 
     after the date of enactment of the Rail Passenger Service 
     Restructuring, Reauthorization, and Development Act and 
     before October 1, 2005, the additional cost-sharing 
     requirements of this section shall become effective on 
     October 1, 2006.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary to carry out 
     this section--
       ``(1) $125,000,000 for fiscal year 2006;
       ``(2) $100,000,000 for fiscal year 2007;
       ``(3) $90,000,000 for fiscal year 2008;
       ``(4) $75,000,000 for fiscal year 2009; and
       ``(5) $50,000,000 for fiscal year 2010.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243 is amended by adding at the end the following:

``24316. Operating grants for corridor routes''.

     SEC. 105. OPERATING GRANTS FOR LONG DISTANCE ROUTES

       (a) In General.--Chapter 243, as amended by section 104, is 
     amended by adding at the end the following:

     ``Sec. 24317. Operating grants for long distance routes

       ``(a) In General.--
       ``(1) Operating grant authority.--Beginning on October 1, 
     2005, the Secretary of Transportation may make grants to the 
     American Passenger Railway Corporation or to a State 
     providing financial support for a long distance route for 
     operating assistance under the authority of this section, and 
     not under any other provision of law, to reimburse operators 
     of the long distance routes operated by Amtrak on the day 
     before the date on which the restructuring required by 
     section 24300 is completed (as determined by the Secretary) 
     for a portion of the operating

[[Page 6889]]

     subsidies required to operate those routes with the same 
     train frequencies.
       ``(2) Conditions.--
       ``(A) A grant under this section shall be subject to the 
     terms, conditions, requirements, and provisions the Secretary 
     decides are necessary or appropriate for the purposes of this 
     section, including limitations on what operating expenses are 
     eligible for reimbursement.
       ``(B) The Secretary shall require the American Passenger 
     Railway Corporation, as a condition of a grant under this 
     section, to systematically reduce its route and system-wide 
     overhead expenses by a minimum of 5 percent annually through 
     fiscal year 2010. A contract between the National Railroad 
     Passenger Corporation and the American Passenger Railway 
     Corporation for the operation of a long distance route or 
     routes must provide for a reduction in the annual operating 
     subsidy to reflect the reduction in such expenses.
       ``(3) Annual determination of subsidy.--On an annual basis, 
     the Inspector General for the Department of Transportation 
     shall analyze and advise the Secretary of Transportation as 
     to the operating subsidy required on each long distance route 
     operated by the American Passenger Railway Corporation 
     without competitive bid and the portion of the subsidy 
     attributable to route and system-wide overhead expenses.
       ``(b) Federal Share of Operating Losses.--Pending 
     restructuring of the long distance routes required by 
     sections 106 through 108 of the Rail Passenger Service 
     Restructuring, Reauthorization, and Development Act, the 
     Federal share for an operating grant may be 100 percent of 
     the qualifying operating subsidy for the route.
       ``(c) Cost-sharing Process for Long Distance Routes.--
     Within 9 months after the date of enactment of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act, the Secretary shall develop a process to 
     facilitate State cost-sharing on long distance routes. The 
     process shall--
       ``(1) provide States the option of either--
       ``(A) receiving Federal grants, managing the service, and 
     selecting the train operator; or
       ``(B) having the service managed by the Federal government 
     with a train operator selected by the National Rail Passenger 
     Corporation;
       ``(2) include a methodology to assist States interested in 
     providing financial support in equitably allocating the share 
     of a route's required operating subsidy among the affected 
     States; and
       ``(3) be made available to the Long Distance Restructuring 
     Commission established under section 106 of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act and the States to assist in the development 
     of the restructuring plan under that section.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary of 
     Transportation to carry out this section--
       ``(1) $550,000,000 for fiscal year 2006;
       ``(2) $425,000,000 for fiscal year 2007;
       ``(3) $375,000,000 for fiscal year 2008;
       ``(4) $325,000,000 for fiscal year 2009; and
       ``(5) $300,000,000 for fiscal year 2010.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243, as amended by section 104 of this Act, is amended by 
     adding at the end the following:

``24317. Operating grants for long distance routes

     SEC. 106. LONG DISTANCE ROUTE RESTRUCTURING COMMISSION.

       (a) Establishment.--There is established an independent 
     commission to be known as the Long Distance Route 
     Restructuring Commission.
       (b) Duty.--
       (1) In general.--The Commission shall submit a plan to 
     Congress for restructuring long distance intercity passenger 
     rail routes in a manner that will reduce Federal operating 
     subsidies on the routes by at least 50 percent by the end of 
     fiscal year 2010 (as compared to the operating subsidies for 
     those routes for fiscal year 2003) by--
       (A) retaining routes that provide a unique service that can 
     be contracted out by the National Railroad Passenger 
     Corporation on a for-profit basis;
       (B) restructuring other routes as linked corridor routes 
     between major metropolitan areas; and
       (C) consolidating or discontinuing service over remaining 
     routes.
       (2) Preservation of national network.--The restructuring 
     plan submitted by the Commission shall ensure that no 
     corridor route is completely isolated from the rest of the 
     intercity passenger rail network.
       (3) Exceptions.--
       (A) In general.--A route will be excluded from 
     consideration for restructuring, consolidation, or closure if 
     a State or group of States commits, by contractual 
     arrangement with the American Passenger Railway Corporation 
     or another operator selected through a competitive process, 
     to provide financial operating support at a level sufficient 
     to offset at least
       (i) 30 percent of the operating subsidy for fiscal year 
     2007;
       (ii) 40 percent of the operating subsidy for fiscal year 
     2008; and
       (iii) 50 percent of the operating subsidy thereafter.
       (B) Failure of support.--If a State or group of States 
     fails to provide the financial support to which it committed 
     under this paragraph, then service over the route shall be 
     discontinued.
       (4) Consultation required.--In carrying out its duties, the 
     Commission shall consult with the American Passenger Railway 
     Corporation, State and local officials, freight railroads, 
     companies with expertise in intercity passenger 
     transportation, and other organizations with an interest in 
     the restructuring of the long distance train routes.
       (c) Appointment.--
       (1) The Commission shall be composed of 7 members appointed 
     by the President within 6 months after the date of enactment 
     of this Act.
       (2) The Commission members shall elect 1 member to serve as 
     Chairman.
       (d) Termination.--The Commission shall terminate 90 days 
     after the Commission's recommendations for consolidation and 
     closure are submitted to Congress.
       (e) Vacancies.--A vacancy on the Commission shall be filled 
     in the same manner as the original appointment.
       (f) Detailees.--Upon the request of the Chairman of the 
     Commission, the head of any Federal department or agency may 
     detail personnel of that department or agency to the 
     Commission to assist the Commission in carrying out its 
     duties.
       (g) Compensation; reimbursement.--Members of the Commission 
     shall serve without pay, but shall receive travel expenses, 
     including per diem in lieu of subsistence, in accordance with 
     sections 5702 and 5703 of title 5, United States Code.
       (h) Other Authority.--
       (1) The Commission may procure by contract, to the extent 
     funds are available, the temporary or intermittent services 
     of experts or consultants pursuant to section 3109 of title 
     5, United States Code.
       (2) The Commission may lease space and acquire personal 
     property to the extent funds are available.
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated for the use of the Commission in carrying 
     out its responsibilities under this section for each of 
     fiscal years 2005 and 2006, $4,000,000, such sums to remain 
     available until expended.

     SEC. 107. CRITERIA FOR RESTRUCTURING.

       (a) Restructuring as Linked Corridors.--
       (1) Prerequisite for restructuring.--A long distance route 
     or portion thereof may be recommended for restructuring as a 
     linked corridor if--
       (A) the origin-to-destination travel time of each corridor 
     link in the new route, at conventional train speeds, 
     including all station stops, will be competitive with other 
     modes of transportation;
       (B) each corridor link in the new route connects at least 2 
     major metropolitan areas or provides a link between 2 or more 
     existing corridor routes;
       (C) the route as restructured can be reasonably expected to 
     attract at least 10 percent of the combined common carrier 
     market in the markets served;
       (D) the projected cash operating loss of each of the 
     restructured links does not exceed 11 cents per passenger-
     mile on a fully allocated cost basis; and
       (E) by the end of fiscal year 2010 the Federal operating 
     subsidy will be reduced by at least 50 percent (as compared 
     to the operating subsidy for the route for fiscal year 2003), 
     taking into account commitments by the affected States to 
     provide financial support for the route so that no Federal 
     operating subsidy is available for any portion of a route for 
     which there is no such State commitment.
       (2) Hours of operation.--In addition to the eligibility 
     criteria in paragraph (1), any long distance routes 
     recommended for restructuring as linked corridors shall be 
     designed to operate between the hours of 6:00 a.m. and 11:00 
     p.m.
       (3) Modification of routes.--With the concurrence of the 
     affected States and the host railroad, the route and stations 
     service by a restructured long distance route may be modified 
     to improve ridership and financial performance.
       (4) New capital plans.--As part of the restructuring plan 
     for reconfigured routes, the Commission shall develop a 
     capital plan, if additional capital is needed to reconfigure 
     the route as linked corridors.
       (b) Contracting-Out of Profitable Long Distance Routes and 
     Services.--The Commission shall determine which long distance 
     routes or services on such routes, including auto-ferry 
     transportation, food service, and sleeping accommodations, 
     could be contracted to a private operator on a for-profit 
     basis. In making these determinations, the Commission shall 
     solicit expressions of interest from the private sector in 
     operating long distance routes or services, including the 
     conditions under which private companies may be interested in 
     operating such services.
       (c) Consolidation and Closure.--The Commission shall make 
     recommendations to Congress for consolidating and closing 
     long distance train routes or portions of routes that cannot 
     be restructured under subsection

[[Page 6890]]

     (a) or contracted out under subsection (b), to reduce the 
     Federal operating subsidy required by at least 50 percent by 
     the end of fiscal year 2010 (as compared to the operating 
     subsidies for those routes for fiscal year 2003), taking into 
     consideration--
       (1) the operating loss on a fully allocated cost basis, 
     including capital costs, of the route or portion thereof;
       (2) the extent to which train service is the only available 
     public transportation to the cities and towns along the route 
     or portion thereof;
       (3) whether an alternate route could significantly reduce 
     operating losses and capital requirements or increase 
     ridership;
       (4) available capacity on the rights-of-way of the host 
     railroad or railroads; and
       (5) commitments by the affected States to provide financial 
     support for the route or portion thereof.
       (d) Cooperation of American Passenger Railway 
     Corporation.--
       (1) The American Passenger Railway Corporation shall 
     cooperate and comply, subject to the agreement of the 
     Commission to protect the confidentiality of proprietary 
     information, with all requests for financial, marketing, and 
     other information about the routes under consideration by the 
     Commission.
       (2) The Secretary of Transportation may withhold all or 
     part of an operating or capital grant to the Corporation if 
     the Secretary determines the American Passenger Railway 
     Corporation is not cooperating with the Commission as 
     required by this subsection.
       (e) Report.--The Commission shall submit its 
     recommendations for restructuring the long distance routes to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Transportation 
     and Infrastructure within 18 months after the date of 
     enactment of this Act. The report shall include a description 
     of--
       (1) the analysis performed by the Commission to reach its 
     conclusions;
       (2) options considered in the development of a 
     restructuring plan; and
       (3) the impact of the restructuring on employees of the 
     American Passenger Railway Corporation for any long distance 
     route restructured under this section.

     SEC. 108. IMPLEMENTATION OF RESTRUCTURING PLAN.

       (a) In General.--The Secretary of Transportation shall 
     implement the restructuring plan submitted to Congress by the 
     Long Distance Route Restructuring Commission in its report 
     pursuant to section 106 unless a joint resolution is enacted 
     by the Congress disapproving such recommendations of the 
     Commission before the earlier of--
       (1) the end of the 60-day period beginning on the date the 
     Commission submits its report to Congress; or
       (2) the adjournment of Congress sine die for the session 
     during which such report is submitted.
       (b) Certain Days Disregarded.--For purposes of subsection 
     (a), the days on which either House of Congress is not in 
     session because of an adjournment of more than 4 days to a 
     day certain shall be excluded in the computation of a period.
       (c) 1-year Implementation Period.--Unless disapproved under 
     section (a), the Secretary of Transportation shall fully 
     implement the plan within 1 year after the date on which the 
     period described in subsection (a) expires.

     SEC. 109. REDEMPTION OF COMMON STOCK.

       (a) Valuation.--The Secretary of Transportation shall 
     arrange, at the National Railroad Passenger Corporation's 
     expense, for a valuation of all Amtrak assets and liabilities 
     with an estimated value in excess of $1,000,000 as of the 
     date of enactment of this Act by the Secretary of the 
     Treasury, or by a contractor selected by the Secretary of the 
     Treasury. The valuation shall be conducted in accordance with 
     the Uniform Standards of Professional Appraisal Practice of 
     the Appraisal Foundation's Appraisal Standards Board and 
     shall be completed within 1 year after the date of enactment 
     of this Act.
       (b) Redemption.--
       (1) Prior to the transfer of assets to the Secretary 
     directed by section 110 of this Act, and within 3 months 
     after the completion of the valuation under subsection (a), 
     the National Railroad Passenger Corporation shall redeem all 
     common stock in Amtrak issued prior to the date of enactment 
     of this Act at the fair market value of such stock, based on 
     the valuation performed under subsection (a).
       (2) No provision of this Act, or amendments made by this 
     Act, provide to the owners of the common stock a priority 
     over holders of indebtedness or other stock of Amtrak.
       (c) Acquisition through Eminent Domain.--In the event that 
     the National Railroad Passenger Corporation and the owners of 
     the Amtrak common stock have not completed the redemption of 
     such stock within 3 months after the completion of the 
     valuation under subsection (a), the National Railroad 
     Passenger Corporation shall exercise its right of eminent 
     domain under section 24311 of title 49, United States Code, 
     to acquire that stock. The value assigned to the common stock 
     under subsection (a) shall be deemed to constitute just 
     compensation except to the extent that the owners of the 
     common stock demonstrate that the valuation is less than the 
     constitutional minimum value of the stock.
       (d) Amendment of section 24311.--Section 24311(a)(1) is 
     amended--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by striking ``Amtrak.'' in subparagraph (B) and 
     inserting ``Amtrak; or''; and
       (3) by adding at the end the following:
       ``(C) necessary to redeem Amtrak's common stock from any 
     holder thereof, including a rail carrier.''.
       (e) Conversion of Preferred Stock to Common.--
       (1) Subsequent to the redemption of the common stock in the 
     corporation issued prior to the date of enactment of this 
     Act, the Secretary of Transportation shall convert the one 
     share of the preferred stock of the corporation retained 
     under section 110 of this Act for 10 shares of common stock 
     in the National Railroad Passenger Corporation.
       (2) The National Railroad Passenger Corporation may not 
     issue any other common stock, and may not issued preferred 
     stock, without the express written consent of the Secretary.
       (f) Termination of Section 24907 Note and Mortgage 
     Authority.--Section 24907 is amended by adding at the end the 
     following:
       ``(d) Termination of Authority.--The authority of the 
     Secretary to obtain a note of indebtedness from, and make a 
     mortgage agreement with, the American Passenger Railway 
     Corporation under subsection (a) is terminated as of the date 
     of the transfer of assets under section 110 of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act.''.

     SEC. 110. RETIREMENT OF PREFERRED STOCK; TRANSFER OF ASSETS.

       (a) Transfer.--Not later than 30 days after the redemption 
     or acquisition of stock under section 109 of this Act, the 
     National Railroad Passenger Corporation shall, in return for 
     the consideration specified in subsection (c), transfer to 
     the Secretary of Transportation title to--
       (1) the portions of the Northeast Corridor currently owned 
     or leased by the Corporation as well as any improvements made 
     to these assets, including the rail right-of-way, stations, 
     track, signal equipment, electric traction facilities, 
     bridges, tunnels, repair facilities, and all other 
     improvements owned by the Corporation between Boston, 
     Massachusetts, and Washington, District of Columbia 
     (including the route through Springfield, Massachusetts, and 
     the routes to Harrisburg, Pennsylvania, and Albany, New York, 
     from the Northeast Corridor mainline);
       (2) Chicago Union Station and rail-related assets in the 
     Chicago Metropolitan area; and
       (3) all other track and right-of-way, stations, repair 
     facilities, and other real property owned or leased by the 
     Corporation.
       (b) Existing Encumbrances.--
       (1) Assumption by Federal Government.--Any outstanding debt 
     on the mainline of the Northeast Corridor (other than debt 
     associated with rolling stock) shall become a debt obligation 
     of the United States as of the date of transfer of title 
     under subsection (a)(1).
       (2) Restructuring.--Except as provided in paragraph (1), 
     the obligation of the American Passenger Railway Corporation 
     or its successors or assigns to repay in full any 
     indebtedness to the United States incurred since January, 
     1990, is not affected by this Act or an amendment made by 
     this Act.
       (c) Consideration.--In consideration for the assets 
     transferred to the United States under subsection (a), the 
     Secretary shall--
       (1) deliver to the National Passenger Railroad Corporation 
     all but one share of the preferred stock of the corporation 
     held by the Secretary and forgive the corporation's legal 
     obligation to pay any dividends, including accrued but unpaid 
     dividends as of the date of transfer, evidenced by the 
     preferred stock certificates; and
       (2) release the National Railroad Passenger Corporation 
     from all mortgages and liens held by the Secretary that were 
     in existence on January 1, 1990.
       (d) Agreement.--Prior to accepting title to the assets 
     transferred under this section, the Secretary shall enter 
     into a contract with American Passenger Railway Corporation 
     under which American Passenger Railway Corporation will 
     exercise care, custody, maintenance, and operational control 
     of the assets to be transferred. The term of the contract 
     shall be for 1 year, which shall be renewed annually without 
     action on the part of either party unless canceled by either 
     party with 90 days notice.
       (e) Further Transfers.--
       (1) The Secretary may, for appropriate consideration, 
     transfer title to all or part of Chicago Union Station and 
     rail-related assets in the Chicago metropolitan area acquired 
     under this section to a regional public transportation agency 
     that has significant operations in Chicago Union Station on 
     the date of enactment of this Act.
       (2) The Secretary may, for appropriate consideration, 
     transfer to the underlying States title to real estate 
     properties owned by the Corporation between Boston, 
     Massachusetts, and Washington, District of Columbia, that 
     constitute the route through Springfield, Massachusetts, and 
     the routes to Harrisburg,

[[Page 6891]]

     Pennsylvania, and Albany, New York, from the Northeast 
     Corridor mainline.
       (3) The Secretary may, for appropriate consideration, 
     transfer title to all or part of the assets acquired under 
     subsection (a)(3) to a State, a public agency, a railroad, or 
     other entity deemed appropriate by the Secretary.
       (f) Use of Proceeds.--Notwithstanding section 3302 of title 
     31, United States Code, any proceeds from the transfer of the 
     assets described subsection (e) shall be credited as off-
     setting collections to the account that finances debt and 
     interest payments to the American Passenger Railway 
     Corporation. Funds available for corridor development under 
     chapter 244 of title 49, United States Code, shall be 
     increased by an amount equal to the amounts credited under 
     the preceding sentence.

     SEC. 111. REAL ESTATE AND ASSET SALES; OTHER.

       (a) In General.--Within 3 years after the date of enactment 
     of this Act, the Secretary of Transportation shall transfer 
     all stations, track, and other fixed facilities outside the 
     Northeast Corridor mainline to which the Secretary has 
     assumed title under section 110 of this Act, other than 
     equipment repair facilities, to States, municipalities, 
     railroads, or other entities for maximum consideration.
       (b) Use of Proceeds.--Notwithstanding section 3302 of title 
     31, United States Code, any proceeds from the transfer of 
     assets under this section shall be credited as off-setting 
     collections to the account that finances debt and interest 
     payments to the American Passenger Railway Corporation. Funds 
     available for corridor development under chapter 244 of title 
     49, United States Code, shall be increased by an amount equal 
     to the amounts credited under the preceding sentence.

                     Subtitle B--Northeast Corridor

     SEC. 131. INTERSTATE COMPACT FOR THE NORTHEAST CORRIDOR.

       (a) Consent to Compact.--
       (1) In general.--The States and the District of Columbia 
     that constitute the Northeast Corridor, as defined in section 
     24102 of title 49, United States Code, may enter into a 
     multistate compact, not in conflict with any other law of the 
     United States, to be known as the Northeast Corridor Compact, 
     to manage railroad operations and rail service and conduct 
     related activities on the Northeast Corridor mainline between 
     Boston, Massachusetts, and Washington, District of Columbia.
       (2) Congressional approval required.--The Northeast 
     Corridor Compact shall be submitted to Congress for its 
     consent. It is the sense of the Congress that rapid consent 
     to the Compact is a priority matter for the Congress.
       (b) Compact Commission.--
       (1) In general.--There is hereby established a commission 
     to be known as the Northeast Corridor Compact Commission. The 
     Commission shall be composed of--
       (A) 2 members (or their designees), to be selected by the 
     Secretary of Transportation;
       (B) 2 members (or their designees), to be selected by 
     agreement of--
       (i) the governors of Maryland, Delaware, Pennsylvania, New 
     Jersey, New York, Connecticut, Rhode Island, and 
     Massachusetts (hereinafter referred to as the ``participating 
     States''); and
       (ii) the mayor of the District of Columbia; and
       (C) 1 member to be selected by the 4 members selected under 
     subparagraphs (A) and (B).
       (2) Administrative provisions.--
       (A) Members of the Commission shall be appointed for the 
     life of the Commission.
       (B) A vacancy in the Commission shall be filled in the 
     manner in which the original appointment was made.
       (C) Members shall serve without pay but shall receive 
     travel expenses, including per diem in lieu of subsistence, 
     in accordance with sections 5702 and 5703 of title 5, United 
     States Code.
       (D) The Chairman of the Commission shall be elected by the 
     members.
       (E) The Commission may appoint and fix the pay of such 
     personnel as it considers appropriate.
       (F) Upon the request of the Commission, the head of any 
     department or agency of the United States may detail, on a 
     reimbursable basis, any of the personnel of that department 
     or agency to the Commission to assist it in carrying out its 
     duties under this section.
       (G) Upon the request of the Commission, the Administrator 
     of General Services shall provide to the Commission, on a 
     reimbursable basis, the administrative support services 
     necessary for the Commission to carry out its 
     responsibilities under this section.
       (c) Functions.--The Commission shall prepare for the 
     consideration of and adoption by participating States, the 
     District of Columbia, and the Secretary of Transportation an 
     interstate compact that provides for--
       (1) full authority for 99 years to succeed to the 
     responsibilities of the National Railroad Passenger 
     Corporation as manager of the Northeast Corridor, subject to 
     the provisions of a lease from the Department of 
     Transportation, including responsibility for--
       (A) Corridor maintenance and improvement;
       (B) the operation of intercity passenger rail service;
       (C) making arrangements for operation of freight railroad 
     operations and commuter operations;
       (D) the use of the Corridor for non-rail purposes; and
       (E) the Northeast Corridor financial operations;
       (2) execution of a lease of the Northeast Corridor from the 
     Department of Transportation, for a period of 99 years, 
     subject to appropriate provisions protecting the lessor's 
     interests, including reversion of all lease interests to the 
     lessor in the event the lessee fails to meet its financial 
     obligations or otherwise assume financial responsibility for 
     Northeast Corridor functions; and
       (C) participation by the Department of Transportation, as 
     the non-voting representative of the United States.
       (d) Final Compact Proposal.--
       (1) The Commission shall submit a final compact proposal to 
     participating States, the District of Columbia, and the 
     Federal Government not later than 18 months after the date of 
     enactment of this Act.
       (2) The Commission shall terminate on the 180th day 
     following the date of transmittal of the final compact 
     proposal under this subsection.
       (e) Governance and Funding Requirements for Compact.--
       (1) The governance provisions of the compact shall provide 
     a mechanism to ensure voting representation for the 
     participating States and the District of Columbia and for 
     non-voting representation for the Secretary of Transportation 
     and a freight railroad that conducts operations on the 
     Northeast Corridor as ex officio members participating in all 
     Compact affairs.
       (2) The provisions of the compact shall establish the 
     financial obligations of each compact member and shall 
     provide for each member's management of rail services in the 
     Northeast Corridor.
       (f) Federal Interest Requirements for Compact.--The 
     provisions of the Compact shall hold the United States 
     Government harmless as to the actions of the Compact under 
     the lease of rights to the Northeast Corridor by the United 
     States Government.
       (g) Compact Borrowing Authority.--
       (1) The borrowing authority provisions of the Compact may 
     authorize it to issue bonds or other debt instruments from 
     time to time at its discretion for purposes that include 
     paying any part of the cost of rail service improvements, 
     construction, and rehabilitation and the acquisition of real 
     and personal property, including operating equipment, except 
     that debt issued by the Compact may be secured only by 
     revenues to the Compact and may not be a debt of a 
     participating State, the District of Columbia, or the Federal 
     Government.
       (2) The debt authorized by this subsection shall under no 
     circumstances be backed by the full faith and credit of the 
     United States, and a grant made under the authority of this 
     Act or under the authority of part C of subtitle V of title 
     49, United States Code, shall include an express 
     acknowledgement by the grantee that the debt does not 
     constitute an obligation of the United States.
       (h) Adoption of Compact; Turnover.--
       (1) In general.--The participating States and the District 
     of Columbia shall adopt a final compact agreement within 5 
     years after the date of enactment of this Act, and the 
     Compact shall thereafter assume responsibility for the 
     Northeast Corridor operations on a date that is not later 
     than 6 months after adoption of the Compact.
       (2) Operations.--Upon leasing the Northeast Corridor to the 
     Compact, the Secretary shall assign to the Compact and the 
     Compact shall assume the then-current contract for operation 
     of the Northeast Corridor. Upon the termination of that 
     contract, the Compact may make such arrangements for 
     operation of the Northeast Corridor as it sees fit consistent 
     with its lease and this Act. If the Compact chooses to use a 
     contractor other than the American Passenger Railway 
     Corporation to operate trains on the Northeast Corridor, the 
     contract shall be awarded competitively.
       (3) Maintenance.--Upon leasing the Northeast Corridor to 
     the Compact, the Secretary shall assign to the Compact and 
     the Compact shall assume the then-current contract for 
     maintenance of the Northeast Corridor. Upon the termination 
     of that contract, the Compact may make such arrangements for 
     maintenance of the Northeast Corridor as it sees fit 
     consistent with its lease and this Act. If the Compact 
     chooses to use a contractor other than the American Passenger 
     Railway Corporation to maintain the Northeast Corridor and 
     provide related services, the contract shall be awarded 
     competitively.
       (4) Non-compact alternative.--If the participating States 
     and the District of Columbia do not adopt the final compact 
     agreement and make it operational under the schedule set 
     forth in this section, the Secretary of Transportation, 
     through a competitive bidding process, shall contract with 
     another public or private entity to manage the Northeast 
     Corridor, with a goal of maximizing the return to the Federal 
     government from such operations.
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated to

[[Page 6892]]

     the Secretary of Transportation to carry out this section--
       (1) $3,000,000 for fiscal year 2005, and
       (2) $2,000,000 for fiscal year 2006,
     such sums to remain available until expended.

     SEC. 132. SHUT-DOWN OF COMMUTER OR FREIGHT OPERATIONS.

       (a) In General.--Section 11123 is amended by striking 
     ``National Railroad Passenger Corporation'' each place it 
     appears and inserting ``American Passenger Railway 
     Corporation''.
       (b) Authorization of Appropriations.--From the funds made 
     available for the American Passenger Railway Corporation for 
     fiscal years 2005 through 2010, the Secretary of 
     Transportation shall in each fiscal year hold in reserve from 
     the amounts authorized by section 24402(g) of title 49, 
     United States Code, such sums as may be necessary to carry 
     out directed service orders issued under section 1123 of 
     title 49, United States Code, to respond to the shut-down of 
     commuter rail operations or freight operations due to a shut-
     down of operations by the American Passenger Railway 
     Corporation. The Secretary shall make the reserved funds 
     available through an appropriate grant instrument during the 
     fourth quarter of each fiscal year to the extent that no 
     grant orders have been issued by the Surface Transportation 
     Board during that fiscal year prior to the date of transfer 
     of the reserved funds or there is a balance of reserved funds 
     not needed by the Board to pay for any directed service order 
     in that fiscal year.
       (c) Effective Date for Subsection (a).--The amendment made 
     by subsection (a) shall take effect on the date, determined 
     by the Secretary of Transportation, on which the 
     restructuring required by sections 24300 of title 49, United 
     States Code, is completed.

     SEC. 133. CAPITAL GRANTS FOR NORTHEAST CORRIDOR.

       (a) In General.--Chapter 243, as amended by section 105, is 
     amended by adding at the end the following:

     ``Sec. 24318. Capital authorizations for the Northeast 
       Corridor

       ``(a) In General.--The Secretary of Transportation, in 
     consultation with the American Passenger Railway Corporation, 
     shall develop and implement a capital program to restore the 
     mainline of the Northeast Corridor between Boston, 
     Massachusetts, and Washington, District of Columbia, to a 
     state of good repair, as defined by the Secretary.
       ``(b) Authorization of Appropriations for Capital Projects 
     on the Northeast Corridor.--There are authorized to be 
     appropriated to the Secretary of Transportation to make 
     capital grants under this section $200,000,000 for fiscal 
     year 2005 and $300,000,000 for each of fiscal years 2006 
     through 2010.
       ``(c) Achievement of State-of-good-repair on Northeast 
     Corridor.--
       ``(1) Use of funds.--Sums authorized for the Northeast 
     Corridor under subsection (b) may be used solely for the 
     purpose of funding deferred maintenance and safety projects, 
     including the negotiated Federal share for life-safety 
     improvements in the New York Penn Station tunnels.
       ``(2) State of good repair.--The Northeast Corridor shall 
     be considered to be in a state of good repair upon the 
     completion of the capital program developed under subsection 
     (a).''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243, as amended by section 105, is amended by adding at the 
     end thereof the following:

``24318. Capital authorizations for the Northeast Corridor''.

                      Subtitle C--Related Matters

     SEC. 151. FAIR AND OPEN COMPETITION.

       (a) In General.--The Secretary of Transportation shall 
     consult with States that competitively bid intercity 
     passenger rail services to ensure their bidding practices 
     provide for fair and open competition for all bidders, 
     including the American Passenger Railway Corporation. The 
     Secretary may withhold all or a portion of a grant under this 
     Act if the Secretary determines that the State's bidding 
     processes do not treat all competitors fairly.
       (b) Use of Federal or State Funds.--The Secretary shall 
     ensure that the American Passenger Railway Corporation may 
     not use Federal or State financial support for a passenger 
     rail route to subsidize a competitive bid to operate 
     intercity passenger rail service on another route.

     SEC. 152. ACCESS TO OTHER RAILROADS.

       (a) Terms and Conditions for Access to Other Railroads.--
       (1) Existing routes and frequencies.--
       (A) In general.--The National Railroad Passenger 
     Corporation shall be responsible for negotiating the terms 
     and conditions under which--
       (i) the American Passenger Railway Corporation, a State, or 
     other entity may access the property of a rail carrier to 
     provide intercity passenger rail service over routes operated 
     by Amtrak on the day before the date, determined by the 
     Secretary of Transportation, on which the restructuring 
     required by sections 24300 of title 49, United States Code, 
     is completed at the frequencies in effect on that day; and
       (ii) the American Passenger Railway Corporation, freight 
     railroads, commuter authorities, and other entities may 
     obtain access to property owned by the United States 
     Government to provide intercity, commuter, freight rail and 
     other services, except that the National Railroad Passenger 
     Corporation shall delegate its authority under this clause to 
     the interstate compact authorized by section 131 after that 
     compact has been adopted.
       (B) Preservation of railroad benefits.--The access and 
     liability terms and conditions of the contracts between the 
     National Railroad Passenger Corporation and other rail 
     carriers following the restructuring required by section 
     24300 of title 49, United States Code, shall be no less 
     favorable to the railroads than the access and liability 
     terms and conditions under contracts in effect on the day 
     before the date, as so determined by the Secretary, on which 
     the restructuring is completed.
       (C) Incentive payments; penalties.--The National Railroad 
     Passenger Corporation shall retain a system of incentive 
     payments and performance penalties in negotiating 
     compensation payments to other rail carriers under 
     subparagraph (A) that encourages on-time performance.
       (3) Conditions for new routes and train frequencies.--
       (A) In general.--The terms and conditions for the operation 
     of a new intercity passenger rail route or frequency added 
     after the date of enactment of this Act shall, except for the 
     rental charge compensation to another rail carrier, be 
     determined by negotiation and mutual agreement between the 
     host railroad and the operator or sponsor of the route or 
     frequency to be added.
       (B) Standard of compensation.--The standard of compensation 
     for the rental change shall be fully allocated costs, 
     excluding capital investments associated with an added route 
     or frequency, when the on-time performance of the new route 
     or train frequency meets or exceeds 95 percent of the goal 
     set by the parties, net of delays not within the host 
     railroad's control.
       (C) Failure of negotiation.--If the parties cannot agree on 
     the terms of the rental charge, either party may petition the 
     Surface Transportation Board to prescribe the terms under 
     section 24308 of title 49, United States Code.
       (b) Fitness Qualifications for Passenger Rail.--
       (1) In general.--No person may operate intercity passenger 
     rail service unless that person demonstrates to the 
     satisfaction of the Secretary of Transportation that--
       ``(A) its intercity passenger rail operations will meet all 
     applicable Federal safety rules and regulations;
       ``(B) it will operate the service on a sound financial 
     basis; and
       ``(C) it has the technical expertise to operate intercity 
     passenger rail service.''.
       (2) Minimum standards.--Within 6 months after the date of 
     enactment of this Act, the Secretary of Transportation shall 
     by regulation establish minimum safety and financial 
     qualifications for operators of intercity passenger rail 
     service.

     SEC. 153. LIMITATIONS ON RAIL PASSENGER TRANSPORTATION 
                   LIABILITY.

       Section 28103 is amended by striking ``Amtrak shall 
     maintain a total'' in subsection (c) and inserting ``each 
     operator of intercity passenger rail service shall 
     maintain''.

     SEC. 154. TRAIN OPERATIONS INSURANCE POOL.

       (a) In General.--Chapter 281 is amended by adding at the 
     end the following:

     ``Sec. 28104. Train operations insurance pool

       ``(a) In General.--The Secretary of Transportation is 
     authorized to encourage and otherwise assist insurance 
     companies and other insurers that meet the requirements 
     prescribed under subsection (b) of this section to form, 
     associate, or otherwise join together in a pool--
       ``(1) to provide the insurance coverage required by section 
     28103; and
       ``(2) for the purpose of assuming, on such terms and 
     conditions as may be agreed upon, such financial 
     responsibility as will enable such companies and other 
     insurers to assume a reasonable proportion of responsibility 
     for the adjustment and payment of claims under section 28103.
       ``(b) Regulations To Establish Insurer Qualification 
     Requirements.--In order to promote the effective 
     administration of the intercity rail passenger program, and 
     to assure that the objectives of this chapter are furthered, 
     the Secretary is authorized to prescribe requirements for 
     insurance companies and other insurers participating in an 
     insurance pool under subsection (a), including minimum 
     requirements for capital or surplus or assets.
       ``(c) Authority To Collect and Pay Premiums and Other 
     Costs.--In order to provide adequate insurance coverage at 
     affordable cost to operators of intercity passenger rail 
     service at no cost to the United States, the Secretary is 
     authorized to divide the insurance premiums and all other 
     costs of forming and operating the insurance pool created 
     pursuant to this section, including the costs of any 
     contractors or consultants the Secretary may hire, among all 
     the operators of intercity passenger rail service (including 
     the American Passenger Railway Corporation) and collect from 
     each operator of intercity passenger rail service the 
     insurance premiums and other costs the Secretary has 
     allocated to it. Notwithstanding any other

[[Page 6893]]

     provision of law, the Secretary may receive funds collected 
     under this section directly from each operator of intercity 
     passenger rail service, credit the appropriation charged for 
     the insurance premiums and other costs of forming and 
     operating the insurance pool, and use those funds to pay 
     insurance premiums and other costs of forming and operating 
     the insurance pool, including the costs of any contractors or 
     consultants the Secretary may hire. The Secretary may advance 
     such sums as may be necessary to pay insurance premiums and 
     other costs of forming and operating the insurance pool from 
     unobligated balances available to the Federal Railroad 
     Administration for intercity passenger rail service, to be 
     reimbursed from payments received from operators of intercity 
     passenger rail service. Where the Secretary is making a grant 
     of operating funds for a route, the Secretary may collect the 
     insurance premiums and other costs the Secretary has 
     allocated to it by withholding those funds from the grant and 
     crediting them to the appropriation charged for the insurance 
     premiums and other costs of forming and operating the 
     insurance pool.

     ``Sec. 28105. Use of insurance pool, companies, or other 
       private organizations for certain payments

       ``(a) Authorization To Enter into Contracts for Certain 
     Responsibilities.--The Secretary of Transportation may enter 
     into contracts with the pool formed or otherwise created 
     under section 28104, or any insurance company or other 
     private organizations, for the purpose of securing 
     performance by such pool, company, or organization of any or 
     all of the following responsibilities:
       ``(1) Estimating and later determining any amounts of 
     payments to be made from the pool.
       ``(2) Receiving from the Secretary, disbursing, and 
     accounting for payments of insurance premiums.
       ``(3) Making such audits of the records of any insurance 
     company or other insurer, insurance agent or broker, or 
     insurance adjustment organization as may be necessary to 
     assure that proper payments are made.
       ``(4) Otherwise assisting in such manner as the contract 
     may provide to further the purposes of this chapter.
       ``(b) Terms and Conditions of Contract.--Any contract with 
     the pool or an insurance company or other private 
     organization under this section may contain such terms and 
     conditions as the Secretary finds necessary or appropriate 
     for carrying out responsibilities under subsection (a) of 
     this section, and may provide for payment of any costs which 
     the Secretary determines are incidental to carrying out such 
     responsibilities which are covered by the contract.
       ``(c) Competitive Bidding.--Any contract entered into under 
     subsection (a) of this section may be entered into without 
     regard to section 5 of title 41 or any other provision of law 
     requiring competitive bidding.
       ``(d) Findings of Secretary.--No contract may be entered 
     into under this section unless the Secretary finds that the 
     pool, company, or organization will perform its obligations 
     under the contract efficiently and effectively, and will meet 
     such requirements as to financial responsibility, legal 
     authority, and other matters as the Secretary finds 
     pertinent.
       ``(e) Term of Contract; Renewals; Termination.--Any 
     contract entered into under this section shall be for a term 
     of 1 year, and may be made automatically renewable from term 
     to term in the absence of notice by either party of an 
     intention to terminate at the end of the current term; except 
     that the Secretary may terminate any such contract at any 
     time (after reasonable notice to the pool, company, or 
     organization involved) if the Secretary finds that the pool, 
     company, or organization has failed substantially to carry 
     out the contract, or is carrying out the contract in a manner 
     inconsistent with the efficient and effective administration 
     of the intercity rail passenger program.''.
       (b) Conforming Amendments.--
       (1) Chapter 281 is amended by striking ``LAW ENFORCEMENT'' 
     in the chapter heading and inserting ``LAW ENFORCEMENT; 
     LIABILITY; INSURANCE''.
       (2) The part analysis of subtitle V is amended by striking 
     the item relating to chapter 281 and inserting the following:

``281. Law enforcement; liability; insurance...................28101''.

       (3) The table of contents of the title is amended by 
     striking the item relating to chapter 281 and inserting the 
     following:

``281. Law enforcement; liability; insurance...................28101''.

       (4) The chapter analysis for chapter 281 is amended by 
     adding at the end the following:

``28104. Train operations insurance pool
``28105. Use of insurance pool, companies, or other private 
              organizations for certain payments''.

     SEC. 155. COLLECTIVE BARGAINING ARRANGEMENTS.

       (a) Status as Employer or Carrier.--
       (1) In general.--Any entity providing intercity passenger 
     railroad transportation (within the meaning of section 20102 
     of title 49, United States Code) that begins operations after 
     the date of enactment of this Act shall be considered an 
     employer for purposes of the Railroad Retirement Act of 1974 
     (45 U.S.C. 231 et seq.) and considered a carrier for purposes 
     of the Railway Labor Act (45 U.S.C. 151 et seq.).
       (2) Collective bargaining agreement.--Any entity providing 
     intercity passenger railroad transportation (within the 
     meaning of section 20102 of title 49, United States Code) 
     that begins operations after the date of enactment of this 
     Act and replaces intercity rail passenger service that was 
     provided by another entity as of the date of enactment of 
     this Act, shall enter into an agreement with the authorized 
     bargaining agent or agents for employees of the predecessor 
     provider that--
       (A) gives each employee of the predecessor provider 
     priority in hiring according to the employee's seniority on 
     the predecessor provider for each position with the replacing 
     entity that is in the employee's craft or class and is 
     available within three years after the termination of the 
     service being replaced;
       (B) establishes a procedure for notifying such an employee 
     of such positions;
       (C) establishes a procedure for such an employee to apply 
     for such positions; and
       (D) establishes rates of pay, rules, and working 
     conditions.
       (3) Replacement of existing rail passenger service.--
       (A) Negotiations.--An entity providing replacement 
     intercity rail passenger service under paragraph (2) shall 
     give written notice of its plan to replace existing rail 
     passenger service to the authorized collective bargaining 
     agent or agents for the employees of the predecessor provider 
     at least 90 days prior to the date it plans to commence 
     service. Within 5 days after the date of receipt of such 
     written notice, negotiations between the replacing entity and 
     the collective bargaining agent or agents for the employees 
     of the predecessor provider shall commence for the purpose of 
     reaching agreement with respect to all matters set forth in 
     subparagraphs (A) through (D) of paragraph (2). The 
     negotiations shall continue for 30 days or until an agreement 
     is reached, whichever is sooner. If at the end of 30 days the 
     parties have not entered into an agreement with respect to 
     all such matters, the unresolved issues shall be submitted 
     for arbitration in accordance with the procedure set forth in 
     subparagraph (B).
       (B) Arbitration.--If an agreement has not been entered into 
     with respect to all matters set forth in subparagraphs (A) 
     through (D) of paragraph (2) as provided in subparagraph (A) 
     of this paragraph, the parties shall select an arbitrator. If 
     the parties are unable to agree upon the selection of such 
     arbitrator within 5 days, either or both parties shall notify 
     the National Mediation Board, which shall provide a list of 7 
     arbitrators with experience in arbitrating rail labor 
     protection disputes. Within 5 days after such notification, 
     the parties shall alternately strike names from the list 
     until only one name remains, and that person shall serve as 
     the neutral arbitrator. Within 45 days after selection of the 
     arbitrator, the arbitrator shall conduct a hearing on the 
     dispute and shall render a decision with respect to the 
     unresolved issues set forth in subparagraphs (A) through (D) 
     of paragraph (2). This decision shall be final, binding, and 
     conclusive upon the parties. The salary and expenses of the 
     arbitrator shall be borne equally by the parties, but all 
     other expenses shall be paid by the party incurring them.
       (C) Service commencement.--An entity providing replacement 
     intercity rail passenger service under paragraph (2) shall 
     commence service only after an agreement is entered into with 
     respect to the matters set forth in subparagraphs (A) through 
     (D) of paragraph (2) or the decision of the arbitrator has 
     been rendered.
       (b) Regulations.--Not later than 6 months after the date of 
     the enactment of this Act, the Secretary of Transportation 
     shall issue regulations for carrying out this section.

                       TITLE II--RAIL DEVELOPMENT

     SEC. 201. CAPITAL ASSISTANCE FOR INTERCITY PASSENGER RAIL 
                   SERVICE.

       (a) In General.--Part C of subtitle V is amended by 
     inserting after chapter 243 the following:

   ``CHAPTER 244--INTERCITY PASSENGER RAIL SERVICE CORRIDOR CAPITAL 
                               ASSISTANCE

``Sec.
``24401. Definitions
``24402. Capital investment grants to support intercity passenger rail 
              service
``24403. Project management oversight
``24404. Inclusion of projects in Budget
``24405. Local share and maintenance of effort
``24406. Grants for maintenance and modernization

     ``Sec. 24401. Definitions

       ``In this chapter:
       ``(1) Applicant.--The term `applicant' means a State, a 
     group of States, including an interstate compact formed under 
     section 410 of the Amtrak Reform and Accountability Act of 
     1997 (49 U.S.C. 24101 note) or section 131 of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act, or a public corporation, board, commission, 
     or agency established by one or more States designated as the 
     lead agency of a State for providing intercity passenger rail 
     service.
       ``(2) Capital project.--The term `capital project' means a 
     project for--

[[Page 6894]]

       ``(A) acquiring or constructing equipment or a facility for 
     use in intercity passenger rail service, expenses incidental 
     to the acquisition or construction (including designing, 
     inspecting, supervising, engineering, location surveying, 
     mapping, environmental studies, and acquiring rights-of-way), 
     alternatives analysis related to the development of such 
     train services, capacity improvements on the property over 
     which the service will be conducted, passenger rail-related 
     intelligent transportation systems, highway-rail grade 
     crossing improvements or closures on routes used for 
     intercity passenger rail service, relocation assistance, 
     acquiring replacement housing sites, and acquiring, 
     constructing, relocating, and rehabilitating replacement 
     housing;
       ``(B) rehabilitating or remanufacturing rail rolling stock 
     and associated facilities used primarily in intercity 
     passenger rail service;
       ``(C) leasing equipment or a facility for use in intercity 
     passenger rail service, subject to regulations (to be 
     prescribed by the Secretary of Transportation) limiting such 
     leasing arrangements to arrangements that are more cost-
     effective than purchase or construction;
       ``(D) modernizing existing intercity passenger rail service 
     facilities and information systems;
       ``(E) the introduction of new technology, through 
     innovative and improved products, other than magnetic 
     levitation; or
       ``(F) defraying, with respect to new service established 
     under section 24402, the cost of rental charges to freight 
     railroads.
       ``(3) Intercity corridor passenger rail service.--The term 
     `intercity corridor passenger rail service' means the 
     transportation of passengers between major metropolitan areas 
     by rail, including high-speed rail (as defined in section 
     26105(2) of this title), at multiple daily frequencies in 
     corridors of 300 miles or less in length or with trip times 
     of 4 hours or less.
       ``(4) Net project cost.--The term `net project cost' means 
     that portion of the cost of a project than cannot be financed 
     from revenues reasonably expected to be generated by the 
     project.

     ``Sec. 24402. Capital investment grants to support new 
       intercity passenger rail service

       ``(a) General Authority.--
       ``(1) Grants.--The Secretary of Transportation may make 
     grants under this section to an applicant to assist in 
     financing capital investments to establish or add additional 
     train frequencies for new intercity corridor passenger rail 
     service.
       ``(2) Terms and conditions.--The Secretary shall require 
     that a grant under this section be subject to the terms, 
     conditions, requirements, and provisions the Secretary 
     decides are necessary or appropriate for the purposes of this 
     section, including requirements for the disposition of net 
     increases in value of real property resulting from the 
     project assisted under this section.
       ``(3) Application with chapter 53.--A grant under this 
     section may not be made for a project or program of projects 
     that qualifies for financial assistance under chapter 53 of 
     this title.
       ``(b) Project as Part of Approved Program.--
       ``(1) In general.--The Secretary may not approve a grant 
     for a project under this section unless the Secretary finds 
     that the project is part of an approved corridor plan and 
     program developed under section 135 of title 23 and that the 
     applicant or recipient has or will have the legal, financial, 
     and technical capacity to carry out the project (including 
     safety and security aspects of the project), satisfactory 
     continuing control over the use of the equipment or 
     facilities, and the capability and willingness to maintain 
     the equipment or facilities.
       ``(2) Eligibility information.--An applicant shall provide 
     sufficient information upon which the Secretary can make the 
     findings required by this subsection.
       ``(3) Proposed operator justification.--If an applicant has 
     not selected the proposed operator of its service 
     competitively, the applicant shall provide written 
     justification to the Secretary showing why the proposed 
     operator is preferred, taking into account price and other 
     factors, and that use of the proposed operator will not 
     increase the capital cost of the project.
       ``(4) Rail agreement.--The Secretary of Transportation may 
     not approve a grant under this section unless the applicant 
     demonstrates that the railroad over which the intercity 
     passenger rail service will operate concurs with the 
     applicant's operating plans and infrastructure improvement 
     requirements.
       ``(c) Criteria for Grants for Intercity Corridor Passenger 
     Rail Projects.--
       ``(1) In general.--The Secretary may approve a grant under 
     this section for a capital project only if the Secretary 
     determines that the proposed project is--
       ``(A) justified, based on--
       ``(i) the results of an alternatives analysis and 
     preliminary engineering; and
       ``(ii) a comprehensive review of its mobility improvements, 
     environmental benefits, cost effectiveness, and operating 
     efficiencies; and
       ``(B) supported by an acceptable degree of State and local 
     financial commitment, including evidence of stable and 
     dependable financing sources to construct, maintain, and 
     operate the system or extension.
       ``(2) Alternatives analysis and preliminary engineering.--
     In evaluating a project under paragraph (1)(A), the Secretary 
     shall analyze and consider the results of the alternatives 
     analysis and preliminary engineering for the project.
       ``(3) Project justification.--In evaluating a project under 
     paragraph (1)(B), the Secretary shall consider--
       ``(A) the direct and indirect benefits and costs of 
     relevant alternatives;
       ``(B) the ability of the service to compete with other 
     modes of transportation;
       ``(C) the extent to which the project fills an unmet 
     transportation need;
       ``(D) the ability of the service to fund its operating 
     expenses from fare revenues;
       ``(E) population density in the corridor;
       ``(F) the technical capability of the grant recipient to 
     construct the project;
       ``(G) factors such as congestion relief, improved mobility, 
     air pollution, noise pollution, energy consumption, and all 
     associated ancillary and mitigating cost increases necessary 
     to carry out each alternative analyzed;
       ``(H) the level of private sector financial participation 
     and risk sharing in the project;
       ``(I) differences in local land, construction, and 
     operating costs in evaluating project justification; and
       ``(J) other factors that the Secretary determines 
     appropriate to carry out this chapter.
       ``(4) Local financial commitment.--
       ``(A) Evaluation of project.--In evaluating a project under 
     paragraph (1)(C), the Secretary shall require that--
       ``(i) the proposed project plan provides for the 
     availability of contingency amounts that the Secretary 
     determines to be reasonable to cover unanticipated cost 
     increases;
       ``(ii) each proposed State or local source of capital and 
     operating financing is stable, reliable, and available within 
     the proposed project timetable; and
       ``(iii) State or local resources are available to operate 
     the proposed service.
       ``(B) Considerations.--In assessing the stability, 
     reliability, and availability of proposed sources of local 
     financing under subparagraph (A), the Secretary shall 
     consider--
       ``(i) existing grant commitments;
       ``(ii) the degree to which financing sources are dedicated 
     to the purposes proposed;
       ``(iii) any debt obligation that exists or is proposed by 
     the applicant for the proposed project or other intercity 
     passenger rail service purpose; and
       ``(iv) the extent to which the project has a local 
     financial commitment that exceeds the required non-Federal 
     share of the cost of the project.
       ``(5) Project evaluation and rating.--A proposed project 
     may advance from alternatives analysis to preliminary 
     engineering, and may advance from preliminary engineering to 
     final design and construction, only if the Secretary finds 
     that the project meets the requirements of this section and 
     there is a reasonable likelihood that the project will 
     continue to meet such requirements. In making such findings, 
     the Secretary shall evaluate and rate the project as `highly 
     recommended', `recommended', or `not recommended', based on 
     the results of alternatives analysis, the project 
     justification criteria, and the degree of local financial 
     commitment, as required under this subsection. In rating the 
     projects, the Secretary shall provide, in addition to the 
     overall project rating, individual ratings for each of the 
     criteria established under the regulations issued under 
     paragraph (5).
       ``(6) Full funding grant agreement.--A project financed 
     under this subsection shall be carried out through a full 
     funding grant agreement. The Secretary shall enter into a 
     full funding grant agreement based on the evaluations and 
     ratings required under this subsection. The Secretary shall 
     not enter into a full funding grant agreement for a project 
     unless that project is authorized for final design and 
     construction.
       ``(d) Letters of Intent, Full Funding Grant Agreements, and 
     Early Systems Work Agreements.--
       ``(1) Letter of intent.--
       ``(A) The Secretary may issue a letter of intent to an 
     applicant announcing an intention to obligate, for a project 
     under this section, an amount from future available budget 
     authority specified in law that is not more than the amount 
     stipulated as the financial participation of the Secretary in 
     the project.
       ``(B) At least 60 days before issuing a letter under 
     subparagraph (A) of this paragraph or entering into a full 
     funding grant agreement, the Secretary shall notify in 
     writing the Senate Committee on Commerce, Science, and 
     Transportation and the House of Representatives Committee on 
     Transportation and Infrastructure, and the House of 
     Representatives and Senate Committees on Appropriations of 
     the proposed letter or agreement. The Secretary shall include 
     with the notification a copy of the proposed letter or 
     agreement as well as the evaluations and ratings for the 
     project.
       ``(C) The issuance of a letter is deemed not to be an 
     obligation under sections 1108(c) and (d), 1501, and 1502(a) 
     of title 31, or an administrative commitment.
       ``(D) An obligation or administrative commitment may be 
     made only when amounts are appropriated.

[[Page 6895]]

       ``(2) Full funding agreement.--
       ``(A) The Secretary may make a full funding grant agreement 
     with an applicant. The agreement shall--
       ``(i) establish the terms of participation by the United 
     States Government in a project under this section;
       ``(ii) establish the maximum amount of Government financial 
     assistance for the project, which, with respect to a high-
     speed rail project, shall be sufficient to complete at least 
     an operable segment;
       ``(iii) cover the period of time for completing the 
     project, including a period extending beyond the period of an 
     authorization; and
       ``(iv) make timely and efficient management of the project 
     easier according to the law of the United States.
       ``(B) An agreement under this paragraph obligates an amount 
     of available budget authority specified in law and may 
     include a commitment, contingent on amounts to be specified 
     in law in advance for commitments under this paragraph, to 
     obligate an additional amount from future available budget 
     authority specified in law. The agreement shall state that 
     the contingent commitment is not an obligation of the Federal 
     Government and is subject to subject to the availability of 
     appropriations made by Federal law and to Federal laws in 
     force on or enacted after the date of the contingent 
     commitment. Interest and other financing costs of efficiently 
     carrying out a part of the project within a reasonable time 
     are a cost of carrying out the project under a full funding 
     grant agreement, except that eligible costs may not be more 
     than the cost of the most favorable financing terms 
     reasonably available for the project at the time of 
     borrowing. The applicant shall certify, in a way satisfactory 
     to the Secretary, that the applicant has shown reasonable 
     diligence in seeking the most favorable financing terms.
       ``(3) Early systems work agreement.--
       ``(A) The Secretary may make an early systems work 
     agreement with an applicant if a record of decision under the 
     National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
     seq.) has been issued on the project and the Secretary finds 
     there is reason to believe--
       ``(i) a full funding grant agreement for the project will 
     be made; and
       ``(ii) the terms of the work agreement will promote 
     ultimate completion of the project more rapidly and at less 
     cost.
       ``(B) A work agreement under this paragraph obligates an 
     amount of available budget authority specified in law and 
     shall provide for reimbursement of preliminary costs of 
     carrying out the project, including land acquisition, timely 
     procurement of system elements for which specifications are 
     decided, and other activities the Secretary decides are 
     appropriate to make efficient, long-term project management 
     easier. A work agreement shall cover the period of time the 
     Secretary considers appropriate. The period may extend beyond 
     the period of current authorization. Interest and other 
     financing costs of efficiently carrying out the work 
     agreement within a reasonable time are a cost of carrying out 
     the agreement, except that eligible costs may not be more 
     than the cost of the most favorable financing terms 
     reasonably available for the project at the time of 
     borrowing. The applicant shall certify, in a way satisfactory 
     to the Secretary, that the applicant has shown reasonable 
     diligence in seeking the most favorable financing terms. If 
     an applicant does not carry out the project for reasons 
     within the control of the applicant, the applicant shall 
     repay all Government payments made under the work agreement 
     plus reasonable interest and penalty charges the Secretary 
     establishes in the agreement.
       ``(4) Limit on total obligations and commitments.--The 
     total estimated amount of future obligations of the 
     Government and contingent commitments to incur obligations 
     covered by all outstanding letters of intent, full funding 
     grant agreements, and early systems work agreements under 
     this section, when combined with obligations under section 
     5309 of this title, may be not more than the amount 
     authorized under section 5338(b) of this title, less an 
     amount the Secretary reasonably estimates is necessary for 
     grants under this section not covered by a letter. The total 
     amount covered by new letters and contingent commitments 
     included in full funding grant agreements and early systems 
     work agreements may be not more than a limitation specified 
     in law.
       ``(e) Federal Share of Net Project Cost.--
       ``(1) In general.--
       ``(A) Based on engineering studies, studies of economic 
     feasibility, and information on the expected use of equipment 
     or facilities, the Secretary shall estimate the net project 
     cost.
       ``(B) A grant for the project may be for up to 50 percent 
     of the net project cost. The remainder shall be provided in 
     cash from non-Federal sources.
       ``(f) Undertaking Projects in Advance.--
       ``(1) In general.--The Secretary may pay the Federal share 
     of the net capital project cost to an applicant that carries 
     out any part of a project described in this section according 
     to all applicable procedures and requirements if--
       ``(A) the applicant applies for the payment;
       ``(B) the Secretary approves the payment; and
       ``(C) before carrying out a part of the project, the 
     Secretary approves the plans and specifications for the part 
     in the same way as other projects under this section.
       ``(2) Interest costs.--The cost of carrying out part of a 
     project includes the amount of interest earned and payable on 
     bonds issued by the applicant to the extent proceeds of the 
     bonds are expended in carrying out the part. The amount of 
     interest includable as cost under this paragraph may not be 
     more than the most favorable interest terms reasonably 
     available for the project at the time of borrowing. The 
     applicant shall certify, in a manner satisfactory to the 
     Secretary, that the applicant has shown reasonable diligence 
     in seeking the most favorable financial terms.
       ``(3) Use of cost indices.--The Secretary shall consider 
     changes in capital project cost indices when determining the 
     estimated cost under paragraph (2) of this subsection.
       ``(g) Funding.--There are authorized to be appropriated to 
     the Secretary of Transportation for purposes of this 
     section--
       ``(1) $525,000,000 for fiscal year 2006,
       ``(2) $525,000,000 for fiscal year 2007,
       ``(3) $650,000,000 for fiscal year 2008,
       ``(4) $750,000,000 for fiscal year 2009, and
       ``(5) $800,000,000 for fiscal year 2010,
     such sums to remain available until expended.

     ``Sec. 24403. Project management oversight

       ``(a) Project Management Plan Requirements.--To receive 
     Federal financial assistance for a major capital project 
     under this chapter, an applicant shall prepare and carry out 
     a project management plan approved by the Secretary of 
     Transportation. The plan shall provide for--
       ``(1) adequate recipient staff organization with well-
     defined reporting relationships, statements of functional 
     responsibilities, job descriptions, and job qualifications;
       ``(2) a budget for the project, including the project 
     management organization, appropriate consultants, property 
     acquisition, utility relocation, systems demonstration staff, 
     audits, and miscellaneous payments the recipient may be 
     prepared to justify;
       ``(3) a construction schedule for the project;
       ``(4) a document control procedure and recordkeeping 
     system;
       ``(5) a change order procedure that includes a documented, 
     systematic approach to handling the construction change 
     orders;
       ``(6) organizational structures, management skills, and 
     staffing levels required throughout the construction phase;
       ``(7) quality control and quality assurance functions, 
     procedures, and responsibilities for construction, system 
     installation, and integration of system components;
       ``(8) material testing policies and procedures;
       ``(9) internal plan implementation and reporting 
     requirements;
       ``(10) criteria and procedures to be used for testing the 
     operational system or its major components;
       ``(11) annual updates of the plan, especially related to 
     project budget and project schedule, financing, and ridership 
     estimates; and
       ``(12) the recipient's commitment to submit a project 
     budget and project schedule to the Secretary each month.
       ``(b) Plan Approval.--
       ``(1) 60-day decision.--The Secretary shall approve or 
     disapprove a plan not later than 60 days after it is 
     submitted. If the approval process cannot be completed within 
     60 days, the Secretary shall notify the recipient, explain 
     the reasons for the delay, and estimate the additional time 
     that will be required.
       ``(2) Explanation of disapproval.--If the Secretary 
     disapproves a plan, the Secretary shall inform the applicant 
     of the reasons for disapproval of the plan.
       ``(c) Secretarial Oversight.--
       ``(1) In general.--The Secretary may use no more than 0.5 
     percent of amounts made available in a fiscal year for 
     capital projects under this chapter to enter into contracts 
     to oversee the construction of such projects.
       ``(2) Use of funds.--The Secretary may use amounts 
     available under paragraph (1) of this subsection to make 
     contracts for safety, procurement, management, and financial 
     compliance reviews and audits of a recipient of amounts under 
     paragraph (1).
       ``(3) Federal share.--The Federal Government may pay the 
     entire cost of carrying out a contract under this subsection.
       ``(d) Access to Sites and Records.--Each recipient of 
     assistance under this chapter shall provide the Secretary and 
     a contractor the Secretary chooses under subsection (b) of 
     this section with access to the construction sites and 
     records of the recipient when reasonably necessary.

     ``Sec. 24404. Inclusion of projects in Budget

       ``Beginning with fiscal year 2005, the Secretary of 
     Transportation shall transmit to the Office of Management and 
     Budget for inclusion in the President's budget submission for 
     the fiscal year a list of projects recommended for funding 
     under section 24402 for the fiscal year.

[[Page 6896]]



     ``Sec. 24405. Local share and maintenance of effort

       ``(a) In General.--Notwithstanding any other provision of 
     law, a recipient of assistance under section 24402 may use, 
     as part of the local matching funds for a capital project, 
     the proceeds from the issuance of revenue bonds.
       ``(b) Maintenance of Effort.--The Secretary of 
     Transportation shall approve the use of proceeds from the 
     issuance of revenue bonds for the non-Federal share of the 
     net project cost only if the aggregate amount of financial 
     support for intercity passenger rail service from the State 
     is not less than the average annual amount provided by the 
     State during the preceding 3 years.

     ``Sec. 24406. Grants for maintenance and modernization

       ``(a) In General.--The Secretary of Transportation may make 
     capital grants for renewal and modernization of intercity 
     passenger rail services to--
       ``(1) the American Passenger Railway Corporation for 
     services it operates under contract with the Secretary of 
     Transportation; or
       ``(2) to States for intercity passenger rail services 
     operated under a contract with the American Passenger Railway 
     Corporation or another train operator.
       ``(b) Use of Funds.--Grants under this section may be 
     used--
       ``(1) to purchase, lease, rehabilitate, or remanufacture 
     rolling stock and associated facilities used primarily in 
     intercity passenger rail service;
       ``(2) to modernize existing intercity passenger rail 
     service facilities and information systems; or
       ``(3) to defray the cost of rental charges to freight 
     railroads for the addition of train frequencies.
       ``(c) Federal Share.--For fiscal years 2005 through 2010, 
     the Federal share for a capital grant under this section may 
     be 100 percent, except that the Federal share for a grant 
     made under subsection (b)(3) may not exceed 50 percent. After 
     fiscal year 2010, the Federal share for a capital grant under 
     this section may not exceed 80 percent.
       ``(d) Allocation Formula.--Funds made available by this 
     section shall be allocated equitably among the States based 
     on a formula to be determined by the Secretary.
       ``(e) Sleeping and Dining Cars.--Pending the restructuring 
     of long distance routes under sections 106 through 108 of the 
     Rail Passenger Service Restructuring, Reauthorization, and 
     Development Act, capital grants may be made to the American 
     Passenger Railway Corporation for sleeping and dining cars 
     only to the extent necessary to maintain the equipment in 
     working order and not for the purpose of refurbishing, 
     rebuilding, or renewing such equipment to extend the 
     equipment's useful life.
       ``(f) Long Distance Restructuring Plan.--Unless the 
     restructuring plan submitted by the Long Distance Route 
     Restructuring Commission under section 106 of the Rail 
     Passenger Service Restructuring, Reauthorization, and 
     Development Act is disapproved by Congress, from the sums 
     authorized for capital projects outside of the Northeast 
     Corridor, the Secretary may reserve up to $20,000,000 in each 
     of fiscal years 2007 through 2010 to assist in the 
     restructuring of long distance routes as linked corridors, 
     and the Federal share of such assistance shall be 100 
     percent.
       ``(g) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary of 
     Transportation $200,000,000 for each of fiscal years 2005 
     through 2010 to carry out this section.''.

     SEC. 202. REGULATIONS IMPLEMENTING CHAPTER 244.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Transportation shall 
     issue final regulations under chapter 244 of title 49, United 
     States Code.
       ``(b) Specific Requirements.--The regulations under chapter 
     244 of title 49, United States Code, shall include--
       ``(1) the manner in which the Secretary will evaluate and 
     rate projects based on the results of alternatives analysis, 
     project justification, and the degree of local financial 
     commitment, as required by section 24402 of that title;
       ``(2) a definition of `major capital project' for purposes 
     of section 24403;
       ``(3) a requirement that project oversight begin during the 
     preliminary engineering stage of a project, unless the 
     Secretary finds it more appropriate to begin oversight during 
     another stage of a project, to maximize the transportation 
     benefits and cost savings associated with project management 
     oversight;
       ``(4) a deadline by which all grant applications for a 
     fiscal year shall be submitted that is early enough to permit 
     the Secretary to evaluate all timely applications thoroughly 
     before making grants;
       ``(5) a formula based on infrastructure ownership, 
     boardings, and passenger-miles traveled in the prior fiscal 
     year by which the funds authorized for modernization of 
     existing services will be allocated among the States; and
       ``(6) a requirement that, if a State does not apply for its 
     share of formula grant funds under paragraph (5) of this 
     subsection in a timely manner, those funds will be made 
     available to other States.

                           TITLE III--REFORMS

     SEC. 301. MANAGEMENT OF SECURED DEBT.

       Except as approved by the Secretary of Transportation to 
     refinance existing secured debt, Amtrak (until the American 
     Passenger Railway Corporation is established) and the 
     American Passenger Railway Corporation thereafter, may not 
     enter into any obligation secured by assets after the date of 
     enactment of this Act. This section does not prohibit 
     unsecured lines of credit used for working capital purposes.

     SEC. 302. EMPLOYEE ASSISTANCE.

       (a) Transition Financial Incentives.--
       (1) In general.--To reduce operating expenses in 
     preparation for competition from other rail carriers, the 
     American Passenger Railway Corporation may institute a 
     program under which it may, at its discretion, provide 
     financial incentives to employees who voluntarily terminate 
     their employment with the Corporation and relinquish any 
     legal rights to receive termination-related payments under 
     any contractual agreement with the Corporation.
       (2) Conditions for financial incentives.--As a condition 
     for receiving financial assistance grants under this section, 
     the American Passenger Railway Corporation shall certify to 
     the Secretary of Transportation that--
       (A) the financial assistance results in a net reduction in 
     the total number of employees equal to the number receiving 
     financial incentives;
       (B) the financial assistance results in a net reduction in 
     total employment expense equivalent to the total employment 
     expenses associated with the employees receiving financial 
     incentives; and
       (C) the total number of employees eligible for termination-
     related payments will not be increased without the express 
     written consent of the Secretary.
       (3) Amount of financial incentives.--The financial 
     incentives authorized under this section may not exceed 1 
     year's base pay.
       (4) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation 
     $25,000,000 for each of fiscal years 2005, 2006, and 2007 to 
     make grants to the American Passenger Railway Corporation to 
     fund financial incentive payments to employees under this 
     subsection.
       (b) Labor Protection for Employees of the American 
     Passenger Railway Corporation.--
       (1) In general.--The American Passenger Railway Corporation 
     shall be responsible for obligations imposed by law or 
     collective bargaining agreement for compensation and benefits 
     payable to its employees terminated in connection with the 
     restructuring of passenger rail service under this Act and 
     the amendments made by this Act. The responsibility of the 
     American Passenger Railway Corporation under the preceding 
     sentence, and the obligations for which it is responsible 
     under that sentence, may not be transferred to any other 
     entity in connection with such restructuring by contract or 
     otherwise.
       (2) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation for the 
     use of the American Passenger Railway Corporation in meeting 
     its responsibility under paragraph (1) $75,000,000 for each 
     of fiscal years 2007 through 2010.
       (3) Not an obligation of the united states.--
     Notwithstanding paragraph (2), nothing in paragraph (1) shall 
     be construed to mean that any labor protection obligation of 
     the American Passenger Railway Corporation under that 
     paragraph is an obligation of the United States Government.

     SEC. 303. TERMINATION OF AUTHORITY FOR GSA TO PROVIDE 
                   SERVICES TO AMTRAK.

       Section 1110 of division A of H.R. 5666 (114 Stat. 2763A-
     202), as enacted by section 1(a)(4) of the Consolidated 
     Appropriations Act, 2001, is repealed.

     SEC. 304. AMTRAK REFORM BOARD OF DIRECTORS.

       Section 24302 is amended by adding at the end the 
     following:
       ``(d) Asset Transition Committee.--
       ``(1) In general.--The Reform Board shall form an asset 
     transition committee comprised of the Secretary or the 
     Secretary's designee, and 2 other members, or 1 other member 
     if 2 other members are not lawfully appointed.
       ``(2) Powers and duties.--In addition to other powers and 
     duties assigned by the board, the Asset Transition Committee 
     has the duty to ensure that the public interest is served in 
     board decisions and Amtrak management actions that change the 
     use of or status of--
       ``(A) the contractual right of access of Amtrak to rail 
     lines of other railroads;
       ``(B) Amtrak's secured debt;
       ``(C) Northeast Corridor real property and assets; and
       ``(D) rolling stock.
       ``(3) Approval required.--The board may not take an action 
     with regard to the assets or secured debt specified in 
     paragraph (2), or permit Amtrak management action with regard 
     to those assets, that is not approved by the asset transition 
     committee.''.

[[Page 6897]]



     SEC. 305. LIMITATIONS ON AVAILABILITY OF GRANTS.

       (a) In General.--Chapter 243, as amended by section 136 of 
     this Act is amended by inserting after section 24318 the 
     following:

     ``Sec. 24319. Limitations on availability of grants

       ``(a) In General.--In addition to any other requirement 
     imposed under this title, grants under this subtitle are 
     subject to the following conditions:
       ``(1) The Secretary of Transportation may approve funding 
     to cover operating losses or operating expenses (including 
     advance purchase orders) only after receiving and approving a 
     grant request for each specific train route to which the 
     grant relates.
       ``(2) Each such grant request shall be accompanied by a 
     detailed financial analysis, revenue projection, and capital 
     expenditure program justifying the Federal support to the 
     Secretary's satisfaction.
       ``(3) Not later than December 31st prior to each fiscal 
     year in which a grant under this subtitle is to be made, the 
     grant recipient shall transmit a business plan for operating 
     and capital improvements to be funded in the fiscal year 
     under section 24104(a) to the Secretary of Transportation, 
     the Committee on Commerce, Science, and Transportation of the 
     Senate, the Committee on Transportation and Infrastructure of 
     the House of Representatives, and the House of 
     Representatives and Senate Committees on Appropriations.
       ``(4) The business plan shall include--
       ``(A) targets, as applicable, for ridership, revenues, and 
     capital and operating expenses;
       ``(B) a separate accounting for such targets--
       ``(i) on the Northeast Corridor;
       ``(ii) each intercity train route;
       ``(iii) as a group for long distance trains and corridor 
     services; and
       ``(iv) commercial activities, including contract operations 
     and mail and express; and
       ``(C) a description of the work to be funded, along with 
     cost estimates and an estimated timetable for completion of 
     the projects covered by the business plan.
       ``(5) Each month of each fiscal year in which grants are 
     made under this subtitle, the grant recipient shall submit a 
     supplemental report in electronic format regarding the 
     business plan, which shall describe the work completed to 
     date, any changes to the business plan, and the reasons for 
     such changes, to the Secretary of Transportation, the 
     Committee on Commerce, Science, and Transportation of the 
     Senate, the Committee on Transportation and Infrastructure of 
     the House of Representatives, and the House of 
     Representatives and Senate Committees on Appropriations.
       ``(6) None of the funds authorized by this subtitle or the 
     Rail Passenger Service Restructuring, Reauthorization, and 
     Development Act may be disbursed for operating expenses, 
     including advance purchase orders and capital projects not 
     approved by the Secretary nor in the business plan submitted 
     by the grant recipient under paragraph (3).
       ``(7) The grant recipient shall display the business plan 
     required by paragraph (3) and all subsequent supplemental 
     plans required by paragraph (5) on its website within a 
     reasonable time after they are submitted to the Secretary and 
     the Congress under this section.
       ``(8) The Secretary may not make any grant under this 
     subtitle, until the grant recipient agrees to continue 
     abiding by the provisions of paragraphs (1), (2), (5), (9), 
     and (11) of the summary of conditions on the direct loan 
     agreement of June 28, 2002, until the loan is repaid.
       ``(9) With respect to any route on which intercity 
     passenger rail service is provided on the day before the date 
     on which the restructuring required by section 24300 is 
     completed (as determined by the Secretary), the American 
     Passenger Railway Corporation shall make available to any 
     replacement operator the legacy equipment that is associated 
     with the service on the route. The equipment shall be made 
     available on such terms as the National Railroad Passenger 
     Corporation determines are fair, reasonable, and in the 
     public interest.
       ``(10) The American Passenger Railway Corporation shall 
     provide interline reservations services to any other provider 
     of intercity passenger rail transportation on the same basis 
     and at the same rates as those services were provided to the 
     operating entities that provide passenger rail service within 
     Amtrak as of the date of enactment of the Rail Passenger 
     Service Restructuring, Reauthorization, and Development Act.
       ``(b) Grant Recipient.--In this section, the term `grant 
     recipient' means--
       ``(1) Amtrak, until the date on which the American 
     Passenger Railway Corporation is established; and
       ``(2) the American Passenger Railway Corporation, after it 
     is established.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243 is amended by inserting after the item relating to 
     section 24318 the following:

``24319. Limitations on availability of grants''.

     SEC. 306. REPEAL OF OBSOLETE AND EXECUTED PROVISIONS OF LAW.

       (a) In General.--The following sections are repealed:
       (1) Section 24701.
       (2) Section 24706.
       (3) Section 24901.
       (4) Section 24902.
       (5) Section 24904.
       (6) Section 24906.
       (7) Section 24909.
       (b) Amendment of Section 24305.--Section 24305 is amended--
       (1) by striking paragraph (2) of subsection (a) and 
     redesignating paragraph (3) as paragraph (2); and
       (2) by inserting ``With regard to items acquired with funds 
     provided by the Federal Government,'' before ``Amtrak'' in 
     subsection (f)(2).
       (c) Conforming Amendments.--The chapter analyses for 
     chapters 243, 247, and 249 are amended, as appropriate, by 
     striking the items relating to sections 24307, 24701, 24706, 
     24901, 24902, 24904, 24906, 24908, and 24909.

     SEC. 307. ESTABLISHMENT OF FINANCIAL ACCOUNTING SYSTEM.

       (a) In General.--The Inspector General of the Department of 
     Transportation shall employ an independent financial 
     consultant--
       (1) to assess Amtrak's financial accounting and reporting 
     system and practices as of the date of enactment of this Act;
       (2) to design and assist the American Passenger Railway 
     Corporation in implementing a modern financial accounting and 
     reporting system, on the basis of the assessment, that will 
     produce accurate and timely financial information in 
     sufficient detail--
       (A) to enable the American Passenger Railway Corporation to 
     assign revenues and expenses appropriately to each of its 
     lines of business and to each major activity within each line 
     of business activity, including train operations, equipment 
     maintenance, ticketing, and reservations;
       (B) to aggregate expenses and revenues related to 
     infrastructure and distinguish them from expenses and 
     revenues related to rail operations; and
       (C) to provide ticketing and reservation information on a 
     real-time basis.
       (b) Verification of System; Report.--The Inspector General 
     of the Department of Transportation shall review the 
     accounting system designed and implemented under subsection 
     (a) to ensure that it accomplishes the purposes for which it 
     is intended. The Inspector General shall report his findings 
     and conclusions, together with any recommendations, to the 
     Senate Committee on Commerce, Science, and Transportation and 
     the House of Representatives Committee on Transportation and 
     Infrastructure.
       (c) Separate Financial Statements for Northeast Corridor 
     Infrastructure.--Beginning with fiscal year 2006, the 
     American Passenger Railway Corporation shall issue separate 
     financial statements for activities related to the 
     infrastructure of the Northeast Corridor.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation 
     $2,500,000 for fiscal year 2005 to carry out subsection (a), 
     such sums to remain available until expended.

     SEC. 308. RESTRUCTURING OF LONG-TERM DEBT AND CAPITAL LEASES.

       (a) In General.--The Secretary of the Treasury, in 
     consultation with the Secretary of Transportation and Amtrak, 
     shall restructure Amtrak's indebtedness as of the date of 
     enactment of this Act.
       (b) Debt Redemption.--The Secretary of Transportation, in 
     consultation with the Secretary of the Treasury, shall enter 
     into negotiations with the holders of Amtrak debt, including 
     leases, that is outstanding on the date of enactment of this 
     Act for the purpose of restructuring that debt. The 
     Secretary, in consultation with the Secretary of the 
     Treasury, shall secure agreements for repayment on such terms 
     as the Secretary deems favorable to the interests of the 
     Government.
       (c) Criteria.--In redeeming or restructuring Amtrak's 
     indebtedness, the Secretaries and Amtrak--
       (1) shall ensure that the restructuring imposes the least 
     practicable burden on taxpayers; and
       (2) take into consideration repayment costs, the term of 
     any loan or loans, and market conditions.
       (d) Early Redemption Plan.--Within 1 year after the date of 
     enactment of this Act, the Secretary of Transportation and 
     the Secretary of the Treasury shall transmit to the 
     Congress--
       (1) a plan for the early redemption of Amtrak debt; and
       (2) a proposal for covering the costs associated with the 
     early redemption.
       (e) Amtrak Principal and Interest Payments.--
       (1) Principal on debt service.--Unless the Secretary of 
     Transportation and the Secretary of the Treasury restructure 
     or redeem the debt, there are authorized to be appropriated 
     to the Secretary of Transportation for the use of Amtrak 
     (before the date, determined by the Secretary of 
     Transportation, on which the restructuring required by 
     section 24300 of title 49, United States Code, is completed) 
     and the American Passenger Railway Corporation (after that 
     date) for retirement of principal on loans for capital 
     equipment, or capital leases, not more than the following 
     amounts:

[[Page 6898]]

       (A) For fiscal year 2005, $110,000,000.
       (B) For fiscal year 2006, $115,000,000.
       (C) For fiscal year 2007, $205,000,000.
       (D) For fiscal year 2008, $165,000,000.
       (E) For fiscal year 2009, $155,000,000.
       (F) For fiscal year 2010, $150,000,000.
       (2) Interest on debt.--Unless the Secretary of 
     Transportation and the Secretary of the Treasury restructure 
     or redeem the debt, there are authorized to be appropriated 
     to the Secretary of Transportation for the use of Amtrak 
     (before the date, determined by the Secretary of 
     Transportation, on which the restructuring required by 
     section 24300 of title 49, United States Code, is completed) 
     and the American Passenger Railway Corporation (after that 
     date) for the payment of interest on loans for capital 
     equipment, or capital leases, the following amounts:
       (A) For fiscal year 2005, $155,000,000.
       (B) For fiscal year 2006, $150,000,000.
       (C) For fiscal year 2007, $140,000,000.
       (D) For fiscal year 2008, $130,000,000.
       (E) For fiscal year 2009, $125,000,000.
       (F) For fiscal year 2010, $115,000,000.
       (3) Reductions in authorization levels.--Whenever action 
     taken by the Secretary of the Treasury under subsection (c) 
     results in reductions in amounts of principle and interest 
     that Amtrak must service on existing debt, Amtrak shall 
     submit to the Senate Committee on Commerce, Science and 
     Transportation, the House of Representatives Committee on 
     Transportation and Infrastructure, the Senate Committee on 
     Appropriations, and House of Representatives Committee on 
     Appropriations revised requests for amounts authorized by 
     paragraphs (1) and (2) that reflect the such reductions.
       (g) Legal Effect of Payments under this Section.--The 
     payment of principal and interest secured debt with the 
     proceeds of grants under subsection (f) shall not--
       (1) modify the extent or nature of any indebtedness of the 
     National Railroad Passenger Corporation to the United States 
     in existence of the date of enactment of this Act;
       (2) change the private nature of Amtrak's or its 
     successors' liabilities; or
       (3) imply any Federal guarantee or commitment to amortize 
     Amtrak's outstanding indebtedness.

     SEC. 309. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the Secretary of 
     Transportation for the benefit of Amtrak for fiscal year 2005 
     $750,000,000 for operating expenses.
                                 ______
                                 
      By Mr. GRASSLEY:
  S. 2307. A bill to amend the Federal Food, Drug, and Cosmetic Act 
with respect to the importation of prescription drugs by importers, and 
by individuals for personal use, and for other purposes; to the 
Committee on Finance.
  Mr. GRASSLEY. Mr. President, I would like to pose a question to the 
Chamber today.
  What would you call it if Americans were paying up to 300 percent 
more for the same product as consumers from other countries were 
paying? Back in Iowa, we would call that ``highway robbery.'' Yet, 
highway robbery is what is happening every day in this country, and it 
is happening over prescription drugs.
  Yes, prescription drugs are being sold at prices that are 30 to 300 
percent higher in the United States than in places like Canada or 
Europe.
  Here are some examples.
  The price in Canada of Nexium which is for heart burn and ulcers, is 
about 40 percent of the price in the U.S. Nexium would cost about $120 
for 28 20-milligram capsules if you bought it here in the States. If 
you order the same Nexium from Canada, you'd pay about $51.
  Here is another example: The price in Canada for Vioxx which is for 
arthritis pain, is also about 40 percent of the price in the U.S. If 
you purchased 30 12.5-milligram tablets in Canada, you would pay about 
$36 and here in a U.S. pharmacy, you would pay about $86.
  And why is that, Mr. President? The reason is the importation of 
prescription drugs, those very same drugs that patients are using in 
Canada, and Australia, and Japan, is illegal in this country. So 
consumers in other countries get price breaks from the drug 
manufacturers and the American public doesn't.
  One way to look at this is that by paying those higher prices, the 
American public is paying more than its fair share for the cost of 
research and development for future new drugs. That is not fair.
  This means when a new drug comes on the market, the American consumer 
has paid for the research but consumers in other countries benefit from 
the new therapy.
  I have supported amendments to permit Canadian drug purchases before. 
We have had numerous votes in this Chamber on legalizing importation. 
We had a vote most recently during the Medicare debate.
  Last year, the House overwhelmingly passed a drug reimportation bill 
by a vote of 243 to 186. But, in the end, the conference report for the 
Medicare bill watered down the possibility of legal importation such 
that it was meaningless.
  I was very disappointed about that. I think it was victory by 
subterfuge for the pharmaceutical industry.
  So, I decided to roll up my sleeves and go to work on drafting my own 
bill that would address the problems surrounding importation. In fact, 
I was working very closely since the beginning of the year with my 
friend and colleague from Massachusetts, Senator Kennedy. We were 
working together until 3 weeks ago to create a bipartisan piece of 
legislation. We made a lot of progress. We still had some issues to 
work out but we were very close to having a final agreement.
  With my leadership on the Finance Committee, and Senator Kennedy's 
leadership on the HELP Committee, let alone his expertise on the Food, 
Drug, and Cosmetics Act, I figured we had a good shot at getting 
something done.
  Our discussions certainly created a lot of buzz around town. I had 
reporters and all manner of interest groups asking me and my staff 
about the bill and when we would introduce it. But those discussions 
have since evaporated. Apparently, the Democratic caucus was concerned 
that things were moving too quickly or that too much momentum was 
building behind a bipartisan effort. What I do know is that our 
bipartisan product was no longer the priority.
  I was disappointed about that too. Senator Kennedy and I work well 
together. In fact, we are joining forces even now to get the Family 
Opportunity Act to the floor and passed out of the Senate.
  You can understand why I was discouraged to learn that Senator 
Daschle had determined lowering the costs of prescription drugs through 
importation was going to be a partisan issue.
  Members can understand why I was discouraged to learn that Senator 
Daschle determined lowering the cost of prescription drugs through 
importation was going to be a partisan issue. This reminded me of what 
happened in the year 2002 with the Medicare prescription drug debate. 
There, too, Senator Daschle became concerned that the Finance 
Committee--then chaired by my friend, Senator Baucus--would report a 
bipartisan prescription drug benefit for seniors.
  Senator Daschle, in 2002, as the majority leader, bypassed the 
Finance Committee and took the prescription drug bill straight to the 
floor. That is not how we get legislation passed in the Senate, and 
everyone around here knows it. As I say so often to my colleagues, 
nothing gets done in the Senate if it is not bipartisan or at least 
somewhat bipartisan.
  In the year 2002, it resulted in a very partisan debate in the Senate 
over competing Medicare drug benefit proposals. There were multiple 
partisan proposals by the Senator from Florida, Mr. Graham. I had a 
proposal supported by both Republicans and Democrats. The Democratic 
caucus fought our bill, which was dubbed the tripartisan bill because 
one of the key authors, Senator Jeffords from Vermont, sits in the body 
as an Independent.
  What happened in the final analysis in 2002? The Senate did not pass 
a Medicare drug benefit proposal that year. The debate fell apart in 
partisan bickering in the Senate. That happened because partisan 
politics intervened to prevent a bipartisan compromise.
  It looks to me that this is what is happening now on the issue of the 
importation of drugs into the United States to help our seniors. When 
we go to the pharmacist to pick up a prescription, I don't remember the 
pharmacist asking if you are a Republican or a Democrat. When you pay 
your health insurance premium, I don't think the insurance company 
looks for

[[Page 6899]]

an ``R'' or a ``D'' by your name before they accept your payment.
  No, I don't see the importation of drugs as a partisan issue. Being 
forced to pay higher prescription prices because there is a lack of 
competition in the global pharmaceutical industry is not a partisan 
issue. That is why I decided to move ahead and introduce the bill I am 
introducing today.
  This bill I am introducing today in a large degree is the bill on 
which I worked very closely with Senator Kennedy when our efforts got 
superseded by the Democratic caucus. I made a few changes, but this 
bill is basically what Senator Kennedy and I were working on together 
before partisan politics got in the way. I thought what we had was a 
good proposal. We were close to having all the details worked out. I am 
going ahead and introducing that bill today by myself.
  Let me explain the bill. Quite simply, it would legalize immediately 
the importation of prescription drugs from Canada. After 2 years, 
consumers would be able to order their drugs from other countries, as 
well. It creates a practical and safe system to do it.
  Today the law prohibits the importation of prescription drugs until 
the Secretary of Health and Human Services certifies that importation 
can be done safely. Under current resources and under current 
authority, the Food and Drug Administration has not been able to 
provide such assurance on the safety of drugs coming in from other 
countries. We have had Health and Human Service Secretaries in both the 
Clinton administration and the Bush administration. This is not 
Republicans protecting pharmaceuticals, if you want to look at it this 
way. It is both Democrat Presidents and Republican Presidents making a 
decision that the certification and safety of drug importation was not 
legally permitted.
  Even though the law says you can import drugs, because of the lack of 
certification, they cannot come into the country. More and more people 
have been getting prescriptions filled in Canada, regardless of what 
the law says. Technically, that is illegal today.
  The Food and Drug Administration and our customs officials have been 
looking the other way. The Food and Drug Administration has said there 
are serious safety issues with drug importation from other countries. 
They say this because no public health authority is overseeing many of 
the prescriptions coming in from other countries. In fact, the Canadian 
Government has said it will not take responsibility for assuring the 
safety of drugs being shipped to the United States from Canada. They 
have basically told the U.S. consumer: You are on your own from the 
standpoint of safety--I suppose, as far as the Food and Drug 
Administration, efficacy as well as safety.
  Today, importation is no longer limited to organized bus trips across 
the border to pharmacies in Canada. Instead, it is becoming a booming 
mail-order pharmacy operation with customers all over the United 
States. We see press accounts on a regular basis describing Americans 
who log on to the Internet to purchase drugs from Canada and elsewhere.
  The Permanent Subcommittee on Investigations of the Senate Committee 
on Governmental Affairs conducted an investigation into drug 
importation. They found about 40,000 parcels containing prescription 
drugs come through JFK Airport every day. JFK Airport houses the 
largest international mail branch in the United States. From Miami, 
30,000 packages of drugs come into the United States; 20,000 packages 
come into Chicago each day of the year. About 28 percent of the drugs 
coming in are controlled substances. These are addictive drugs that 
require close supervision from physicians.
  From where are most of these drugs coming? I was surprised to hear it 
was not only Canada, but also Brazil, India, Pakistan, the Netherlands, 
Spain, Portugal, Mexico, and Romania.
  My bill immediately halts unsafe importation from rogue operators but 
permits individuals to obtain prescriptions from licensed Canadian 
pharmacies on an interim basis while the Food and Drug Administration 
gets a new drug importation system up and it runs well.
  The American public is tired of waiting for the Federal Government to 
take action to legalize importation and to assure the safety of 
imported drugs. Under my bill, the Food and Drug Administration is 
required to issue final regulations for the new drug importation system 
within 90 days of enactment. Under the new importation system, 
individuals and pharmacies could purchase qualified drugs for import 
into the United States from foreign exporters that register with the 
Food and Drug Administration. To be registered, the foreign exporters 
must demonstrate compliance with safety measures, must submit to the 
jurisdiction of U.S. courts, and take other steps to assure the safety 
of imported drugs.
  A user fee charged to registered exporters would provide the 
financing needed for the Food and Drug Administration to register and 
oversee foreign drug exporters and assure the state of imported drugs.
  The drugmakers do not want to see their lower priced products from 
other countries coming into the United States. That is certain because 
the present laws do not permit this competition to them. They would say 
it undermines their profits here. They will want to do everything they 
can to stop drug importation.
  Even though this bill might pass, these companies will find some way 
to keep these drugs out of the country. So I have to deal with that 
fact in this legislation.
  So under my bill, drugmakers that take steps to prevent importation 
of their products from these registered drug importers will lose their 
tax deduction for their advertising costs.
  Now, that is going to upset the trade associations that deal with 
advertising. That is going to upset TV and newspapers and magazines 
that get a lot of money from advertising. I have had a long history of 
supporting the deductibility of advertising expenses as a legitimate 
business expense. I have not changed my mind in regard to that, not at 
all. In fact, I have a history of voting against amendments that are 
offered on the floor of the Senate that would make advertising not 
deductible.
  But we are not talking about not allowing the deductibility of 
advertising costs. Only if a company tries to do something illegal and 
keep drugs from coming in from out of this country, then they will pay 
the penalty of not having their advertising costs deducted. But I 
assume, when we pass this bill, these drug companies are going to abide 
by this law. There will not be one cent of advertising that cannot be 
deducted as a legitimate expense, so I do not want the advertising 
fraternity to get upset with this legislation, when I have been a 
backer of the legitimate writeoff of advertising expenses.
  Now, this not only has the stick that I just described, but we have a 
carrot as well, to encourage companies to abide by this law and not try 
to keep imported drugs from coming into this country by some sort of 
requirement they would put on supplies outside the country not to ship 
drugs into this country; and that is, they will get a 20-percent 
benefit--a 20-percent benefit--by having an increase in their R&D tax 
credit.
  I am going to discuss that further, but going back to the advertising 
costs, I do sense, from my people in Iowa--at every town meeting some 
person complains about the advertising of drugs on TV. I defend the 
advertising of drugs on TV because that is commercial free speech. I 
think our citizenry ought to be as educated about drugs as they can be, 
so they are not beholden to their own doctor or doctors for what might 
be applied. I think we ought to have an educated patient group, so this 
advertising is very good. But I still have to say that my Iowa 
constituents are pretty fed up with all those drug ads they see on TV, 
and how they are probably adding to the cost of prescription drugs.
  I am fully in favor of this free speech, and I do not, in any way, 
want to prohibit companies from running the ads they want to run. But 
if drug companies are not going to allow U.S. consumers to have access 
to these lower

[[Page 6900]]

prices in other countries, then, under this legislation, they would 
lose the tax deduction for the cost of those advertisements.
  Now, on the other hand, I said there is a carrot out there. The 
drugmakers complain to us that these lower prices might take money from 
research and development. They would rightly say: Where are we going to 
get the money to have the next generation of ``magic'' drugs that we 
have? We want that to happen, because when I buy a drug today, my 
mother or grandmother, when they bought pills, paid for that research 
for the generation of drugs I take. I want my children and 
grandchildren to have a new generation of drugs for the future. So we 
do not want to hurt research and development.
  So my bill, then, creates an incentive for drug companies that do not 
fight this importation of drugs. Companies that do not prevent 
importation from registered exporters will get a 20-percent increase in 
their R&D tax credit. I hope everybody will think that is very fair.
  I have a more detailed summary of this bill that I am going to put in 
the Record. I ask unanimous consent that this summary and a question 
and answer document be printed in the Record following my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRASSLEY. I believe that free trade principles argue in favor of 
permitting the importation from Canada and perhaps from other developed 
countries as long as we can implement a system for safe importation.
  Today, there is no assurance of safety--no one is watching the 
store--and products are coming in from all over the world.
  My legislation has two objectives. First, it will put an immediate 
end to the unregulated and unsafe situations of drug imports that we 
have today by default. This is key because the situation today 
threatens the safety of our Nation's drug supply and puts patients who 
obtain these drugs at risk of harm.
  Second, the legislation will provide the Food and Drug Administration 
with the resources and authority to ensure the safety of imported 
drugs, and importation will only be permitted by registered exporters 
who submit to the Food and Drug Administration authority.
  Now, this bill will get referred to the Finance Committee because it 
has tax provisions in it, but the bulk of my bill falls under the 
jurisdiction of the HELP Committee, and my friend, Senator Gregg, as 
chairman of that committee, has announced he will hold a markup this 
year on a drug importation bill.
  I do not intend to assert jurisdiction over this proposal, and I 
believe we should rely upon that regular committee process to work. 
That is how we get legislation passed in the Senate. Because that is 
where bipartisanship is formulated, at the committee level.
  I hope my colleagues will look at this bill. I wanted to get these 
ideas out here for discussion. I hope some of my colleagues will want 
to cosponsor this bill. It is time we got this done, and this is the 
year to get it done, particularly following upon the vote that was in 
the House of Representatives last year.
  We must not let partisan politics get in the way, and I think it is 
getting a little bit in the way right now. I hope we overcome that. I 
hope I am able to develop a relationship with Democrats, once again, to 
work on this bill in a bipartisan way. If we do not do this, I think 
there is going to be a penalty paid at the ballot box in November.
  The American consumers are waiting. Let's get the job done.
  I ask unanimous consent that a summary be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

                               Exhibit 1

                        Overview of Key Elements

       Legalizes reimportation (or importation) of prescription 
     drugs from FDA approved exporters. To be approved, registered 
     exporters must agree to meet safety requirements and to 
     permit FDA inspectors on their premises full time to ensure 
     compliance.
       Creates a ``fast-track'' regulatory process for FDA to 
     implement the importation system quickly.
       Importation of qualified prescription drugs from Canada is 
     immediately legalized while the new importation system is 
     developed and implemented by FDA.
       Under the new system, individuals, pharmacies, and drug 
     wholesalers are permitted to legally import prescription 
     drugs from registered foreign exporters:
       Individuals may order drugs from a registered exporter 
     pursuant to a valid prescription issued by a U.S. doctor and 
     filled by a pharmacist whose licensing requirements are 
     equivalent to those required in the U.S. or by a dispensing 
     pharmacist duly licensed by a state.
       Commercial shipments are permitted only to licensed 
     pharmacists for resale directly to consumers and by drug 
     wholesalers who can sell to pharmacies as they do today.
       Drugs imported to U.S. pharmacies and drug wholesalers must 
     be FDA approved drugs produced in the United States or in FDA 
     inspected manufacturing facilities in other counties. FDA is 
     required to provide the proper labeling for drugs for 
     importation.
       The FDA through its inspectors is responsible for tracing 
     all drugs exported to the U.S. back to their original 
     manufacturing plant and ensuring that they have been stored 
     and transported safely from that plant.
       Individuals may also purchase drugs that are bioequivalent 
     to FDA-approved brand name drugs that are produced by the 
     same brand-name manufacturer.
       These drugs are drugs not technically approved by the FDA 
     but the foreign government has approved the drug and that 
     drug has the same active ingredient or ingredients as the 
     FDA-approved drug and the same route of administration, 
     dosage form, and strength.
       If a drug manufacturer believes, however, that the non-FDA 
     approved drug is not bioequivalent to the FDA approved drug, 
     then it must submit a petition to the FDA to show that (a) 
     the differences result in a product that is not bioequivalent 
     to the drug approved in the U.S., and (b) that such 
     differences are due to scientifically and legally valid 
     differences in the regulatory requirements of the U.S. and 
     the country(ies) in which the apparently similar drug is 
     marketed. The manufacturer is required to pay a user fee 
     sufficient to cover the cost of the FDA's review of the 
     petition and supporting documentation.
       A User Fee charged to registered exporters provides the 
     financing to provide the resources to FDA to ensure the 
     safety of imported drugs.
       User fees charged to registered exporters would be 
     sufficient to cover all costs including those incurred for 
     inspection and verification within the United States, at the 
     exporter's premises and any other location where the drugs 
     have been stored prior to entry into the U.S.
       The FDA would be required to verify the source and inspect 
     the intermediate handlers of all drugs intended for export 
     into the United States.
       FDA would also be required to determine by a statistically 
     significant sample that the recipients held valid 
     prescriptions (individuals ordering 90-day supply or less) or 
     verify that recipient was a licensed pharmacy that only 
     dispensed drugs to individuals.
       The FDA would also be required to supply valid U.S. 
     labeling upon request of the registered exporter and affix or 
     supervise the affixing of seals, markings or tracking 
     technology that would inform border personnel that such 
     imports were lawful to be entered as labeled.
       Drugs not permitted for importation include controlled 
     substances and certain other drugs not appropriate for 
     importation because of storage, significant safety concerns, 
     or drugs that are more likely to be counterfeited.
     Provisions to Protect Safety of the Public
       Unauthorized imports would be treated as contraband and 
     would be seized and destroyed upon entry without notice.
       For the first two years, importation would be limited to 
     Canada. The Department of Health and Human Services would 
     submit a report to Congress in the second year, and unless 
     Congress changed the law, countries from which importation is 
     permitted would be expanded to include, the European Union, 
     the European Free Trade Association, Japan, Australia, and 
     New Zealand. Other countries meeting statutory criteria could 
     also be added to the list by the Secretary.
       The legislation continues to prohibit the import or 
     reimport of drugs supplied free or at nominal cost to 
     charitable or humanitarian organizations including the United 
     Nations or a government of a foreign country.
       Requires pedigrees from the manufacturer to the dispensing 
     pharmacist for all prescription drugs sold within the U.S. or 
     to an exporter authorized to export drugs into the U.S.
       Requires the automatic suspension of an exporter's 
     registration for any attempted entry of non-qualified or 
     unsafe drugs with restricted ability to seek re-instatement 
     in the future.
       Requires that registered exporters submit to the 
     jurisdiction of the U.S. federal court

[[Page 6901]]

     system and provides a mechanism for civil actions against the 
     property of persons that import non-qualified drugs.
       Repeals the provision in the Controlled Substances Act that 
     permits the personal import of scheduled drugs, which is a 
     significant source of illegal drug trade in the U.S.
     Tax Incentives for Manufacturers to Facilitate Reimportation
       Incentive To Not Prevent Reimportation: Manufacturers that 
     do not take any action, directly or indirectly, to prevent 
     reimportation receive a 20% increase in R&D tax credit for 
     that year.
       Penalty For Preventing Reimportation: Manufacturers that 
     take any action, directly or indirectly, to prevent 
     authorized reimportation lose the business expense deduction 
     for advertising expenses.


                  Questions and Answers about the Bill

       Question. What are the goals of the legislation?
       Answer. The legislation has two objectives. First, it would 
     put an immediate end to the unregulated and unsafe situation 
     with drug imports that exists today. Second, the legislation 
     would provide the Food and Drug Administration (FDA) with the 
     resources and authority to ensure the safety of imported 
     drugs.
       Question. How does the bill work?
       Answer. Current law prohibits the importation of 
     prescription drugs until the Secretary of Health and Human 
     Services (HHS) certifies that importation can be done safely. 
     Using current resources and authority, the FDA has not been 
     able to provide an assurance of safety of imported drugs.
       The bill immediately halts unsafe importation but permits 
     individuals to obtain prescriptions from Canadian pharmacies 
     on an interim basis while FDA gets the new drug importation 
     system up and running.
       Under the bill, the FDA is required to issue final 
     regulations for the new system within 90 days of enactment. 
     Under the new importation system, individuals, pharmacies, 
     and drug wholesalers could purchase qualified drugs for 
     import into the U.S. from foreign exporters that register 
     with the FDA. To obtain a registration, a foreign exporter 
     must demonstrate compliance with safety measures, must submit 
     to jurisdiction of U.S. courts, and take others steps to 
     assure safety of imported drugs. A user fee charged to 
     registered exporters would provide the financing needed for 
     FDA to register and oversee foreign drug exporters and ensure 
     the safety of imported drugs.
       Question. How will patients get their prescriptions filled 
     at an overseas drug exporter?
       Answer. First of all, consumers that want to have their 
     prescriptions filled at an overseas prescription drug 
     exporter will be able to go to the FDA website and find a 
     list of companies that have passed FDA's requirements to 
     become a registered exporter. Just as for filling a 
     prescription in the U.S. today, the patient must have a valid 
     prescription written by a health care professional licensed 
     in a state to prescribe drugs. The patient will then compare 
     drug prices at the different registered exporters to find the 
     best price available. To get the prescription filled, the 
     patient will have to contact that exporter and either mail or 
     fax the prescription to them.
       Alternatively, the registered exporter could call the 
     patient's prescriber and get the prescription over the phone. 
     This is the same process as mail order pharmacies in the U.S. 
     use today.
       A pharmacist at the registered exporter would fill the 
     prescription according to the prescriber's instructions. The 
     registered exporter may only fill the prescription with 
     brand-name drugs, meaning these are the same drugs as those 
     approved by the FDA and manufactured by the same company as 
     approved by the FDA for sale in the U.S.
       Individuals can also have a prescription filled that is 
     technically not an FDA-approved drug, but the drug has the 
     same active ingredients, dosage form, strength, and route of 
     administration as the FDA-approved drug and is made by the 
     same manufacturer as the FDA-approved drug. These drugs are 
     manufactured by the same brand-name manufacturer and are made 
     for sale in the market of the approved country.
       The registered exporter is required to verify that the drug 
     can be traced back to the original manufacturer and the drug 
     must have been stored and handled properly. The FDA, through 
     its on-site inspectors, will also be verifying that the 
     prescription drugs being dispensed to patients meet FDA's 
     criteria.
       Once the prescription is filled, the registered exporter 
     will place a label or other markings on the package for 
     shipping that identify the shipment as being in compliance 
     with FDA's safety requirements and all registration 
     conditions. These markings will be designed by FDA and may 
     include track-and-trace technologies and anti-counterfeiting 
     measures. When the package enters the U.S., that marking will 
     signify to Customs officials that the product was dispensed 
     from a registered exporter and can therefore be permitted to 
     enter the country. Packages with drugs that lack this marking 
     will be seized by Customs and destroyed.
       Question. Can the importation of prescription drugs from 
     other countries be expanded?
       Answer. Yes. In the second year of the importation program, 
     HHS would be required to submit a report to Congress on the 
     safety of the program and its impact on trade. Unless 
     Congress acted, the program would be expanded in year three 
     to include importation from the European Union, the European 
     Free Trade Association, Japan, Australia and New Zealand. 
     Other countries that meet specific statutory criteria may 
     also be added to the list.
       Question. What is the complete list of countries that would 
     be permitted in the third year of the program?
       Answer. There are currently 15 members of the European 
     Union: Austria, Belgium, Denmark, Finland, France, Germany, 
     Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, 
     The Netherlands, and the United Kingdom. Beginning on May 1, 
     2004, there will be 10 new member states in the European 
     Union: Cyprus, Czech Republic, Estonia, Hungary, Latvia, 
     Lithuania, Malta, Poland, Slovakia, and Slovenia. There are 4 
     member countries in the European Free Trade Association: 
     Iceland, Liechtenstein, Norway, and Switzerland.
       Question. How much does this program cost?
       Answer. The infrastructure needed to guarantee the safety 
     of the imported prescriptions would be financed through user 
     fees. User fees would be paid by registered exporters, which 
     could be the overseas pharmacies or prescription drug 
     wholesalers, for example. Congressional Budget Office has not 
     yet officially scored the bill.
       Question. Now that the bill is introduced, what comes next?
       Answer. Because the bill contains tax provisions, it has 
     been referred to the Finance Committee. Senate leadership has 
     expressed an interest in developing legislation this year to 
     allow the importation of prescription drugs. Because the bulk 
     of the legislation falls within the jurisdiction of the 
     Health, Education, Labor & Pensions (HELP) Committee, it is 
     expected that HELP will take the lead in reporting any 
     legislation.
       Question. How is this bill different than other legislation 
     on importation?
       Answer. While the idea of importation of prescription drugs 
     from foreign countries enjoys broad bipartisan support, the 
     issue of safety continues to remain a major barrier to 
     allowing importation to move forward. Secretaries of HHS from 
     both the Clinton and Bush Administrations have determined 
     that safe importation of prescription drugs cannot be 
     guaranteed with the authority and resources the FDA has 
     today. Many bills presume that importation is safe and that 
     FDA and the public should not be overly alarmed. However, 
     there is a legitimate concern about unsafe pharmaceuticals 
     entering the U.S. every day. Hundreds of thousands of 
     packages enter our country on a daily basis, with little or 
     no ability for the U.S. Customs Service or the FDA to 
     guarantee these drugs are safe and effective. Rather than 
     ignore the safety issue, this bill responds to the concerns 
     raised by FDA and others and creates a way to ensure safe 
     access to lower cost prescriptions.
       Question. How does this bill lower the costs of 
     prescription drugs Americans have to pay?
       Answer. United States consumers pay 30 to 300 percent more 
     for their prescriptions drugs than those in other countries. 
     Drug manufacturers are forced to sell their products at lower 
     prices in other countries and try to re-coup their profits by 
     making Americans pay higher prices for the same products. 
     This bill recognizes that competition in the global 
     marketplace can work to lower prescription drug costs. If 
     lower cost pharmaceuticals are made available to Americans, 
     drug companies will be forced to re-think their pricing 
     strategy and won't be able to gouge consumers in the United 
     States.
       Question. What mechanisms does the bill propose to 
     guarantee safety?
       Answer. The bill would allow importation of qualified drugs 
     only from registered exporters, whose actions will be held 
     accountable in U.S. Federal courts.
       Registered exporters must have an FDA-approved compliance 
     plan that demonstrates they are meeting the safety 
     requirements established in the bill or by FDA. Exporters 
     must permit FDA inspectors to be present onsite on a 
     continuous day-to-day basis and FDA is required to have 
     assigned inspectors to that exporter. FDA will conduct day-
     to-day onsite monitoring of the exporter at the place of 
     business for the exporter including any warehouses owned or 
     operated by the exporter and FDA will have access to inspect 
     the exporters records to ensure compliance. Only where an 
     exporter has demonstrated a track record of compliance will 
     FDA be permitted to perform periodic inspections. The FDA 
     must verify the chain of custody for each qualifying drug 
     from the manufacturer of the drug to the exporter.
       Only licensed pharmacists at the registered exporter will 
     be allowed to dispense prescriptions with a valid U.S. 
     prescription from a U.S. physician. Commercial shipments can 
     only be received and resold by licensed pharmacists. 
     Unauthorized imports would be treated as contraband and would 
     be seized and destroyed upon entry without notice. Under the 
     bill, an exporter's registration would automatically be 
     suspended for

[[Page 6902]]

     any attempted entry of non-qualified or unsafe drugs and 
     these exporters can be barred from seeking re-instatement in 
     the future. The bill would allow for importation first from 
     Canada in order to test the safety of the system and 
     determine whether additional controls are needed before 
     expansion to additional counties.
       Question. How does the bill prevent drug manufacturers from 
     gaming the system?
       Answer. Drug manufacturers that take any action, directly 
     or indirectly, to prevent authorized importation will see a 
     loss of their tax deduction for advertising expenses. Drug 
     manufacturers that do NOT take action, directly or 
     indirectly, to prevent importation will see a 20 percent 
     increase in their research and development tax credit for 
     that year.
                                 ______
                                 
      By Mr. CORZINE (for himself, Mr. Reed, Mr. Bingaman, Mr. 
        Lautenberg, and Ms. Cantwell):
  S. 2308. A bill to provide for prompt payment and interest on late 
payments of health care claims; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation to 
ensure that managed care plans and other private health insurers pay 
health care claims in a timely fashion. I thank my colleagues Senators 
Lautenberg, Reed, Bingaman and Cantwell for joining me in introducing 
this bill.
  This legislation seeks to address the very serious backlog of HMO 
payments that hospitals and physicians are facing in my State of New 
Jersey and across the country. Specifically, the legislation requires 
private health plans to pay manually filed claims within 30 days and 
electronically filed claims within 14 days. Insurers that fail to meet 
these time frames would be required to pay interest for every day the 
claims went unpaid. Insurers that knowingly violate these prompt 
payment requirements would be subject to monetary penalties.
  A Federal prompt pay law is critical to ensuring that our health care 
providers maintain adequate cash flows and are able to continue 
functioning. The need for such a law cannot be understated. In my State 
of New Jersey, almost half of all hospitals are operating in the red, 
and that number is growing. Physicians and hospitals are experiencing a 
severe medical malpractice crisis, which is further limiting their 
resources. Untimely payment of claims has only compounded this problem.
  According to a survey of 50 New Jersey hospitals, only 39 percent of 
manually-filed clean claims are paid within 40 days. These institutions 
cannot afford to wait indefinitely for reimbursement for services they 
have provided. Each year, hundreds of millions of dollars in HMO 
payments to hospitals are held up for months at a time, worsening 
provider fiscal woes.
  The problem of late payments has reached such a crisis that 47 
States, including New Jersey, have enacted ``prompt pay'' laws to 
require insurers to pay their bills within a specific time frame. 
Unfortunately, New Jersey's law, like most similar State laws, is 
largely ineffective because it lacks strong enforcement provisions and 
offers no incentives for private insurers to comply. Furthermore, State 
prompt-pay laws only apply to non-ERISA regulated plans, which only 
cover approximately 50 percent of New Jersey insureds.
  Shouldn't we hold private insurers to the same standards that regular 
citizens must adhere to? If you don't pay your health insurance premium 
when it's due, the company will simply cancel your policy. If you're 
late making your credit care payments, your credit care company charges 
you interest. Why shouldn't private health insurers also be penalized 
for making late payments?
  In my view, it only makes sense to hold insurance companies to the 
same type of standards to which we hold Medicare. Medicare must pay 
claims within thirty days of receiving them. Why should private 
insurers be immune from any such time limits?
  The bottom line is that patients, hospitals and other health care 
providers should not have to shoulder the burden of unpaid claims. My 
legislation will ensure that private insurers assume the financial 
responsibilities for the health coverage they are being paid to 
provide.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2308

       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 ``Prompt Payment of Health 
     Benefits Claims Act of 2004''.

     SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY 
                   ACT OF 1974.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 714. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

       ``(a) Timeframe for Payment of Complete Claim.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, shall pay all complete claims and uncontested claims--
       ``(1) in the case of a claim that is submitted 
     electronically, within 14 days of the date on which the claim 
     is submitted; or
       ``(2) in the case of a claim that is not submitted 
     electronically, within 30 days of the date on which the claim 
     is submitted.
       ``(b) Procedures Involving Submitted Claims.--
       ``(1) In general.--Not later than 10 days after the date on 
     which a complete claim is submitted, a group health plan, and 
     a health insurance issuer offering group health insurance 
     coverage in connection with a group health plan, shall 
     provide the claimant with a notice that acknowledges receipt 
     of the claim by the plan or issuer. Such notice shall be 
     considered to have been provided on the date on which the 
     notice is mailed or electronically transferred.
       ``(2) Claim deemed to be complete.--A claim is deemed to be 
     a complete claim under this section if the group health plan 
     or health insurance issuer involved does not provide notice 
     to the claimant of any deficiency in the claim within 10 days 
     of the date on which the claim is submitted.
       ``(3) Incomplete claims.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer determines that a claim for health care 
     expenses is incomplete, the plan or issuer shall, not later 
     than the end of the period described in paragraph (2), notify 
     the claimant of such determination. Such notification shall 
     specify all deficiencies in the claim and shall list all 
     additional information or documents necessary for the proper 
     processing and payment of the claim.
       ``(B) Determination after submission of additional 
     information.--A claim is deemed to be a complete claim under 
     this paragraph if the group health plan or health insurance 
     issuer involved does not provide notice to the claimant of 
     any deficiency in the claim within 10 days of the date on 
     which additional information is received pursuant to 
     subparagraph (A).
       ``(C) Payment of uncontested portion of a claim.--A group 
     health plan or health insurance issuer shall pay any 
     uncontested portion of a claim in accordance with subsection 
     (a).
       ``(3) Obligation to pay.--A claim for health care expenses 
     that is not paid or contested by a group health plan or 
     health insurance issuer within the timeframes set forth in 
     this subsection shall be deemed to be a complete claim and 
     paid by the plan or issuer in accordance with subsection (a).
       ``(c) Date of payment of Claim.--Payment of a complete 
     claim under this section is considered to have been made on 
     the date on which full payment is received by the health care 
     provider.
       ``(d) Interest Schedule.--
       ``(1) In general.--With respect to a complete claim, a 
     group health plan or health insurance issuer that fails to 
     comply with subsection (a) shall pay the claimant interest on 
     the amount of such claim, from the date on which such payment 
     was due as provided in this section, at the following rates:
       ``(A) 1\1/2\ percent per month from the 1st day of 
     nonpayment after payment is due through the 15th day of such 
     nonpayment;
       ``(B) 2 percent per month from the 16th day of such 
     nonpayment through the 45th day of such nonpayment; and
       ``(C) 2\1/2\ percent per month after the 46th day of such 
     nonpayment.
       ``(2) Contested claims.--With respect to claims for health 
     care expenses that are contested by the plan or issuer, once 
     such claim is deemed complete under subsection (b), the 
     interest rate applicable for noncompliance under this 
     subsection shall apply consistent with paragraphs (1) and 
     (2).
       ``(e) Private Right of Action.--Nothing in this section 
     shall be construed to prohibit or limit a claim or action not 
     covered by the subject matter of this section that any 
     claimant has against a group health plan, or a health 
     insurance issuer.
       ``(f) Anti-Retaliation.--Consistent with applicable Federal 
     or State law, a group

[[Page 6903]]

     health plan or health insurance issuer shall not retaliate 
     against a claimant for exercising a right of action under 
     this section.
       ``(g) Fines and Penalties.--
       ``(1) Fines.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer offering group health insurance coverage, 
     willfully and knowingly violates this section or has a 
     pattern of repeated violations of this section, the Secretary 
     shall impose a fine not to exceed $1,000 per claim for each 
     day a response is delinquent beyond the date on which such 
     response is required under this section.
       ``(B) Repeated violations.--If 3 separate fines under 
     subparagraph (A) are levied within a 5-year period, the 
     Secretary is authorized to impose a penalty in an amount not 
     to exceed $10,000 per claim.
       ``(2) Remedial Action Plan.--Where it is established that 
     the group health plan or health insurance issuer willfully 
     and knowingly violated this section or has a pattern of 
     repeated violations, the Secretary shall require the group 
     health plan or health insurance issuer to--
       ``(A) submit a remedial action plan to the Secretary; and
       ``(B) contact claimants regarding the delays in the 
     processing of claims and inform claimants of steps being 
     taken to improve such delays.
       ``(h) Definitions.--In this section:
       ``(1) Claimant.--The term `claimant' means a participant, 
     beneficiary or health care provider submitting a claim for 
     payment of health care expenses.
       ``(2) Complete claim.--The term `complete claim' is a claim 
     for payment of covered health care expenses that--
       ``(A) in the case of a claim involving a health care 
     provider that is an institution or other facility or agency 
     that provides health care services, is a properly completed 
     billing instrument that consists of--
       ``(i) the Health Care Financing Administration 1450 (UB-92) 
     paper form, or its successor, as adopted by the NUBC, with 
     data element usage consistent with the usage prescribed in 
     the UB-92 National Uniform Billing Data Elements 
     Specification Manual, and, for claims submitted before 
     October 1, 2002, any State-designated data requirements that 
     are determined and approved by the State uniform billing 
     committee of the State in which the health care service or 
     supply is furnished; or
       ``(ii) the electronic format for institutional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2); 
     and
       ``(B) in the case of claim involving a health care provider 
     that is a physician or other individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services, is a properly completed billing 
     instrument that--
       ``(i) the Health Care Financing Administration 1500 paper 
     form, or its successor, as adopted by the NUCC and further 
     defined by data element specifications contained in the NUCC 
     implementation guide or, if such specifications are not 
     issued by the NUCC, the data element specifications contained 
     in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4) 
     sections 2010.1 through 2010.4; or
       ``(ii) the electronic format for professional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
       ``(3) Contested claim.--The term `contested claim' means a 
     claim for health care expenses that is denied by a group 
     health plan or health insurance issuer during or after the 
     benefit determination process.
       ``(4) Health care provider.--The term `health care 
     provider' includes a physician or other individual who is 
     licensed, accredited, or certified under State law to provide 
     specified health care services and who is operating with the 
     scope of such licensure, accreditation, or certification, as 
     well as an institution or other facility or agency that 
     provides health care services and is licensed, accredited, or 
     certified to provide health care items and services under 
     applicable State law.
       ``(5) Incomplete claim.--The term `incomplete claim' means 
     a claim for health care expenses that cannot be adjudicated 
     because it fails to include all of the required data elements 
     necessary for adjudication.
       ``(6) NUBC.--The term `NUBC' means the National Uniform 
     Billing Committee.
       ``(7) NUCC.--The term `NUCC' means the National Uniform 
     Claim Committee.''.

     SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

       (a) Group Market.--Subpart 2 of part A of title XXVII of 
     the Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 2707. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

       ``(a) Timeframe for Payment of Complete Claim.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, shall pay all complete claims and uncontested claims--
       ``(1) in the case of a claim that is submitted 
     electronically, within 14 days of the date on which the claim 
     is submitted; or
       ``(2) in the case of a claim that is not submitted 
     electronically, within 30 days of the date on which the claim 
     is submitted.
       ``(b) Procedures Involving Submitted Claims.--
       ``(1) In general.--Not later than 10 days after the date on 
     which a complete claim is submitted, a group health plan, and 
     a health insurance issuer offering group health insurance 
     coverage in connection with a group health plan, shall 
     provide the claimant with a notice that acknowledges receipt 
     of the claim by the plan or issuer. Such notice shall be 
     considered to have been provided on the date on which the 
     notice is mailed or electronically transferred.
       ``(2) Claim deemed to be complete.--A claim is deemed to be 
     a complete claim under this section if the group health plan 
     or health insurance issuer involved does not provide notice 
     to the claimant of any deficiency in the claim within 10 days 
     of the date on which the claim is submitted.
       ``(3) Incomplete claims.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer determines that a claim for health care 
     expenses is incomplete, the plan or issuer shall, not later 
     than the end of the period described in paragraph (2), notify 
     the claimant of such determination. Such notification shall 
     specify all deficiencies in the claim and shall list all 
     additional information or documents necessary for the proper 
     processing and payment of the claim.
       ``(B) Determination after submission of additional 
     information.--A claim is deemed to be a complete claim under 
     this paragraph if the group health plan or health insurance 
     issuer involved does not provide notice to the claimant of 
     any deficiency in the claim within 10 days of the date on 
     which the additional information is received pursuant to 
     subparagraph (A).
       ``(C) Payment of uncontested portion of a claim.--A group 
     health plan or health insurance issuer shall pay any 
     uncontested portion of a claim in accordance with subsection 
     (a).
       ``(3) Obligation to pay.--A claim for health care expenses 
     that is not paid or contested by a group health plan or 
     health insurance issuer within the timeframes set forth in 
     this subsection shall be deemed to be a complete claim and 
     paid by the plan or issuer in accordance with subsection (a).
       ``(c) Date of payment of Claim.--Payment of a complete 
     claim under this section is considered to have been made on 
     the date on which full payment is received by the health care 
     provider.
       ``(d) Interest Schedule.--
       ``(1) In general.--With respect to a complete claim, a 
     group health plan or health insurance issuer that fails to 
     comply with subsection (a) shall pay the claimant interest on 
     the amount of such claim, from the date on which such payment 
     was due as provided in this section, at the following rates:
       ``(A) 1\1/2\ percent per month from the 1st day of 
     nonpayment after payment is due through the 15th day of such 
     nonpayment;
       ``(B) 2 percent per month from the 16th day of such 
     nonpayment through the 45th day of such nonpayment; and
       ``(C) 2\1/2\ percent per month after the 46th day of such 
     nonpayment.
       ``(2) Contested claims.--With respect to claims for health 
     care expenses that are contested by the plan or issuer, once 
     such claim is deemed complete under subsection (b), the 
     interest rate applicable for noncompliance under this 
     subsection shall apply consistent with paragraphs (1) and 
     (2).
       ``(e) Private Right of Action.--Nothing in this section 
     shall be construed to prohibit or limit a claim or action not 
     covered by the subject matter of this section that any 
     claimant has against a group health plan, or a health 
     insurance issuer.
       ``(f) Anti-Retaliation.--Consistent with applicable Federal 
     or State law, a group health plan or health insurance issuer 
     shall not retaliate against a claimant for exercising a right 
     of action under this section.
       ``(g) Fines and Penalties.--
       ``(1) Fines.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer offering group health insurance coverage 
     willfully and knowingly violates this section or has a 
     pattern of repeated violations of this section, the Secretary 
     shall impose a fine not to exceed $1,000 per claim for each 
     day a response is delinquent beyond the date on which such 
     response is required under this section.
       ``(B) Repeated violations.--If 3 separate fines under 
     subparagraph (A) are levied within a 5-year period, the 
     Secretary is authorized to impose a penalty in an amount not 
     to exceed $10,000 per claim.
       ``(2) Remedial Action Plan.--Where it is established that 
     the group health plan or health insurance issuer willfully 
     and knowingly violated this section or has a pattern of 
     repeated violations, the Secretary shall require the health 
     plan or health insurance issuer to--
       ``(A) submit a remedial action plan to the Secretary; and
       ``(B) contact claimants regarding the delays in the 
     processing of claims and inform claimants of steps being 
     taken to improve such delays.
       ``(h) Definitions.--In this section:

[[Page 6904]]

       ``(1) Claimant.--The term `claimant' means an enrollee or 
     health care provider submitting a claim for payment of health 
     care expenses.
       ``(2) Complete claim.--The term `complete claim' is a claim 
     for payment of covered health care expenses that--
       ``(A) in the case of a claim involving a health care 
     provider that is an institution or other facility or agency 
     that provides health care services, is a properly completed 
     billing instrument that consists of--
       ``(i) the Health Care Financing Administration 1450 (UB-92) 
     paper form, or its successor, as adopted by the NUBC, with 
     data element usage consistent with the usage prescribed in 
     the UB-92 National Uniform Billing Data Elements 
     Specification Manual, and, for claims submitted before 
     October 1, 2002, any State-designated data requirements that 
     are determined and approved by the State uniform billing 
     committee of the State in which the health care service or 
     supply is furnished; or
       ``(ii) the electronic format for institutional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2); 
     and
       ``(B) in the case of claim involving a health care provider 
     that is a physician or other individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services, is a properly completed billing 
     instrument that--
       ``(i) the Health Care Financing Administration 1500 paper 
     form, or its successor, as adopted by the NUCC and further 
     defined by data element specifications contained in the NUCC 
     implementation guide or, if such specifications are not 
     issued by the NUCC, the data element specifications contained 
     in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4) 
     sections 2010.1 through 2010.4; or
       ``(ii) the electronic format for professional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
       ``(3) Contested claim.--The term `contested claim' means a 
     claim for health care expenses that is denied by a group 
     health plan or health insurance issuer during or after the 
     benefit determination process.
       ``(4) Health care provider.--The term `health care 
     provider' includes a physician or other individual who is 
     licensed, accredited, or certified under State law to provide 
     specified health care services and who is operating with the 
     scope of such licensure, accreditation, or certification, as 
     well as an institution or other facility or agency that 
     provides health care services and is licensed, accredited, or 
     certified to provide health care items and services under 
     applicable State law.
       ``(5) Incomplete claim.--The term `incomplete claim' means 
     a claim for health care expenses that cannot be adjudicated 
     because it fails to include all of the required data elements 
     necessary for adjudication.
       ``(6) NUBC.--The term `NUBC' means the National Uniform 
     Billing Committee.
       ``(7) NUCC.--The term `NUCC' means the National Uniform 
     Claim Committee.''.
       (b) Individual Market.--Part B of title XXVII of the Public 
     Health Service Act (42 U.S.C. 300gg-41 et seq.) is amended--
       (1) by redesignating the first subpart 3 (relating to other 
     requirements) as subpart 2; and
       (2) by adding at the end of subpart 2 the following:

     ``SEC. 2753. STANDARDS RELATING TO PROMPT PAYMENT OF HEALTH 
                   BENEFITS CLAIMS.

       ``The provisions of section 2707 shall apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual market in the same manner as they apply to 
     health insurance coverage offered by a health insurance 
     issuer in connection with a group health plan in the small or 
     large group market.''.

     SEC. 4. AMENDMENTS TO THE SOCIAL SECURITY ACT.

       (a) Medicare.--
       (1) Medicare advantage plans.--Section 1857(f) of the 
     Social Security Act (42 U.S.C. 1395w-27(f)) is amended--
       (A) in paragraph (1), by striking ``consistent with the 
     provisions of sections 1816(c)(2) and 1842(c)(2)'' and 
     inserting ``consistent with the provisions of section 2707 of 
     the Public Health Service Act''; and
       (B) in paragraph (2)--
       (i) in the second sentence, by inserting ``and to reflect 
     the amount of any fines or penalties imposed pursuant to the 
     provisions of section 2707(g) of the Public Health Service 
     Act'' before the period at the end; and
       (ii) by inserting before the second sentence the following 
     new sentence: ``Payment of such amounts shall include any 
     interest due pursuant to the provisions of section 2707(d) of 
     the Public Health Service Act.''.
       (2) Prescription drug plans.--Section 1860D-12(b)(3) of the 
     Social Security Act (42 U.S.C.1395w-112(b)(3)) is amended--
       (A) by redesignating subparagraphs (E) and (F) as 
     subparagraphs (F) and (G), respectively; and
       (B) by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Prompt payment by medicare advantage organization.--
     Section 1857(f).''.
       (b) Medicaid.--Section 1932(f) of the Social Security Act 
     (42 U.S.C. 1396u-2(f)) is amended by striking ``the claims 
     payment procedures described in section 1902(a)(37)(A), 
     unless the health care provider and the organization agree to 
     an alternate payment schedule'' and inserting ``section 2707 
     of the Public Health Service Act''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2004.

     SEC. 5. PREEMPTION.

       The provisions of this Act shall not supersede any contrary 
     provision of State law if the provision of State law imposes 
     requirements, standards, or implementation specifications 
     that are equal to or more stringent than the requirements, 
     standards, or implementation specifications imposed under 
     this Act, and any such requirements, standards, or 
     implementation specifications under State law that are equal 
     to or more stringent than the requirements, standards, or 
     implementation specifications under this Act shall apply to 
     group health plans and health insurance issuers as provided 
     for under State law.

     SEC. 7. EFFECTIVE DATE.

       (a) In General.--Except as provided in this section, the 
     amendments made by this Act shall apply with respect to group 
     health plans and health insurance issuers for plan years 
     beginning after December 31, 2004.
       (b) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     this Act shall not apply to plan years beginning before the 
     later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2005.
     For purposes of paragraph (1), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement of the amendments made by this section shall not 
     be treated as a termination of such collective bargaining 
     agreement.

     SEC. 7. SEVERABILITY.

       If any provision of this Act, or an amendment made by this 
     Act, is held by a court to be invalid, such invalidity shall 
     not affect the remaining provisions of this Act, or 
     amendments made by this Act.
                                 ______
                                 
      By Mr. DORGAN:
  S. 2309. A bill to amend the Internal Revenue Code of 1986 to provide 
for a refundable wage differential credit for activated military 
reservists; to the Committee on Finance.
  Mr. DORGAN. Mr. President, I rise today to introduce legislation to 
provide a financial safety net for the families of our young men and 
women who proudly serve in the Nation's military Reserve and National 
Guard.
  Our country is demanding that our military reservists and members of 
the National Guard play a more crucial and sustained role in 
supplementing the activities of our traditional armed forces than at 
any other time in our recent history. In response to the Iraq War and 
homeland security needs, the country has called up hundreds of 
thousands of our Reserve and National Guard members for extended tours 
of duty of up to 18 months.
  Today, roughly 175,000 members of the reserve components are on 
active duty. About 40 percent of the troops now going into Iraq are 
reservists. Reserve component leaders expect the total number of 
guardsmen and reservists on active duty for the war on terrorism to 
remain above 100,000 for the next two years.
  Since September 11, 2001, more than 60 percent of North Dakota's 
guardsmen and reservists have been called to duty. One of the issues I 
hear most often about from those service members and their families is 
how hard it is for them to make ends meet on their military incomes.
  When Guard members or reservists are mobilized, it has an enormous 
impact not only on their lives, but also on the lives of their loved 
ones. In many cases when an individual is mobilized, his or her family 
may experience a significant loss of income. This is because active 
duty military compensation often falls below what reservists earn in 
civilian income. These income losses are often exacerbated by the 
additional family expenses that are associated with military 
activation, such as the cost of long distance phone calls and the need 
for extra day care.

[[Page 6905]]

  Clearly this is a major financial problem for many reservists and 
their families. The Pentagon's Reserve Forces Policy Board says that a 
significant number of mobilized Reserve component members earn less 
than their private sector and civilian salaries while on active duty. 
The most recent information provided on mobilization income loss comes 
from a Pentagon survey in the year 2000. Some 41 percent of guardsmen 
and reservists who were mobilized that year reported income losses 
ranging from $350 per month to more than $3,000 per month. Self-
employed reservists reported an average income loss of $1,800 per 
month. Physicians and registered nurses in private practice reported an 
average income loss of as much as $7,000 per month.
  Those were big losses. But when that survey was conducted in 2000, 
reservists were mobilized for an average of only 3.6 months. Today 
mobilizations of 14 to 18 months are common. So the annual losses in 
wages are much, much bigger.
  The loss of income that reservists and guardsmen incur when they are 
ordered to leave their good-paying private sector or civilian jobs to 
serve their country often creates an unmanageable financial burden. 
This further disrupts the lives of their families who are already 
trying to cope with the emotional stress and hardship caused by the 
departure of a beloved spouse, or parent who has been ordered to active 
duty.
  In the mid-1990s the Pentagon tried to address this problem by 
offering members of the National Guard and Reserve the opportunity to 
buy insurance to protect against income loss upon mobilization. The 
program sold coverage for income losses of up to $5,000 per month. 
Unfortunately, the program was poorly planned and executed, and 
Congress had to appropriate substantial money to bail out the program 
before it was terminated. Since then the private sector has shown 
little interest in reviving the mobilization income insurance program.
  We need to find another way to deal with the issue. I believe that 
the federal government should try to help alleviate the financial havoc 
created for activated reservists, guardsmen, and their families. The 
bill I am introducing today will help in this endeavor.
  Specifically, my legislation provides a fully refundable, 100-percent 
income tax credit of up to $20,000 annually to a military reservist on 
active duty based upon the difference in wages paid in his or her 
private sector or civilian job and the military wages paid upon 
mobilization. For this purpose, a qualified military reservist is a 
member of the National Guard or Ready Reserve who is mobilized and 
serving for more than 90 days. The benefit of this activated military 
reservist tax credit is available for tax years beginning after 
December 31, 2003.
  We owe a great deal to those Americans who put on their uniforms and 
serve in the military in the most difficult of circumstances. We can 
never fully repay that debt. However, we can do much more to remove the 
immediate financial burden that many National Guard and Reserve 
families experience when a family member is ordered to active duty. 
This legislation will provide those families with some much-needed 
financial assistance. I urge my colleagues in the Senate to support my 
efforts to get this tax relief measure enacted into law as soon as 
possible.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mr. Nelson of Florida, and Mr. 
        Reed):
  S. 2310. A bill to promote the national security of the United States 
by facilitating the removal of potential nuclear weapons materials from 
vulnerable sites around the world, and for other purposes; to the 
Committee on Armed Services.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce legislation 
to address one of the critical security issues in the post 9/11 world: 
the existence of hundreds of vulnerable facilities around the world 
with nuclear materials. If keeping weapons of mass destruction, WMD, 
out of the hands of terrorists is at the top of our foreign policy 
agenda, then removing weapons-usable material from facilities where it 
is susceptible to terrorist theft or should diversion be a top priority 
for U.S. national security policy.
  Yet, currently, there is no single, integrated U.S. government 
program, with a defined budget and resources, to facilitate the removal 
of these materials. The legislation I introduce today with Senators 
Bill Nelson, and Reed will: establish a presidential task force in the 
Department of Energy on nuclear removal; provide a specific mandate for 
a program to remove nuclear materials from vulnerable sites around the 
world as quickly as possible; provide specific direction to allow the 
use of flexible incentives, tailored to each site, to secure host-
country cooperation in removing the nuclear materials, and; authorize 
$40 million in Fiscal Year 2005 to carry out the functions of this 
bill.
  There are hundreds of facilities around the world that store from 
kilograms to tons of plutonium or highly enriched uranium, HEU. The 
State Department has identified 24 of these locations as high priority 
sites.
  President Bush singled out terrorist nuclear attacks on the United 
States as the defining threat our nation will face in the future. In 
making the case against Saddam Hussein, he argued: ``If the Iraqi 
regime is able to produce, buy, or steal an amount of uranium a little 
bigger than a softball, it could have a nuclear weapon in less than a 
year.''
  What he did not mention is that with the same amount of uranium, al 
Qaeda, Hezbollah, Hamas, or any terrorist organization could do the 
same and smuggle the weapon across U.S. borders. And the fact that AQ 
Khan's network put actual bomb designs on the black market only 
heightens the need to make sure the ingredients are not available.
  In response to this threat, the Administration has focused its 
efforts on removing vulnerable international nuclear materials through 
four projects: the take-back to Russia of HEU fuels from Soviet-
supplied reactors; the on-going effort to convert Soviet-designed 
research reactors from HEU to non-bomb-grade fuels; the decades-long 
effort to convert U.S.-supplied research reactors from HEU to LEU, and; 
the on-going effort to take back U.S.-supplied HEU.
  This represents an important first step, but I am deeply concerned 
that these efforts are not sufficient and do not adequately address the 
seriousness of the issue.
  The current approach will take 10-20 years to complete at the current 
rate of about 1 facility per year. This is a time frame out of synch 
with near-term dangers.
  Under the current approach to the take-back of Soviet-supplied HEU, 
there have been only two successful HEU removals in more than two 
years, at Vinca and at Pitesti. But the Vinca operation also required 
the contribution of $5 million from the Nuclear Threat Initiative to 
complete, because of the administration's claim of inadequate authority 
to pursue various activities to facilitate Serbian cooperation.
  The U.S.-Russian bilateral agreement on a broader take-back effort 
has taken years to complete--and even once final Russian government 
approval is secured, there are a wide range of other issues delaying 
progress within Russia, including the need to prepare environmental 
assessments of types that have never before been done in Russia, that 
will require sustained, high-level pressure to overcome.
  U.S. efforts to convert HEU-fueled reactors within Russia are still 
moving slowly on the technical front, in part because of insufficient 
funding, and we are only now beginning to take the first steps toward 
providing incentives directly to facilities to give up their HEU.
  The scope of the HEU conversion effort in Russia is inadequate. It 
covers only research reactors. Outside the scope of current efforts are 
critical assemblies, pulsed powered reactors, and civilian and military 
naval fuels. This leaves numerous vulnerable HEU stockpiles scattered 
across the FSU.

[[Page 6906]]

  Under the current U.S. HEU take-back effort, the return of U.S.-
origin HEU fuels, if no new incentives are offered, tons of U.S.-
supplied HEU will remain abroad when the program is complete, this is 
DOE's official projection.
  Under the current U.S. HEU reactor conversion effort, if no new 
incentives are offered, scores of U.S.-supplied reactors may continue 
to use HEU indefinitely.
  A report released last year from the John F. Kennedy School of 
Government at Harvard University described a scenario in which a 10 
kiloton nuclear bomb is smuggled into Manhattan and detonated resulting 
in the loss of 500,000 people and causing $1 trillion in direct 
economic damage.
  We must do everything in our power to prevent such an event from ever 
occurring.
  We need a presidential task force in the Department of Energy on 
nuclear removal. We must provide a specific mandate for a program to 
remove nuclear materials from vulnerable sites around the world as 
quickly as possible and provide specific direction to allow the use of 
flexible incentives, tailored to each site, to secure host-country 
cooperation in removing the nuclear materials.
  And, yes, we need additional funding to get the job done.
  This legislation will give our government the direction, tools, and 
resources necessary to remove nuclear materials from vulnerable sites 
around the world in an expeditious manner. We have little time to 
spare. I urge my colleagues to support this bill.
  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. 2310

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

     SECTION 1. REMOVAL OF POTENTIAL NUCLEAR WEAPONS MATERIALS 
                   FROM VULNERABLE SITES WORLDWIDE.

       (a) Sense of Congress.--It is the sense of Congress that 
     removing potential nuclear weapons materials from vulnerable 
     sites around the world would reduce the possibility that such 
     materials could fall into the hands of al Qaeda or other 
     groups and states hostile to the United States, and should be 
     a top priority for achieving the national security of the 
     United States.
       (b) Task Force on Nuclear Material Removal.--(1) The 
     President shall establish in the Department of Energy a task 
     force to be known as the Task Force on Nuclear Material 
     Removal (in this section referred to as the ``Task Force'').
       (2) The head of the Task Force shall be the Director of the 
     Task Force on Nuclear Material Removal, who shall be 
     appointed by the President for that purpose.
       (3) The Director of the Task Force shall report directly to 
     the Deputy Administrator for Defense Nuclear Nonproliferation 
     of the National Nuclear Security Administration regarding the 
     activities of the Task Force under this section.
       (4)(A) The Secretary of Energy, the Administrator for 
     Nuclear Security, and the Deputy Administrator for Defense 
     Nuclear Nonproliferation shall assign to the Task Force 
     personnel having such experience and expertise as is 
     necessary to permit the Task Force to carry out its mission 
     under this section.
       (B) The Secretary of Energy and the Administrator for 
     Nuclear Security shall jointly consult with the Assistant to 
     the President for National Security Affairs, the Secretary of 
     State, the Secretary of Defense, the Chairman of the Nuclear 
     Regulatory Commission, the heads of other appropriate 
     departments and agencies of the Federal Government, and 
     appropriate international organizations in order to identify 
     and establish mechanisms and procedures to ensure that the 
     Task Force is able to draw quickly on the capabilities of the 
     departments and agencies of the Federal Government and such 
     international organizations to carry out its mission under 
     this section.
       (C) Mechanisms under subparagraph (B) may include the 
     assignment to the Task Force of personnel of the Department 
     of Energy and of other departments and agencies of the 
     Federal Government.
       (5) The President may establish within the Executive Office 
     of the President a mechanism for coordinating the activities 
     of the Task Force under this section.
       (c) Mission.--The mission of the Task Force shall be to 
     ensure that potential nuclear weapons materials are entirely 
     removed from the most vulnerable sites around the world as 
     soon as practicable after the date of the enactment of this 
     Act.
       (d) Assistance.--To assist the Task Force in carrying out 
     its mission under this section, the Secretary of Energy may--
       (1) provide funds to remove potential nuclear weapons 
     materials from vulnerable sites, including funds to cover the 
     costs of--
       (A) transporting such materials from such sites to secure 
     facilities;
       (B) providing interim security upgrades for such materials 
     pending their removal from their current sites;
       (C) managing such materials after their arrival at secure 
     facilities;
       (D) purchasing such materials;
       (E) converting such sites to the use of low-enriched 
     uranium fuels;
       (F) assisting in the closure and decommissioning of such 
     sites; and
       (G) providing incentives to facilitate the removal of such 
     materials from vulnerable facilities;
       (2) arrange for the shipment of potential nuclear weapons 
     materials to the United States, or to other countries willing 
     to accept such materials and able to provide high levels of 
     security for such materials, and dispose of such materials, 
     in order to ensure that United States national security 
     objectives are accomplished as quickly and effectively as 
     possible; and
       (3) provide funds to upgrade security and accounting at 
     sites where, as determined by the Secretary, potential 
     nuclear weapons materials will remain for an extended period 
     in order to ensure that such materials are secure against 
     plausible potential threats, and will remain so in the 
     future.
       (e) Report.--(1) Not later than 30 days after the submittal 
     to Congress of the budget of the President for fiscal year 
     2006 pursuant to section 1105(a) of title 31, United States 
     Code, the Secretary of Energy, in coordination with other 
     relevant Federal Government and international agencies, shall 
     submit to Congress a report that includes the following:
       (A) A list of the sites determined by the Task Force to be 
     of the highest priorities for removal of potential nuclear 
     weapons materials, based on the quantity and attractiveness 
     of such materials at such sites and the risk of theft or 
     diversion of such materials for weapons purposes.
       (B) An inventory of all sites worldwide where highly-
     enriched uranium or separated plutonium is located, 
     including, to the extent practicable, a prioritized 
     assessment of the terrorism and proliferation risk posed by 
     such materials at each such site, based on the quantity of 
     such materials, the attractiveness of such materials for use 
     in nuclear weapons, the current level of security and 
     accounting for such materials, and the level of threat 
     (including the effects of terrorist or criminal activity and 
     the pay and morale of personnel and guards) in the country or 
     region where such sites are located.
       (C) A strategic plan, including measurable milestones and 
     metrics, for accomplishing the mission of the Task Force 
     under this section.
       (D) An estimate of the funds required to complete the 
     mission of the Task Force under this section, set forth by 
     year until anticipated completion of the mission.
       (E) The recommendations of the Secretary on whether any 
     further legislative actions or international agreements are 
     necessary to facilitate the accomplishment of the mission of 
     the Task Force.
       (F) Such other information on the status of activities 
     under this section as the Secretary considers appropriate.
       (2) The report shall be submitted in unclassified form, but 
     may include a classified annex.
       (f) Potential Nuclear Weapons Material Defined.--In this 
     section, the term ``potential nuclear weapons material'' 
     means plutonium, highly-enriched uranium, or other material 
     capable of sustaining an explosive nuclear chain reaction, 
     including irradiated materials if the radiation field from 
     such materials is not sufficient to prevent the theft and use 
     of such materials for an explosive nuclear chain reaction.
       (g) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Department of Energy for fiscal 
     year 2005 for activities of the National Nuclear Security 
     Administration in carrying out programs necessary for 
     national security for purposes of defense nuclear 
     nonproliferation activities, $40,000,000 to carry out this 
     section.
                                 ______
                                 
      By Ms. SNOWE (for herself, Mrs. Feinstein, Mr. Bingaman, and Ms. 
        Cantwell):
  S. 2311. A bill to provide for various energy efficiency programs and 
tax incentives, and for other purposes; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today, along with Senators 
Feinstein, Bingaman, and Cantwell, to introduce the Efficient Energy 
through Certified Technologies and Electricity Reliability Act, or 
EFFECTER Act of 2004. This legislation is urgently needed to help 
prevent the painful disruption of electric power blackouts, to save 
American consumers billions of dollars in wasted energy costs, to 
create jobs, and eventually, to avoid the needless

[[Page 6907]]

emission of more greenhouse gas pollution than comes from our Nation's 
entire automotive fleet. According to a vast majority of the 
international scientific community, these anthropogenic, or manmade 
gases, especially carbon dioxide, are triggering dramatic changes in 
the Earth's climate system.
  This legislation will increase the security and reliability of the 
electric grid, while reducing natural gas and electricity prices though 
a gradual reduction in demand. Targeted tax incentives and standards 
for energy efficiency in commercial buildings, both new and 
retrofitted, will support the reduction in demand, as will the 
construction of new and retrofitted homes, including rental housing, 
and the use of more energy efficient appliances.
  Last March 4, 2003, I introduced, along with Senator Feinstein and 
others, the EFFECT Act of 2003, legislation that provided tax 
incentives for advanced levels of energy efficiency and peak power 
savings technologies in the buildings in which we live, work, and 
learn. Buildings consume some 35 percent of energy nationwide and are 
responsible for the emissions of a comparable percentage of pollution; 
very importantly, they account for more than one-half of the Nation's 
energy cost. I am pleased that many of these provisions were 
incorporated into the Senate energy bill that passed the Senate last 
fall, as I believe incentives provided through the tax system are 
necessary to complement existing energy efficiency policies at the 
Federal and State levels.
  The EFFECTER Act of 2004 that we are introducing today goes even 
further to encourage the EFFECT Act's tax incentives provided in the 
Senate's energy bill. It encourages administrative improvements, cost-
efficiencies, and it also reflects a number of consensus provisions 
from H.R. 6, the Omnibus Energy Conference Report. These provisions 
mirror simple, common sense solutions, such as the mandatory 
electricity reliability provisions that have been held hostage to the 
ineffective ideas in the energy bill for some 4 years. We provide 
requirements for electric generating and transmission companies that 
encourage them to cooperate with each other on a mandatory basis, 
since--as we discovered last summer--relying on ``a gentleman's 
agreement'' doesn't work.
  The legislation also includes the Energy Savings Performance 
Contracts program, whose authorization expired in October of 2003. The 
ESPC program promotes consensus energy efficiency standards and reforms 
in Government contracting that save the taxpayers money. This bill 
requires the Federal Government, through its agencies, to acquire the 
most cost-effective as well as energy efficient products and to design 
buildings that can also save the Government money. Through what many 
characterized as an arcane scoring method, the CBO had incorporated a 
$3 billion cost increase into the program. However, in its wisdom, the 
Senate, in the FY05 Budget Resolution, appropriately directed the ESPC 
to score at zero. The result is a zero cost to this provision.
  The EFFECTER Act of 2004 addresses some of our largest energy 
problems head-on. Its incentives for energy efficiency are more 
effective and expedient than those in the energy bills currently being 
debated, yet they cost less to the Government. Indeed, over the long-
term, they save the Federal Government money.
  Last August our country suffered a costly and harmful blackout that 
affected some 40 million Americans. Now, more than 6 months later, we 
have take little effective action to reduce the likelihood that 
additional blackouts could threaten lives and damage our economy again 
this year or any time in the near future. Our country currently has a 
need for more electric power plants, but we also need to protect our 
present electricity system from overload caused by wasted power use. By 
not pulling power from the grid at peak times in the next 10 years, the 
EFFECTER Act of 2004 will help America's building owners save more 
electricity--electriicty equivalent to the amount that would be 
produced by 350 new power plants of 400 MW capacity.
  Since last summer, natural gas and oil prices have skyrocketed. These 
high prices hurt Americans two ways: jobs are lost when high fuel 
prices force industry to cut back on production, and high heating bills 
strain family and business budgets. Saving wasted energy is one of the 
easiest and least costly ways to save money and save jobs. This 
legislation will save American families and business owners over $30 
billion dollars annually by 2015, and prevent the waste of over 3.3 
quads of natural gas annually--over 12 percent of total gas use.
  We all recognize the importance of increasing employment. Energy 
efficiency creates jobs both through manufacturing, designing and 
installing efficiency measures and through additional consumer and 
business spending--spending consumers can afford when their energy 
bills are lower. The EFFECTER Act of 2004 will produce over a half 
million new jobs in the American economy.
  As a Nation, we are engaged in a difficult debate about reducing 
greenhouse gas emissions, an effort we believe will protect the world's 
climate while assuring continued productivity for our economy. By 
reducing energy use that otherwise would be wasted in inefficient 
buildings, this legislation will reduce greenhouse gas pollution in an 
amount equivalent to the reduction that would occur if we took 25 
percent of the cars off America's roads.
  These energy, money, and pollution saving solutions focus first on 
promoting fast acting energy efficiency both for natural gas and for 
peak electricity, which in turn also contributes to natural gas demand. 
Dramatic energy savings can be obtained by a carefully crafted package 
of low cost market-based incentives and consensus efficiency standards. 
I believe we have crafted just such a package and I urge my colleagues 
to support this bipartisan bill that uses tested, performance-based and 
cost-effective approaches that truly help solve our most immediate 
energy problems.
                                 ______
                                 
      By Mr. GRAHAM of Florida (for himself, Mrs. Clinton, Mrs. Boxer, 
        Mr. Nelson of Florida, Mr. Schumer, Mr. Lautenberg, Mr. 
        Hollings, and Mrs. Lincoln):
  S. 2313. A bill to amend the Help America Vote Act of 2002 to require 
a voter-verified permanent record or hardcopy under title III of such 
Act, and for other purposes; to the Committee on Rules and 
Administration.
  Mr. GRAHAM of Florida. Mr. President, the people of the United States 
learned many things from the election of 2000. I believe the most 
important lesson was that voting equipment should produce a clear paper 
record of each voter's intentions for use in a manual recount. 
Americans remember well that the outcome of the 2000 presidential 
election was determined by whether a ``chad'' was hanging, pregnant, or 
dimpled.
  More recently we have found that, despite the passage of election 
reform legislation in 2002 called the Help America Vote Act, our 
electoral system is still experiencing difficulties. The 2004 
presidential primaries have produced accounts of voting irregularities. 
This is especially distressing considering another national election is 
just months away. Voters in several States, including California, 
Maryland, Georgia and my own State of Florida have experienced problems 
casting their votes and seeing them accurately counted.
  On the Tuesday, March 9, 2004, presidential primary in Palm Beach 
County, FL, the ``oops factor'' again reared its ugly head, casting 
doubt in the minds of many Floridians about whether or not their votes 
actually counted. An error on the part of poll workers--pressing the 
wrong button to activate voting machines--prevented many from voting in 
the Democratic primary. A technological error in the tabulation of 
ballots in Bay County, FL showed Congressman Dick Gephardt winning the 
primary by a 2-to-1 margin. Fortunately, Bay County uses a paper ballot 
system so they could refer to their paper trail to rectify the error.
  This is not the first election since 2000 where the value of a paper 
record

[[Page 6908]]

has been apparent. Just this past January, victory in a South Florida 
Republican primary election for a vacant seat in the State legislature 
was determined by just 12 votes. In that election, 137 blank ballots 
were cast on electronic voting machines that do not produce a paper 
record. A candidate requested a manual recount, only to find such a 
recount impossible without paper records verifying the intent of those 
137 voters.
  In Georgia's Presidential Primary, ``smart cards'' containing ballot 
information for electronic machines were left unprogrammed. Technical 
irregularities in Maryland elections prevented at least one voter form 
voting--and he wrote about it in the Washington Post.
  These incidents and many others are clear evidence that we need 
voting machines that produce an individual paper record for all votes 
cast. While the Help America Vote Act (HAVA) included provisions 
requiring paper records for manual audits, we have come to find out 
that voting jurisdictions are not interpreting these provision the way 
Congress intended.
  I am pleased to join Senators Clinton and Boxer in introducing the 
Restore Elector Confidence in Our Representative Democracy Act (RECORD 
Act). This legislation will ensure that all voting jurisdictions will 
have machines that produce voter-verifiable paper records, so that they 
will be as prepared as they can be to count every vote come this 
November. It is critical that Congress take every possible step to 
prevent any resemblance between Election Day 2000 and Election Day 
2004.
  Once a month I spend a day working side-by-side with the people of 
Florida. On Saturday, March 6, 2003, I spent my 399th Workday as an 
elections worker for the Miami-Dade County Division of Elections. 
Veteran Supervisor of Elections Connie Kaplan assured me that 
electronic voting machines are accurate. The things I learned on the 
job reinforced that assessment. But several voters expressed confusion 
about the layout of the electronic ballots, and uncertainty about 
whether or not their votes had been cast. It was clear to me that 
voters would be more confident that their votes would be counted if 
there were a paper record of those votes. In light of reported 
irregularities and security concerns, this voter apprehension is 
legitimate. In order to be certain about the accuracy and security of 
computer voting systems we need a paper record to confirm every vote 
cast.
  Modern society is replete with electronic machines that provide the 
most basic services: ATMs, train ticket vending machines, gasoline pay-
at-the-pump stations. All of these machines produce paper records. The 
votes of America's citizens are at least as important as these 
transactions. People do not and should not blindly trust the accuracy 
of computer voting technologies. Congress must pass the RECORD Act so 
that Americans can have confidence that their votes will be counted.
  Mrs. CLINTON. Mr. President, I am pleased to join Senator Graham in 
introducing the ``Restore Elector Confidence in Our Representative 
Democracy Act of 2004'' (``RECORD'' Act) because there is no civic 
action more important in a democracy than voting. Yet right now, many 
Americans have concerns about the integrity of the electoral system. We 
must restore trust in our voting, and we must do it now.
  Electronic voting systems, specifically touch-screen voting machines, 
are being increasingly used across the nation. Indeed, according to 
Election Data Services, it is estimated that this November, at least 50 
million voters this year will vote on touch-screen voting machines.
  These machines have benefits but there are major concerns with the 
security of these machines and the current ability of voters to verify 
their votes through a paper record. This legislation effectively 
addresses both of these vitally important issues.
  In New York, electronic voting is on the horizon. Some machines will 
be used next year in the New York City mayoral race. As New Yorkers 
start to use this new technology, I want them to be absolutely certain 
their right to elect the leaders of their choice won't be at risk for 
want of a simple fix like this.
  When you use an ATM, you get a paper receipt. Right now, when you 
cast an electronic vote, you get nothing. You have no way of knowing 
that the selections you've made on the touch screen will be recorded 
and counted.
  This legislation will ensure that voters will be able to verify a 
paper ballot that accurately reflects their intentions and that will be 
locked away and will be the official ballot in a recount. This 
legislation will also address the security issues surrounding 
electronic voting systems.
  Why is this so critical? Because we know from computer experts that 
these systems are vulnerable to hacking--and that with just a push of a 
button, hackers could turn Kerry votes to Bush votes. Think about that.
  Indeed, a number of recent studies, including the July 2001 study by 
Caltech/MIT, the July 2003 study by Johns Hopkins and Rice 
universities, the September 2003 study by Science Applications 
International, and the two November 2003 studies conducted by Compuware 
corporation and InfoSENTRY, pointed to significant and disturbing 
security risks in electronic voting systems and related administrative 
procedures and processes.
  According to the Johns Hopkins study, these voting machines are 
incapable of detecting their own mistakes. Specifically, as one of the 
authors noted, there is no way to validate the outcome of an election 
using the current crop of machines. Errors can't be detected and, in my 
opinion, that is a threat to all of us.
  There were also problems with these machines in the recent 
presidential primaries. Counties in California, Georgia, and Maryland 
reported problems with encoders, the devices that allow touch-screen 
voting machines to display the candidate and ballot measures specific 
to one county.
  We already know of stories from Florida in which there was a special 
election for one office, and the computer election system recorded 120 
people as there but not voting.
  These security concerns have only been inflamed by statements from 
people like Walden O'Dell--the CEO of Diebold, a major electronic 
voting machine manufacturer--who said he would do anything to ensure 
that President Bush would be re-elected.
  So we have a system that is vulnerable to attack, that provides no 
real accountability to ensure accuracy and, to add to our concerns, an 
e-voting manufacturer demonstrating his tremendous partisanship. This 
should give us all pause.
  This legislation will require the use of voter verifiable paper 
ballots so that each and every voter will be able to confirm that his 
or her vote was accurately cast and recorded. The verified paper ballot 
will be deemed the official record for purposes of a recount and at 
least 2 percent of all ballots in all jurisdictions in each State and 2 
percent of the ballots of military and overseas voters will be counted 
at random.
  One hundred and fifty million will also be appropriated to the 
Election Assistance Commission in order to help States implement the 
paper ballot system.
  To ensure greater security of electronic voting systems, the Act 
authorizes the use of only open source software. Manufacturers will 
also have to satisfy a number of security standards concerning the 
development, maintenance, and transfer of software used in electronic 
voting systems.
  This legislation also provides $10 million to the Election Assistance 
Commission to help it administer the implementation of verification 
systems and improved security measures nationally, and $2 million to 
the National Institute of Standards and Technology for consultation 
services to State and local governments regarding voter verification 
and the security of their electronic voting machines.
  The Commission must receive this additional administrative funding 
because unfortunately, even though the Help America Vote Act of 2002 
authorized $10 million annually to help the

[[Page 6909]]

Commission do its work, Congress in the fiscal year 2004 omnibus 
appropriations legislation appropriated less than $2 million to the 
Commission, making it that much more difficult for the Commission to do 
its work.
  Lastly, the Act requires the Election Assistance Commission to report 
to Congress within 3 months of enactment on operational and management 
systems that should be used in Federal elections and within 6 months of 
enactment on a proposed security review and certification process for 
all voting systems.
  Our Nation is the greatest nation on earth and it is the leading 
democracy in the world. In fact, the Bush Administration takes pride in 
promoting democracy around the world--and they should. But we also have 
to do everything in our power to ensure democracy here. Central to our 
democracy is the ability of Americans to have confidence in the voting 
system used to register and record their votes. This is a fundamental 
standard that must be met. We are currently, however, falling short of 
that standard.
  And let me say one more thing. The election this November is going to 
be one of the most important of my lifetime. And every pundit in 
America says it will be close, because we are still so divided. If we 
have huge problems again, if we have another debacle like Palm Beach 
voting for Buchanan, people will fundamentally lose confidence in our 
democracy and in their vote. We cannot let that happen.
  This legislation is good insurance against that risk. For all of 
those who believe that in a democracy, there is no more important task 
than assuring the sanctity of votes, this should be an easy step to 
take to assure it. I ask all of my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. BURNS:
  S. 2315. A bill to amend the Communications Satellite Act of 1962 to 
extend the deadline for the INTELSAT initial public offering; to the 
Committee on Commerce, Science, and Transportation.
  Mr. BURNS. Mr. President, I rise to introduce a bill that would make 
a technical change to the ORBIT Act's IPO provision.
  As you may recall, I sponsored the ORBIT Act in 1999 with strong 
bipartisan support. Since that time, I have worked with Senators 
McCain, Hollings and others to pass technical amendments to the Act by 
unanimous consent when needed. And it is my hope and expectation that 
we can pass this small technical change as quickly as before.
  Congress passed the ORBIT Act to enhance competition in the global 
satellite communications market. I am proud to say that ORBIT has 
achieved all of its objectives. Since its enactment, the FCC has found 
that positive change has occurred in the satellite services market as a 
result of the ORBIT Act. The FCC has declared that the pro-competitive 
objectives of the ORBIT Act have been achieved--including the complete 
transformation of Intelsat from what used to be a highly bureaucratic, 
intergovernmental organization into a fully privatized, U.S. licensed 
company that is headquartered and operates in the U.S., and is now 
subject to U.S. laws and U.S. regulations.
  Another important benefit produced by the ORBIT Act has been the 
infusion of U.S. capital and other private investment into the former 
intergovernmental organizations. American and other private investors 
have made significant investments in Intelsat and Inmarsat following 
enactment of the ORBIT Act. The only piece of unfinished business from 
the ORBIT Act that remains is the requirement that an IPO occur by a 
date certain.
  I have always had serious reservations with the very idea that 
Congress would impose a date certain for an IPO, rather than letting 
market forces determine the appropriate time for such an event. If I 
had my preference, we would get rid of the mandatory IPO requirement 
altogether. But since the Intelsat IPO deadline is June 30, 2004, we 
don't have a lot of time to get back into the substance of that issue.
  The pressing matter at hand is that Intelsat's IPO deadline is fast 
approaching, and the market is simply not conducive for a successful 
IPO. This is the same situation we encountered in 2002 when my good 
friend Senator Hollings and I worked together to provide a time 
extension for conducting the IPO. I would say to my colleagues that the 
telecom market isn't much better now than it was in 2002. So we again 
need to provide Intelsat with an extension on its IPO deadline because 
market conditions are not favorable at this time.
  If Congress does not quickly pass legislation extending the June 30, 
2004 IPO deadline, several U.S. entities who are major investors in 
Intelsat stand to lose hundreds of millions of dollars because the 
telecom market for IPOs is far from ideal. This will be extremely 
harmful to U.S. interests and it will damage Intelsat, an important 
communications asset for the U.S.
  For these reasons, I urge my colleagues and the leadership to quickly 
move the passage of this legislation. The bill would simply extend 
Intelsat's IPO deadline for 12 months and give the FCC discretionary 
authority to further extend this deadline another 6 months if market 
conditions warrant.
  I urge my colleagues to support quick passage of this legislation so 
that it can be enacted into law well before June 30, 2004.
  I ask by 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 
Reord, as follows:

                                S. 2315

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

     SECTION 1. EXTENSION OF IPO DEADLINE.

       Section 621(5)(A)(i) of the Communications Satellite Act of 
     1962 (47 U.S.C. 763(5)(A)(i)) is amended--
       (1) by striking ``December 31, 2003,'' and inserting ``June 
     30, 2005,''; and
       (2) by striking ``June 30, 2004;'' and inserting ``December 
     31, 2005;''.
                                 ______
                                 
      By Ms. MURKOWSKI (for herself and Ms. Landrieu):
  S. 2316. A bill to amend the Internal Revenue Code of 1986 to allow 
penalty-free withdrawals from individual retirement plans for adoption 
expenses; to the Committee on Finance.
  Ms. MURKOWSKI. Mr. President, today I am pleased to introduce 
legislation along with Senator Landrieu to help bring adoption within 
reach for more Americans. Today in the United States there are 
literally thousands of children waiting to be adopted. The average 
child has been waiting in foster care for about four years.
  One of the major barriers to adoption for many Americans is cost. I'm 
not sure that people understand that adopting a child can sometimes 
cost more than $50,000. That's just the adoption process itself!
  The $10,000 per child adoption tax credit does help some, but it 
helps after the fact when you have the receipts. The problem is that 
many times the money for adoption has to be given beforehand--it 
requires up-front money. The tax credit doesn't help out there.
  The legislation we are introducing today is one way the Federal 
Government can help with the initial costs of adoption. Many Americans 
place money for their retirement in IRA accounts, but you generally 
can't touch this money until you're 59\1/2\ years old, and if you do, 
you'll pay not only your marginal tax rate on the withdrawal, you'll 
also be forced to pay an additional 10 percent penalty to the IRS.
  There are exceptions to this, however. Under current law, you can 
make penalty-free early withdrawals from your IRA to help you buy your 
first home, pay for excessive medical costs, or for qualifying 
education expenses. The idea is certainly to encourage savings for 
retirement, but also to allow you to use your own money--penalty free--
if there's a compelling need.
  I would make the case on behalf of the thousands of children who 
desperately want a loving family, and on behalf of the thousands of 
parents who dream of becoming parents, that adoption is a compelling 
need. And, the majority of Americans agree. Fully 78 percent of 
Americans said in a poll that

[[Page 6910]]

they believe the government should be doing more to promote adoption.
  Our bill would prohibit the IRS from penalizing Americans who want to 
use a portion of their retirement savings to adopt a child. It would 
allow Americans to withdraw up to $10,000 penalty-free from their IRA 
to help with adoption expenses. This is money that can be used up-front 
to pay for travel, court costs, attorney fees and all of the little 
surprises that add up to make adoption unaffordable for many.
  We need to continue to promote adoption in America to the extent that 
we can. We owe it to these children and to families across our country 
to break down the barriers that keep kids from becoming a part of a 
permanent loving family. I urge my colleagues' support.

                          ____________________