[Congressional Record (Bound Edition), Volume 151 (2005), Part 11]
[Senate]
[Pages 14733-14759]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. LOTT (for himself and Mr. Baucus):
  S. 1327. A bill to amend the Internal Revenue Code of 1986 to modify 
the active business definition under section 355; to the Committee on 
Finance.
  Mr. LOTT. Mr. President, I rise today to introduce legislation 
proposing a change to the Internal Revenue Code that has been endorsed 
by both the Joint Committee on Taxation and the United States Treasury 
Department. It is a simplification measure that has been passed by this 
body on three separate occasions, and I am pleased to be joined by the 
gentleman from Montana, Senator Baucus, the Ranking Democratic Member 
on the Finance Committee, in introducing this common sense legislation 
today. It is now time for Congress to act again and include this 
meritorious provision in the next appropriate tax bill reported from 
the Finance Committee.
  Corporations and affiliated groups of corporations, for any number of 
good reasons, find it appropriate and many times necessary to shed some 
of their businesses. If the business is not being sold, the Internal 
Revenue Code makes it possible to reorganize without having to 
recognize gain on the transaction. A typical transaction is a spin-off 
transaction performed per the terms of section 355 of the Internal 
Revenue Code, where a parent corporation distributes the shares of its 
subsidiary(s) to its shareholders who once had shares of just the 
parent corporation now have shares of both the parent and the shares of 
just the parent corporation now have shares of its subsidiary(s) to its 
shareholders who once had shares of just the parent corporation now 
have shares of both the parent and the subsidiary. As a matter of long-
standing tax policy, there is typically no tax exacted with these kinds 
of divisions, nor should there be. Typically the business hasn't 
changed what it is doing; it is simply being done under a separated 
ownership structure and the shareholders have ownership in two 
corporations instead of one, with no overall change in their holdings.
  In order to be accorded tax-free treatment, section 355 requires the 
corporation involved in the transaction to be engaged in an ``active 
trade or business.'' Under the current regulations interpreting section 
355 of the Internal Revenue Code, a much more rigorous test of ``active 
trade or business'' is imposed if a holding company seeks to spin-off a 
subsidiary than would be the case if the subsidiary were simply owned 
directly by the parent corporation. It is a distinction without 
substance and requires corporations, holding companies, to go through 
major restructurings to satisfy the requirements of section 355. There 
is absolutely no substantive policy rationale for such a result. The 
distinction is inappropriate and has been identified as such by both 
the staff of the Joint Committee on Taxation and the Treasury 
Department in 1999 and 2000. This legislation addresses that anomaly 
and treats both situations equally.
  The cost of this provision is minimal, at about $8 million a year by 
the last revenue estimate from the staff of the Joint Committee on 
Taxation. This provision is a small but significant step toward 
simplification of the tax code, and I urge my colleagues on the Finance 
Committee and in this body to

[[Page 14734]]

act on this change one more time, and hopefully for the last time.
  Mr. BAUCUS. Mr. President, virtually everyone supports tax 
simplification. But for some reason, it is awfully hard to accomplish. 
Today, I am pleased to join my friend and colleague from Mississippi, 
Senator Lott, in introducing tax legislation that is non-controversial 
and a clear tax simplification measure. Further, the bill we are filing 
today has been supported in the past by the Joint Tax Committee and the 
U.S. Treasury.
  Normally, corporations are taxed on distributions of property to 
shareholders as if sold at fair market value. However, section 355 of 
the tax code provides corporations with the flexibility to distribute 
one or more of their businesses to their shareholders, such as in a 
spin-off, without triggering tax consequences if the transaction meets 
important requirements. Through this exception in section 355, 
corporations may make strategic business decisions without imposing tax 
burdens on their shareholders, but only if both the distributing and 
distributed businesses continue as an active trade or business. The 
regulatory structure that has evolved over the years under section 355 
has created very different ``active trade or business'' tests depending 
on whether the distributing corporation operates as a holding company 
or whether it holds the business assets directly. There is no rationale 
to support that distinction.
  Both the staff of the Joint Tax Committee and the Clinton Treasury 
Department recommended that the rules be conformed as a tax 
simplification measure. The Senate has passed legislation similar to 
what we are proposing today on three occasions. And, on one of those 
occasions, it passed the House as well in legislation that was later 
vetoed for other reasons. I have heard of no opposition to this change, 
which would simply apply a ``look through'' rule for the ``active trade 
or business'' test on an affiliated group level, so that parent holding 
companies could count the active businesses of its subsidiaries. And it 
would eliminate hours of wasted time and resources in tax planning 
activities that serve no function other than to try and conform 
corporate ownership structures to satisfy the literal language of 
current tax requirements.
  Again, I should emphasize that this proposal does not bring wholesale 
change to section 355. Spin-off requirements dealing with the 
continuity of historical shareholder interest, continuity of business 
enterprises, business purpose, and absence of any device to distribute 
earnings and profits all remain. With a cost of less than $10 million a 
year, this is an affordable step we can take now to simplify the 
Internal Revenue Code.
  I am pleased to join with Senator Lott in working for passage of this 
important simplification bill, and I urge my colleagues on the Finance 
Committee and in the Senate give our bill every consideration.
                                 ______
                                 
      By Mr. JEFFORDS (for himself and Mr. Sarbanes):
  S. 1328. A bill to amend the Safe Drinking Water Act to ensure that 
the District of Columbia and States are provided a safe, lead-free 
supply of drinking water; to the Committee on Environment and Public 
Works.
  Mr. JEFFORDS. Mr. President, I rise today to introduce the Lead-Free 
Drinking Water Act of 2005 with my colleague Senator Sarbanes. We are 
joined by our colleagues, Congresswoman Norton, Congressman Waxman, and 
others, who will be introducing the House companion bill today. Today, 
we introduce this bill for the second time.
  Last year, we shared the shock felt by DC residents when it was first 
reported that lead levels in the DC public water system were 
significantly higher than Federal guidelines, and had been so for at 
least 2 years.
  We sought answers to the same questions everyone was asking 
themselves--How much water did I drink? How much water did my children 
drink? What are the effects of lead in our bloodstream?
  We shared the outrage felt by many DC residents, asking ourselves--
why were we not told about this sooner? How did this happen? What are 
we going to do about it?
  In the 108th Congress, we attempted to answer those questions. We 
held a hearing in the Senate Environment and Public Works Committee and 
listened to the concerns of DC parents worried about their children's 
health.
  We listened to experts who identified weaknesses in the Safe Drinking 
Water Act and the lead and copper rule, governing how the public is 
informed when lead is present in a drinking water system and what 
corrective actions public water systems must take.
  One of the most disturbing points is that many of the things that 
happened in Washington, DC, were within the boundaries of the existing 
rules that purport to protect the public from lead in drinking water.
  We responded by introducing the Lead-Free Drinking Water Act of 2004, 
which sought to correct the weaknesses in those rules.
  Today, we are reintroducing the Lead-Free Drinking Water Act of 2005. 
Our bill will overhaul the Safe Drinking Water Act to strengthen the 
Federal rules governing lead testing and regulations in our public 
water systems to ensure that our most vulnerable citizens--infants, 
children, pregnant women, and new moms--are not harmed by lead in 
drinking water.
  Specifically, the bill requires the EPA to reevaluate the current 
regulatory structure to figure out if it really provides the level of 
public health protection required.
  The bill calls on the EPA to establish a maximum contaminant level 
for lead at the tap, and if that is not practical given the presence of 
lead inside home plumbing systems, the bill requires EPA to reevaluate 
the current action level for lead to ensure that vulnerable populations 
such as infants, children, pregnant women, and nursing mothers receive 
adequate protection.
  I look forward to working with EPA on this evaluation to determine 
which approach is most feasible and which provides the greatest level 
of public health protection.
  EPA has three choices: keep current standard, an ``action level'' at 
15 parts per billion; lower the current action level below 15 parts per 
billion; establish a ``maximum contaminant load.''
  For example, it is clear that a maximum contaminant level, which is 
measured at the water treatment plant, would do little to protect 
people from lead-contaminated drinking water at their faucets. Our bill 
requires that standards be measured at the tap.
  A low lead action level measured at the tap could provide more 
protection than a high MCL measured anywhere in the system if there 
were extremely strong and effective public notification procedures in 
place.
  Public notice is the key to success of any lead regulation--parents 
say to me, ``If only I had known, I could have protected my family.'' 
It is our job to be sure the public notice system we have in place gets 
people the information they need when they need it.
  The bill will require information such as the number of homes tested, 
the lead levels found, the areas of the community in which they were 
located, and the disproportionate adverse health effects of lead on 
infants, be made public immediately upon detection of lead.
  In addition, the bill requires that, as part of routine testing 
conducted, any residents whose homes test high for lead receive 
notification and appropriate medical referrals within 14 days.
  Finally, we don't want the day of an exceedance to be the first time 
people have heard about lead in drinking water. The bill establishes a 
basic public education program to ensure that people have a basic 
understanding that lead may be present in drinking water and what the 
corrective actions might be even before their water system detects a 
problem.
  The bill requires increased water testing and lead remediation in 
schools and day-care centers nationwide. This provision exists in law 
today, but it was affected by previous litigation. This bill corrects 
the problem by requiring the Administrator to execute this program if 
states choose not to. It is wholly unacceptable to do anything less 
than provide a learning environment for our next generation that does

[[Page 14735]]

not degrade their intellectual capacity. Our bill provides $150 million 
over 5 years for this program.
  And we strengthen existing requirements to ensure that all lead 
service lines will be replaced by a public water system at a rate of 10 
percent per year until they are gone.
  This is common sense--let us get rid of the lead in our systems and 
get rid of the lead in our water.
  Our bill makes water systems responsible for replacing lead service 
lines, including the privately owned sections, once a system exceeds 
lead standards. Homeowners have the final say in whether their line is 
replaced.
  We provide $1 billion over 5 years for lead service line replacement.
  The EPA estimates that our Nation needs $265 billion to maintain and 
improve its drinking water infrastructure over the next 20 years.
  If we do not address this, we will be facing more and more health and 
environmental issues as our Nation's water infrastructure degrades.
  Lead service lines are only one part of the picture. Leaded solder 
was banned in 1987. However, ``lead-free'' plumbing fixtures are 
currently allowed to have 8 percent lead.
  Our bill makes ``lead-free'' mean lead-free. It defines the term as 
trace amounts of lead -0.2 percent. It prohibits the use of pipes, or 
pipe or plumbing fitting or fixtures that are ``high lead'' which our 
bill defines as 2.0 percent lead within 1 year. And within 5 years, it 
prohibits the use of any plumbing components with anymore than 0.2 
percent lead. This is a huge step toward making our water systems truly 
lead-free.
  Our bill strengthens existing requirements for leaching by requiring 
independent third-party performance certification.
  Finally, our bill requires that the existing requirements for 
leaching be revised to be as protective as the existing leaching 
standards in California which have set the bar for plumbing fittings 
and fixtures.
  We urge our colleagues to support this legislation.
  Last year, Good Housekeeping independently ran a piece about the 
Lead-Free Drinking Water Act and gave its readers information to 
contact us with their support. We received over a thousand responses 
from individual readers in 48 States and the District of Columbia.
  In the 18th century, almost 300 years ago, Ben Franklin concluded 
that lead was poisonous. In a biography written by Edmund S. Morgan, 
this story is recounted:
  At the request of his friend and English publisher Benjamin Vaughan, 
he wrote out a proof of what he had once casually mentioned in 
conversation: his conclusion that lead was poisonous. After detailing 
his own and other printers' ailments from the continuous handling of 
lead type, he went on to describe his observations of the grass and 
plants that died from the fumes near furnaces where lead was smelted, 
of the effects of drinking rainwater that sluiced off lead roofs, and 
of his queries to sickened plumbers, painters, and glaziers in a Paris 
hospital. His observations of the toxic effects of lead, he noted, were 
nothing new; and he remarked wryly, ``how long a useful Truth may be 
known, and exist, before it is generally receiv'd and practis'd on.''
  We have known lead is a poison for centuries. What are we waiting 
for? As we learned from the incidents in Washington, DC, and Boston, 
there are large deficiencies in Federal safe drinking water 
regulations. It is time to plug the holes in these regulations and 
fully protect the public from this poison. It is time to get the lead 
out.
  Safe drinking water is not a privilege; it is a right--whether you 
live in Washington, DC, or Washington State or Washington County, VT.
  I urge my colleagues to join us in working to pass the Lead-Free 
Drinking Water Act of 2005 to get the lead out of our pipes, out of our 
water, out of our families, and out of our lives.
                                 ______
                                 
      By Mrs. CLINTON (for herself, Mr. Smith, Mr. Martinez, Mr. Reed, 
        and Mr. Durbin):
  S. 1330. A bill to amend the Internal Revenue Code of 1986 to provide 
incentives for employer-provided employee housing assistance, and for 
other purposes; to the Committee on Finance.
  Mrs. CLINTON. Mr. President, I rise today during National Home 
Ownership Month to introduce the Housing America's Workforce Act.
  Affordable and safe housing plays a vital role in creating and 
sustaining healthy communities and a vibrant workforce. The Housing 
America's Workforce Act creates incentives to expand employer-assisted 
housing initiatives across the Nation. I thank Senators Smith, 
Martinez, Reed, and Durbin for their co-sponsorship of this important 
legislation. I would also like to thank Congresswoman Nydia Velaz-
quez for her leadership in introducing the companion bill in the House 
of Representatives.
  The sad truth is that across our Nation, working full-time no longer 
guarantees that a family will be able to afford a secure and 
comfortable home. The shortage of workforce housing has become a 
national crisis as housing costs have far outgrown the rate of 
inflation in many markets and as the gap between wages and housing 
costs widens. The result is that affordable housing is out of reach for 
a growing number of working families. As a result, people who provide 
the backbone services for our communities--teachers, firefighters, 
police officers, and nurses--often cannot afford to live in the 
communities in which they serve. A recent workforce housing study 
released by the National Association of Home Builders found that for 
the most part, workers who provide these vital community services can 
only find housing they can afford in less than half of the nation's top 
25 metropolitan areas.
  Across the Nation, the number of working families with critical 
housing problems (defined as those paying more than half of their 
income for housing and/or living in dilapidated conditions) has 
increased by 67 percent between 1997 and 2003 to approximately 5 
million families. Families that spend more than half of their income on 
housing have little income left over for other essentials such as food, 
healthcare, and transportation.
  And despite overall improvements in home-ownership trends since 1978, 
working families--employed households with children earning less than 
120 percent of Area Median Income--have actually experienced a decrease 
in homeownership rates. A 2004 Center for Housing Policy study shows 
that the homeownership rate for working families with children was at 
62.5 percent in 1978, and only 56.6 percent through 2001.
  Employer-assisted housing, EAH, is a local, innovative solution that 
a growing number of employers are using to meet the housing needs of 
their employees while increasing the competitiveness of their 
businesses. There are several types of EAH products, including 
homebuyer education, down payment assistance, rental assistance and 
loan guarantee programs. Employers often combine these products to meet 
their employees' specific needs in the most effective ways.
  The benefits for employees and employers are impressive. The 
employee, in addition to receiving financial support from an employer 
to buy or rent a home closer to work, also regains extra time--formerly 
spent in traffic--for family or community life. The employer likewise 
benefits from a more stable workforce when employees live near work. 
They enjoy the advantages from the improved employee morale, lower 
turnover rate and reduced recruitment costs result in bottom line 
savings that the increased proximity brings. Furthermore, EAH programs 
benefit not only the workers and employers, but also the entire 
community. As former commuters buy homes near the jobsite, the 
surrounding community which previously suffered from traffic 
congestion, now enjoys new investment and property tax revenues.
  The Housing America's Workforce Act is inspired in great part by 
lessons learned in States and local communities across the Nation, 
where EAH has proven to be an effective tool to promote housing 
affordability for working families and community revitalization. 
Through EAH programs, the

[[Page 14736]]

private sector becomes part of the solution, investing in housing 
assistance for employees while experiencing bottom line benefits. This 
is clearly a public-private partnership that is proven and makes sense.
  The Housing America's Workforce Act provides incentives to increase 
private sector investment in housing in three important ways. First, it 
offers a tax credit of 50 cents for every dollar that an employer 
provides to eligible employees up to $10,000 or six percent of the 
employee's home purchase price, whichever is less, or up to $2,000 for 
rental assistance. Second, to ensure that employees receive the full 
value of employers' contributions, the Act defines housing assistance 
as a ``nontaxable benefit,'' similar to health, dental and life 
insurance. Third, the act establishes a competitive grant program 
available to nonprofit housing organizations that provide technical 
assistance, program administration, and outreach support to employers 
undertaking EAH initiatives.
  In New York and in other parts of the country, EAH has caught on with 
the local business community, elected and appointed officials, and the 
broader housing arena. Its expansion indicates a growing understanding 
among the private sector that it pays to invest in workforce housing. I 
have worked with employers across my State to launch county employer-
assisted housing programs in places such as Long Island, Rochester and 
Westchester.
  I have met many of the families that have already benefited from Long 
Island's EAH program, which I helped launch in 2002. People like the 
Isaacs family, who were able to buy their first home in North 
Amityville in 2002 thanks to their employer's participation in the 
program. Pamela Isaac, like so many employees on Long Island, works as 
a Dietician at Our Lady of Consolation, part of the Catholic Health 
Services Network. Catholic Health Services' participation in the 
employer assisted housing program enabled Pamela and her husband 
Bartholomew to stay on Long Island and raise their three children in 
their own home.
  I also worked in collaboration with Mayor William A. Johnson of 
Rochester to jumpstart the City of Rochester's EAH initiative. The City 
provides $3,000 for its own employees and also encourages other 
employers to provide a home purchase benefit by offering to match that 
benefit dollar for dollar up to a maximum of $3,000. Therefore, if an 
employer offered the maximum benefit of $3,000, he or she would produce 
a $6,000 benefit for his or her employees with the city's matching 
funds.
  The Westchester County EAH, which was spEAHheaded by the Business 
Council and Fannie Mae, brings together the following Westchester 
County nonprofit organizations: Housing Action Council, Westchester 
Residential Opportunities, Westchester Housing Fund and Community 
Housing Innovations. Each of these nonprofits provides standardized, 
comprehensive education and counseling support to participating 
employers. The initiative also provides matching funds of up to $3,000 
from Westchester County or from the cities of Yonkers, New Rochelle, 
White Plains or Mount Vernon. In addition, the nonprofit collaborative 
offers down payment and closing cost assistance programs that can match 
employer contributions.
  The creation of Federal incentives to expand employer-assisted 
housing has been a consistent recommendation of experts in the broader 
housing arena, including the Millennial Housing Commission. In 
addition, former HUD Secretaries Henry Cisneros and Jack Kemp, along 
with Nic Retsinas and Kent Colton of the Harvard Joint Center for 
Housing Studies recently released a bipartisan platform for national 
housing policy, which includes EAH as one of its recommendations.
  According to the Society for Human Resources Management's 2004 
Benefits Survey, 12 percent of employers offered home ownership 
assistance in 2004, up from 7 percent in 2002. Since 1991, Fannie Mae 
has offered a nationwide EAH program through participating lending 
institutions and employers. Fannie Mae has helped about 750 employers 
of various sizes implement EAH programs and nearly 570 have been 
launched since 2000. Freddie Mac launched a similar national program in 
1999, which it expanded in 2004. Several states have enacted EAH tax 
incentive programs, including Illinois, Connecticut, Missouri, and New 
Jersey.
  Employer-assisted housing programs offer a fresh approach to 
addressing our Nation's housing challenge by allowing the private 
sector to play a direct role in promoting housing affordability. I hope 
every Senator will recognize that the Housing America's Workforce Act 
will create opportunities for us as a Nation to expand these public-
private partnerships and will make a profound impact in the lives of 
our workforce, and I hope that you will support this important piece of 
legislation.
  Mr. SMITH. Mr. President, I rise today to join Senators Clinton, 
Martinez, Reed, and Durbin to introduce the Housing America's Workforce 
Act.
  Across the country, low- and moderate-income families face difficulty 
finding affordable housing. Homebuilding has not kept pace with job 
growth, and the cost of housing has skyrocketed. In the last 5 years, 
the number of working U.S. families paying more than half their income 
to put a roof over their heads has jumped to 4.2 million in 2003 from 
2.4 million in 1997, a 76-percent increase in 5 years.
  Our bill tries to address the issue of affordable housing from a new 
perspective, one that allows the private sector to play a direct role 
in promoting housing affordability. Specifically, our bill would create 
a Federal tax credit for businesses that offer housing assistance 
programs to their low- to moderate-income employees.
  Employer assisted housing, EAH, programs have been used successfully 
for more than 100 years and have proven effective in helping to 
revitalize neighborhoods and to recruit and retain employees. In my 
home State of Oregon, EAH programs have been used by employers such as 
Legacy Emanuel Hospital & Health Center, Housing Authority of Portland, 
Multnomah County, and Wacker Siltronic.
  In 1990, Legacy Emanuel developed an EAH program to encourage 
employees to purchase homes in the neighborhood near the hospital. The 
program shortened employee commute time, reduced traffic congestion, 
and helped spur a dramatic revitalization of the surrounding area. 
Similar programs have succeeded around the country and have helped to 
ease the spatial mismatch between where job growth is taking place and 
where people can afford to live.
  Under our bill, housing assistance can be used for either 
homeownership or rental assistance. Homeownership assistance could be 
used for down payments, closing costs, financing costs, or 
contributions to an employee homeownership savings plan, such as an 
Individual Development Accounts. Rental assistance could be used for 
security deposits and rental payments.
  Employer assisted housing programs are innovative ways to leverage 
public and private funds to make housing affordable for working 
families. As such, our proposal has been endorsed by National Housing 
Conference, National Association of Home Builders, National Association 
of Realtors, National Association of Housing and Redevelopment 
Officials, National League of Cities, National Association of Counties, 
Mortgage Bankers Association, National NeighborWorks Association, 
AmeriDream, and the National Association of Local Housing Finance 
Agencies.
  I look forward to continuing to work with my colleagues to address 
the affordable housing shortfall.
                                 ______
                                 
      By Mr. JOHNSON (for himself, Mr. Thomas, Mr. Enzi, Mr. Dorgan, 
        Mr. Burns, Mr. Thune, Mr. Bingaman, and Mr. Baucus):
  S. 1331. A bill to amend the Agricultural Marketing Act of 1946 to 
change the date of implementation of country of origin labeling to 
January 30, 2006; to the Committee on Agriculture, Nutrition, and 
Forestry.
  Mr. JOHNSON. Mr. President, I rise to discuss an issue of great 
importance to producers and consumers in my home State of South Dakota 
and

[[Page 14737]]

across the Nation. Mandatory country of origin labeling, COOL, remains 
an overwhelmingly popular provision not only as a consumer right-to-
know issue, but also as a marketing tool for our Nation's farmers and 
ranchers.
  Mandatory country of origin labeling was signed into law under this 
most recent Farm Bill and by this current President. As the primary 
author of the COOL language included in the 2002 Farm Bill, I am 
increasingly frustrated at the amount of heel dragging this 
Administration has shown for the program. I rise to introduce a bill to 
move forward with the implementation of mandatory COOL in a timely and 
reasonable manner, instating a January 30, 2006 mandatory date of 
implementation. COOL has experienced great bipartisan support in the 
Senate. I am pleased that Senator Craig Thomas joins me in this 
bipartisan effort, as does Senator Mike Enzi, Senator Byron Dorgan, and 
Senator Conrad Burns.
  I worked with my Senate colleagues to ensure that no delay language 
was included in the Senate version of the fiscal year 2006 Agriculture 
Appropriations Bill that was reported out of committee. As a member of 
the Senate Appropriations Committee, and specifically, the Agriculture 
Appropriations Subcommittee, I worked with my Senate colleagues to 
ensure we assembled a satisfactory bill that did not contain the same 
delay language as found in the House agriculture spending measure. The 
House fiscal year 2006 Agriculture Appropriations Bill contained a 1-
year delay for meat and meat products, which is identical to the 
situation that unfolded with the program in fiscal year 2004.
  While the House version of the fiscal year 2004 spending bill 
contained a 1-year delay for meat and meat products exclusively, the 
final omnibus contained a 2-year delay for all covered commodities 
except fish and shellfish. During closed door consideration of the 
measure, Senate leadership chose to bow to special interest groups 
despite the significant support COOL experiences from the majority of 
consumers and producers. While I was pleased to see the Senate version 
of the fiscal year 2006 bill that we reported out of committee 
contained $3.111 million for an audit-based compliance program for COOL 
implementation, the United States Department of Agriculture, USDA, 
Agricultural Marketing Service, AMS, will need substantive funding for 
the implementation of the full program. While the money funds an audit-
based compliance program exclusively for fish and shellfish, additional 
dollars are needed for the inclusion of all covered commodities.
  Mandatory COOL for fish and shellfish was implemented on April 4, 
2005. USDA instituted a six month phase-in period to ensure adequate 
time for compliance, and the Department promulgated an interim final 
rule on September 30, 2004. Given this process, I see no reason why the 
Department should not proceed with the promulgation of the interim 
final rule for all covered commodities at the earliest possible time. 
If the implementation date is moved to January 30, 2006, then producers 
and consumers will at least see benefits under the program by late 
summer of 2006. Producers and consumers have waited long enough for 
program implementation, and it is high time USDA move forward with the 
implementation of this crucial program.
                                 ______
                                 
      By Mr. SPECTER (for himself and Mr. Leahy):
  S. 1332. A bill to prevent and mitigate identity theft; to ensure 
privacy; and to enhance criminal penalties, law enforcement assistance, 
and other protections against security breaches, fraudulent access, and 
misuse of personally identifiable information; read the first time.
  Mr. SPECTER. Mr. President, I rise today to introduce S. 1332, the 
Personal Data Privacy and Security Act of 2005.
  Not too long ago, our personal information--our Social Security 
numbers, our date of birth, our mothers' maiden name, where we live-all 
remained relatively private. Where we live, and what we paid for our 
house, and whether we had a mortgage might have been publicly 
available, but finding that information out would require a trip to the 
local recorders office. Our privacy was preserved by the sheer 
difficulty of obtaining the information. This privacy--the ability to 
be left alone--has been a cherished value throughout American history.
  As our day-to-day transactions have become electronic, more and more 
of our personal data has been stored, transmitted and accessed 
electronically. Almost all of us have benefited from this change. 
Because our personal information is available electronically, we can 
purchase goods and services over the phone or on the internet. We can 
obtain a mortgage or rent an apartment in a matter of hours. We can 
apply for a credit card while we wait at the store and purchase things 
on-line. The availability of such information also helps law 
enforcement agencies conduct investigations and catch criminals. The 
information has also been used to do good. In one instance, Associated 
Press journalists matched Social Security numbers obtained from data 
brokers to Mississippi prison data exposing eight school teachers who 
failed to report that they had been convicted of sex offenses or drug 
crimes.
  However, as Justice Warren prophetically wrote in the 1963 case, 
Lopez v. United States--a case balancing the privacy interests of an 
individual with the law enforcement needs of the government--``The 
fantastic advances in the field of electronic communication constitute 
a great danger to the privacy of the individual.'' In electronic form, 
our personal information is both more valuable and more vulnerable. As 
we have all witnessed in recent months, electronic data is more 
vulnerable because it can be accessed from afar and can be stolen in a 
split second. The problem first became apparent when data brokers, 
companies that buy and sell our personal data, announced that they had 
experienced large-scale breaches involving the personal data of 
hundreds of thousands of Americans. In February, ChoicePoint, one of 
the Nation's largest collectors of consumer information, notified over 
145,000 Americans of a system security breach. In March, LexisNexis 
announced that unauthorized persons posing as legitimate customers 
obtained personal the personal data of over 300,000 Americans.
  It soon became apparent that the problem extended beyond data 
brokers. In April, Carnegie Mellon University notified 19,000 students, 
alumni, faculty and staff that their personal data may have been 
compromised. In May, a data storage company lost information on 600,000 
current and former employees of Time Warner. In recent days, MasterCard 
announced 40 million credit card numbers belonging to U.S. consumers 
were accessed by a computer hacker--the largest breach yet.
  Even government agencies have not been immune. Personal data 
including Social Security numbers on nearly 6,000 current and former 
Federal Deposit Insurance Corporation employees was stolen early last 
year, some of which has been used for fraudulent purposes.
  Electronic personal data is more valuable because identity thieves 
can steal large volumes and use it before anyone knows. For the last 5 
years, Identity Theft has topped the FTC's list of consumer complaints. 
From 2002 to 2004, the number of complaints rose 52 percent, to 
246,570. Put another way, that's once every 2 minutes. But this is only 
the tip of the iceberg. Not all consumers report identity theft to the 
FTC. Not all victims report identity theft to their local police. Sixty 
percent of those who did file a report with the FTC did not call their 
local police department. It stands to reason that many did not call the 
FTC.
  A recent study by the Better Business Bureau concluded that 9.3 
million Americans were victims of identity fraud in 2004, and that each 
victim lost approximately $5,800. Ultimately, nearly 20 percent 
Americans will become victims of identity theft. Worse, according to 
the study, it took victims an average of 28 hours on the phone with 
creditors and credit bureaus to clear their names. I use the term 
``clear'' loosely, because in many cases the damage caused by identity 
theft is

[[Page 14738]]

irreversible. Victims will have fraud alerts on their credit reports 
for years to come, making it more difficult to open new accounts or 
make major purchases. Some will be erroneously contacted by collection 
agencies.
  Individuals whose personal information is not stolen also suffer. 
Businesses lose nearly $50 billion a year from identity thieves posing 
as customers. These losses translate into increased prices for every 
consumer.
  In some cases, the availability of electronic personal data can lead 
to tragedy. In 1999, a former high school classmate of Amy Lynn Boyer 
obtained her former work address and social security number from an on-
line data broker. By calling her home and posing as the former 
employer, he convinced Amy's mom to give him Amy's work address. He 
then drove to Boyer's workplace and fatally shot her.
  In an effort to protect the privacy and security of our electronic 
personal information, and prevent future tragedies, small and large, my 
colleague Senator Leahy and I are introducing the Personal Data Privacy 
and Security Act of 2005. First, this legislation goes after identity 
thieves by increasing penalties for crimes involving electronic 
personal data. For example, it increases penalties for computer fraud 
when such fraud involves personal data. It also goes after those who 
intentionally expose Americans to identity theft by punishing those who 
intentionally conceal a security breach that involves personal data.
  The bill also empowers Americans to look after the privacy of their 
own data. The bill will allow individuals to obtain access to any 
personal information held by data brokers. For individuals who believe 
their information is wrong, data brokers must provide them with 
guidance on how to correct their information.
  The legislation also puts the burden those that store, transmit and 
access electronic personal data. It will require the companies, 
government agencies, universities that keep significant amounts of 
personal data to assess the vulnerability of their systems and to adopt 
policies that will address those vulnerabilities. Some entities will 
choose to encrypt the personal data that they store and transmit. 
Others will pick a means more appropriate their size and the 
sensitivity of their data.
  Of course, these provisions do not apply to data held by health care 
providers and financial institutions that is already regulated by other 
federal laws. This legislation fills in gaps left by other federal 
laws. It has become clear that many entities other than health care 
providers and financial institutions have large amounts of personal 
information. This legislation would require such entities to adequately 
protect their electronic data.
  Such measures will not always be enough. As I've already noted, the 
nature of electronic data makes it vulnerable even when those who hold 
it take reasonable steps to protect it. Currently, no federal law 
requires those who maintain our sensitive personal data to notify 
affected individuals when such data is lost or exposed. This 
legislation would require those who maintained such data to notify 
affected individuals as well as law enforcement. As everyone knows, 
knowledge is power. Once individuals learn that their personal 
information is exposed, they can take steps to protect themselves. And, 
the company, school or agency that experienced the breach must help. 
They must provide individuals whose data was lost with a monthly credit 
report and they must provide information on the identity theft victim 
assistance available to them. For large breaches, the media must be 
notified. Media reports over the past few months have made Americans 
far more aware of the problem of security breaches. Hopefully, we can 
continue to raise awareness by requiring data holders to continue the 
practice of making public announcements regarding large breaches. 
Notice will also give law enforcement a head start in the effort to 
prevent harm to individuals as a result of a breach.
  One of the most critical pieces of information that can be lost is 
one's Social Security number. We can all think of instances when we've 
been asked for our Social Security number to verify our identities--
utilities, doctors, schools--I could go on. In itself, this is not 
harmful. Problems arise however, when the Social Security number gets 
passed along to others without the person's knowledge or permission. 
The legislation would prohibit companies from buying, selling or 
displaying a Social Security number without consent from the individual 
whose number it is. The bill also would prevent companies from 
requiring individuals to give their Social Security number in order to 
obtain goods or services. Finally, it would bar government agencies 
from posting public records that contain Social Security numbers on the 
internet. This legislation would not prevent the use of Social Security 
numbers altogether. We recognize that would not be practical. It would, 
however, protect the value of Social Security numbers by preventing 
their proliferation.
  Finally, this legislation will protect the privacy of all Americans 
by providing a check on the government's use of databases maintained by 
data brokers. As I've already noted, federal law enforcement uses 
electronic personal data maintained by data brokers to track criminals 
and criminal activity. Correctly used, these databases can be very 
useful tools in the fight against crime. However, there should be some 
check on their use. In addition, the legislation aims at making sure 
the government's use of such data is secure. It will require audits to 
ensure that data brokers are keeping law enforcement inquiries private.
  This bill represents a comprehensive effort to protect the privacy 
and security of electronic personal data. Our lives have all been made 
easier because our personal information is readily available to those 
who have a legitimate need for it. This legislation aims to keep such 
information out of the hands of those who have no legitimate need for 
it. I urge my colleagues to join me in supporting this important 
legislation. I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1332

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Personal 
     Data Privacy and Security Act of 2005''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.

 TITLE I--ENHANCING PUNISHMENT FOR IDENTITY THEFT AND OTHER VIOLATIONS 
                      OF DATA PRIVACY AND SECURITY

Sec. 101. Fraud and related criminal activity in connection with 
              unauthorized access to personally identifiable 
              information.
Sec. 102. Organized criminal activity in connection with unauthorized 
              access to personally identifiable information.
Sec. 103. Concealment of security breaches involving personally 
              identifiable information.
Sec. 104. Aggravated fraud in connection with computers.
Sec. 105. Review and amendment of Federal sentencing guidelines related 
              to fraudulent access to or misuse of digitized or 
              electronic personally identifiable information.

  TITLE II--ASSISTANCE FOR STATE AND LOCAL LAW ENFORCEMENT COMBATING 
 CRIMES RELATED TO FRAUDULENT, UNAUTHORIZED, OR OTHER CRIMINAL USE OF 
                  PERSONALLY IDENTIFIABLE INFORMATION

Sec. 201. Grants for State and local enforcement.
Sec. 202. Authorization of appropriations.

                        TITLE III--DATA BROKERS

Sec. 301. Transparency and accuracy of data collection.
Sec. 302. Enforcement.
Sec. 303. Relation to State laws.
Sec. 304. Effective date.

 TITLE IV--PRIVACY AND SECURITY OF PERSONALLY IDENTIFIABLE INFORMATION

             Subtitle A--Data Privacy and Security Program

Sec. 401. Purpose and applicability of data privacy and security 
              program.

[[Page 14739]]

Sec. 402. Requirements for a personal data privacy and security 
              program.
Sec. 403. Enforcement.
Sec. 404. Relation to State laws.

                Subtitle B--Security Breach Notification

Sec. 421. Right to notice of security breach.
Sec. 422. Notice procedures.
Sec. 423. Content of notice.
Sec. 424. Risk assessment and fraud prevention notice exemptions.
Sec. 425. Victim protection assistance.
Sec. 426. Enforcement.
Sec. 427. Relation to State laws.
Sec. 428. Study on securing personally identifiable information in the 
              digital era.
Sec. 429. Authorization of appropriations.
Sec. 430. Effective date.

             TITLE V--PROTECTION OF SOCIAL SECURITY NUMBERS

Sec. 501. Social Security number protection.
Sec. 502. Limits on personal disclosure of social security numbers for 
              commercial transactions and accounts.
Sec. 503. Public records.
Sec. 504. Treatment of social security numbers on government checks and 
              prohibition of inmate access.
Sec. 505. Study and report.
Sec. 506. Enforcement.
Sec. 507. Relation to State laws.

       TITLE VI--GOVERNMENT ACCESS TO AND USE OF COMMERCIAL DATA

Sec. 601. General Services Administration review of contracts.
Sec. 602. Requirement to audit information security practices of 
              contractors and third party business entities.
Sec. 603. Privacy impact assessment of government use of commercial 
              information services containing personally identifiable 
              information.
Sec. 604. Implementation of Chief Privacy Officer requirements.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) databases of personal identifiable information are 
     increasingly prime targets of hackers, identity thieves, 
     rogue employees, and other criminals, including organized and 
     sophisticated criminal operations;
       (2) identity theft is a serious threat to the nation's 
     economic stability, homeland security, the development of e-
     commerce, and the privacy rights of Americans;
       (3) over 9,300,000 individuals were victims of identity 
     theft in America last year;
       (4) security breaches are a serious threat to consumer 
     confidence, homeland security, e-commerce, and economic 
     stability;
       (5) it is important for business entities that own, use, or 
     license personally identifiable information to adopt 
     reasonable procedures to ensure the security, privacy, and 
     confidentially of that personally identifiable information;
       (6) individuals whose personal information has been 
     compromised or who have been victims of identity theft should 
     receive the necessary information and assistance to mitigate 
     their damages and to restore the integrity of their personal 
     information and identities;
       (7) data brokers have assumed a significant role in 
     providing identification, authentication, and screening 
     services, and related data collection and analyses for 
     commercial, nonprofit, and government operations;
       (8) data misuse and use of inaccurate data have the 
     potential to cause serious or irreparable harm to an 
     individual's livelihood, privacy, and liberty and undermine 
     efficient and effective business and government operations;
       (9) there is a need to insure that data brokers conduct 
     their operations in a manner that prioritizes fairness, 
     transparency, accuracy, and respect for the privacy of 
     consumers;
       (10) government access to commercial data can potentially 
     improve safety, law enforcement, and national security; and
       (11) because government misuse of commercial data endangers 
     privacy, security, and liberty, there is a need for Congress 
     to exercise oversight over government use of commercial data.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Agency.--The term ``agency'' has the same meaning given 
     such term in section 551 of title 5, United States Code.
       (2) Affiliate.--The term ``affiliate'' means persons 
     related by common ownership or affiliated by corporate 
     control.
       (3) Business entity.--The term ``business entity'' means 
     any organization, corporation, trust, partnership, sole 
     proprietorship, unincorporated association, venture 
     established to make a profit, or nonprofit, and any 
     contractor, subcontractor, affiliate, or licensee thereof 
     engaged in interstate commerce.
       (4) Identity theft.--The term ``identity theft'' means a 
     violation of section 1028 of title 18, United States Code, or 
     any other similar provision of applicable State law.
       (5) Data broker.--The term ``data broker'' means a business 
     entity which for monetary fees, dues, or on a cooperative 
     nonprofit basis, regularly engages, in whole or in part, in 
     the practice of collecting, transmitting, or otherwise 
     providing personally identifiable information on a nationwide 
     basis on more than 5,000 individuals who are not the 
     customers or employees of the business entity or affiliate.
       (6) Data furnisher.--The term ``data furnisher'' means any 
     agency, governmental entity, organization, corporation, 
     trust, partnership, sole proprietorship, unincorporated 
     association, venture established to make a profit, or 
     nonprofit, and any contractor, subcontractor, affiliate, or 
     licensee thereof, that serves as a source of information for 
     a data broker.
       (7) Personal electronic record.--The term ``personal 
     electronic record'' means the compilation of personally 
     identifiable information of an individual (including 
     information associated with that personally identifiable 
     information) in a database, networked or integrated 
     databases, or other data system.
       (8) Personally identifiable information.--The term 
     ``personally identifiable information'' means any 
     information, or compilation of information, in electronic or 
     digital form serving as a means of identification, as defined 
     by section 1028(d)(7) of title 18, United State Code.
       (9) Public record.--The term ``public record'' means any 
     item, collection, or grouping of information about an 
     individual that is maintained by an agency, including--
       (A) education, financial transactions, medical history, and 
     criminal or employment history containing the name of an 
     individual; and
       (B) the identifying number, symbol, or other identifying 
     particular assigned to an individual, such as--
       (i) a fingerprint;
       (ii) a voice print; or
       (iii) a photograph.
       (10) Security breach.--
       (A) In general.--The term ``security breach'' means 
     compromise of the security, confidentiality, or integrity of 
     computerized data through misrepresentation or actions that 
     result in, or there is a reasonable basis to conclude has 
     resulted in, the unauthorized acquisition of and access to 
     sensitive personally identifiable information.
       (B) Exclusion.--The term ``security breach'' does not 
     include a good faith acquisition of sensitive personally 
     identifiable information if the sensitive personally 
     identifiable information is not subject to further 
     unauthorized disclosure.
       (11) Sensitive personally identifiable information.--The 
     term ``sensitive personally identifiable information'' means 
     any name or number used in conjunction with any other 
     information to identify a specific individual, including 
     any--
       (A) name, social security number, date of birth, official 
     State or government issued driver's license or identification 
     number, alien registration number, government passport 
     number, employer or taxpayer identification number;
       (B) unique biometric data, such as--
       (i) a fingerprint;
       (ii) a voice print;
       (iii) a retina or iris image; or
       (iv) any other unique physical representation;
       (C) unique electronic identification number, address, or 
     routing code; or
       (D) telecommunication identifying information or access 
     device (as defined in section 1029(e) of title 18, United 
     States Code).

 TITLE I--ENHANCING PUNISHMENT FOR IDENTITY THEFT AND OTHER VIOLATIONS 
                      OF DATA PRIVACY AND SECURITY

     SEC. 101. FRAUD AND RELATED CRIMINAL ACTIVITY IN CONNECTION 
                   WITH UNAUTHORIZED ACCESS TO PERSONALLY 
                   IDENTIFIABLE INFORMATION.

       Section 1030(a)(2) of title 18, United States Code, is 
     amended--
       (1) in subparagraph (B), by striking ``or'' after the 
     semicolon;
       (2) in subparagraph (C), by inserting ``or'' after the 
     semicolon; and
       (3) by adding at the end the following:
       ``(D) information contained in the databases or systems of 
     a data broker, or in other personal electronic records, as 
     such terms are defined in section 3 of the Personal Data 
     Privacy and Security Act of 2005;''.

     SEC. 102. ORGANIZED CRIMINAL ACTIVITY IN CONNECTION WITH 
                   UNAUTHORIZED ACCESS TO PERSONALLY IDENTIFIABLE 
                   INFORMATION.

       Section 1961(1) of title 18, United States Code, is amended 
     by inserting ``section 1030(a)(2)(D)(relating to fraud and 
     related activity in connection with unauthorized access to 
     personally identifiable information,'' before ``section 
     1084''.

     SEC. 103. CONCEALMENT OF SECURITY BREACHES INVOLVING 
                   PERSONALLY IDENTIFIABLE INFORMATION.

       (a) In General.--Chapter 47 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1039. Concealment of security breaches involving 
       personally identifiable information

       ``Whoever, having knowledge of a security breach requiring 
     notice to individuals under title IV of the Personal Data 
     Privacy and Security Act of 2005, intentionally and willfully 
     conceals the fact of, or information related to, such 
     security breach, shall be fined under this title or 
     imprisoned not more than 5 years, or both.''.

[[Page 14740]]

       (b) Conforming and Technical Amendments.--The table of 
     sections for chapter 47 of title 18, United States Code, is 
     amended by adding at the end the following:

``1039. Concealment of security breaches involving personally 
              identifiable information.''.

     SEC. 104. AGGRAVATED FRAUD IN CONNECTION WITH COMPUTERS.

       (a) In General.--Chapter 47 of title 18, United States 
     Code, is amended by adding after section 1030 the following:

     ``Sec. 1030A. Aggravated fraud in connection with computers

       ``(a) In General.--Whoever, during and in relation to any 
     felony violation enumerated in subsection (c), knowingly 
     obtains, accesses, or transmits, without lawful authority, a 
     means of identification of another person may, in addition to 
     the punishment provided for such felony, be sentenced to a 
     term of imprisonment of up to 2 years.
       ``(b) Consecutive Sentences.--Notwithstanding any other 
     provision of law, should a court in its discretion impose an 
     additional sentence under subsection (a)--
       ``(1) no term of imprisonment imposed on a person under 
     this section shall run concurrently, except as provided in 
     paragraph (3), with any other term of imprisonment imposed on 
     such person under any other provision of law, including any 
     term of imprisonment imposed for the felony during which the 
     means of identifications was obtained, accessed, or 
     transmitted;
       ``(2) in determining any term of imprisonment to be imposed 
     for the felony during which the means of identification was 
     obtained, accessed, or transmitted, a court shall not in any 
     way reduce the term to be imposed for such crime so as to 
     compensate for, or otherwise take into account, any separate 
     term of imprisonment imposed or to be imposed for a violation 
     of this section; and
       ``(3) a term of imprisonment imposed on a person for a 
     violation of this section may, in the discretion of the 
     court, run concurrently, in whole or in part, only with 
     another term of imprisonment that is imposed by the court at 
     the same time on that person for an additional violation of 
     this section.
       ``(c) Definition.--For purposes of this section, the term 
     `felony violation enumerated in subsection (c)' means any 
     offense that is a felony violation of paragraphs (2) through 
     (7) of section 1030(a).''.
       (b) Conforming and Technical Amendments.--The table of 
     sections for chapter 47 of title 18, United States Code, is 
     amended by inserting after the item relating to section 1030 
     the following new item:

``1030A. Aggravated fraud in connection with computers.''.

     SEC. 105. REVIEW AND AMENDMENT OF FEDERAL SENTENCING 
                   GUIDELINES RELATED TO FRAUDULENT ACCESS TO OR 
                   MISUSE OF DIGITIZED OR ELECTRONIC PERSONALLY 
                   IDENTIFIABLE INFORMATION.

       (a) Review and Amendment.--Not later than 180 days after 
     the date of enactment of this Act, the United States 
     Sentencing Commission, pursuant to its authority under 
     section 994 of title 28, United States Code, and in 
     accordance with this section, shall review and, if 
     appropriate, amend the Federal sentencing guidelines 
     (including its policy statements) applicable to persons 
     convicted of using fraud to access, or misuse of, digitized 
     or electronic personally identifiable information, including 
     identity theft or any offense under--
       (1) sections 1028, 1028A, 1030, 1030A, 2511, and 2701 of 
     title 18, United States Code; or
       (2) any other relevant provision.
       (b) Requirements.--In carrying out the requirements of this 
     section, the United States Sentencing Commission shall--
       (1) ensure that the Federal sentencing guidelines 
     (including its policy statements) reflect--
       (A) the serious nature of the offenses and penalties 
     referred to in this Act;
       (B) the growing incidences of theft and misuse of digitized 
     or electronic personally identifiable information, including 
     identity theft; and
       (C) the need to deter, prevent, and punish such offenses;
       (2) consider the extent to which the Federal sentencing 
     guidelines (including its policy statements) adequately 
     address violations of the sections amended by this Act to--
       (A) sufficiently deter and punish such offenses; and
       (B) adequately reflect the enhanced penalties established 
     under this Act;
       (3) maintain reasonable consistency with other relevant 
     directives and sentencing guidelines;
       (4) account for any additional aggravating or mitigating 
     circumstances that might justify exceptions to the generally 
     applicable sentencing ranges;
       (5) consider whether to provide a sentencing enhancement 
     for those convicted of the offenses described in subsection 
     (a), if the conduct involves--
       (A) the online sale of fraudulently obtained or stolen 
     personally identifiable information;
       (B) the sale of fraudulently obtained or stolen personally 
     identifiable information to an individual who is engaged in 
     terrorist activity or aiding other individuals engaged in 
     terrorist activity; or
       (C) the sale of fraudulently obtained or stolen personally 
     identifiable information to finance terrorist activity or 
     other criminal activities;
       (6) make any necessary conforming changes to the Federal 
     sentencing guidelines to ensure that such guidelines 
     (including its policy statements) as described in subsection 
     (a) are sufficiently stringent to deter, and adequately 
     reflect crimes related to fraudulent access to, or misuse of, 
     personally identifiable information; and
       (7) ensure that the Federal sentencing guidelines 
     adequately meet the purposes of sentencing under section 
     3553(a)(2) of title 18, United States Code.
       (c) Emergency Authority to Sentencing Commission.--The 
     United States Sentencing Commission may, as soon as 
     practicable, promulgate amendments under this section in 
     accordance with procedures established in section 21(a) of 
     the Sentencing Act of 1987 (28 U.S.C. 994 note) as though the 
     authority under that Act had not expired.

  TITLE II--ASSISTANCE FOR STATE AND LOCAL LAW ENFORCEMENT COMBATING 
 CRIMES RELATED TO FRAUDULENT, UNAUTHORIZED, OR OTHER CRIMINAL USE OF 
                  PERSONALLY IDENTIFIABLE INFORMATION

     SEC. 201. GRANTS FOR STATE AND LOCAL ENFORCEMENT.

       (a) In General.--Subject to the availability of amounts 
     provided in advance in appropriations Acts, the Assistant 
     Attorney General for the Office of Justice Programs of the 
     Department of Justice may award a grant to a State to 
     establish and develop programs to increase and enhance 
     enforcement against crimes related to fraudulent, 
     unauthorized, or other criminal use of personally 
     identifiable information.
       (b) Application.--A State seeking a grant under subsection 
     (a) shall submit an application to the Assistant Attorney 
     General for the Office of Justice Programs of the Department 
     of Justice at such time, in such manner, and containing such 
     information as the Assistant Attorney General may require.
       (c) Use of Grant Amounts.--A grant awarded to a State under 
     subsection (a) shall be used by a State, in conjunction with 
     units of local government within that State, State and local 
     courts, other States, or combinations thereof, to establish 
     and develop programs to--
       (1) assist State and local law enforcement agencies in 
     enforcing State and local criminal laws relating to crimes 
     involving the fraudulent, unauthorized, or other criminal use 
     of personally identifiable information;
       (2) assist State and local law enforcement agencies in 
     educating the public to prevent and identify crimes involving 
     the fraudulent, unauthorized, or other criminal use of 
     personally identifiable information;
       (3) educate and train State and local law enforcement 
     officers and prosecutors to conduct investigations and 
     forensic analyses of evidence and prosecutions of crimes 
     involving the fraudulent, unauthorized, or other criminal use 
     of personally identifiable information;
       (4) assist State and local law enforcement officers and 
     prosecutors in acquiring computer and other equipment to 
     conduct investigations and forensic analysis of evidence of 
     crimes involving the fraudulent, unauthorized, or other 
     criminal use of personally identifiable information; and
       (5) facilitate and promote the sharing of Federal law 
     enforcement expertise and information about the 
     investigation, analysis, and prosecution of crimes involving 
     the fraudulent, unauthorized, or other criminal use of 
     personally identifiable information with State and local law 
     enforcement officers and prosecutors, including the use of 
     multi-jurisdictional task forces.
       (d) Assurances and Eligibility.--To be eligible to receive 
     a grant under subsection (a), a State shall provide 
     assurances to the Attorney General that the State--
       (1) has in effect laws that penalize crimes involving the 
     fraudulent, unauthorized, or other criminal use of personally 
     identifiable information, such as penal laws prohibiting--
       (A) fraudulent schemes executed to obtain personally 
     identifiable information;
       (B) schemes executed to sell or use fraudulently obtained 
     personally identifiable information; and
       (C) online sales of personally identifiable information 
     obtained fraudulently or by other illegal means;
       (2) will provide an assessment of the resource needs of the 
     State and units of local government within that State, 
     including criminal justice resources being devoted to the 
     investigation and enforcement of laws related to crimes 
     involving the fraudulent, unauthorized, or other criminal use 
     of personally identifiable information; and
       (3) will develop a plan for coordinating the programs 
     funded under this section with other federally funded 
     technical assistant and training programs, including directly 
     funded local programs such as the Local Law Enforcement Block 
     Grant program (described under the heading ``Violent Crime 
     Reduction Programs, State and Local Law Enforcement 
     Assistance'' of the Departments of Commerce, Justice, and 
     State, the Judiciary, and Related Agencies Appropriations 
     Act, 1998 (Public Law 105-119)).

[[Page 14741]]

       (e) Matching Funds.--The Federal share of a grant received 
     under this section may not exceed 90 percent of the total 
     cost of a program or proposal funded under this section 
     unless the Attorney General waives, wholly or in part, the 
     requirements of this subsection.

     SEC. 202. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There is authorized to be appropriated to 
     carry out this title $25,000,000 for each of fiscal years 
     2006 through 2009.
       (b) Limitations.--Of the amount made available to carry out 
     this title in any fiscal year not more than 3 percent may be 
     used by the Attorney General for salaries and administrative 
     expenses.
       (c) Minimum Amount.--Unless all eligible applications 
     submitted by a State or units of local government within a 
     State for a grant under this title have been funded, the 
     State, together with grantees within the State (other than 
     Indian tribes), shall be allocated in each fiscal year under 
     this title not less than 0.75 percent of the total amount 
     appropriated in the fiscal year for grants pursuant to this 
     title, except that the United States Virgin Islands, American 
     Samoa, Guam, and the Northern Mariana Islands each shall be 
     allocated 0.25 percent.
       (d) Grants to Indian Tribes.--Notwithstanding any other 
     provision of this title, the Attorney General may use amounts 
     made available under this title to make grants to Indian 
     tribes for use in accordance with this title.

                        TITLE III--DATA BROKERS

     SEC. 301. TRANSPARENCY AND ACCURACY OF DATA COLLECTION.

       (a) In General.--Data brokers engaging in interstate 
     commerce are subject to the requirements of this title for 
     any offered product or service offered to third parties that 
     allows access, use, compilation, distribution, processing, 
     analyzing, or evaluating personally identifiable information, 
     unless that product or service is currently subject to 
     similar protections under subsections (b) and (g) of this 
     section, the Fair Credit Reporting Act (Public Law 91-508), 
     or the Gramm-Leach Bliley Act (Public Law 106-102), and 
     implementing regulations.
       (b) Disclosures to Individuals.--
       (1) In general.--A data broker shall, upon the request of 
     an individual, clearly and accurately disclose to such 
     individual for a reasonable fee all personal electronic 
     records pertaining to that individual maintained for 
     disclosure to third parties in the databases or systems of 
     the data broker at the time of the request.
       (2) Information on how to correct inaccuracies.--The 
     disclosures required under paragraph (1) shall also include 
     guidance to individuals on the processes and procedures for 
     demonstrating and correcting any inaccuracies.
       (c) Creation of an Accuracy Resolution Process.--A data 
     broker shall develop and publish on its website timely and 
     fair processes and procedures for responding to claims of 
     inaccuracies, including procedures for correcting inaccurate 
     information in the personal electronic records it maintains 
     on individuals.
       (d) Accuracy Resolution Process.--
       (1) Public record information.--
       (A) In general.--If an individual notifies a data broker of 
     a dispute as to the completeness or accuracy of information, 
     and the data broker determines that such information is 
     derived from a public record source, the data broker shall 
     determine within 30 days whether the information in its 
     system accurately and completely records the information 
     offered by the public record source.
       (B) Data broker actions.--If a data broker determines under 
     subparagraph (A) that the information in its systems--
       (i) does not accurately and completely record the 
     information offered by a public record source, the data 
     broker shall correct any inaccuracies or incompleteness, and 
     provide to such individual written notice of such changes; 
     and
       (ii) does accurately and completely record the information 
     offered by a public record source, the data broker shall--

       (I) provide such individual with the name, address, and 
     telephone contact information of the public record source; 
     and
       (II) notify such individual of the right to add to the 
     personal electronic record of the individual maintained by 
     the data broker a statement disputing the accuracy or 
     completeness of the information for a period of 90 days under 
     subsection (e).

       (2) Investigation of disputed non-public record 
     information.--If the completeness or accuracy of any non-
     public record information disclosed to an individual under 
     subsection (b) is disputed by the individual and such 
     individual notifies the data broker directly of such dispute, 
     the data broker shall, before the end of the 30-day period 
     beginning on the date on which the data broker receives the 
     notice of the dispute--
       (A) investigate free of charge and record the current 
     status of the disputed information; or
       (B) delete the item from the individuals data file in 
     accordance with paragraph (8).
       (3) Extension of period to investigate.--Except as provided 
     in paragraph (4), the 30-day period described in paragraph 
     (1) may be extended for not more than 15 additional days if a 
     data broker receives information from the individual during 
     that 30-day period that is relevant to the investigation.
       (4) Limitations on extension of period to investigate.--
     Paragraph (3) shall not apply to any investigation in which, 
     during the 30-day period described in paragraph (1), the 
     information that is the subject of the investigation is found 
     to be inaccurate or incomplete or a data broker determines 
     that the information cannot be verified.
       (5) Notice identifying the data furnisher.--If the 
     completeness or accuracy of any information disclosed to an 
     individual under subsection (b) is disputed by the 
     individual, a data broker shall provide upon the request of 
     the individual, the name, business address, and telephone 
     contact information of any data furnisher who provided an 
     item of information in dispute.
       (6) Determination that dispute is frivolous or 
     irrelevant.--
       (A) In general.--Notwithstanding paragraphs (1) through 
     (4), a data broker may decline to investigate or terminate an 
     investigation of information disputed by an individual under 
     those paragraphs if the data broker reasonably determines 
     that the dispute by the individual is frivolous or 
     irrelevant, including by reason of a failure by the 
     individual to provide sufficient information to investigate 
     the disputed information.
       (B) Notice.--Not later than 5 business days after making 
     any determination in accordance with subparagraph (A) that a 
     dispute is frivolous or irrelevant, a data broker shall 
     notify the individual of such determination by mail, or if 
     authorized by the individual, by any other means available to 
     the data broker.
       (C) Contents of notice.--A notice under subparagraph (B) 
     shall include--
       (i) the reasons for the determination under subparagraph 
     (A); and
       (ii) identification of any information required to 
     investigate the disputed information, which may consist of a 
     standardized form describing the general nature of such 
     information.
       (7) Consideration of individual information.--In conducting 
     any investigation with respect to disputed information in the 
     personal electronic record of any individual, a data broker 
     shall review and consider all relevant information submitted 
     by the individual in the period described in paragraph (2) 
     with respect to such disputed information.
       (8) Treatment of inaccurate or unverifiable information.--
       (A) In general.--If, after any review of public record 
     information under paragraph (1) or any investigation of any 
     information disputed by an individual under paragraphs (2) 
     through (4), an item of information is found to be inaccurate 
     or incomplete or cannot be verified, a data broker shall 
     promptly delete that item of information from the 
     individual's personal electronic record or modify that item 
     of information, as appropriate, based on the results of the 
     investigation.
       (B) Notice to individuals of reinsertion of previously 
     deleted information.--If any information that has been 
     deleted from an individual's personal electronic record 
     pursuant to subparagraph (A) is reinserted in the personal 
     electronic record of the individual, a data broker shall, not 
     later than 5 days after reinsertion, notify the individual of 
     the reinsertion and identify any data furnisher not 
     previously disclosed in writing, or if authorized by the 
     individual for that purpose, by any other means available to 
     the data broker, unless such notification has been previously 
     given under this subsection.
       (C) Notice of results of investigation of disputed non-
     public record.--
       (i) In general.--Not later than 5 business days after the 
     completion of an investigation under paragraph (2), a data 
     broker shall provide written notice to an individual of the 
     results of the investigation, by mail or, if authorized by 
     the individual for that purpose, by other means available to 
     the data broker.
       (ii) Additional requirement.--Before the expiration of the 
     5-day period, as part of, or in addition to such notice, a 
     data broker shall, in writing, provide to an individual--

       (I) a statement that the investigation is completed;
       (II) a report that is based upon the personal electronic 
     record of such individual as that personal electronic record 
     is revised as a result of the investigation;
       (III) a notice that, if requested by the individual, a 
     description of the procedures used to determine the accuracy 
     and completeness of the information shall be provided to the 
     individual by the data broker, including the business name, 
     address, and telephone number of any data furnisher of 
     information contacted in connection with such information; 
     and
       (IV) a notice that the individual has the right to request 
     notifications under subsection (g).

       (D) Description of investigation procedures.--Not later 
     than 15 days after receiving a request from an individual for 
     a description referred to in subparagraph (C)(ii)(III), a 
     data broker shall provide to the individual such a 
     description.
       (E) Expedited dispute resolution.--If by no later than 3 
     business days after the date on which a data broker receives 
     notice of a dispute from an individual of information in

[[Page 14742]]

     the personal electronic record of such individual in 
     accordance with paragraph (2), a data broker resolves such 
     dispute in accordance with subparagraph (A) by the deletion 
     of the disputed information, then the data broker shall not 
     be required to comply with subsections (e) and (f) with 
     respect to that dispute if the data broker provides--
       (i) to the individual, by telephone, prompt notice of the 
     deletion; and
       (ii) to the individual a right to request that the data 
     broker furnish notifications under subsection (g).
       (e) Statement of Dispute.--
       (1) In general.--If the completeness or accuracy of any 
     information disclosed to an individual under subsection (b) 
     is disputed, an individual may file a brief statement setting 
     forth the nature of the dispute.
       (2) Contents of statement.--A data broker may limit the 
     statements made pursuant to paragraph (1) to not more than 
     100 words if it provides an individual with assistance in 
     writing a clear summary of the dispute or until the dispute 
     is resolved, whichever is earlier.
       (f) Notification of Dispute in Subsequent Reports.--
     Whenever a statement of a dispute is filed under subsection 
     (e), unless there is a reasonable grounds to believe that it 
     is frivolous or irrelevant, a data broker shall, in any 
     subsequent report, product, or service containing the 
     information in question, clearly note that it is disputed by 
     an individual and provide either the statement of such 
     individual or a clear and accurate codification or summary 
     thereof for a period of 90 days after the data broker first 
     posts the statement of dispute.
       (g) Notification of Deletion of Disputed Information.--
     Following any deletion of information which is found to be 
     inaccurate or whose accuracy can no longer be verified, a 
     data broker shall, at the request of an individual, furnish 
     notification that the item has been deleted or the statement, 
     codification, or summary pursuant to subsection (e) or (f) to 
     any user or customer of the products or services of the data 
     broker who has within 90 days received a report with the 
     deleted or disputed information or has electronically 
     accessed the deleted or disputed information.

     SEC. 302. ENFORCEMENT.

       (a) Civil Penalties.--
       (1) Penalties.--Any data broker that violates the 
     provisions of section 301 shall be subject to civil penalties 
     of not more than $1,000 per violation per day, with a maximum 
     of $15,000 per day, while such violations persist.
       (2) Intentional or willful violation.--A data broker that 
     intentionally or willfully violates the provisions of section 
     301 shall be subject to additional penalties in the amount of 
     $1,000 per violation per day, with a maximum of an additional 
     $15,000 per day, while such violations persist.
       (3) Equitable relief.--A data broker engaged in interstate 
     commerce that violates this section may be enjoined from 
     further violations by a court of competent jurisdiction.
       (4) Other rights and remedies.--The rights and remedies 
     available under this subsection are cumulative and shall not 
     affect any other rights and remedies available under law.
       (b) Injunctive Actions by the Attorney General.--
       (1) In general.--Whenever it appears that a data broker to 
     which this title applies has engaged, is engaged, or is about 
     to engage, in any act or practice constituting a violation of 
     this title, the Attorney General may bring a civil action in 
     an appropriate district court of the United States to--
       (A) enjoin such act or practice;
       (B) enforce compliance with this title;
       (C) obtain damages--
       (i) in the sum of actual damages, restitution, and other 
     compensation on behalf of the affected residents of a State; 
     and
       (ii) punitive damages, if the violation is willful or 
     intentional; and
       (D) obtain such other relief as the court determines to be 
     appropriate.
       (2) Other injunctive relief.--Upon a proper showing in the 
     action under paragraph (1), the court shall grant a permanent 
     injunction or a temporary restraining order without bond.
       (c) State Enforcement.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State has been or is threatened or 
     adversely affected by an act or practice that violates this 
     title, the State may bring a civil action on behalf of the 
     residents of that State in a district court of the United 
     States of appropriate jurisdiction, or any other court of 
     competent jurisdiction, to--
       (A) enjoin that act or practice;
       (B) enforce compliance with this title;
       (C) obtain--
       (i) damages in the sum of actual damages, restitution, or 
     other compensation on behalf of affected residents of the 
     State; and
       (ii) punitive damages, if the violation is willful or 
     intentional; or
       (D) obtain such other legal and equitable relief as the 
     court may consider to be appropriate.
       (2) Notice.--
       (A) In general.--Before filing an action under this 
     subsection, the attorney general of the State involved shall 
     provide to the Attorney General--
       (i) a written notice of that action; and
       (ii) a copy of the complaint for that action.
       (B) Exception.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this subsection, if the attorney general of a 
     State determines that it is not feasible to provide the 
     notice described in this subparagraph before the filing of 
     the action.
       (C) Notification when practicable.--In an action described 
     under subparagraph (B), the attorney general of a State shall 
     provide the written notice and the copy of the complaint to 
     the Attorney General as soon after the filing of the 
     complaint as practicable.
       (3) Attorney general authority.--Upon receiving notice 
     under paragraph (2), the Attorney General shall have the 
     right to--
       (A) move to stay the action, pending the final disposition 
     of a pending Federal proceeding or action as described in 
     paragraph (4);
       (B) intervene in an action brought under paragraph (1); and
       (C) file petitions for appeal.
       (4) Pending proceedings.--If the Attorney General has 
     instituted a proceeding or action for a violation of this Act 
     or any regulations thereunder, no attorney general of a State 
     may, during the pendency of such proceeding or action, bring 
     an action under this subsection against any defendant named 
     in such criminal proceeding or civil action for any violation 
     that is alleged in that proceeding or action.
       (5) Rule of construction.--For purposes of bringing any 
     civil action under paragraph (1), nothing in this Act shall 
     be construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State to--
       (A) conduct investigations;
       (B) administer oaths and affirmations; or
       (C) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (6) Venue; service of process.--
       (A) Venue.--Any action brought under this subsection may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1931 
     of title 28, United States Code.
       (B) Service of process.--In an action brought under this 
     subsection process may be served in any district in which the 
     defendant--
       (i) is an inhabitant; or
       (ii) may be found.

     SEC. 303. RELATION TO STATE LAWS.

       (a) In General.--Except as provided in subsection (b), this 
     title does not annul, alter, affect, or exempt any person 
     subject to the provisions of this title from complying with 
     the laws of any State with respect to the access, use, 
     compilation, distribution, processing, analysis, and 
     evaluation of any personally identifiable information by data 
     brokers, except to the extent that those laws are 
     inconsistent with any provisions of this title, and then only 
     to the extent of such inconsistency.
       (b) Exceptions.--No requirement or prohibition may be 
     imposed under the laws of any State with respect to any 
     subject matter regulated under section 301, relating to 
     individual access to, and correction of, personal electronic 
     records.

     SEC. 304. EFFECTIVE DATE.

       This title shall take effect 180 days after the date of 
     enactment of this Act.

 TITLE IV--PRIVACY AND SECURITY OF PERSONALLY IDENTIFIABLE INFORMATION

             Subtitle A--Data Privacy and Security Program

     SEC. 401. PURPOSE AND APPLICABILITY OF DATA PRIVACY AND 
                   SECURITY PROGRAM.

       (a) Purpose.--The purpose of this subtitle is to ensure 
     standards for developing and implementing administrative, 
     technical, and physical safeguards to protect the privacy, 
     security, confidentiality, integrity, storage, and disposal 
     of personally identifiable information.
       (b) In General.--A business entity engaging in interstate 
     commerce that involves collecting, accessing, transmitting, 
     using, storing, or disposing of personally identifiable 
     information in electronic or digital form on 10,000 or more 
     United States persons is subject to the requirements for a 
     data privacy and security program under section 402 for 
     protecting personally identifiable information.
       (c) Limitations.--Notwithstanding any other obligation 
     under this subtitle, this subtitle does not apply to--
       (1) financial institutions subject to--
       (A) the data security requirements and implementing 
     regulations under the Gramm-Leach-Bliley Act (15 U.S.C. 6801 
     et seq.); and
       (B) examinations for compliance with the requirements of 
     this Act by 1 or more Federal functional regulators (as 
     defined in section 509 of the Gramm-Leach-Bliley Act (15 
     U.S.C. 6809)); or
       (2) ``covered entities'' subject to the Health Insurance 
     Portability and Accountability Act of 1996 (42 U.S.C. 1301 et 
     seq.), including the data security requirements and 
     implementing regulations of that Act.

     SEC. 402. REQUIREMENTS FOR A PERSONAL DATA PRIVACY AND 
                   SECURITY PROGRAM.

       (a) Personal Data Privacy and Security Program.--Unless 
     otherwise limited under

[[Page 14743]]

     section 401(c), a business entity subject to this subtitle 
     shall comply with the following safeguards to protect the 
     privacy and security of personally identifiable information:
       (1) Scope.--A business entity shall implement a 
     comprehensive personal data privacy and security program, 
     written in 1 or more readily accessible parts, that includes 
     administrative, technical, and physical safeguards 
     appropriate to the size and complexity of the business entity 
     and the nature and scope of its activities.
       (2) Design.--The personal data privacy and security program 
     shall be designed to--
       (A) ensure the privacy, security, and confidentiality of 
     personal electronic records;
       (B) protect against any anticipated vulnerabilities to the 
     privacy, security, or integrity of personal electronic 
     records; and
       (C) protect against unauthorized access to use of personal 
     electronic records that could result in substantial harm or 
     inconvenience to any individual.
       (3) Risk assessment.--A business entity shall--
       (A) identify reasonably foreseeable internal and external 
     vulnerabilities that could result in unauthorized access, 
     disclosure, use, or alteration of personally identifiable 
     information or systems containing personally identifiable 
     information;
       (B) assess the likelihood of and potential damage from 
     unauthorized access, disclosure, use, or alteration of 
     personally identifiable information; and
       (C) assess the sufficiency of its policies, technologies, 
     and safeguards in place to control and minimize risks from 
     unauthorized access, disclosure, use, or alteration of 
     personally identifiable information.
       (4) Risk management and control.--Each business entity 
     shall--
       (A) design its personal data privacy and security program 
     to control the risks identified under paragraph (3); and
       (B) adopt measures commensurate with the sensitivity of the 
     data as well as the size, complexity, and scope of the 
     activities of the business entity that--
       (i) control access to systems and facilities containing 
     personally identifiable information, including controls to 
     authenticate and permit access only to authorized 
     individuals;
       (ii) detect actual and attempted fraudulent, unlawful, or 
     unauthorized access, disclosure, use, or alteration of 
     personally identifiable information, including by employees 
     and other individuals otherwise authorized to have access; 
     and
       (iii) protect personally identifiable information during 
     use, transmission, storage, and disposal by encryption or 
     other reasonable means (including as directed for disposal of 
     records under section 628 of the Fair Credit Reporting Act 
     (15 U.S.C. 1681w) and the implementing regulations of such 
     Act as set forth in section 682 of title 16, Code of Federal 
     Regulations).
       (5) Accountability.--Each business entity required to 
     establish a data security program under section 401 shall 
     publish on its website or make otherwise available the terms 
     of such program to the extent that such terms do not reveal 
     information that compromise data security or privacy.
       (b) Training.--Each business entity subject to this 
     subtitle shall take steps to ensure employee training and 
     supervision for implementation of the data security program 
     of the business entity.
       (c) Vulnerability Testing.--
       (1) In general.--Each business entity subject to this 
     subtitle shall take steps to ensure regular testing of key 
     controls, systems, and procedures of the personal data 
     privacy and security program to detect, prevent, and respond 
     to attacks or intrusions, or other system failures.
       (2) Frequency.--The frequency and nature of the tests 
     required under paragraph (1) shall be determined by the risk 
     assessment of the business entity under subsection (a)(3).
       (d) Relationship to Service Providers.--In the event a 
     business entity subject to this subtitle engages service 
     providers not subject to this subtitle, such business entity 
     shall--
       (1) exercise appropriate due diligence in selecting those 
     service providers for responsibilities related to personally 
     identifiable information, and take reasonable steps to select 
     and retain service providers that are capable of maintaining 
     appropriate safeguards for the security, privacy, and 
     integrity of the personally identifiable information at 
     issue; and
       (2) require those service providers by contract to 
     implement and maintain appropriate measures designed to meet 
     the objectives and requirements governing entities subject to 
     this section, section 401, and subtitle B.
       (e) Periodic Assessment and Personal Data Privacy and 
     Security Modernization.--Each business entity subject to this 
     subtitle shall on a regular basis monitor, evaluate, and 
     adjust, as appropriate its data privacy and security program 
     in light of any relevant changes in--
       (1) technology;
       (2) the sensitivity of personally identifiable information;
       (3) internal or external threats to personally identifiable 
     information; and
       (4) the changing business arrangements of the business 
     entity, such as--
       (A) mergers and acquisitions;
       (B) alliances and joint ventures;
       (C) outsourcing arrangements;
       (D) bankruptcy; and
       (E) changes to personally identifiable information systems.
       (f) Implementation Time Line.--Not later than 1 year after 
     the date of enactment of this Act, a business entity subject 
     to the provisions of this subtitle shall implement a data 
     privacy and security program pursuant to this subtitle.

     SEC. 403. ENFORCEMENT.

       (a) Civil Penalties.--
       (1) In general.--Any business entity that violates the 
     provisions of sections 401 or 402 shall be subject to civil 
     penalties of not more than $5,000 per violation per day, with 
     a maximum of $35,000 per day, while such violations persist.
       (2) Intentional or willful violation.--A business entity 
     that intentionally or willfully violates the provisions of 
     sections 401 or 402 shall be subject to additional penalties 
     in the amount of $5,000 per violation per day, with a maximum 
     of an additional $35,000 per day, while such violations 
     persist.
       (3) Equitable relief.--A business entity engaged in 
     interstate commerce that violates this section may be 
     enjoined from further violations by a court of competent 
     jurisdiction.
       (4) Other rights and remedies.--The rights and remedies 
     available under this section are cumulative and shall not 
     affect any other rights and remedies available under law
       (b) Injunctive Actions by the Attorney General.--
       (1) In general.--Whenever it appears that a business entity 
     or agency to which this subtitle applies has engaged, is 
     engaged, or is about to engage, in any act or practice 
     constituting a violation of this subtitle, the Attorney 
     General may bring a civil action in an appropriate district 
     court of the United States to--
       (A) enjoin such act or practice;
       (B) enforce compliance with this subtitle; and
       (C) obtain damages--
       (i) in the sum of actual damages, restitution, and other 
     compensation on behalf of the affected residents of a State; 
     and
       (ii) punitive damages, if the violation is willful or 
     intentional; and
       (D) obtain such other relief as the court determines to be 
     appropriate.
       (2) Other injunctive relief.--Upon a proper showing in the 
     action under paragraph (1), the court shall grant a permanent 
     injunction or a temporary restraining order without bond.
       (c) State Enforcement.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State has been or is threatened or 
     adversely affected by an act or practice that violates this 
     subtitle, the State may bring a civil action on behalf of the 
     residents of that State in a district court of the United 
     States of appropriate jurisdiction, or any other court of 
     competent jurisdiction, to--
       (A) enjoin that act or practice;
       (B) enforce compliance with this subtitle;
       (C) obtain--
       (i) damages in the sum of actual damages, restitution, or 
     other compensation on behalf of affected residents of the 
     State; and
       (ii) punitive damages, if the violation is willful or 
     intentional; or
       (D) obtain such other legal and equitable relief as the 
     court may consider to be appropriate.
       (2) Notice.--
       (A) In general.--Before filing an action under this 
     subsection, the attorney general of the State involved shall 
     provide to the Attorney General--
       (i) a written notice of that action; and
       (ii) a copy of the complaint for that action.
       (B) Exception.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this subsection, if the attorney general of a 
     State determines that it is not feasible to provide the 
     notice described in this subparagraph before the filing of 
     the action.
       (C) Notification when practicable.--In an action described 
     under subparagraph (B), the attorney general of a State shall 
     provide the written notice and the copy of the complaint to 
     the Attorney General as soon after the filing of the 
     complaint as practicable.
       (3) Attorney general authority.--Upon receiving notice 
     under paragraph (2), the Attorney General shall have the 
     right to--
       (A) move to stay the action, pending the final disposition 
     of a pending Federal proceeding or action as described in 
     paragraph (4);
       (B) intervene in an action brought under paragraph (1); and
       (C) file petitions for appeal.
       (4) Pending proceedings.--If the Attorney General has 
     instituted a proceeding or action for a violation of this Act 
     or any regulations thereunder, no attorney general of a State 
     may, during the pendency of such proceeding or action, bring 
     an action under this subsection against any defendant named 
     in such criminal proceeding or civil action for any violation 
     that is alleged in that proceeding or action.

[[Page 14744]]

       (5) Rule of construction.--For purposes of bringing any 
     civil action under paragraph (1) nothing in this Act shall be 
     construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State to--
       (A) conduct investigations;
       (B) administer oaths and affirmations; or
       (C) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (6) Venue; service of process.--
       (A) Venue.--Any action brought under this subsection may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1931 
     of title 28, United States Code.
       (B) Service of process.--In an action brought under this 
     subsection process may be served in any district in which the 
     defendant--
       (i) is an inhabitant; or
       (ii) may be found.

     SEC. 404. RELATION TO STATE LAWS.

       (a) In General.--Except as provided in subsection (b), this 
     title does not annul, alter, affect, or exempt any person 
     subject to the provisions of this title from complying with 
     the laws of any State with respect to security programs for 
     personally identifiable information, except to the extent 
     that those laws are inconsistent with any provisions of this 
     title, and then only to the extent of such inconsistency.
       (b) Exceptions.--No requirement or prohibition may be 
     imposed under the laws of any State with respect to any 
     subject matter regulated under section 401(c), relating to 
     entities exempted from compliance with subtitle A.

                Subtitle B--Security Breach Notification

     SEC. 421. RIGHT TO NOTICE OF SECURITY BREACH.

       (a) In General.--Unless delayed under section 422(d) or 
     exempted under section 424, any business entity or agency 
     engaged in interstate commerce that involves collecting, 
     accessing, using, transmitting, storing, or disposing of 
     personally identifiable information shall notify, following 
     the discovery of a security breach of its systems or 
     databases in its possession or direct control when such 
     security breach impacts sensitive personally identifiable 
     information--
       (1) if the security breach impacts more than 10,000 
     individuals nationwide, impacts a database, networked or 
     integrated databases, or other data system associated with 
     more than 1,000,000 individuals nationwide, impacts databases 
     owned or used by the Federal Government, or involves 
     sensitive personally identifiable information of employees 
     and contractors of the Federal Government--
       (A) the United States Secret Service, which shall be 
     responsible for notifying----
       (i) the Federal Bureau of Investigation, if the security 
     breach involves espionage, foreign counterintelligence, 
     information protected against unauthorized disclosure for 
     reasons of national defense or foreign relations, or 
     Restricted Data (as that term is defined in section 11y of 
     the Atomic Energy Act of 1954 (42 U.S.C. 2014(y)), except for 
     offenses affecting the duties of the United States Secret 
     Service under section 3056(a) of title 18, United States 
     Code; and
       (ii) the United States Postal Inspection Service, if the 
     security breach involves mail fraud; and
       (B) the attorney general of each State affected by the 
     security breach;
       (2) each consumer reporting agency described in section 
     603(p) of the Fair Credit Reporting Act (15 U.S.C. 1681a), 
     pursuant to subsection (b); and
       (3) any resident of the United States whose sensitive 
     personally identifiable information was subject to the 
     security breach, pursuant to sections 422 and 423, but in the 
     event a business entity or agency is unable to identify the 
     specific residents of the United States whose sensitive 
     personally identifiable information was impacted by a 
     security breach, the business entity or agency shall consult 
     with the United States Secret Service to determine the scope 
     of individuals who there is a reasonable basis to conclude 
     have been impacted by such breach and should receive notice.
       (b) Consumer Reporting Agencies.--Any business entity or 
     agency obligated to provide notice of a security breach to 
     more than 1,000 residents of the United States under 
     subsection (a)(3) shall inform consumer reporting agencies of 
     the fact and scope of such notices for the purpose of 
     facilitating and managing potential increases in consumer 
     inquiries and mitigating identity theft or other negative 
     consequences of the breach.

     SEC. 422. NOTICE PROCEDURES.

       (a) Timeliness of Notice.--
       (1) In general.--Except as provided in subsection (c), all 
     notices required under section 421 shall be issued 
     expeditiously and without unreasonable delay after discovery 
     of the events requiring notice.
       (2) 14-day rule.--The notices to Federal law enforcement 
     and the attorney general of each State affected by a security 
     breach required under section 421(a) shall be delivered not 
     later than 14 days after discovery of the events requiring 
     notice.
       (3) Required disclosure.--In complying with the notices 
     required under section 421, a business entity or agency shall 
     expeditiously and without unreasonable delay take reasonable 
     measures which are necessary to--
       (A) determine the scope and assess the impact of a breach 
     under section 421; and
       (B) restore the reasonable integrity of the data system.
       (b) Method.--Any business entity or agency obligated to 
     provide notice under section 421 shall be in compliance with 
     that section if they provide notice as follows:
       (1) Written notification.--By written notification to the 
     last known home address of the individual whose sensitive 
     personally identifiable information was breached, or if 
     unknown, notification via telephone call to the last known 
     home telephone number.
       (2) Internet posting.--If more than 1,000 residents of the 
     United States require notice under section 421 and if the 
     business entity or agency maintains an Internet site, 
     conspicuous posting of the notice on the Internet site of the 
     business entity or agency.
       (3) Media notice.--If more than 5,000 residents of a State 
     or jurisdiction are impacted, notice to major media outlets 
     serving that State or jurisdiction.
       (c) Delay of Notification for Law Enforcement Purposes.--
       (1) In general.--If Federal law enforcement or the attorney 
     general of a State determines that the notices required under 
     section 421(a) would impede a criminal investigation, such 
     notices may be delayed until such law enforcement agency 
     determines that the notices will no longer compromise such 
     investigation.
       (2) Extended delay of notification for law enforcement 
     purposes.--If a business entity or agency has delayed the 
     notices required under paragraphs (2) and (3) of section 
     421(a) as described in paragraph (1), the business entity or 
     agency shall give notice 30 days after the day such law 
     enforcement delay was invoked unless Federal law enforcement 
     provides written notification that further delay is 
     necessary.

     SEC. 423. CONTENT OF NOTICE.

       (a) In General.--A business entity or agency obligated to 
     provide notice to residents of the United States under 
     section 421(a)(3) shall clearly and concisely detail the 
     nature of the sensitive personally identifiable information 
     impacted by the security breach.
       (b) Content of Notice.--A notice under subsection (a) shall 
     include--
       (1) the availability of victim protection assistance 
     pursuant to section 425;
       (2) guidance on how to request that a fraud alert be placed 
     in the file of the individual maintained by consumer 
     reporting agencies, pursuant to section 605A of the Fair 
     Credit Reporting Act (15 U.S.C. 1681c-1) and the implications 
     of such actions;
       (3) the availability of a summary of rights for identity 
     theft victims from consumer reporting agencies, pursuant to 
     section 609 of the Fair Credit Reporting Act (15 U.S.C. 
     1681g);
       (4) if applicable, notice that the State where an 
     individual resides has a statute that provides the individual 
     the right to place a security freeze on their credit report; 
     and
       (5) if applicable, notice that consumer reporting agencies 
     have been notified of the security breach.
       (c) Marketing Not Allowed in Notice.--A notice under 
     subsection (a) may not include--
       (1) marketing information;
       (2) sales offers; or
       (3) any solicitation regarding the collection of additional 
     personally identifiable information from an individual.

     SEC. 424. RISK ASSESSMENT AND FRAUD PREVENTION NOTICE 
                   EXEMPTIONS.

       (a) Risk Assessment Exemption.--A business entity will be 
     exempt from the notice requirements under paragraphs (2) and 
     (3) of section 421(a), if a risk assessment conducted in 
     consultation with Federal law enforcement and the attorney 
     general of each State affected by a security breach concludes 
     that there is a de minimis risk of harm to the individuals 
     whose sensitive personally identifiable information was at 
     issue in the security breach.
       (b) Fraud Prevention Exemption.--A business entity will be 
     exempt from the notice requirement under section 421(a) if--
       (1) the nature of the sensitive personally identifiable 
     information subject to the security breach cannot be used to 
     facilitate transactions or facilitate identity theft to 
     further transactions with another business entity that is not 
     the business entity subject to the security breach 
     notification requirements of section 421;
       (2) the business entity utilizes a security program 
     reasonably designed to block the use of the sensitive 
     personally identifiable information to initiate unauthorized 
     transactions before they are charged to the account of the 
     individual; and
       (3) the business entity has a policy in place to provide 
     notice and provides such notice after a breach of the 
     security of the system has resulted in fraud or unauthorized 
     transactions, but does not necessarily require notice in 
     other circumstances.

     SEC. 425. VICTIM PROTECTION ASSISTANCE.

       Any business entity or agency obligated to provide notice 
     to residents of the United States under section 421(a)(3) 
     shall offer to those same residents to cover the cost of--

[[Page 14745]]

       (1) monthly access to a credit report for a period of 1 
     year from the date of notice provided under section 
     421(a)(3); and
       (2) credit-monitoring services for up to 1 year from the 
     date of notice provided under section 421(a)(3).

     SEC. 426. ENFORCEMENT.

       (a) Civil Penalties.--
       (1) In general.--Any business entity that violates the 
     provisions of sections 421 through 425 shall be subject to 
     civil penalties of not more than $5,000 per violation per 
     day, with a maximum of $55,000 per day, while such violations 
     persist.
       (2) Intentional or willful violation.--A business entity 
     that intentionally or willfully violates the provisions of 
     sections 421 through 425 shall be subject to additional 
     penalties in the amount of $5,000 per violation per day, with 
     a maximum of an additional $55,000 per day, while such 
     violations persist.
       (3) Equitable relief.--A business entity engaged in 
     interstate commerce that violates this section may be 
     enjoined from further violations by a court of competent 
     jurisdiction.
       (4) Other rights and remedies.--The rights and remedies 
     available under this section are cumulative and shall not 
     affect any other rights and remedies available under law.
       (b) Injunctive Actions by the Attorney General.--
       (1) In general.--Whenever it appears that a business entity 
     or agency to which this subtitle applies has engaged, is 
     engaged, or is about to engage, in any act or practice 
     constituting a violation of this subtitle, the Attorney 
     General may bring a civil action in an appropriate district 
     court of the United States to--
       (A) enjoin such act or practice;
       (B) enforce compliance with this subtitle; and
       (C) obtain damages--
       (i) in the sum of actual damages, restitution, and other 
     compensation on behalf of the affected residents of a State; 
     and
       (ii) punitive damages, if the violation is willful or 
     intentional; and
       (D) obtain such other relief as the court determines to be 
     appropriate.
       (2) Other injunctive relief.--Upon a proper showing in the 
     action under paragraph (1), the court shall grant a permanent 
     injunction or a temporary restraining order without bond.
       (c) State Enforcement.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State has been, or is threatened to be, 
     adversely affected by a violation of this subtitle, the 
     State, as parens patriae, may bring a civil action on behalf 
     of the residents of that State in a district court of the 
     United States of appropriate jurisdiction, or any other court 
     of competent jurisdiction, to--
       (A) enjoin that practice;
       (B) enforce compliance with this subtitle;
       (C) obtain damages--
       (i) in the sum of actual damages, restitution, and other 
     compensation on behalf of the affected residents of that 
     State; and
       (ii) punitive damages, if the violation is willful or 
     intentional; and
       (D) obtain such other equitable relief as the court may 
     consider to be appropriate.
       (2) Notice.--
       (A) In general.--Before filing an action under paragraph 
     (1), the attorney general of the State involved shall provide 
     to the Attorney General--
       (i) written notice of the action; and
       (ii) a copy of the complaint for the action.
       (B) Exception.--
       (i) In general.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this subsection, if the attorney general of a 
     State determines that it is not feasible to provide the 
     notice described in such subparagraph before the filing of 
     the action.
       (ii) Notification when practicable.--In an action described 
     in clause (i), the attorney general of a State shall provide 
     notice and a copy of the complaint to the Attorney General at 
     the time the attorney general of a State files the action.
       (3) Attorney general authority.--Upon receiving notice 
     under paragraph (2), the Attorney General shall have the 
     right to--
       (A) move to stay the action, pending the final disposition 
     of a pending Federal proceeding or action as described in 
     paragraph (4);
       (B) intervene in an action brought under paragraph (1); and
       (C) file petitions for appeal.
       (4) Pending proceedings.--If the Attorney General has 
     instituted a proceeding or action for a violation of this Act 
     or any regulations thereunder, no attorney general of a State 
     may, during the pendency of such proceeding or action, bring 
     an action under this subsection against any defendant named 
     in such criminal proceeding or civil action for any violation 
     that is alleged in that proceeding or action.
       (5) Rule of construction.--For purposes of bringing any 
     civil action under paragraph (1), nothing in this subsection 
     shall be construed to prevent an attorney general of a State 
     from exercising the powers conferred on such attorney general 
     by the laws of that State to--
       (A) conduct investigations;
       (B) administer oaths or affirmations; or
       (C) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (6) Venue; service of process.--
       (A) Venue.--Any action brought under this subsection may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1391 
     of title 28, United States Code.
       (B) Service of process.--In an action brought under this 
     subsection process may be served in any district in which the 
     defendant--
       (i) is an inhabitant; or
       (ii) may be found.

     SEC. 427. RELATION TO STATE LAWS.

       (a) In General.--Except as provided in subsection (b), this 
     title does not annul, alter, affect, or exempt any person 
     subject to the provisions of this title from complying with 
     the laws of any State with respect to protecting consumers 
     from the risk of theft or misuse of personally identifiable 
     information, except to the extent that those laws are 
     inconsistent with any provisions of this title, and then only 
     to the extent of such inconsistency.
       (b) Exceptions.--No requirement or prohibition may be 
     imposed under the laws of any State with respect to any 
     subject matter regulated under--
       (1) section 3(9), relating to the definition of ``security 
     breach'';
       (2) paragraphs (1)(A), (2), and (3) of subsection (a), and 
     subsection (b) of section 421, relating to the right to 
     notice of security breach;
       (3) section 422, relating to notice procedures;
       (4) section 423, relating to notice content, except that 
     nothing in this section shall prevent a State from requiring 
     notice of additional victim protection assistance by that 
     State; and
       (5) section 424, relating to risk assessment and fraud 
     prevention notice exemptions.

     SEC. 428. STUDY ON SECURING PERSONALLY IDENTIFIABLE 
                   INFORMATION IN THE DIGITAL ERA.

       (a) Requirement for Study.--Not later than 120 days after 
     the date of enactment of this Act, the Department of Justice 
     shall enter into a contract with the National Research 
     Council of the National Academies to conduct a study on 
     securing personally identifiable information in the digital 
     era.
       (b) Matters to Be Assessed in Review.--The study required 
     under subsection (a) shall include--
       (1) threats to the public posed by the unauthorized or 
     improper disclosure of personally identifiable information, 
     including threats to--
       (A) law enforcement;
       (B) homeland security;
       (C) individual citizens; and
       (D) commerce;
       (2) an assessment of the benefits and costs of currently 
     available strategies for securing personally identifiable 
     information based on--
       (A) technology;
       (B) legislation;
       (C) regulation; or
       (D) public education;
       (3) research needed to develop additional strategies;
       (4) recommendations for congressional or other policy 
     actions to further minimize vulnerabilities to the threats 
     described in paragraph (1); and
       (5) other relevant issues that in the discretion of the 
     National Research Council warrant examination.
       (c) Time Line for Study and Requirement for Report.--Not 
     later than 18-month period beginning upon completion of the 
     performance of the contract described in subsection (a), the 
     National Research Council shall conduct the study and report 
     its findings, conclusions, and recommendations to Congress.
       (d) Federal Department and Agency Compliance.--Federal 
     departments and agencies shall comply with requests made by 
     the National Science Foundation, National Research Council, 
     and National Academies for information that is necessary to 
     assist in preparing the report required by subsection (c).
       (e) Authorization of Appropriations.--Of the amounts 
     authorized to be appropriated to the Department of Justice 
     for Department-wide activities, $850,000 shall be made 
     available to carry out the provisions of this section for 
     fiscal year 2006.

     SEC. 429. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated such sums as may be 
     necessary to cover the costs incurred by the United States 
     Secret Service to carry out investigations and risk 
     assessments of security breaches as required under this 
     subtitle.

     SEC. 430. EFFECTIVE DATE.

       This subtitle shall take effect 90 days after the date of 
     enactment of this Act.

             TITLE V--PROTECTION OF SOCIAL SECURITY NUMBERS

     SEC. 501. SOCIAL SECURITY NUMBER PROTECTION.

       (a) In General.--No person may--

[[Page 14746]]

       (1) display any individual's social security number to a 
     third party without the voluntary and affirmatively expressed 
     consent of such individual; or
       (2) sell or purchase any social security number of an 
     individual without the voluntary and affirmatively expressed 
     consent of such individual.
       (b) Prerequisites for Consent.--To obtain the consent of an 
     individual under paragraphs (1) or (2) of subsection (a), the 
     person displaying, selling, or attempting to sell, 
     purchasing, or attempting to purchase the social security 
     number of such individual shall--
       (1) inform such individual of the general purpose for which 
     the social security number will be used, the types of persons 
     to whom the social security number may be available, and the 
     scope of transactions permitted by the consent; and
       (2) obtain the affirmatively expressed consent 
     (electronically or in writing) of such individual.
       (c) Harvested Social Security Numbers.--Subsection (a) 
     shall apply to any public record of a Federal agency that 
     contains social security numbers extracted from other public 
     records for the purpose of displaying or selling such numbers 
     to the general public.
       (d) Exceptions.--Nothing in this section shall be construed 
     to prohibit or limit the display, sale, or purchase of a 
     social security number--
       (1) as required, authorized, or excepted under Federal law;
       (2) to the extent necessary for a public health purpose, 
     including the protection of the health or safety of an 
     individual in an emergency situation;
       (3) to the extent necessary for a national security 
     purpose;
       (4) to the extent necessary for a law enforcement purpose, 
     including the investigation of fraud and the enforcement of a 
     child support obligation;
       (5) to the extent necessary for research conducted for the 
     purpose of advancing public knowledge, on the condition that 
     the researcher provides adequate assurances that--
       (A) the social security numbers will not be used to harass, 
     target, or publicly reveal information concerning any 
     individual;
       (B) information about individuals obtained from the 
     research will not be used to make decisions that directly 
     affect the rights, benefits, or privileges of specific 
     individuals; and
       (C) the researcher has in place appropriate safeguards to 
     protect the privacy and confidentiality of any information 
     about individuals;
       (6) if such a number is required to be submitted as part of 
     the process for applying for any type of Federal, State, or 
     local government benefit or program;
       (7) when the transmission of the number is incidental to, 
     and in the course of, the sale, lease, franchising, or merger 
     of all or a portion of a business; or
       (8) to the extent only the last 4 digits of a social 
     security number are displayed.

     SEC. 502. LIMITS ON PERSONAL DISCLOSURE OF SOCIAL SECURITY 
                   NUMBERS FOR COMMERCIAL TRANSACTIONS AND 
                   ACCOUNTS.

       (a) In General.--Part A of title XI of the Social Security 
     Act (42 U.S.C. 1301 et seq.) is amended by adding the 
     following:

     ``SEC. 1150A. LIMITS ON PERSONAL DISCLOSURE OF SOCIAL 
                   SECURITY NUMBERS FOR COMMERCIAL TRANSACTIONS 
                   AND ACCOUNTS.

       ``(a) Account Numbers.--
       ``(1) In general.--A business entity may not--
       ``(A) require an individual to use the social security 
     number of such individual as an account number or account 
     identifier when purchasing a commercial good or service; or
       ``(B) deny an individual goods or services for refusing to 
     accept the use of the social security number of such 
     individual as an account number or account identifier.
       ``(2) Existing account exception.--Paragraph (1) shall not 
     apply to any account number or account identifier established 
     prior to the date of enactment of this Act.
       ``(b) Social Security Number Prerequisites for Goods and 
     Services.--A business entity may not require an individual to 
     provide the social security number of such individual when 
     purchasing a commercial good or service or deny an individual 
     goods or services for refusing to provide that number except 
     for any purpose relating to--
       ``(1) obtaining a consumer report for any purpose permitted 
     under the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.);
       ``(2) a background check of the individual conducted by a 
     landlord, lessor, employer, or voluntary service agency;
       ``(3) law enforcement; or
       ``(4) a Federal, State, or local law requirement.
       ``(c) Application of Civil Money Penalties.--A violation of 
     this section shall be deemed to be a violation of section 
     1129(a).
       ``(d) Application of Criminal Penalties.--A violation of 
     this section shall be deemed to be a violation of section 
     208(a)(8).''.

     SEC. 503. PUBLIC RECORDS.

       (a) In General.--Except as provided in paragraph (2), 
     paragraphs (a) and (b) of section 501 shall apply to all 
     public records posted on the Internet or provided in an 
     electronic medium by, or on behalf of, a Federal agency.
       (b) Exceptions.--
       (1) Truncation and prior displays.--Section 501(a) shall 
     not apply to--
       (A) a public record which displays only the last 4 digits 
     of the social security number of an individual; and
       (B) any record or a category of public records first posted 
     on the Internet or provided in an electronic medium by, or on 
     behalf of, a Federal agency prior to the date of enactment of 
     this Act.
       (2) Law enforcement.--Nothing in this subsection shall be 
     construed to prevent an entity acting pursuant to a police 
     investigation or regulatory power of a domestic governmental 
     unit from accessing the full social security number of an 
     individual.

     SEC. 504. TREATMENT OF SOCIAL SECURITY NUMBERS ON GOVERNMENT 
                   CHECKS AND PROHIBITION OF INMATE ACCESS.

       (a) Prohibition of Use of Social Security Numbers on Checks 
     Issued for Payment by Governmental Entities.--
       (1) In general.--Section 205(c)(2)(C) of the Social 
     Security Act (42 U.S.C. 405(c)(2)(C)) is amended by adding at 
     the end the following:
       ``(x) No Federal, State, or local agency may display the 
     social security account number of any individual, or any 
     derivative of such number, on any check issued for any 
     payment by the Federal, State, or local agency.''.
       (2) Effective date.--The amendment made under paragraph (1) 
     shall apply with respect to checks issued after the date that 
     is 3 years after the date of enactment of this Act.
       (b) Prohibition on Inmate Access to Social Security 
     Numbers.--
       (1) In general.--Section 205(c)(2)(C) of the Social 
     Security Act (42 U.S.C. 405(c)(2)(C)), as amended by 
     subsection (b), is further amended by adding at the end the 
     following:
       ``(xi)(I) No Federal, State, or local agency may employ, or 
     enter into a contract for the use or employment of, prisoners 
     in any capacity that would allow such prisoners access to the 
     social security account numbers of other individuals.
       ``(II) For purposes of this clause, the term `prisoner' 
     means an individual confined in a jail, prison, or other 
     penal institution or correctional facility pursuant to 
     conviction of such individual of a criminal offense.''.
       (2) Effective date.--The amendment made under paragraph (1) 
     shall apply with respect to employment of prisoners, or entry 
     into contract with prisoners, after the date that is 1 year 
     after the date of enactment of this Act.

     SEC. 505. STUDY AND REPORT.

       (a) By the Comptroller General.--The Comptroller General of 
     the United States (in this section referred to as the 
     ``Comptroller General'') shall conduct a study and prepare a 
     report on--
       (1) all of the uses of social security numbers permitted, 
     required, authorized, or excepted under any Federal law; and
       (2) the uses of social security numbers in Federal, State, 
     and local public records.
       (b) Content of Report.--The report required under 
     subsection (a) shall--
       (1) identify users of social security numbers under Federal 
     law;
       (2) include a detailed description of the uses allowed as 
     of the date of enactment of this Act;
       (3) describe the impact of such uses on privacy and data 
     security;
       (4) evaluate whether such uses should be continued or 
     discontinued by appropriate legislative action;
       (5) examine whether States are complying with prohibitions 
     on the display and use of social security numbers--
       (A) under the Privacy Act of 1974 (5 U.S.C. 552a et seq.); 
     and
       (B) the Driver's Privacy Protection Act of 1994 (18 U.S.C. 
     2721 et seq.);
       (6) include a review of the uses of social security numbers 
     in Federal, State, or local public records;
       (7) include a review of the manner in which public records 
     are stored (with separate reviews for both paper records and 
     electronic records);
       (8) include a review of the advantages, utility, and 
     disadvantages of public records that contain social security 
     numbers, including--
       (A) impact on law enforcement;
       (B) threats to homeland security; and
       (C) impact on personal privacy and security;
       (9) include an assessment of the costs and benefits to 
     State and local governments of truncating, redacting, or 
     removing social security numbers from public records, 
     including a review of current technologies and procedures for 
     truncating, redacting, or removing social security numbers 
     from public records (with separate assessments for both paper 
     and electronic records);
       (10) include an assessment of the benefits and costs to 
     businesses, non-profit organizations, and the general public 
     of requiring truncation, redaction, or removal of social 
     security numbers on public records (with separate assessments 
     for both paper and electronic records);
       (11) include an assessment of Federal and State 
     requirements to truncate social security numbers, and issue 
     recommendations on--

[[Page 14747]]

       (A) how to harmonize those requirements; and
       (B) whether to further extend truncation requirements, 
     taking into consideration the impact on accuracy and use;
       (12) include recommendations regarding whether subsection 
     (a) should apply to any record or category of public records 
     first posted on the Internet or provided in an electronic 
     medium by, or on behalf of, a Federal agency prior to the 
     date of enactment of this Act; and
       (13) include such recommendations for legislation based on 
     criteria the Comptroller General determines to be 
     appropriate.
       (c) Required Consultation.--In developing the report 
     required under this subsection, the Comptroller General shall 
     consult with--
       (1) the Administrative Office of the United States Courts;
       (2) the Conference of State Court Administrators;
       (3) the Department of Justice;
       (4) the Department of Homeland Security;
       (5) the Social Security Administration;
       (6) Sate and local governments that store, maintain, or 
     disseminate public records; and
       (7) other stakeholders, including members of the private 
     sector who routinely use public records that contain social 
     security numbers.
       (d) Timing of Report.--Not later than 1 year after the date 
     of enactment of this Act, the Comptroller General shall 
     report to Congress its findings under this section.

     SEC. 506. ENFORCEMENT.

       (a) Civil Penalties.--
       (1) In general.--Any person that violates the provisions of 
     sections 501 or 502 shall be subject to civil penalties of 
     not more than $5,000 per violation per day, with a maximum of 
     $35,000 per day, while such violations persist.
       (2) Intentional or willful violation.--Any person who 
     intentionally or willfully violates the provisions of 
     sections 501 or 502 shall be subject to additional penalties 
     in the amount of $5,000 per violation per day, with a maximum 
     of an additional $35,000 per day, while such violations 
     persist.
       (3) Equitable relief.--Any person who engages in interstate 
     commerce that violates this section may be enjoined from 
     further violations by a court of competent jurisdiction.
       (4) Other rights and remedies.--The rights and remedies 
     available under this section are cumulative and shall not 
     affect any other rights and remedies available under law
       (b) Injunctive Actions by the Attorney General.--
       (1) In general.--Whenever it appears that a person to which 
     this title applies has engaged, is engaged, or is about to 
     engage, in any act or practice constituting a violation of 
     this title, the Attorney General may bring a civil action in 
     an appropriate district court of the United States to--
       (A) enjoin such act or practice;
       (B) enforce compliance with this title; and
       (C) obtain damages--
       (i) in the sum of actual damages, restitution, and other 
     compensation on behalf of the affected residents of a State; 
     and
       (ii) punitive damages, if the violation is willful or 
     intentional; and
       (D) obtain such other relief as the court determines to be 
     appropriate.
       (2) Other injunctive relief.--Upon a proper showing in the 
     action under paragraph (1), the court shall grant a permanent 
     injunction or a temporary restraining order without bond.
       (c) State Enforcement.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State has been or is threatened or 
     adversely affected by an act or practice that violates this 
     section, the State may bring a civil action on behalf of the 
     residents of that State in a district court of the United 
     States of appropriate jurisdiction, or any other court of 
     competent jurisdiction, to--
       (A) enjoin that act or practice;
       (B) enforce compliance with this Act;
       (C) obtain damages, restitution, or other compensation on 
     behalf of residents of that State; or
       (D) obtain such other legal and equitable relief as the 
     court may consider to be appropriate.
       (2) Notice.--
       (A) In general.--Before filing an action under this 
     subsection, the attorney general of the State involved shall 
     provide to the Attorney General--
       (i) a written notice of that action; and
       (ii) a copy of the complaint for that action.
       (B) Exception.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this subsection, if the attorney general of a 
     State determines that it is not feasible to provide the 
     notice described in this subparagraph before the filing of 
     the action.
       (C) Notification when practicable.--In an action described 
     under subparagraph (B), the attorney general of a State shall 
     provide the written notice and the copy of the complaint to 
     the Attorney General as soon after the filing of the 
     complaint as practicable.
       (3) Attorney general authority.--Upon receiving notice 
     under paragraph (2), the Attorney General shall have the 
     right to--
       (A) move to stay the action, pending the final disposition 
     of a pending Federal proceeding or action as described in 
     paragraph (4);
       (B) intervene in an action brought under paragraph (1); and
       (C) file petitions for appeal.
       (4) Pending proceedings.--If the Attorney General has 
     instituted a proceeding or action for a violation of this Act 
     or any regulations thereunder, no attorney general of a State 
     may, during the pendency of such proceeding or action, bring 
     an action under this subsection against any defendant named 
     in such criminal proceeding or civil action for any violation 
     that is alleged in that proceeding or action.
       (5) Rule of construction.--For purposes of bringing any 
     civil action under paragraph (1), nothing in this Act shall 
     be construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State to--
       (A) conduct investigations;
       (B) administer oaths and affirmations;
       (C) or compel the attendance of witnesses or the production 
     of documentary and other evidence.
       (6) Venue; service of process.--
       (A) Venue.--Any action brought under this subsection may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1391 
     of title 28, United States Code.
       (B) Service of process.--In an action brought under this 
     subsection process may be served in any district in which the 
     defendant--
       (i) is an inhabitant; or
       (ii) may be found.

     SEC. 507. RELATION TO STATE LAWS.

       (a) In General.--Except as provided in subsection (b), this 
     title does not annul, alter, affect, or exempt any person 
     subject to the provisions of this title from complying with 
     the laws of any State with respect to protecting and securing 
     social security numbers, except to the extent that those laws 
     are inconsistent with any provisions of this title, and then 
     only to the extent of such inconsistency.
       (b) Exceptions.--No requirement or prohibition may be 
     imposed under the laws of any State with respect to any 
     subject matter regulated under--
       (1) section 501(b), relating to prerequisites for consent 
     for the display, sale, or purchase of social security 
     numbers;
       (2) section 501(c), relating to harvesting of social 
     security numbers; and
       (3) section 504, relating to treatment of social security 
     numbers on government checks and prohibition of inmate 
     access.

       TITLE VI--GOVERNMENT ACCESS TO AND USE OF COMMERCIAL DATA

     SEC. 601. GENERAL SERVICES ADMINISTRATION REVIEW OF 
                   CONTRACTS.

       (a) In General.--In considering contract awards entered 
     into after the date of enactment of this Act, the 
     Administrator of the General Services Administration shall 
     evaluate--
       (1) the program of a contractor to ensure the privacy and 
     security of data containing personally identifiable 
     information;
       (2) the compliance of a contractor with such program;
       (3) the extent to which the databases and systems 
     containing personally identifiable information of a 
     contractor have been compromised by security breaches; and
       (4) the response by a contractor to such breaches, 
     including the efforts of a contractor to mitigate the impact 
     of such breaches.
       (b) Penalties.--In awarding contracts for products or 
     services related to access, use, compilation, distribution, 
     processing, analyzing, or evaluating personally identifiable 
     information, the Administrator of the General Services 
     Administration shall include the following:
       (1) Monetary or other penalties--
       (A) for failure to comply with subtitles A and B of title 
     IV of this Act;
       (B) if a contractor knows or has reason to know that the 
     personally identifiable information being provided is 
     inaccurate, and provides such inaccurate information; or
       (C) if a contractor is notified by an individual that the 
     personally identifiable information being provided is 
     inaccurate and it is in fact inaccurate.
       (2) Accuracy update requirements that obligate a contractor 
     to provide notice to the Federal department or agency of any 
     changes or corrections to the personally identifiable 
     information provided under the contract.

     SEC. 602. REQUIREMENT TO AUDIT INFORMATION SECURITY PRACTICES 
                   OF CONTRACTORS AND THIRD PARTY BUSINESS 
                   ENTITIES.

       Section 3544(b) of title 44, United States Code, is 
     amended--
       (1) in paragraph (7)(C)(iii), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (8), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(9) procedures for evaluating and auditing the 
     information security practices of contractors or third party 
     business entities supporting the information systems or 
     operations of the agency involving personally

[[Page 14748]]

     identifiable information, and ensuring remedial action to 
     address any significant deficiencies.''.

     SEC. 603. PRIVACY IMPACT ASSESSMENT OF GOVERNMENT USE OF 
                   COMMERCIAL INFORMATION SERVICES CONTAINING 
                   PERSONALLY IDENTIFIABLE INFORMATION.

       (a) In General.--Section 208(b)(1) of the E-Government Act 
     of 2002 (44 U.S.C. 3501 note) is amended--
       (1) in subparagraph (A)(i), by striking ``or''; and
       (2) in subparagraph (A)(ii), by striking the period and 
     inserting ``; or''; and
       (3) by inserting after clause (ii) the following:
       ``(iii) purchasing or subscribing for a fee to personally 
     identifiable information from a commercial entity (other than 
     news reporting or telephone directories).''.
       (b) Limitation.--Notwithstanding any other provision of 
     law, commencing 60 days after the date of enactment of this 
     Act, no Federal department or agency may procure or access 
     any commercially available database consisting primarily of 
     personally identifiable information concerning United States 
     persons (other than news reporting or telephone directories) 
     unless the head of such department or agency--
       (1) completes a privacy impact assessment under section 208 
     of the E-Government Act of 2002 (44 U.S.C. 3501 note), which 
     shall include a description of--
       (A) such database;
       (B) the name of the commercial entity from whom it is 
     obtained; and
       (C) the amount of the contract for use;
       (2) adopts regulations that specify--
       (A) the personnel permitted to access, analyze, or 
     otherwise use such databases;
       (B) standards governing the access analysis, or use of such 
     databases;
       (C) any standards used to ensure that the personally 
     identifiable information accessed, analyzed, or used is the 
     minimum necessary to accomplish the intended legitimate 
     purpose of the Federal department or agency;
       (D) standards limiting the retention and redisclosure of 
     personally identifiable information obtained from such 
     databases;
       (E) procedures ensuring that such data meet standards of 
     accuracy, relevance, completeness, and timeliness;
       (F) the auditing and security measures to protect against 
     unauthorized access, analysis, use, or modification of data 
     in such databases;
       (G) applicable mechanisms by which individuals may secure 
     timely redress for any adverse consequences wrongly incurred 
     due to the access, analysis, or use of such databases;
       (H) mechanisms, if any, for the enforcement and independent 
     oversight of existing or planned procedures, policies, or 
     guidelines; and
       (I) an outline of enforcement mechanisms for accountability 
     to protect individuals and the public against unlawful or 
     illegitimate access or use of databases; and
       (3) incorporates into the contract or other agreement with 
     the commercial entity, provisions--
       (A) providing for penalties--
       (i) if the entity knows or has reason to know that the 
     personally identifiable information being provided to the 
     Federal department or agency is inaccurate, and provides such 
     inaccurate information; or
       (ii) if the entity is notified by an individual that the 
     personally identifiable information being provided to the 
     Federal department or agency is inaccurate and it is in fact 
     inaccurate; and
       (B) requiring commercial entities to inform Federal 
     departments or agencies to which they sell, disclose, or 
     provide access to personally identifiable information of any 
     changes or corrections to the personally identifiable 
     information.
       (c) Individual Screening Programs.--Notwithstanding any 
     other provision of law, commencing 60 days after the date of 
     enactment of this Act, no Federal department or agency may 
     use commercial databases to implement an individual screening 
     program unless such program is--
       (1) congressionally authorized; and
       (2) subject to regulations developed by notice and comment 
     that--
       (A) establish a procedure to enable individuals, who suffer 
     an adverse consequence because the screening system 
     determined that they might pose a security threat, to appeal 
     such determination and correct information contained in the 
     system;
       (B) ensure that Federal and commercial databases that will 
     be used to establish the identity of individuals or otherwise 
     make assessments of individuals under the system will not 
     produce a large number of false positives or unjustified 
     adverse consequences;
       (C) ensure the efficacy and accuracy of all of the search 
     tools that will be used and ensure that the department or 
     agency can make an accurate predictive assessment of those 
     who may constitute a threat;
       (D) establish an internal oversight board to oversee and 
     monitor the manner in which the system is being implemented;
       (E) establish sufficient operational safeguards to reduce 
     the opportunities for abuse;
       (F) implement substantial security measures to protect the 
     system from unauthorized access;
       (G) adopt policies establishing the effective oversight of 
     the use and operation of the system; and
       (H) ensure that there are no specific privacy concerns with 
     the technological architecture of the system.
       (d) Study of Government Use.--
       (1) Scope of study.--Not later than 180 days after the date 
     of enactment of this Act, the Comptroller General of the 
     United States shall conduct a study and audit and prepare a 
     report on Federal agency use of commercial databases, 
     including the impact on privacy and security, and the extent 
     to which Federal contracts include sufficient provisions to 
     ensure privacy and security protections, and penalties for 
     failures in privacy and security practices.
       (2) Report.--A copy of the report required under paragraph 
     (1) shall be submitted to Congress.

     SEC. 604. IMPLEMENTATION OF CHIEF PRIVACY OFFICER 
                   REQUIREMENTS.

       (a) Designation of the Chief Privacy Officer.--Pursuant to 
     the requirements under section 522 of the Transportation, 
     Treasury, Independent Agencies, and General Government 
     Appropriations Act, 2005 (Division H of Public Law 108-447; 
     118 Stat. 3199) that each agency designate a Chief Privacy 
     Officer, the Department of Justice shall implement such 
     requirements by designating a department-wide Chief Privacy 
     Officer, whose primary role shall be to fulfill the duties 
     and responsibilities of Chief Privacy Officer and who shall 
     report directly to the Deputy Attorney General.
       (b) Duties and Responsibilities of Chief Privacy Officer.--
     In addition to the duties and responsibilities outlined under 
     section 522 of the Transportation, Treasury, Independent 
     Agencies, and General Government Appropriations Act, 2005 
     (Division H of Public Law 108-447; 118 Stat. 3199), the 
     Department of Justice Chief Privacy Officer shall--
       (1) oversee the Department of Justice's implementation of 
     the requirements under section 603 to conduct privacy impact 
     assessments of the use of commercial data containing 
     personally identifiable information by the Department;
       (2) promote the use of law enforcement technologies that 
     sustain, rather than erode, privacy protections, and assure 
     that the implementation of such technologies relating to the 
     use, collection, and disclosure of personally identifiable 
     information preserve the privacy and security of such 
     information; and
       (3) coordinate with the Privacy and Civil Liberties 
     Oversight Board, established in the Intelligence Reform and 
     Terrorism Prevention Act of 2004 (Public Law 108-458), in 
     implementing paragraphs (1) and (2) of this subsection.

  Mr. LEAHY. Mr. President, today we introduce the Specter-Leahy 
Personal Data Privacy and Security Act of 2005. Reforms are urgently 
needed to protect Americans' privacy and to secure their personal data. 
There have been steady waves of security breaches over the past 6 
months, with the latest involving a database containing 40 million 
credit card numbers at a company that most Americans never knew 
existed.
  These security breaches are a window on a broader, more challenging 
trend. Advanced technologies have improved our lives and can help make 
us safer. Private data about Americans has become a hot commodity. This 
personal and financial information about each of us suddenly is a 
treasure trove, valuable and vulnerable, but our privacy and security 
laws have not kept pace. The reality is that in the digital era, a 
robust market has developed for collecting and selling personal 
information. Today, all types of corporate and governmental entities 
routinely traffic in billions of digitized personal records about 
Americans.
  The data broker market has exploded in size to meet this demand. 
Insecure databases are now low-hanging fruit for hackers looking to 
steal identities and commit fraud. We are seeing a rise in organized 
rings that target personal data to sell in online, virtual bazaars.
  In this information-saturated age, the use of personal data has 
significant consequences for every American. People have lost jobs, 
mortgages and control over their credit and identities because personal 
information has been mishandled or listed incorrectly. This trend 
raises new threats to our personal security as well as to our privacy. 
In one disturbing case, a stalker purchased the Social Security number 
of a woman with whom he was obsessed, used that information to track 
her down. He killed her, and then shot himself.
  Americans everywhere are wondering, ``Why do all these companies have 
my personal information? What

[[Page 14749]]

are they doing with it? Why aren't they protecting it better?'' And 
they are right to wonder. It is time for Congress to catch up with the 
data market and to show the American people that we are aware of these 
threats and will protect the privacy and security of their personal 
information.
  Chairman Specter and I have worked closely together over many months 
to craft comprehensive legislation to fix key vulnerabilities in our 
information economy. We thought through these issues carefully and took 
the time needed to develop well-balanced, focused legislation that 
provides strong protections where necessary. We also provide tough 
penalties and consequences for failing to protect Americans' most 
personal information. Reforms like these are long overdue. This issue 
and our legislation deserve to become a key part of this year's 
domestic agenda so that we can achieve some positive changes in areas 
that affect the everyday lives of Americans.
  First, our bill requires data brokers to let people know what 
information they have about them, and to allow people to correct 
inaccurate information. These principles have precedent from the credit 
report context, and we have adapted them in a way that makes sense for 
the data brokering industry. It's a simple matter of fairness.
  Second, we would require companies that have databases with personal 
information on Americans to establish and implement data privacy and 
security programs. Any company that wants to be trusted by the public 
in this day and age must vigilantly protect databases housing 
Americans' private data. They also have a responsibility in the next 
link in the security chain, to make sure that contractors hired to 
process data are on the up-and-up and secure. This is critical as 
Americans' personal information is increasingly processed overseas.
  Third, our bill requires notice when sensitive personal information 
has been compromised. The American people have a right to know when 
they are at risk because of corporate failures to protect their data, 
or when a criminal has infiltrated data systems. The notice rules in 
our bill were crafted carefully to ensure that the trigger for notice 
is tied to risk and to recognize important fraud prevention techniques 
that already exist. But our priority was making sure that victims have 
that critical information as a roadmap providing the assistance 
necessary to protect themselves, their families and their financial 
well-being.
  Fourth, our bill provides tough new protections for Social Security 
numbers, which are the keys to unlocking so much of our financial and 
personal lives. The use of Social Security numbers has expanded well 
beyond the intended purposes. Some uses provide important benefits, but 
others have made Americans vulnerable. Social Security numbers are for 
sale online for small fees. Earlier this year, it was reported that a 
payroll and benefits company put the Social Security numbers of 1,000 
workers on postcards--on postcards--brazenly visible for anyone to see. 
Worse still, those postcards described in detail how those Social 
Security numbers could be used to access employee benefits online. This 
is unacceptable, and this bill would make that kind of disregard and 
sloppiness illegal.
  Finally, our bill addresses the government's use of personal data. We 
are living in a world where the government is increasingly looking to 
the private sector to get personal data that it could not legally 
collect on its own without oversight and appropriate protections. So 
ingrained has the data broker-government partnership become that a 
ChoicePoint executive stated, ``We do act as an intelligence agency, 
gathering data, applying analytics.'' While these relationships can 
help protect us, there must be oversight and appropriate protections.
  The recent decision to award ChoicePoint an IRS contract highlights 
this tension. It is especially galling right now to be rewarding firms 
that have been so careless with the public's confidential information. 
The dust has not yet settled and the investigations are incomplete on 
ChoicePoint's lax security practices. We should at least take a pause 
before rewarding such missteps with even more government contracts. 
This bill would place privacy and security front and center in 
evaluating whether data brokers can be trusted with government 
contracts that involve sensitive information about the American people. 
It would require contract reviews that include these considerations, 
audits to ensure good practice, and contract penalties for failure to 
protect data privacy and security.
  The Specter-Leahy legislation meets other key goals. It provides 
tough monetary and criminal penalties for compromising personal data or 
failing to provide necessary protections. This creates an incentive for 
companies to protect personal information, especially when there is no 
commercial relationship between individuals and companies using their 
data.
  Our legislation also carefully balances the need for Federal 
uniformity and State leadership. States are often on the forefront of 
protecting privacy and spurring change. The California security breach 
law has been an important lesson. My State of Vermont was among the 
first--if not the first--to require individual consent before sharing 
financial information with third parties, and to require a person or 
business to obtain consent from individuals before reviewing their 
credit reports. The role of States is important, and our bill 
identifies areas that require uniformity while leaving the States free 
to act elsewhere as they see fit. We also would authorize an additional 
$100 million over 4 years to help state law enforcement fight misuse of 
personal information.
  This is a solid bill--a comprehensive bill--that not only deals with 
providing Americans notice when they have already been hurt, but also 
deals with the underlying problem of lax security and lack of 
accountability in dealing with their most personal and private 
information.
  I commend Senator Specter for his leadership on this emerging 
problem. A number of us have been working on these issues--Senator 
Feinstein, Senator Nelson, Senator Cantwell and Senator Schumer, among 
others. I appreciate and recognize their hard work and look forward to 
making progress together. I am pleased to work closely with Senator 
Specter on this and believe that we have a bill that significantly 
advances the ball in protecting Americans.
  I ask unanimous consent that a copy of the bill be printed in the 
Record.
  Mr. FEINGOLD. Mr. President, I am proud to join the chairman and the 
ranking member of the Senate Judiciary Committee in cosponsoring the 
Personal Data Privacy and Security Act of 2005. This bill is a much-
needed solution to the daunting problem of ensuring the privacy and the 
security of our personal data, which has become such a precious 
commodity.
  As we enter the 21st century, several forces are converging to make 
our personal information more valuable--and vulnerable--than ever. The 
world is going digital, and so is our personal data. In this day and 
age, almost everything we do results in a third party creating a 
digital record about us--digital records that we may not even realize 
exist. We seek the convenience of opening bank accounts and making 
major purchases over the Internet, often without ever speaking to 
another person face to face or even over the telephone, making identity 
theft easier and more lucrative. Businesses, nonprofits and even 
political parties are personalizing their messages, products and 
services to a degree we've never seen before, and they are willing to 
invest significant amounts of money in collecting personal information 
about potential customers or donors. And we are living in an age where 
identity-based screening and security programs can be vitally 
important, resulting in more information being collected about 
individuals in an attempt to identify them accurately.
  As a result, personal information has become a hot commodity that is 
bought, sold, and--as so often happens when something becomes 
valuable--stolen.
  We are at a crossroads. We all know about the security breaches that 
have

[[Page 14750]]

been on the front pages of newspapers all over the country for the past 
6 months. They have placed the identities of hundreds of thousands of 
Americans at risk.
  But this is about much more than just information security. Until 
California law required ChoicePoint to notify individuals that their 
information was compromised and they might be vulnerable to identity 
theft, many Americans had never heard of this company. As news stories 
focused on the data broker business, many Americans were surprised to 
discover that companies are creating digital dossiers about them that 
contain massive amounts of information, and that these companies sell 
that information to commercial and government entities. The revelations 
about these security breaches highlighted the fact that Americans need 
a better understanding of what happens to their information in a 
digital world--and what kind of consequences they can face as a result.
  When I am back home in Wisconsin, I hear from people who do not 
understand why companies have the right to sell their sensitive 
personal information. I hear from people who are shocked to discover 
that personal information about them is available for free on the 
Internet.
  There is no question that data aggregators facilitate societal 
benefits, allowing consumers to obtain instant credit and personalized 
services, and police officers to locate suspects. But these companies 
also gather a great deal of potentially sensitive information about 
individuals, and in many instances they go largely unregulated.
  Too many of my constituents feel they have lost control over their 
own information. Congress must return some power to individual 
Americans so that we can all better understand and manage what happens 
to our own personal data.
  The Personal Data Privacy and Security Act takes a comprehensive 
approach to the privacy and security problems we face. It gives 
consumers back some control over their own information. The bill 
requires data brokers to allow consumers to access their own 
information, and to investigate when consumers tell them that 
corrections are necessary. And it requires companies to give notice to 
affected consumers and to law enforcement if there is a serious 
security breach, so that individuals know their identity may be at risk 
and can take steps to protect themselves.
  In addition, the bill increases penalties for those who steal our 
identities. It provides grants to State and local law enforcement to 
help them combat data fraud and related crimes. It requires companies 
that buy and sell information to have appropriate data security systems 
in place. It provides protection to Social Security numbers by 
prohibiting the sale, purchase or display of Social Security numbers, 
with certain exceptions, and preventing companies from requiring 
customers to provide their Social Security numbers in order to purchase 
goods or services. These protections will help safeguard against future 
privacy violations and security breaches in the commercial data 
industry. But that is not all this bill accomplishes.
  The bill also contains some critically important privacy and security 
provisions to govern the Government's use of commercial data. This is 
an aspect of the data broker business that has not yet gotten as much 
attention in the wake of the recent security breaches. The information 
gathered by these companies is not just sold to individuals and 
businesses; Government agencies of all stripes also buy or subscribe to 
information from commercial sources. The most recent example was the 
discovery that the Pentagon has a contract with a marketing firm to 
analyze commercial and other data about high school and college 
students.
  While I believe the Government should be able to access commercial 
databases in appropriate circumstances, there are few existing rules or 
guidelines to ensure this information is used responsibly. Nor are 
there restrictions on the use of commercial data for powerful, 
intrusive data mining programs, an issue I have been particularly 
concerned about. The Privacy Act, which governs when Government 
agencies themselves are collecting data, does not apply because the 
information is held outside the Government and is not gathered solely 
at Government direction.
  As a result, there is a great deal we do not know about Government 
use of commercial data, even in clearly appropriate circumstances such 
as when the agency's goal is simply to locate an individual already 
suspected of a crime.
  We don't know under what circumstances Government employees can 
obtain access to these databases or for what purposes. We don't know 
how Government agencies evaluate the accuracy of the databases to which 
they subscribe, or how the accuracy level affects government use of the 
data. We don't know how employees are monitored to ensure they do not 
abuse their access to these databases, or how those who misuse the 
information are punished. And we don't know how Government agencies, 
particularly those engaged in sensitive national security 
investigations, ensure that the data brokers cannot keep records of who 
the Government is investigating, records which themselves could create 
a huge security risk in light of the vulnerabilities that have come to 
the forefront in recent months.
  That is why I am so pleased that this bill includes provisions to 
address the Government's use of commercial data. A comprehensive 
approach to data privacy and security would be incomplete without 
taking on this piece of the puzzle. The bill recognizes there are many 
legitimate reasons for Government agencies to obtain commercially 
available data, but that they need to be subject to privacy and 
security protections. It takes a commonsense approach, pushing 
Government agencies to take basic steps to ensure that individuals' 
personal information is secure and only used for legitimate purposes, 
and that the commercial information the Government is paying for and 
relying on is accurate and complete.
  Specifically, the bill would require that Federal agencies that 
subscribe to commercial data adopt standards governing its use. These 
standards would reflect long-standing basic privacy principles. The 
bill would ensure that Government agencies consider and determine which 
personnel will be permitted to access the information and under what 
circumstances; develop retention policies for this personal data and 
get rid of data they no longer need, minimizing the opportunity for 
abuse or theft; rely only on accurate and complete data, and penalize 
vendors who knowingly provide inaccurate information to the Federal 
Government; provide individuals who suffer adverse consequences as a 
result of the agency's reliance on commercial data with a redress 
mechanism; and establish enforcement mechanisms for those privacy 
policies.
  The bill also extends to other screening programs the existing 
protections that already are in place to govern the Transportation 
Security Administration's possible use of commercial data for its 
identity-based airline passenger screening program, Secure Flight. If 
the Federal Government is going to rely on commercial data to screen 
Americans and decide whether to permit them to travel by air or engage 
in other common activities, it should do so only subject to explicit 
congressional authorization, as this bill provides. In addition, 
agencies should have to provide a redress process for those wrongly 
affected, and should have to operate under rules that govern the 
access, use, disclosure, accuracy and retention of that data.
  The bill also directs the General Services Administration to review 
Government contracts for commercial data to make sure that vendors have 
appropriate security programs in place, and that they do not provide 
information to the Government that they know to be inaccurate. And it 
requires agencies to audit the information security practices of their 
vendors.
  These are basic good Government measures. They guarantee that the 
Federal Government is not wasting money on inaccurate data, and that 
vendors are undertaking the security

[[Page 14751]]

programs that they have promised and for which the Government is 
paying.
  We live in a new digital world. The law may never fully keep up with 
technology, but we must make every effort we can. I am proud to be 
involved in this comprehensive, reasoned approach to privacy and 
security. I congratulate Chairman Specter and Ranking Member Leahy for 
their excellent work on this bill. This bill is important and it 
deserves very serious consideration by the Senate.
                                 ______
                                 
      By Mr. CORNYN (for himself, Mrs. Lincoln, Mrs. Hutchison, Mr. 
        Talent, Mr. Santorum, Mr. Coleman, Mr. Isakson, Mr. Roberts, 
        Mr. Brownback, Mr. Bond, Mr. Hatch, Mr. Allard, Mr. Alexander, 
        Mr. Martinez, and Mr. Pryor):
  S. 1333. A bill to amend the Agricultural Marketing Act of 1946 to 
establish a voluntary program for country of origin labeling of meat, 
and for other purposes; to the Committee on Agriculture, Nutrition, and 
Forestry.
  Mr. CORNYN. Mr. President, I rise today to introduce the Meat 
Promotion Act of 2005.
  This legislation is long overdue. When implemented, it will help 
assist our producers of cattle, pork, and other livestock to market and 
promote their products as born and raised in the United States. This 
proposal provides an efficient and effective solution to the country-
of-origin labeling dilemma.
  The Meat Promotion Act of 2005 will benefit U.S. food producers by 
promoting American-grown foods. This bipartisan effort is widely 
supported by producers, processors, and retailers as a means to finally 
move country-of-origin labeling forward.
  This legislation provides for USDA implementation of a labeling 
program that will be similar to the many voluntary labeling programs 
that currently exist. Hundreds of programs that label products by 
region, state, and U.S. brand have already proven their value for 
producers and consumers alike. The Meat Promotion Act will put the 
marketplace in charge by allowing producers to meet consumer demand. 
Where that demand is demonstrated, more products labeled with country-
of-origin will become available.
  Country-of-origin labeling has been an issue in the Senate for quite 
awhile, and yet, after all this time, we're no closer to promoting U.S. 
products than we were a decade ago. In reviewing the storied history of 
this issue, it's clear that there is not a shortage of viewpoints. One 
view overwhelmingly vocalized is that U.S. producers of beef and pork 
want to market and promote their products as born and raised in the 
United States of America. They are proud of what they produce, and they 
should be: the U.S. produces the safest, most abundant food supply at 
the most affordable price, and our livestock producers want to capture 
the value they add to the market.
  But just like every other debate in Washington, the debate over 
country-of-origin labeling has been about the means to accomplish the 
goal. It is not that we are fighting about whether or not promoting 
U.S. product is a good idea. We are fighting about how to do it. Some 
in the U.S. Senate and some around the country have said: ``If it isn't 
mandatory, it's not labeling,'' or that the current mandatory labeling 
law that passed in the 2002 Farm Bill is the only way labeling will 
work. I strongly disagree.
  The current mandatory law is an example of a good idea gone awry. The 
warning signs of the negative impact of this law have long been on the 
horizon. On a number of occasions the Government Accountability Office 
published reports and studies, and testified before Congress about the 
burdens of mandatory country-of-origin labeling.
  In 1999--3 years before the current mandatory labeling law was 
passed--GAO testified before Congress that ``There is going to be 
significant costs associated with compliance and enforcement'' of 
mandatory labeling. At that same hearing, a representative of the 
Clinton administration testified that ``There are a variety of 
regulatory regimes for country-of-origin labeling that could be 
adopted.''
  In 2000, the GAO released another study indicating that ``U.S. 
Packers, processors, and grocers would, to the extent possible, pass 
their compliance costs back to their suppliers--U.S. cattle and sheep 
ranchers--in the form of lower prices or forward to consumers in the 
form of higher retail prices.''
  As if that was not enough, again in 2000, the USDA under President 
Clinton released another report which stated: ``[C]ountry-of-origin 
labeling is certain to impose at least some costs on an industry which 
will either be passed back to producers in the form of lower prices or 
forward to consumers via higher prices. There would also be compliance 
and enforcement cost to the government. The extent of these costs would 
vary depending on the nature of the regulatory scheme and the amount of 
enforcement and compliance action.''
  Yet despite the warning signs, the current law passed as part of the 
2002 Farm Bill.
  When USDA issued the proposed rule, it contained a cost-benefit 
analysis that said implementation could cost up to $4 billion--with no 
quantifiable benefit. The rule was followed by a letter from the 
Director of Office of Information and Regulatory Affairs, Dr. John 
Graham, which said ``this is one of the most burdensome rules to be 
reviewed by this administration.''
  And so, I am not surprised by how upset many of my constituents are, 
and that they have come asked me to do something about the burdens this 
law imposes on them. They ask: ``How can something so popular, like 
marketing and promoting U.S. products be so expensive?'' I am 
introducing this bill to help relieve that burden.
  There has to be a better way to market and promote U.S. products, and 
I believe the Meat Promotion Act of 2005 will provide a better 
solution.
  Some have said that voluntary labeling is like a voluntary speed 
limit--that it won't work. On what basis do they make that claim? 
Products like Certified Angus Beef, Angus Pride, Rancher's Reserve; 
these are all labeled on a volunteer basis under existing USDA 
programs. If producers want to have their products labeled, then they 
should participate in a voluntary labeling program rather than impose a 
costly burden on entire segments of our Nation's economy.
  Others have argued that this is about food safety. Let's not kid 
ourselves: country-of-origin labeling is a product-marketing program, 
period. The security of our Nation's food supply is assured by a 
science-based, food-safety inspection system, not by labeling programs. 
In fact, the mandatory labeling law exempts food service and poultry. 
If this debate is about food safety, why are all poultry and the 
majority of beef imports for foodservice allowed an exemption? These 
exemptions clearly demonstrate food safety is not at issue.
  Some have also pointed to the mandatory labeling law now in effect on 
seafood and fish, saying that the sky has not fallen on those 
industries. That is subject to interpretation. GAO analysis of the 
seafood provisions of the mandatory labeling law shows that the seafood 
industry could face up to $89 million in start-up costs and up to $6.2 
million in additional costs in year 10 of the program. Likewise, USDA 
estimated total recordkeeping at $44.6 million for the first year and 
$24.4 million in subsequent years. The Office of Management and Budget 
found the rule to be an ``economically significant'' regulatory action 
and USDA believes the rule would adversely affect--in a substantial 
way--a key sector of the economy. GAO B-294914.
  What do these numbers mean in a practical way? It means that these 
expenses are paid for out of the pockets of hardworking Americans, to 
fund a program that could be more efficient, more effective, and less 
costly.
  I stand with the livestock producers that want to market and promote 
the products they are proud to raise. I believe they should be able to 
market and promote their products as born, raised, and processed in the 
United States, and I believe the Meat Promotion Act of 2005 provides 
the most effective and efficient opportunity for them to do so,

[[Page 14752]]

while adding value to their bottom line and helping the economy of 
rural America.
                                 ______
                                 
      By Mr. BUNNING (for himself and Mr. Stevens):
  S. 1334. A bill entitled ``The Professional Sports Integrity and 
Accountability Act''; to the Committee on Commerce, Science, and 
Transportation and the Committee on Finance.
  Mr. STEVENS. Mr. President, I am pleased to support the efforts of my 
colleague Senator Bunning in holding professional sports leagues in the 
United States to a higher standard with respect to testing their 
athletes for performance-enhancing drugs. Senator Bunning's bill, ``The 
Professional Sports Integrity and Accountability Act,'' is another step 
toward holding professional sports leagues accountable as custodians of 
our Nation's pastimes. I have cosponsored a similar bill with Senator 
McCain, and I look forward to working with both of them in the effort 
to rid professional sports of performance-enhancing drugs and setting a 
positive example for our youth who are using these substances at an 
alarming rate.
  Over the past few years, the Commerce Committee has taken a series of 
actions to review the issue of performance-enhancing drug use at all 
levels of athletic competition, professional and amateur. The results 
of that review have been alarming. The evidence is clear that an 
increasing number of young amateur and U.S. Olympic athletes are using 
these substances for a multitude of reasons, but primarily to enhance 
athletic performance. Some experts suggest that many of these young 
athletes seek to emulate their professional sports heroes and are drawn 
to whatever it takes to achieve similar athletic greatness. For those 
skeptics who question this link and doubt the powerful effect that 
athletes have on the lives of kids, I remind them of the five-fold 
increase in the sales of the steroid-like substance androstenedione--
better known as ``andro''--that occurred after Mark McGwire admitted to 
using the substance in 1998 while chasing Major League Baseball's home 
run record. Since then, the problem of harmful supplement use among 
children and teenagers has reached epidemic proportions.
  In 2004, more than 300,000 high school students used anabolic 
steroids, which are scheduled as a controlled substances in the United 
States. Evidence shows that teenagers are using these substances not 
only for athletic performance enhancement, but also for vanity. Recent 
news reports have indicated that when surveyed, an estimated 5 percent 
of high school girls and 7 percent of middle school girls admitted 
using anabolic steroids at some point in their lives. Steroid use has 
doubled among high school students since the early 1990s.
  The adverse health consequences associated with such use are 
indisputable. Medical experts warn that the effects on children and 
teenagers include stunted growth, scarring acne, hormonal imbalances, 
liver and kidney damage, as well as an increased risk of heart disease 
and stroke later in life. Psychologically, steroids have been 
associated with increased aggression, suicide, and a greater propensity 
to commit serious crimes.
  Notwithstanding the dire health effects of anabolic steroids or 
steroid-like substances, the use of any performance-enhancing substance 
for the sole purpose of gaining a competitive edge over an opponent is 
unfair. Professional sports leagues must be held to the highest 
standard and be held accountable to their players, American consumers 
who pay to see a fair competition on the playing field, and the young 
athletes who are led by the example of professional athletes.
                                 ______
                                 
      By Mr. DODD (for himself, Mr. Kennedy, Mr. Kerry, and Mr. 
        Bingaman):
  S. 1335. A bill to amend title XVIII of the Social Security Act to 
preserve access to appeals before administrative law judges under the 
medicare program; to the Committee on Finance.
  Mr. DODD. Mr. President, I rise today to introduce the Justice for 
Medicare Beneficiaries Act of 2005, legislation that will ensure that 
Medicare beneficiaries who are denied health-related benefits can 
appeal these denials in a meaningful way. Very simply, this initiative 
will ensure that Medicare beneficiaries have access to timely, 
impartial, and in-person hearings before Administrative Law Judges.
  Sec. 931 of the Medicare Prescription Drug, Improvement, and 
Modernization Act requires the transfer of the Medicare appeals process 
from the Social Security Administration (SSA) to the Department of 
Health and Human Services (HHS). A proposed rule recently put forth 
indicates that current HHS plans to bring about this transfer will 
significantly and negatively affect Medicare beneficiaries' ability to 
seek redress from the denial of benefits such as access to prescription 
medicines, home health services, and services provided at skilled 
nursing facilities.
  Specifically, the Administration's proposed transfer plan, slated to 
go into effect in only a handful of days on July 1, will reduce the 
number of sites where these appeal hearings can take place to four from 
the more than 140 sites currently operating nationwide. Today, Medicare 
beneficiaries that have filed coverage appeals are granted a hearing 
before an Administrative Law Judge (ALJ). Under the proposed transfer 
plan, Medicare beneficiaries will now have their hearings heard via 
video- or teleconference (VTC) and will only be allowed to appear in 
person by request and if HHS determines that ``special or extraordinary 
circumstances exist.'' Moreover, beneficiaries granted an in-person 
hearing would not be assured that their cases would be heard within the 
90-day window currently mandated by law. Lastly, the proposed transfer 
plan will endanger the independence and impartiality of Administrative 
Law Judges by requiring them to defer to program guidance provided by 
the Centers for Medicare and Medicaid Services (CMS) rather than on the 
Medicare statute and regulations, as they currently do.
  Central to our system of justice is the right of aggrieved parties to 
appear before an impartial judge in person to have their cases heard. 
Appearing face-to-face before an impartial trier of fact is the best 
way to ensure that a full and fair hearing occurs. In person hearings 
allow parties to fully make their case. At the same time, they allow 
judges to best evaluate the demeanor and condition of the parties, and 
other aspects of a case. The Administration's proposed rule 
transferring the Medicare appeals process from SSA to HHS greatly 
endangers this right by gutting the current practice of guaranteeing 
the right of Medicare beneficiaries to appear in person before an ALJ 
when having their appeals heard and instead will now presume that these 
hearings will be heard via video- or teleconference.
  Often when we talk about the denial of Medicare benefits, we are 
talking about the denial of services that literally have the ability to 
save lives. Medicare provides a critical safety net for millions of 
elderly and disabled beneficiaries and the proposed transfer plan's 
almost wholesale reliance on novel VTC technology may endanger the 
ability of many Medicare beneficiaries to accurately and personally 
portray the severity of their own health conditions.
  The Justice for Medicare Beneficiaries Act of 2005 will ensure those 
Medicare beneficiaries that have filed coverage appeals have access to 
timely, impartial, and in-person hearings before Administrative Law 
Judges. Specifically, this initiative will ensure that Medicare appeals 
will be heard in person before an ALJ, as they presently are. While all 
Medicare beneficiaries will be entitled to appear in person for their 
hearing, any beneficiary may choose to have their hearing heard via 
video- or teleconference.
  The legislation that I introduce today is in no way designed to 
prevent the adoption of the promising technology represented by VTC. 
Rather, this initiative simply seeks to preserve the critically 
important ability of Medicare beneficiaries to appear before the very 
judges charged with hearing their coverage appeals. By preventing

[[Page 14753]]

the great majority of Medicare beneficiaries from appearing in person 
before the judge hearing their Medicare appeals, the Administration's 
proposed plan will greatly harm their ability to accurately and 
completely present all of the facts relevant to their case. And while I 
understand that many Medicare beneficiaries will choose to have their 
appeals heard via either video- or teleconference, I believe that we 
must preserve for Medicare beneficiaries the ability to appear in 
person before a judge when their cases are heard.
  The legislation will also require that all Medicare coverage appeal 
hearings, regardless of whether a Medicare beneficiary appears in 
person or chooses to appear via video- or teleconference, will be heard 
within 90 days as mandated by the Benefits Improvement and Protection 
Act of 2000. All Medicare beneficiaries deserve to have their appeals 
heard in a timely manner regardless of whether their cases are heard in 
person or via utilizing VTC technology.
  The Justice for Medicare Beneficiaries Act will also address the 
Administration's plans to reduce the number of sites where Medicare 
appeal hearings may be heard in person from the more than 140 sites 
currently available to four. This legislation will require at least one 
site for the hearing of in-person Medicare appeals in each state, the 
District of Columbia, and territory, with the nation's five largest 
states featuring two hearing sites geographically distributed 
throughout the state.
  Lastly, this legislation will ensure the independence and 
impartiality of Administrative Law Judges by relieving them of the 
proposed transfer plan's mandate to grant ``substantial deference'' to 
CMS program guidance. Medicare beneficiaries appealing coverage 
decisions should be fully confident that the judges deciding their 
appeals are bound only by the merits of their case and not undue 
pressure from agency of administration interference.
  I want to thank Senators Kennedy, Kerry, and Bingaman for joining me 
in sponsoring this important initiative. The Justice for Medicare 
Beneficiaries Act is also supported by a number of national and local 
organizations dedicated to preserving the continued ability of Medicare 
beneficiaries to access needed health care services. Endorsing the 
legislation that I introduce today are the Center for Medicare Advocacy 
located in my own state of Connecticut, the National Health Law 
Program, the National Senior Citizens Law Center, the Medicare Advocacy 
Project of Vermont Legal Aid, the Medicare Advocacy Project of Greater 
Boston Legal Services, and the Senior Citizens' Law Office of 
Albuquerque, NM.
  In Congress we far too rarely have the opportunity to stave off 
problems before they occur. Rather, too often we are forced to involve 
ourselves in matters only after they have already wreaked havoc on the 
lives of our constituents. With passage of the Justice for Medicare 
Beneficiaries Act of 2005, we have the opportunity to avoid the adverse 
impact that the Administration's proposed transfer plan will likely 
have on Medicare beneficiaries. This legislation will preserve for our 
nation's 41 million Medicare beneficiaries the ability to timely appear 
in person before judges who will impartially determine which health 
care services they're entitled to receive under Medicare. Medicare 
beneficiaries deserve no less than the vital protections offered by 
this act and I ask for the support of my colleagues for this critically 
important initiative.
                                 ______
                                 
      By Mr. ENZI (for himself and Mr. Baucus):
  S. 1337. A bill to restore fairness and reliability to the medical 
justice system and promote patient safety by fostering alternatives to 
current medical tort litigation, and for other purposes; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. ENZI. Mr. President, I rise today along with my colleague Senator 
Baucus from Montana to introduce a bill that will help bring about a 
more reliable system of medical justice for all Americans.
  In the last Congress, we had three robust debates on a critical 
issue--medical liability reform. Though a majority of the Members of 
this body wanted to begin working to pass legislation, we didn't have 
the 60 Senators necessary to invoke cloture and begin the real work on 
the bills. That was disappointing, because skyrocketing medical 
liability insurance premiums are forcing doctors to move their 
practices to States with better legal environments and lower premiums. 
This is endangering the availability of critical healthcare services in 
many areas of Wyoming and other states.
  Throughout our debate, I heard many of my colleagues say that they 
wanted to work on this issue, but that they simply could not support 
the bill as it stood. While I disagreed with their positions then, I 
respected their opposition. I also trust that they sincerely wanted to 
help solve our Nation's medical liability and litigation crisis.
  During those debates, I noticed something interesting. While we 
argued the ``pros and cons'' of the bills, no one stood up to defend 
our current system of medical litigation. In fact, even some of the 
lawyers in this body agreed that our medical litigation system needs 
reform.
  Why didn't we hear anyone defend the merits of our current medical 
litigation system? It's because our system doesn't work. It simply 
doesn't work for patients or for healthcare providers.
  Compensation to patients injured by healthcare errors is neither 
prompt nor fair. The randomness and delay associated with medical 
litigation does not contribute to timely, reasonable compensation for 
most injured patients. Some injured patients get huge jury awards, 
while many others get nothing at all.
  Let's look at the facts. In 1991, a group of researchers published a 
study in the New England Journal of Medicine. The study, known as the 
Harvard Medical Practice Study, was the basis for the Institute of 
Medicine's estimate that nearly 100,000 people die every year from 
healthcare errors.
  As part of their study, the researchers reviewed the medical records 
of a random sample of more than 31,000 patients in New York State. They 
matched those records with statewide data on medical malpractice 
claims. The researchers found that nearly 30 percent of injuries caused 
by medical negligence resulted in temporary disability, permanent 
disability or death. However, less than 2 percent of those who were 
injured by medical negligence filed a claim. These figures suggest that 
most people who suffer negligent injuries don't receive any 
compensation.
  When a patient does decide to litigate, only a few recover anything. 
Only one of every ten medical malpractice cases actually goes to trial, 
and of those cases, plaintiffs win less than one of every five. In 
addition, patients who file suit and are ultimately successful must 
wait a long time for their compensation--the average length of a 
medical malpractice action filed in state court is about 30 months.
  While the vast majority of malpractice cases that go to trial are 
settled before the court hands down a verdict, the settlements even 
then don't guarantee that patients are compensated fairly, particularly 
after legal fees are subtracted. Research shows that for every dollar 
paid in malpractice insurance premiums, about 40 cents in compensation 
is actually paid to the plaintiff--the rest goes for legal fees, court 
costs, and other administrative expenditures.
  To sum up: most patients injured by negligence don't file claims or 
receive compensation. Few of those that do file claims and go to court 
recover anything, and those who are successful wait a long time for 
their compensation. And those who settle out of court end up receiving 
only 40 cents for every dollar that healthcare providers pay in 
liability insurance premiums.
  It's hard to say that our medical litigation system does right by 
patients in light of those facts. Unfortunately, our system doesn't 
work for healthcare providers either.
  Earlier, I spoke about those Harvard researchers who found that fewer 
than 2 percent of those who were injured by

[[Page 14754]]

medical negligence even filed a claim. As they reviewed the medical 
records for their study, the researchers also found another interesting 
fact--most of the providers against whom claims were eventually filed 
were not negligent at all.
  That's right--most providers who were sued had not committed a 
negligent act.
  In matching the records they reviewed to data on malpractice claims, 
the Harvard researchers found 47 actual malpractice claims. In only 8 
of the 47 claims did they find evidence that medical malpractice had 
caused an injury. Even more amazingly, the physician reviewers found no 
evidence of any medical injury, negligent or not, in 26 of the 47 
claims. However, 40 percent of these cases where they found no evidence 
of negligence nonetheless resulted in a payment by the provider. 
Basically, the researchers found no positive relationship between 
medical negligence and compensation.
  That study was based on 1984 data. The same group of researchers 
conducted another study in Colorado and Utah in 1992, and they found 
the same thing. As in the 1984 study, they found that only 3 percent of 
patients who suffered an injury as a result of negligence actually 
sued. And again, physician reviewers could not find negligence in most 
of the cases in which lawsuits were filed.
  Now, I assume that the patients who sued had either an adverse 
medical outcome, or at least an outcome that was less satisfactory than 
the patient expected. But our medical litigation system is not supposed 
to compensate patients for adverse outcomes or dissatisfaction--it's 
supposed to compensate patients who are victims of negligent behavior. 
It's supposed to be a deterrent to substandard medical care.
  It's not fair to doctors and hospitals that they must pay to defend 
against meritless lawsuits. Nor is it fair that they must face a choice 
between settling for a small sum, even if they aren't at fault, so that 
they avoid getting sucked into the whirlpool of our medical litigation 
system.
  It's not hard to understand why physicians and hospitals and their 
insurers want to stay out of court. When they lose, the decisions are 
increasingly resulting in mega-awards based on subjective ``non-
economic'' damages. The number of awards exceeding $1 million grew by 
50 percent between the periods of 1994-1996 and 1999-2000. Today, more 
than half of all jury awards exceed $1 million.
  As a result, when a patient suffers a bad outcome and sues, providers 
have an incentive to settle the case out of court, even if the provider 
isn't at fault. But is this how our medical litigation system is 
supposed to work--as a tool for shaking down our healthcare providers?
  Let's face it--our medical litigation system is broken. It doesn't 
work for patients or providers. Even worse, it replaces the trust in 
the provider-patient relationship with distrust.
  Then, when courts and juries render verdicts with huge awards that 
bear no relation to the conduct of the defendants, this destabilizes 
the insurance markets and sends premiums skyrocketing. This forces many 
physicians to curtail, move or drop their practices, leaving patients 
without access to necessary medical care. This is a particular problem 
in states like Wyoming, where we traditionally struggle with recruiting 
doctors and other healthcare providers.
  Perhaps we could live with this flawed system if litigation served to 
improve quality or safety, but it doesn't. Litigation discourages the 
exchange of critical information that could be used to improve the 
quality and safety of patient care. The constant threat of litigation 
also drives the inefficient, costly and even dangerous practice of 
``defensive medicine.''
  Yes, indeed, defensive medicine is dangerous. A recent study found 
that one of every 1200 children who receive a CAT scan may die later in 
life from radiation-induced cancer. Knowing this puts a physician faced 
with anxious parents in a difficult situation. Does the doctor use his 
or her professional judgment and tell the parents of a sick child not 
to worry, or does the doctor order the CAT scan and subject the child 
to radiation that is probably unnecessary, just to provide some 
protection against a possible lawsuit?
  We have a medical litigation system in which many patients who are 
hurt by negligent actions receive no compensation for their loss. Those 
who do receive compensation end up with about 40 cents of every premium 
dollar after legal fees and other costs are subtracted. And the 
likelihood and the outcomes of lawsuits and settlements bear little 
relation to whether or not a healthcare provider was at fault.
  We like to say that justice is blind. With respect to our medical 
litigation system, I would say that justice is absent and nowhere to be 
found.
  During our debates in the last Congress, I said that the current 
medical liability crisis and the shortcomings of our medical litigation 
system make it clear that it is time for a major change. I also said 
that regardless of how we voted, we all should work toward replacing 
the current medical tort liability scheme with a more reliable and 
predictable system of medical justice.
  Today, Senator Baucus and I are introducing a bill that would help 
achieve that goal.
  Most of us are familiar with the report on medical errors from the 
Institute of Medicine, also known as the IOM. Many of us may be less 
familiar with another report that the IOM published in 2003. That 
report is called ``Fostering Rapid Advances in Healthcare: Learning 
from System Demonstrations.''
  Our Secretary of Health and Human Services at that time, Tommy 
Thompson, challenged the IOM to identify bold ideas that would 
challenge conventional thinking about some of the most vexing problems 
facing our healthcare system. In response, an IOM committee developed 
this report, which identified a set of demonstration projects that 
committee members felt would break new ground and yield a very high 
return-on-investment in terms of dollars and health.
  Medical liability was one of the areas upon which the IOM committee 
focused. The IOM suggested that the federal government should support 
demonstration projects in the states. These demonstrations should be 
based on ``replacing tort liability with a system of patient-centered 
and safety-focused non-judicial compensation.''
  The bill we are introducing today is in the spirit of this IOM 
report. This bill, the Fair and Reliable Medical Justice Act, would 
authorize funding for States to create demonstration programs to test 
alternatives to current medical tort litigation.
  The funding to States under this bill would cover planning grants for 
developing proposals based on the models or other innovative ideas. 
Funding to States would also include the initial costs of getting the 
alternatives up and running.
  The Fair and Reliable Medical Justice Act would require participating 
states and the Federal Government to collaborate in continuous 
evaluations of the results of the alternatives as compared to 
traditional tort litigation. This way, all States and the federal 
government can learn from new approaches.
  By funding demonstration projects, I believe Congress could enable 
States to experiment with and learn from ideas that could provide long-
term solutions to the current medical liability and litigation crisis.
  In introducing this bill, I wanted to provide some alternative ideas 
that would contribute to the debate. As a result, the bill describes 
three models to which states could look in designing their 
alternatives.
  For instance, a State could provide healthcare providers and 
organizations with immunity from lawsuits if they disclose an error 
that results in an injury and make a timely offer to compensate an 
injured patient for his or her actual net economic loss, plus a payment 
for pain and suffering if experts deem such a payment to be 
appropriate. This could give a healthcare provider who makes an honest 
mistake the chance to make amends financially

[[Page 14755]]

with a patient, without the provider fearing that their honesty would 
land them in a lawsuit.
  Another idea would be for a state to set up classes of avoidable 
injuries and a schedule of compensation for them, and then establish an 
administrative board to resolve claims related to those injuries. A 
scientifically rigorous process of identifying preventable injuries and 
setting appropriate compensation would be preferable to the randomness 
of the current system.
  Still another option would be for a state to establish a special 
healthcare court for adjudicating medical malpractice cases. For this 
idea to work, the State would need to ensure that the presiding judges 
have expertise in and an understanding of healthcare, and allow them to 
make binding rulings on issues like causation compensation, and 
standards of care.
  We already have specialized courts for complicated issues like taxes 
and highly charged issues like substance abuse and domestic violence. 
With all the flaws in our current medical litigation system, perhaps we 
should consider special courts for the complex and emotional issue of 
medical malpractice.
  I believe one thing in our medical liability debate is absolutely 
clear--people are demanding change. The States are debating liability 
reform, and a number of states have enacted new laws. States are 
heeding this call for change, and Congress should support those 
efforts.
  My own State, Wyoming, had had a number of lively legislative debates 
on medical liability reform over the past few years, but we have a 
constitutional amendment that prohibits limits on the amounts that can 
be recovered through lawsuits. The Wyoming Senate has considered bills 
recently to amend our State's constitution to create a commission on 
healthcare errors. That commission would have the power to review 
claims, decide if healthcare negligence had occurred, and determine the 
compensation for the death or injury according to a schedule or formula 
provided by law.
  According to the key sponsor of these bills, Senator Charlie Scott, 
one of the biggest obstacles to passage is the uncertainty surrounding 
this new idea. No one has any basis for knowing what a proper schedule 
or formula for compensation would be. No one knows how much the system 
might cost, or how much injured patients would recover compared to what 
they recover now.
  Senator Scott wrote me to say that federal support for finding 
answers to these questions might help the bill's sponsors sufficiently 
respond to the legitimate concerns of their fellow Wyoming legislators. 
We should be helping state legislators like Senator Scott develop 
thoughtful and innovative ideas such as the one he has proposed. That's 
one of the reasons I am offering this bill.
  Clearly, the American people and their elected representatives have 
identified the need to reform our current medical litigation system. 
There is a real medical liability crisis, and Congress needs to act 
sooner rather than later.
  My cosponsor Senator Baucus and I voted differently on medical 
liability reform in the last Congress, but we both agree that we ought 
to lend a hand to States that are working to change their current 
medical litigation systems and to develop creative alternatives that 
could work much better for patients and providers. The States have been 
policy pioneers in many areas--workers' compensation, welfare reform, 
and electricity deregulation, to name three. Medical litigation should 
be the next item on the agenda of the laboratories of democracy that 
are our 50 States.
  No one questions the need to restore reliability to our medical 
justice system. But how do we begin the process? One way is to foster 
innovation by encouraging States to develop more rational and 
predictable methods for resolving healthcare injury claims. And that is 
what the Fair and Reliable Medical Justice Act aims to do.
  In the long run, we would all be better off with a more reliable 
system of medical justice than we have today. I know that my fellow 
Senators recognize this, so I hope my colleagues on both sides of the 
aisle will work with me and Senator Baucus on this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1337

       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 ``Fair and Reliable Medical 
     Justice Act''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to restore fairness and reliability to the medical 
     justice system by fostering alternatives to current medical 
     tort litigation that promote early disclosure of health care 
     errors and provide prompt, fair, and reasonable compensation 
     to patients who are injured by health care errors;
       (2) to promote patient safety through early disclosure of 
     health care errors; and
       (3) to support and assist States in developing such 
     alternatives.

     SEC. 3. STATE DEMONSTRATION PROGRAMS TO EVALUATE ALTERNATIVES 
                   TO CURRENT MEDICAL TORT LITIGATION.

       Part P of title III of the Public Health Service Act (42 
     U.S.C. 280g et seq.) is amended by adding at the end the 
     following:

     ``SEC. 3990. STATE DEMONSTRATION PROGRAMS TO EVALUATE 
                   ALTERNATIVES TO CURRENT MEDICAL TORT 
                   LITIGATION.

       ``(a) In General.--The Secretary is authorized to award 
     demonstration grants to States for the development, 
     implementation, and evaluation of alternatives to current 
     tort litigation for resolving disputes over injuries 
     allegedly caused by health care providers or health care 
     organizations.
       ``(b) Duration.--The Secretary may award up to 10 grants 
     under subsection (a) and each grant awarded under such 
     subsection may not exceed a period of 5 years.
       ``(c) Conditions for Demonstration Grants.--
       ``(1) Requirements.--Each State desiring a grant under 
     subsection (a) shall--
       ``(A) develop an alternative to current tort litigation for 
     resolving disputes over injuries allegedly caused by health 
     care providers or health care organizations that may be 1 of 
     the models described in subsection (d); and
       ``(B) promote a reduction of health care errors by allowing 
     for patient safety data related to disputes resolved under 
     subparagraph (A) to be collected and analyzed by 
     organizations that engage in voluntary efforts to improve 
     patient safety and the quality of health care delivery.
       ``(2) Alternative to current tort litigation.--Each State 
     desiring a grant under subsection (a) shall demonstrate how 
     the proposed alternative described in paragraph (1)(A)--
       ``(A) makes the medical liability system more reliable 
     through prompt and fair resolution of disputes;
       ``(B) encourages the early disclosure of health care 
     errors;
       ``(C) enhances patient safety; and
       ``(D) maintains access to liability insurance.
       ``(3) Sources of compensation.--Each State desiring a grant 
     under subsection (a) shall identify the sources from and 
     methods by which compensation would be paid for claims 
     resolved under the proposed alternative to current tort 
     litigation, which may include public or private funding 
     sources, or a combination of such sources. Funding methods 
     shall to the extent practicable provide financial incentives 
     for activities that improve patient safety.
       ``(4) Scope.--
       ``(A) In general.--Each State desiring a grant under 
     subsection (a) may establish a scope of jurisdiction (such as 
     a designated geographic region, a designated area of health 
     care practice, or a designated group of health care providers 
     or health care organizations) for the proposed alternative to 
     current tort litigation that is sufficient to evaluate the 
     effects of the alternative.
       ``(B) Notification of patients.--A State proposing a scope 
     of jurisdiction under subparagraph (A) shall demonstrate how 
     patients would be notified that they are receiving health 
     care services that fall within such scope.
       ``(5) Preference in awarding demonstration grants.--In 
     awarding grants under subsection (a), the Secretary shall 
     give preference to States--
       ``(A) that have developed the proposed alternative through 
     substantive consultation with relevant stakeholders; and
       ``(B) in which State law at the time of the application 
     would not prohibit the adoption of an alternative to current 
     tort litigation.
       ``(d) Models.--
       ``(1) In general.--Any State desiring a grant under 
     subsection (a) that proposes an alternative described in 
     paragraph (2), (3), or (4) shall be deemed to meet the 
     criteria under subsection (c)(2).
       ``(2) Early disclosure and compensation model.--In the 
     early disclosure and compensation model, the State shall--

[[Page 14756]]

       ``(A) require that health care providers or health care 
     organizations notify a patient (or an immediate family member 
     or designee of the patient) of an adverse event that results 
     in serious injury to the patient, and that such notification 
     shall not constitute an acknowledgment or an admission of 
     liability;
       ``(B) provide immunity from tort liability to any health 
     care provider or health care organization that offers in good 
     faith to pay compensation in accordance with this section to 
     a patient for an injury incurred in the provision of health 
     care services (limited to claims arising out of the same 
     nucleus of operative facts as the injury, and except in cases 
     of fraud related to the provision of health care services, or 
     in cases of criminal or intentional harm);
       ``(C) set a limited time period during which a health care 
     provider or health care organization may make an offer of 
     compensation benefits under subparagraph (B), with 
     consideration for instances where prompt recognition of an 
     injury is unlikely or impossible;
       ``(D) require that the compensation provided under 
     subparagraph (B) include--
       ``(i) payment for the net economic loss of the patient, on 
     a periodic basis, reduced by any payments received by the 
     patient under--

       ``(I) any health or accident insurance;
       ``(II) any wage or salary continuation plan; or
       ``(III) any disability income insurance;

       ``(ii) payment for the non-economic damages of the patient, 
     if appropriate for the injury, based on a defined payment 
     schedule developed by the State in consultation with relevant 
     experts and with the Secretary in accordance with subsection 
     (g); and
       ``(iii) reasonable attorney's fees;
       ``(E) not abridge the right of an injured patient to seek 
     redress through the State tort system if a health care 
     provider does not enter into a compensation agreement with 
     the patient in accordance with subparagraph (B) or if the 
     compensation offered does not meet the requirements of 
     subparagraph (D) or is not offered in good faith;
       ``(F) permit a health care provider or health care 
     organization that offers in good faith to pay compensation 
     benefits to an individual under subparagraph (B) to join in 
     the payment of the compensation benefits any health care 
     provider or health care organization that is potentially 
     liable, in whole or in part, for the injury; and
       ``(G) permit any health care provider or health care 
     organization to contribute voluntarily in the payment of 
     compensation benefits to an individual under subparagraph 
     (B).
       ``(3) Administrative determination of compensation model.--
       ``(A) In general.--In the administrative determination of 
     compensation model--
       ``(i) the State shall--

       ``(I) designate an administrative entity (in this paragraph 
     referred to as the `Board') that shall include 
     representatives of--

       ``(aa) relevant State licensing boards;
       ``(bb) patient advocacy groups;
       ``(cc) health care providers and health care organizations; 
     and
       ``(dd) attorneys in relevant practice areas;

       ``(II) set up classes of avoidable injuries, in 
     consultation with relevant experts and with the Secretary in 
     accordance with subsection (g), that will be used by the 
     Board to determine compensation under clause (ii)(II);
       ``(III) modify tort liability, through statute or contract, 
     to bar negligence claims in court against health care 
     providers and health care organizations for the classes of 
     injuries established under subclause (II), except in cases of 
     fraud related to an injury, or in cases of criminal or 
     intentional harm;
       ``(IV) outline a procedure for informing patients about the 
     modified liability system described in this paragraph and, in 
     systems where participation by the health care provider, 
     health care organization, or patient is voluntary, allow for 
     the decision by the provider, organization, or patient of 
     whether to participate to be made prior to the provision of, 
     use of, or payment for the health care service;
       ``(V) provide for an appeals process to allow for review of 
     decisions; and
       ``(VI) establish procedures to coordinate settlement 
     payments with other sources of payment;

       ``(ii) the Board shall--

       ``(I) resolve health care liability claims for certain 
     classes of avoidable injuries as determined by the State and 
     determine compensation for such claims;
       ``(II) develop a schedule of compensation to be used in 
     making such determinations that includes--

       ``(aa) payment for the net economic loss of the patient, on 
     a periodic basis, reduced by any payments received by the 
     patient under any health or accident insurance, any wage or 
     salary continuation plan, or any disability income insurance;
       ``(bb) payment for the non-economic damages of the patient, 
     if appropriate for the injury, based on a defined payment 
     schedule developed by the State in consultation with relevant 
     experts and with the Secretary in accordance with subsection 
     (g); and
       ``(cc) reasonable attorney's fees; and

       ``(III) update the schedule under subclause (II) on a 
     regular basis.

       ``(B) Appeals.--The State, in establishing the appeals 
     process described in subparagraph (A)(i)(V), may choose 
     whether to allow for de novo review, review with deference, 
     or some opportunity for parties to reject determinations by 
     the Board and elect to file a civil action after such 
     rejection. Any State desiring to adopt the model described in 
     this paragraph shall indicate how such review method meets 
     the criteria under subsection (c)(2).
       ``(C) Timeliness.--The State shall establish timeframes to 
     ensure that claims handled under the system described in this 
     paragraph provide for adjudication that is more timely and 
     expedited than adjudication in a traditional tort system.
       ``(4) Special health care court model.--In the special 
     health care court model, the State shall--
       ``(A) establish a special court for the timely adjudication 
     of disputes over injuries allegedly caused by health care 
     providers or health care organizations in the provision of 
     health care services;
       ``(B) ensure that such court is presided over by judges 
     with health care expertise who meet applicable State 
     standards for judges and who agree to preside over such court 
     voluntarily;
       ``(C) provide authority to such judges to make binding 
     rulings on causation, compensation, standards of care, and 
     related issues with reliance on independent expert witnesses 
     commissioned by the court;
       ``(D) provide for an appeals process to allow for review of 
     decisions; and
       ``(E) at its option, establish an administrative entity 
     similar to the entity described in paragraph (3)(A)(i)(I) to 
     provide advice and guidance to the special court.
       ``(e) Application.--
       ``(1) In general.--Each State desiring a grant under 
     subsection (a) shall submit to the Secretary an application, 
     at such time, in such manner, and containing such information 
     as the Secretary may require.
       ``(2) Review panel.--
       ``(A) In general.--In reviewing applications under 
     paragraph (1), the Secretary shall consult with a review 
     panel composed of relevant experts appointed by the 
     Comptroller General.
       ``(B) Composition.--
       ``(i) Nominations.--The Comptroller General shall solicit 
     nominations from the public for individuals to serve on the 
     review panel.
       ``(ii) Appointment.--The Comptroller General shall appoint, 
     at least 11 but not more than 15, highly qualified and 
     knowledgeable individuals to serve on the review panel and 
     shall ensure that the following entities receive fair 
     representation on such panel:

       ``(I) Patient advocates.
       ``(II) Health care providers and health care organizations.
       ``(III) Attorneys with expertise in representing patients 
     and health care providers.
       ``(IV) Insurers.
       ``(V) State officials.

       ``(C) Chairperson.--The Comptroller General, or an 
     individual within the Government Accountability Office 
     designated by the Comptroller General, shall be the 
     chairperson of the review panel.
       ``(D) Availability of information.--The Comptroller General 
     shall make available to the review panel such information, 
     personnel, and administrative services and assistance as the 
     review panel may reasonably require to carry out its duties.
       ``(E) Information from agencies.--The review panel may 
     request directly from any department or agency of the United 
     States any information that such panel considers necessary to 
     carry out its duties. To the extent consistent with 
     applicable laws and regulations, the head of such department 
     or agency shall furnish the requested information to the 
     review panel.
       ``(f) Report.--Each State receiving a grant under 
     subsection (a) shall submit to the Secretary a report 
     evaluating the effectiveness of activities funded with grants 
     awarded under such subsection at such time and in such manner 
     as the Secretary may require.
       ``(g) Technical Assistance.--
       ``(1) In general.--The Secretary shall provide technical 
     assistance to the States awarded grants under subsection (a).
       ``(2) Requirements.--Technical assistance under paragraph 
     (1) shall include--
       ``(A) the development of a defined payment schedule for 
     non-economic damages (including guidance on the consideration 
     of individual facts and circumstances in determining 
     appropriate payment), the development of classes of avoidable 
     injuries, and guidance on early disclosure to patients of 
     adverse events; and
       ``(B) the development, in consultation with States, of 
     common definitions, formats, and data collection 
     infrastructure for States receiving grants under this section 
     to use in reporting to facilitate aggregation and analysis of 
     data both within and between States.
       ``(3) Use of common definitions, formats, and data 
     collection infrastructure.--States not receiving grants under 
     this section may also use the common definitions, formats, 
     and data collection infrastructure developed under paragraph 
     (2)(B).
       ``(h) Evaluation.--
       ``(1) In general.--The Secretary, in consultation with the 
     review panel established

[[Page 14757]]

     under subsection (e)(2), shall enter into a contract with an 
     appropriate research organization to conduct an overall 
     evaluation of the effectiveness of grants awarded under 
     subsection (a) and to annually prepare and submit a report to 
     the appropriate committees of Congress. Such an evaluation 
     shall begin not later than 18 months following the date of 
     implementation of the first program funded by a grant under 
     subsection (a).
       ``(2) Contents.--The evaluation under paragraph (1) shall 
     include--
       ``(A) an analysis of the effect of the grants awarded under 
     subsection (a) on the number, nature, and costs of health 
     care liability claims;
       ``(B) a comparison of the claim and cost information of 
     each State receiving a grant under subsection (a); and
       ``(C) a comparison between States receiving a grant under 
     this section and States that did not receive such a grant, 
     matched to ensure similar legal and health care environments, 
     and to determine the effects of the grants and subsequent 
     reforms on--
       ``(i) the liability environment;
       ``(ii) health care quality;
       ``(iii) patient safety; and
       ``(iv) patient and health care provider and organization 
     satisfaction with the reforms.
       ``(i) Option to Provide for Initial Planning Grants.--Of 
     the funds appropriated pursuant to subsection (k), the 
     Secretary may use a portion not to exceed $500,000 per State 
     to provide planning grants to such States for the development 
     of demonstration project applications meeting the criteria 
     described in subsection (c). In selecting States to receive 
     such planning grants, the Secretary shall give preference to 
     those States in which State law at the time of the 
     application would not prohibit the adoption of an alternative 
     to current tort litigation.
       ``(j) Definitions.--In this section:
       ``(1) Health care services.--The term `health care 
     services' means any services provided by a health care 
     provider, or by any individual working under the supervision 
     of a health care provider, that relate to--
       ``(A) the diagnosis, prevention, or treatment of any human 
     disease or impairment; or
       ``(B) the assessment of the health of human beings.
       ``(2) Health care organization.--The term `health care 
     organization' means any individual or entity which is 
     obligated to provide, pay for, or administer health benefits 
     under any health plan.
       ``(3) Health care provider.--The term `health care 
     provider' means any individual or entity--
       ``(A) licensed, registered, or certified under Federal or 
     State laws or regulations to provide health care services; or
       ``(B) required to be so licensed, registered, or certified 
     but that is exempted by other statute or regulation.
       ``(4) Net economic loss.--The term `net economic loss' 
     means--
       ``(A) reasonable expenses incurred for products, services, 
     and accommodations needed for health care, training, and 
     other remedial treatment and care of an injured individual;
       ``(B) reasonable and appropriate expenses for 
     rehabilitation treatment and occupational training;
       ``(C) 100 percent of the loss of income from work that an 
     injured individual would have performed if not injured, 
     reduced by any income from substitute work actually 
     performed; and
       ``(D) reasonable expenses incurred in obtaining ordinary 
     and necessary services to replace services an injured 
     individual would have performed for the benefit of the 
     individual or the family of such individual if the individual 
     had not been injured.
       ``(5) Non-economic damages.--The term `non-economic 
     damages' means losses for physical and emotional pain, 
     suffering, inconvenience, physical impairment, mental 
     anguish, disfigurement, loss of enjoyment of life, loss of 
     society and companionship, loss of consortium (other than 
     loss of domestic service), injury to reputation, and all 
     other non-pecuniary losses of any kind or nature, to the 
     extent permitted under State law.
       ``(k) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section such 
     sums as may be necessary. Amounts appropriated pursuant to 
     this subsection shall remain available until expended.''.

  Mr. BAUCUS. Mr. President, I rise today to join Senator ENZI in 
introducing the Fair and Reliable Medical Justice Act of 2005. We have 
debated the medical liability issue in this chamber for years now. But 
the Senate has failed to take action to make the situation better. We 
need to deal with the issue of rising liability costs, and I think this 
bill is a good place to start.
  One of my top priorities in the Senate is ensuring appropriate access 
to affordable, quality health care. In a rural State such as Montana, 
where health care providers are often few and far between, that is a 
tall order. It is a job that is made all the harder by rising medical 
liability insurance premiums.
  To ensure proper access to care, we need to make certain that our 
health care providers can afford their medical liability insurance. We 
also need to make sure that patients who are harmed by medical mistakes 
have access to timely, reasonable compensation for their injuries.
  The Fair and Reliable Medical Justice Act promotes the testing of 
alternatives to current medical tort liability litigation. It aims to 
increase the number of injured patients who receive compensation for 
their injuries, and make such compensation more accurate and more 
timely, all at lower administrative costs than current systems. The 
bill also encourages patient safety by promoting disclosure of medical 
errors, unlike the current system which does not encourage disclosure.
  The Fair and Reliable Medical Justice Act would establish State-based 
demonstration programs to help States test alternative systems of 
health care-related dispute resolution under three different models: 
early disclosure and compensation; administrative determination of 
compensation; and special health care courts. Under the bill, states 
may develop other alternative plans for resolving health care related 
disputes as well.
  The first model involves a system of early disclosure, which 
encourages providers to disclose medical errors that harm patients and 
offer just compensation for injuries. This model would maintain 
patients' access to the traditional legal system if claims cannot be 
resolved by early disclosure, or in cases resulting from criminal or 
intentional harm or fraud.
  The second model would establish a board made up of providers and 
health care organizations, advocates, and attorneys. The board would 
establish classes of avoidable injuries and determine compensation 
rates for each, including economic and non-economic losses, and 
attorneys' fees.
  The third model involves special health care courts, presided over by 
judges with special health care expertise, and assisted by independent 
experts. The judges would be subject to the same criteria as other 
State judges and sit on the court voluntarily.
  These models are based on innovative efforts currently underway in 
the private sector and in some States, where success is already being 
achieved. I think it is time for us to try to encourage more innovation 
and expand the range of options being considered. State-based 
demonstrations provide a great setting for experimentation and 
learning. The Institute of Medicine suggested as much in its 2002 
report entitled ``Fostering Rapid Advances in Health Care: Learning 
from System Demonstrations.''
  I thank Senator Enzi for his leadership on this issue. I am proud to 
have worked with him to develop legislation that I believe will enhance 
patient safety. It is unacceptable that around 100,000 Americans die 
annually as a result of medical errors. And it is unacceptable that 
many patients hurt by medical errors receive no compensation for their 
injuries
  This bill is a good opportunity for us to make progress on both 
fronts--to look at the medical liability issue from a new perspective, 
through a set of commonsense pilot projects centered on improving 
patient safety. I urge my colleagues to support this important effort.
                                 ______
                                 
      By Ms. MURKOWSKI (for herself and Mr. Stevens):
  S. 1338. A bill to require the Secretary of the Interior, acting 
through the Bureau of Reclamation and the United States Geological 
Survey, to conduct a study on groundwater resources in the State of 
Alaska, and for other purposes; to the Committee on Energy and Natural 
Resources.
  Ms. MURKOWSKI. Mr. President, I rise today to introduce a measure of 
benefit to my home State of Alaska, the Alaska Water Resources Act of 
2005. The importance of water resource data collection to a State that 
has a resource-based economy cannot be overstated. Economic development 
is predicated on access to an adequate water supply, and in my State 
there is inadequate hydrologic data upon which to secure both economic 
development

[[Page 14758]]

and the health and welfare of Alaskan citizens.
  Alaska is an amazing State from a hydrological viewpoint. It is home 
to more than 3 million lakes--only about 100 being larger than 10 
square miles--more than 12,000 rivers and uncounted thousands of 
streams, creeks and ponds. Together these water bodies hold about one-
third of all the fresh water found in the United States.
  Alaska is home to a number of large rivers. The Yukon, which 
originates in western Canada, runs 1,400 miles--discharging from 25,000 
cubic feet of water per second in early spring to more than 600,000 
cubic feet per second in May during the spring thaw. The Yukon drains 
roughly 330,000 square miles of Alaska and Canada, about one-third of 
the State. Besides the Yukon, Alaska is home to nine other major rivers 
and creeks all running more than 300 miles in length: the Porcupine, 
Koyukuk, Kuskokwim, Tanana, Innoko, Colville, Noatak, Kobuk and Birch 
Creek.
  Alaska residents from early spring to fall face substantial flood 
threats, from spring flooding caused by breakup and ice damming to 
fall's heavy rains, but the State has fewer than 100 stream gaging 
stations operated by the U.S. Geological Survey--Alaska having less 
than 10 percent of the stream flow information that is taken for 
granted by all other States in the Nation. Alaska averages one working 
gage for each 10,000 square miles, while, as an example, Pacific 
Northwest States average one gage for each 365 square miles. To 
emphasize the lack of data now available for Alaska, I would point out 
that to equal the stream gage density of the Pacific Northwest States, 
my State would need to have over 1,600 total gage sites.
  Alaska also supports the Nation's least modern and undeveloped 
potable water distribution system. Water for Alaska towns outside of 
the more densely populated ``Railbelt'' comes predominately from 
surface water sources Surface water sources often result in supply/
storage problems since these surface sources freeze and are unavailable 
for up to half the year. The chances for water-borne contaminants to 
affect potable water supplies, including fecal matter from Alaska's 
plentiful wildlife populations, human waste from inadequate or 
nonexistent sewage treatment facilities, and natural mineral deposits 
(natural arsenic levels in mineralized zone creeks frequently exceeding 
EPA standards) are present and increasing. In areas that predominately 
depend on groundwater sources, such as the ``Railbelt,'' there is only 
very limited knowledge of the nature and extent of the aquifers that 
support those critical groundwater supplies. Extensive permafrost 
further complicates the potential for adverse impacts to Alaska. In 
portions of Southcentral Alaska where there is a dependence on 
groundwater as the source for an adequate healthy water supply, the 
availability of that supply is starting to be in jeopardy. Allocations 
of water need to be based on scientific data, and the data needed upon 
which the allocations are made is unavailable. Users of water are only 
beginning to realize the potential conflicts that may arise, and the 
limits on future economic development that may result from inadequate 
knowledge of the water resource, particularly in the Matanuska-Susitna 
Borough, on the Kenai Peninsula and to a lesser extent in portions of 
the Municipality of Anchorage where groundwater provided by wells is a 
crucial part of the State's water distribution system and where there 
is little known about the size, capacity, extent and recharge 
capability of the aquifers that these wells tap.
  Alaska, according to the Alaska Department of Environmental 
Conservation, still has some 16,000 homes in 71 generally Native 
villages not being served by piped water or enclosed water haul 
systems. There are still 55 villages in Alaska where up to 29 percent 
of the residents are not served by sanitary water systems, with more 
than 60 percent of residents not being served in 16 villages. Even 
though since Statehood the State and Federal governments have spent 
$1.3 billion on rural water-sanitation system improvements in Alaska, 
the state has an estimated need for nearly $650 million in additional 
funding to complete installation of a modern water-sanitation system.
  Planning and engineering for those locations cannot be completed 
without better information as to the availability and extent of supply 
of water and better analysis of new technologies that could be used for 
water system installations, including possible desalination for some 
island and coastal communities.
  For all these reasons, today I am introducing legislation authorizing 
the Department of the Interior's Commissioner of Reclamation and the 
Director of the U.S. Geological Survey to conduct a series of water 
resource studies in Alaska. The studies will include a survey of water 
treatment needs and technologies including desalination treatment, 
which may be applicable to the water resources development in Alaska. 
The study will review the need for enhancement of the National 
Streamflow Information Program administered by the U.S. Geological 
Survey. The Streamflow review will determine whether more stream gaging 
stations are necessary for flood forecasting, aiding resource 
extraction, determining the risk to the state's transportation system 
and for wildfire management. Groundwater resources will also be further 
evaluated and documented to determine the availability of water, the 
quality of that groundwater, and the extent of the aquifers in urban 
areas.
  This type of study, already conducted for most all other Sates in the 
Nation, should help Alaska better plan and design water systems and 
transportation infrastructure and also better prepare for floods and 
summer wildfires.
  There is literally ``water, water everywhere'' in Alaska, but too 
often, especially in communities such as Ketchikan that take water from 
surface sources, or the rapidly growing Mat-Su Valley, there may be 
less water to drink during unusually dry summers, There is a real and 
growing problem of maintaining an adequate supply of sufficient, pure 
water. This problem is only going to grow with a growing population and 
economy. This bill is designed to provide more information to help 
communities plan for future water needs and to help State officials 
plan for flood and fire safety concerns and economic development.
                                 ______
                                 
      By Mr. LEAHY (for himself, Ms. Collins, Mr. Jeffords, Mrs. Boxer, 
        Mr. Kerry, Mr. Biden, Ms. Cantwell, Mr. Carper, Mr. 
        Rockefeller, Mr. Corzine, Mr. Dayton, Mr. Reid, Mr. Dodd, Mrs. 
        Clinton, Mr. Durbin, Mr. Feingold, Mrs. Feinstein, Mr. Harkin, 
        Mr. Kennedy, Mr. Kohl, Mr. Obama, Mr. Lautenberg, Mr. Levin, 
        Mr. Lieberman, Ms. Mikulski, Mrs. Murray, Mr. Reed, Mr. 
        Sarbanes, Mr. Schumer, Mr. Wyden, Mr. Akaka, and Ms. Snowe):
  S.J. Res. 20. A joint resolution disapproving a rule promulgated by 
the Administrator of the Environmental Protection Agency to delist coal 
and oil-direct utility units from the source category list under the 
Clean Air Act; to the Committee on Environment and Public Works.
  Mr. LEAHY. Mr. President, along with Senator Collins and 28 of our 
colleagues, today I am introducing this resolution to halt the Bush 
administration's flawed and dangerous new rule on toxic mercury 
emissions. I am pleased that another leading cosponsor of this 
resolution is the ranking member of the Committee on Environment and 
Public Works, Senator Jeffords.
  The Bush administration's new rule will continue to allow mercury, a 
substance so toxic that it causes birth defects and IQ loss, to 
continue to poison children and pregnant women. This disastrous rule 
should not be allowed to stand as the law of the land.
  The bipartisan work that produced the Clean Air Act and the 1990 
amendments established a process for us to begin cleaning up the toxic 
mercury spewing out of dirty power plants across the country. The 1990 
amendments require the Environmental Protection Agency, EPA, to control 
each

[[Page 14759]]

power plant's emissions of mercury and other toxics by 2008 at the 
latest. The act requires each plant to use the ``maximum achievable 
control technology'' on every generating unit. That is the law of the 
land. Anything less means more pollution.
  But instead of working to enforce and implement the Clean Air Act, as 
two previous administrations had, the Bush administration has turned 
the Clean Air Act on its head. With this rule the administration 
revokes a 2000 EPA finding that it is ``necessary and appropriate'' to 
require that each power plant apply technology to reduce mercury 
emissions.
  Let me repeat those plain, startling facts: By revoking the earlier 
EPA finding and deciding instead to coddle the biggest mercury 
polluters, the administration is saying it is no longer necessary or 
appropriate to adequately control mercury emissions. Although I am 
somewhat impressed that they can make this statement with straight 
faces, I am appalled at their audacious disregard for the health of the 
American people, and, like the scientific community, I am baffled by 
their gymnastic arguments.
  The plain and simple truth is that this rule will allow more mercury 
into our environment than does the current law. Hundreds of the oldest, 
dirtiest power plants will not even control mercury emissions for more 
than a decade. That is what this rule gives us: More pollution, for 
longer than the Clean Air Act allows.
  This rule is all the more shameful because the evidence of public 
health and environmental damage from mercury and other toxics is clear 
enough for action right now. We do not need to wait 10 or 20 years to 
know the facts about mercury's threats to human health. In fact EPA 
itself admits these threats. Look at EPA's own estimate of the number 
of newborns at risk of elevated mercury exposure, which has doubled to 
630,000. EPA also found that 1 in 6 pregnant women has mercury levels 
in her blood above EPA's safe threshold. The National Academy of 
Sciences has confirmed scientific research showing that maternal 
consumption of unsafe levels of mercury in fish can cause neuro-
developmental harm in children, resulting in learning disabilities, 
poor motor function, mental retardation, seizures and cerebral palsy.
  Yet it seems the majority in Congress and this administration want to 
avoid any public daylight on this flawed rule. The Environment and 
Public Works Committee has refused to even hold a single hearing on 
this rule. Their aim is to keep the public in the dark, and I would 
guess that most Americans in fact do not yet know what EPA and the big 
polluters have been up to with this rule.
  One reason for the administration's lack of candor clearly is the 
discovery that this rule has polluting industries' fingerprints all 
over it. EPA's first proposal for these rules lifted exact texts from 
memorandum provided by utility industry lobbyists. Another reason may 
be because the American people would find a process where the lobbyists 
are shut in and the public is shut out, where the scientific and 
economic analysis was manipulated, and where the public's health was 
ignored.
  But the administration's arrogance does not stop there. EPA's own 
inspector general and the Government Accountability Office criticized 
almost every aspect of how EPA drafted this rule. Unfortunately, their 
recommendations to improve it were also ignored. So were more than 
680,000 public comments--a record for any EPA rule. So were the 
comments of many state environment departments, attorneys general, 
doctors, educators, sportsmen groups and EPA's own advisory committees. 
And, although it should not come as a surprise after 4 years working 
with this administration, the comments of 45 Senate and 184 House 
members were also ignored.
  Many of us in the Senate have spent the past 2 years--working with 3 
different administrators--trying to make the administration follow the 
Clean Air Act and produce a rule that puts the public's health over the 
profits of special interests. A rule that heeds the science and 
encourages available technologies to solve this problem. They failed on 
all fronts, big time.
  Instead they produced a rule that will do nothing for at least a 
decade, despite years of analysis by EPA showing the need for quick 
action. According to EPA's own regulatory impact analysis, we will be 
lucky if 1 percent of power plant capacity will have mercury controls 
by 2015, and only 3 percent by 2020.
  As a Vermonter I know it is ``appropriate and necessary'' to limit 
the pollution plumes from grandfathered power plants. You cannot even 
see my state on EPA's maps showing mercury pollution because so much of 
it is being dumped on us from upwind power plants. Vermonters and New 
Englanders have been waiting for decades for EPA to take action so that 
our lakes can be cleaned up.
  For all their talk of family values, the administration has yet again 
put the value of corporate contributions--not families--first. It is 
not a family value to tell a whole generation of women that their 
health is not important. It is not a family value to put another 
generation of young kids at risk of learning disabilities. These 
mercury rules do just that.
  It is time to put people first, and to stop letting the big polluters 
and the special interests write the rules and run the show over at EPA.
  This resolution will ensure that the health and safety of U.S. 
citizens are fully considered, before EPA rescinds its commitment to 
protect public health from the dangers of mercury pollution. To leave 
mercury pollution from power plants as the only source of toxic air 
pollution that is allowed to avoid rigorous emissions standards under 
the Clean Air Act is a risk to the public's health that we need not, 
and should not, accept.
  I urge my colleagues to support this resolution.

                          ____________________