[Congressional Record (Bound Edition), Volume 151 (2005), Part 14]
[Senate]
[Pages 19216-19284]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BOND:
  S. 1553. A bill to amend the Internal Revenue Code of 1986 to enhance 
tax incentives for small property and casualty insurance companies; to 
the Committee on Finance.

[[Page 19217]]


  Mr. BOND. Mr. President, I rise today to introduce a bill that 
addresses an inequity and helps clarify a tax exemption that exists for 
small property and casualty (P&C) insurance companies under the 
Internal Revenue Code Sections 501(c)(15) and 831(b). These small P&C 
insurers, often originally organized as mutual companies to offer 
insurance coverage to specific groups, mainly serve rural areas and 
farming communities that otherwise may not have been able to obtain 
affordable coverage. This tax exemption helps to provide additional 
surplus and cash flow for these small companies.
  The Pension Funding Equity Act of 2004, ``2004 Act'', amended the 
small P&C insurer exemption because there were concerns that certain 
investment companies offering only a small amount of insurance could 
use the exemption to improperly shelter investment income from federal 
income tax. Now, under current law, the exemption applies only to P&C 
(i.e., non-life) insurance companies if their ``gross receipts'' for 
the taxable year do not exceed $600,000 and if premiums make up more 
than 50 percent of those gross receipts. A mutual P&C insurance company 
also may be exempt if its premiums make up more than 35 percent of its 
gross receipts and its gross receipts do not exceed $150,000. 
Additionally, P&C companies that have direct or net written premiums, 
whichever is greater, exceeding $350,000 but not exceeding $1.2 
million, Income Election Limit, can elect to be taxed under a similar 
tax structure on their net investment income.
  While the 2004 Act helped to close a potential loophole, the special 
provisions for small P&C insurers are in need of further clarification 
or reform. The term ``gross receipts'' is not defined uniformly for 
purposes of the Internal Revenue Code and the Income Election Limit has 
not been adjusted for inflation since the Tax Reform Act of 1986.
  Without a clear definition of the term ``gross receipts,'' many 
unanswered questions remain with respect to determining whether a small 
P&C insurance company qualifies for exemption under section 501(c)(15). 
For example, such a company typically invests a large portion of its 
assets in government bonds. If the gross proceeds on the sale of an 
asset are included in the measure of ``gross receipts,'' based on a 
broad cash-flow definition of gross receipts, the mere maturation of 
bonds and reinvestment could cause a small P&C insurance company to 
fall out of the exemption even though there has been no change in the 
size of the business and even if the company realizes a loss on the 
sale or redemption. On the other hand, this arbitrary result would not 
occur if a definition of gross receipts that includes gains from the 
sale or exchange of assets is used. Such a definition of gross receipts 
looks to the size of the business in terms of income and overall 
profitability, which in turn ties into the reason for the tax 
exemption.
  If the Income Election Limit is not adjusted to keep pace with 
inflation, the impact could be severe. Take, for instance, a small P&C 
insurer in my State that started insuring the local farmers in the late 
1980s. Over the ensuing years, the company's client base changed very 
little, but the insurance premiums increased gradually to keep pace 
with inflationary pressures. As a result, while the business itself has 
not grown in absolute terms, its premium base has, therefore resulting 
in the loss of the elective alternative and simpler tax on investment 
income.
  For the farmers and consumers covered by the small P&C insurer, this 
loss of the tax exemption or a simpler, more limited tax structure is 
certain to mean higher insurance premiums, leaving the client with the 
choice of cutting coverage or paying higher costs, neither of which is 
a preferred option. This is the last thing our agricultural community 
needs.
  The legislation I am introducing today addresses both of these 
concerns. This legislation would add definitional language for ``gross 
receipts'' clarifying that gross receipts means premiums, plus gross 
investment income. In addition, the proposal simply increases the 
Income Election Limit from $1.2 million to $1.971 million, and indexes 
it annually for inflation.
  According to the National Association of Mutual Insurance Companies, 
this legislation will help hundreds of small P&C insurance companies 
nationwide. Under this proposed legislation, at least 56 of the 82 
small insurance companies in my State will be covered, thereby enabling 
them to continue providing critical insurance coverage to small 
businesses across Missouri.
  With this legislation, we have an opportunity to infuse some fairness 
into our tax code and at the same time help the thousands of farmers, 
homeowners, and entrepreneurs covered by small P&C insurers in this 
country. I ask my colleagues to support this legislation, and I look 
forward to working with the Finance Committee to see it enacted into 
law.
  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. 1553

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

     SECTION 1. CLARIFICATION OF DEFINITION OF GROSS RECEIPTS FOR 
                   PURPOSES OF DETERMINING TAX EXEMPTION OF SMALL 
                   PROPERTY AND CASUALTY INSURANCE COMPANIES.

       (a) In General.--Section 501(c)(15) of the Internal Revenue 
     Code is amended by adding at the end the following:
       ``(D) For purposes of subparagraph (A), the term `gross 
     receipts' means the gross amount received during the taxable 
     year from the items described in section 834(b) and premiums 
     (including deposits and assessments).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 2. INCREASE IN LIMITATION FOR ALTERNATIVE TAX LIABILITY 
                   FOR SMALL PROPERTY AND CASUALTY INSURANCE 
                   COMPANIES.

       (a) In General.--Clause (i) of section 831(b)(2)(A) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(i) the net written premiums (or, if greater, direct 
     written premiums) for the taxable year do not exceed 
     $1,971,000, and''.
       (b) Inflation Adjustment.--Paragraph (2) of section 831(b) 
     of such Code is amended by adding at the end the following 
     new subparagraph:
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2006, the $1,971,000 
     amount set forth in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) $1,971,000, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2005' for `calendar year 1992' in subparagraph 
     (B) thereof. If the amount as adjusted under the preceding 
     sentence is not a multiple of $1,000, such amount shall be 
     rounded to the next lowest multiple of $1,000.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

                                 ______
                                 
      By Ms. CANTWELL (for herself, Ms. Collins, Mr. Bingaman, Mrs. 
        Murray, Ms. Mikulski, Mr. Kohl, and Mr. Corzine):
  S. 1555. A bill to amend the Farm Security and Rural Investment Act 
of 2002 to reform funding for the Seniors Farmers' Market Nutrition 
Program, and for other purposes; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Ms. CANTWELL. Mr. President, I am proud to rise today with my 
colleagues Senators Collins, Bingaman, Murray, Mikulski, Kohl and 
Corzine, to introduce bipartisan legislation enhancing the Seniors 
Farmers' Market Nutrition Program. As all of my colleagues know, the 
Seniors Farmers' Market Nutrition Program (SFMNP) was created through 
the Farm Security and Rural Investment Act of 2002 (P.L. 107-171). It 
is a program that provides grants to States, territories, and Native 
American tribal governments to provide coupons to low-income seniors to 
purchase fresh, locally grown fruits, vegetables, and herbs from 
farmers' markets, roadside stands, and community supported agricultural 
programs. The purpose of the program is to make healthy foods available 
to low-income

[[Page 19218]]

seniors while simultaneously assisting domestic farmers.
  Scientific research increasingly confirms that what we eat may have a 
significant impact on our health, quality of life, and longevity. In 
the United States, high intakes of fat and saturated fat, and low 
intakes of calcium and fiber-containing foods such as whole grains, 
vegetables and fruits are associated with several chronic health 
conditions that can impair the quality of life and hasten mortality.
  According to the United States Department of Agriculture, research 
continues to find strong links between eating lots of fruits and 
vegetables and preventing chronic diseases such as cancer, heart 
disease, and stroke. Eating more fruits and vegetables may also play a 
role in preventing other diseases such as high blood pressure and 
osteoporosis, to name just two.
  Two studies, one here in the U.S. and the other in the Netherlands, 
found eating a diet rich in vitamins E and C may help to lower your 
risk of Alzheimer's disease. Both found that eating foods high in 
vitamin E may reduce your risk of Alzheimer's, a degenerative brain 
disease. The U.S. study found that people with the highest vitamin E 
intake in their diet had a 70 percent lower frequency of Alzheimer's 
than those with the lowest amounts of vitamin E in their diet.
  Vitamin A, which is found in many different fruits and vegetables, is 
very important to the health of your eyes. Other nutrients in produce, 
such as carotenoids, also play a role in maintaining healthy eyes and 
good vision. An example of a carotenoid is lutein. Lutein is found in 
dark green leafy vegetables like spinach.
  While the health benefits of eating fruits and vegetables may seem 
obvious, only 27 percent of women and 19 percent of men eat the 
recommended 5 servings of fruits and vegetables every day.
  The U.S. Department of Agriculture (USDA) Food and Nutrition Service 
administers the Seniors Farmers' Market Nutrition Program; and in 
fiscal year 2003, approximately 800,000 people received SFMNP coupons 
throughout the country. The food made available for sale came from an 
estimated 14,000 farmers at more than 2,000 farmers' markets as well as 
nearly 1,800 roadside stands and 200 community supported agricultural 
programs. In fiscal year 2005, 46 States, U.S. Territories, and 
federally recognized Indian tribal governments will operate the SFMNP. 
Close to 900,000 eligible seniors are expected to receive benefits that 
can be used at over 4,000 markets, roadside stands and community 
supported agricultural programs during the 2005 harvest season.
  In Washington State, the Seniors Farmers' Market Nutrition Program 
has been incredibly successful in ensuring access to healthy foods for 
seniors, as well as bolstering the state's farmers and our farmers' 
markets. In fact, according to the Washington State University 
Nutrition Education program, in Washington State, the Senior Farmers' 
Market Nutrition Program reaches about 8,000 lower-income older adults 
each year in 35 of my State's 39 counties. In 2003, 472 farms, 49 
farmers markets, four roadside stands and one community supported 
agriculture program participated in the SFMNP and the participating 
seniors in Washington state purchased approximately 90 tons of fresh 
produce while learning about the role of nutrition in their health in 
preventing chronic disease.
  The bill that I am introducing today aims to better address the 
growing demand and need for the Seniors Farmers' Market Nutrition 
Program in four ways.
  First, the bill would increase funding from $15 million to $25 
million for the program in fiscal year 2005 and continue to expand the 
program by $25 million each year, until the program's expiration in 
2007, meaning that the SFMNP would be funded at not less than $50 
million in fiscal year 2006, and at not less than $75 million in 2007.
  Second, the bill specifies that funds made available through this act 
will remain available to the program until exhausted. As such, any 
remaining funds from one fiscal year will roll over into the subsequent 
fiscal year budget for the SFMNP.
  Third, provisions in the bill support administrative costs. Not more 
than ten percent of available funds in a fiscal year can be used to 
cover the operating expenses of the SFMNP.
  Finally, the bill grants authority to the Secretary of Agriculture to 
expand the list of foods eligible for purchase to include minimally 
processed foods, such as honey, as deemed appropriate.
  We should not forget, too, that an obvious, positive outgrowth of the 
program is the inherent ability of the SFMNP program to strengthen 
local economies and communities while at the same time works to 
preserve farmland and open spaces. I sincerely appreciate that the 
Washington Association of Area Agencies on Aging, as well as the 
Washington State Farmers Market Association, are supporting this 
legislation.
  The legislation I am introducing today will go a long way in 
expanding the amount of funding available for the Senior Farmers' 
Market Nutrition Program. We all know that value and importance that 
individuals of all ages eat their requisite servings of vegetables and 
fruit each day. Such foods are high in fiber and lower the risk of 
chronic diseases such as heart disease and type 2 diabetes, in addition 
to colon and rectal cancer, high blood pressure, and obesity. However, 
food costs can be a significant barrier to developing and maintaining a 
healthy lifestyle. In establishing the Senior Farmers' Market Nutrition 
Program in 2002, Congress recognized that it is important to provide a 
means for low-income seniors to have access to fruits and vegetables. 
The legislation I introduce today will further our nation's commitment 
to ensuring the health of our nation's seniors, and I urge my 
colleagues to join me in cosponsoring 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. 1555

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

     SECTION 1. SENIORS FARMERS' MARKET NUTRITION PROGRAM.

       (a) Funding.--Section 4402 of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 3007) is amended by striking 
     subsection (a) and inserting the following:
       ``(a) Establishment.--The Secretary of Agriculture shall 
     use funds available to the Commodity Credit Corporation to 
     carry out and expand a seniors farmers' market nutrition 
     program in the following amounts, to remain available until 
     expended:
       ``(1) For fiscal year 2005, not less than $25,000,000.
       ``(2) For fiscal year 2006, not less than $50,000,000.
       ``(3) For fiscal year 2007, not less than $75,000,000.''.
       (b) Purposes.--Section 4402(b)(1) of that Act (7 U.S.C. 
     3007(b)(1)) is amended--
       (1) by striking ``unprepared'' and inserting ``minimally 
     processed''; and
       (2) by striking ``and herbs'' and inserting ``herbs, and 
     other locally-produced farm products, as the Secretary 
     considers appropriate''.
       (c) Administrative Costs; Unexpended Funds.--Section 4402 
     of the Farm Security and Rural Investment Act of 2002 (7 
     U.S.C. 3007) is amended by adding at the end the following:
       ``(d) Administrative Costs.--Not more than 10 percent of 
     the funds made available for a fiscal year under subsection 
     (a) may be used to pay the administrative costs of carrying 
     out this section.''.
                                 ______
                                 
      By Mr. WYDEN:
  S. 1556. A bill to amend the Specialty Crops Competitiveness Act of 
2004 to increase the authorization of appropriations for grants to 
support the competitiveness of specialty crops, to amend the 
Agricultural Risk Protection Act of 2000 to improve the program of 
value-added agricultural product market development grants by routing 
funds through State departments of agriculture, to amend the Federal 
Crop Insurance Act to require a nationwide expansion of the adjusted 
gross revenue insurance program, and for other purposes; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mr. WYDEN. Mr. President, today I introduce legislation that will 
safeguard and promote specialty crops and

[[Page 19219]]

value-added agriculture in Oregon and in the United States. The great 
farmers and ranchers of Oregon produce over 200 commodities. This bill 
intends to improve their marketing opportunities, help Oregon farmers 
and processors get better prices for their products, and help Oregon 
farmers and processors compete in an increasingly global market. As it 
will help Oregon farmers so it will help specialty crop farmers from 
New York to Florida, Wisconsin to California.
  I introduce this bill as my colleague from Oregon, Congresswoman 
Hooley, introduces the same bill in the House of Representatives.
  In the increasingly technological world of microchips, products like 
potato chips and other agricultural commodities still remain a large 
part of Oregon's economy. In fact, agriculture is Oregon's second 
largest traded sector and Oregon's second largest export, behind the 
electronics industry. Oregon agriculture creates more than $8 billion 
of direct and indirect economic activity, in both urban and rural areas 
in the state.
  At the center of this bill is the expansion of a specialty crop grant 
program, authorized by Congress in 2001, of which Oregon producers have 
already made use. Oregon received about $3.2 million that was used for 
over 50 projects involving product development, marketing, research, 
and export promotion. The Oregon Department of Agriculture estimates 
that over 3000 producers benefited from these projects. They also 
estimate that enhanced sales resulting from these projects reached $20 
million--about six times what was invested.
  The problem with this pilot program was the grants were only 
available once. Last year Congress passed legislation that reinstated 
these specialty crop grants but at funding level that would provide 
only around $500,000 to Oregon. This legislation raises the authorized 
level to $500 million and makes the grant program permanent. Under this 
expansion Oregon has the potential to receive $5 million a year in 
specialty crop grants.
  The bill I am introducing today also improves USDA's value added 
grant program. Right now this program is run by bureaucrats in 
Washington, DC who have probably never been to Oregon and probably 
couldn't name the top Oregon specialty crops. My office has heard 
numerous complaints that this program is unwieldy, bureaucratic, and 
difficult to navigate. Last year every applicant from Oregon was 
disqualified on a technicality. This bill would make one simple but 
very important change: instead of having the Federal Government 
distribute the money, each State would get a share of the money to hand 
out to their chosen priorities.
  Between these two grant programs each State in the union should have 
plenty of money to implement agricultural promotion strategies that 
match the needs of its individual growers, processors, and citizens.
  This bill also authorizes funds for farmers and processors to become 
``certified.'' Certification comes in many forms like ``Good 
Agricultural Practices,'' ``Good Handling Practices,'' or ``Organic.'' 
Often getting certified is necessary before farmers or processors can 
effectively market products whether in local grocery stores or to 
foreign countries. Certified products often fetch premium prices. To 
encourage farmers to get these certifications and increase their market 
share this legislation would have the USDA reimburse half the cost of 
the certifications.
  Last, this legislation improves opportunities for specialty crop 
farmers to get crop insurance, increase loan availability, provide 
additional funding for export promotion, and make sure that American 
trade policy takes specialty crops into account.
  I know that Oregonians doing a great job growing some of the best 
quality crops in the world. There are a lot of challenges facing 
agriculture: cheap imports, low commodity prices, taxation, labor, and 
dozens of others. This bill won't solve everything, but I think it will 
make an important contribution to improving Oregon agriculture by 
making it more competitive on a global level and helping farmers get a 
decent price for what they produce. I look forward to working with my 
colleagues to assure the enactment of 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. 1556

       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 ``Specialty Crop and Value-
     Added Agriculture Promotion Act''.

     SEC. 2. DEFINITION OF SPECIALTY CROP.

       Section 3(1) of the Specialty Crops Competitiveness Act of 
     2004 (Public 108-465; 7 U.S.C. 1621 note) is amended--
       (1) by inserting ``fish and shellfish whether farm-raised 
     or harvested in the wild,'' after ``dried fruits,''; and
       (2) by adding at the end the following: ``The term includes 
     specialty crops that are organically produced (as defined in 
     section 2103 of the Organic Foods Production Act of 1990 (7 
     U.S.C. 6502).''.

     SEC. 3. PERMANENT AUTHORIZATION OF APPROPRIATIONS FOR STATE 
                   SPECIALTY CROP BLOCK GRANTS.

       Section 101 of the Specialty Crops Competitiveness Act of 
     2004 (Public 108-465; 7 U.S.C. 1621 note) is amended by 
     striking subsection (i) and inserting the following:
       ``(i) Authorization of Appropriations.--For fiscal year 
     2006 and every fiscal year thereafter, there is authorized to 
     be appropriated to the Secretary of Agriculture $500,000,000 
     to make grants under this section.''.

     SEC. 4. BLOCK GRANTS TO STATES FOR VALUE-ADDED AGRICULTURAL 
                   PRODUCT MARKET DEVELOPMENT.

       (a) In General.--Section 231 of the Agricultural Risk 
     Protection Act of 2000 (Public Law 106-224; 7 U.S.C. 1621 
     note) is amended by striking subsection (b) and inserting the 
     following:
       ``(b) Grant Program.--
       ``(1) State defined.--In this subsection, the term `State' 
     means each of the 50 States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, American Samoa, and the Commonwealth of the 
     Northern Mariana Islands.
       ``(2) Block grants to states.--
       ``(A) Amount of grant to state.--From the amount made 
     available under paragraph (7) for a fiscal year, the 
     Secretary shall provide to each State, subject to 
     subparagraph (B), a grant in an amount equal to the product 
     obtained by multiplying the amount made available for that 
     fiscal year by the result obtained by dividing--
       ``(i) the total value of the agricultural commodities and 
     products made in the State during the preceding fiscal year; 
     by
       ``(ii) the total value of the agricultural commodities and 
     products made in all of the States during the preceding 
     fiscal year.
       ``(B) Limitation.--The total grant provided to a State for 
     a fiscal year under subparagraph (A) shall not exceed 
     $3,000,000.
       ``(3) Use of grant funds by states.--A State shall use the 
     grant funds to award competitive grants--
       ``(A) to an eligible independent producer (as determined by 
     the State) of a value-added agricultural product to assist 
     the producer--
       ``(i) in developing a business plan for viable marketing 
     opportunities for the value-added agricultural product; or
       ``(ii) in developing strategies that are intended to create 
     marketing opportunities for the producer; and
       ``(B) to an eligible agricultural producer group, farmer or 
     rancher cooperative, or majority-controlled producer-based 
     business venture (as determined by the State) to assist the 
     entity--
       ``(i) in developing a business plan for viable marketing 
     opportunities in emerging markets for a value-added 
     agricultural product; or
       ``(ii) in developing strategies that are intended to create 
     marketing opportunities in emerging markets for the value-
     added agricultural product.
       ``(4) Amount of competitive grant .--
       ``(A) In general.--The total amount provided under 
     paragraph (3) to a grant recipient shall not exceed $500,000.
       ``(B) Majority-controlled producer-based business 
     ventures.--The amount of grants provided by a State to 
     majority-controlled producer-based business ventures under 
     paragraph (3)(B) for a fiscal year may not exceed 10 percent 
     of the amount of funds that are used by the State to make 
     grants for the fiscal year under paragraph (3).
       ``(5) Grantee strategies.--A recipient of a grant under 
     paragraph (3) shall use the grant funds--
       ``(A) to develop a business plan or perform a feasibility 
     study to establish a viable marketing opportunity for a 
     value-added agricultural product; or
       ``(B) to provide capital to establish alliances or business 
     ventures that allow the producer of the value-added 
     agricultural product to better compete in domestic or 
     international markets.

[[Page 19220]]

       ``(6) Reports.--Not later than 90 days after the end of a 
     fiscal year for which funds are provided to a State under 
     paragraph (2), the State shall submit to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate a 
     report describing how the funds were used.
       ``(7) Funding.--On October 1 of each fiscal year, of the 
     funds of the Commodity Credit Corporation, the Secretary 
     shall make available to carry out this subsection 
     $100,000,000, to remain available until expended.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2005.

     SEC. 5. REIMBURSEMENT OF CERTIFICATION COSTS.

       (a) Incentive Program.--
       (1) In general.--The Secretary of Agriculture shall 
     establish an incentive program to encourage the independent 
     third-party certification of agricultural producers and 
     processors for product qualities, production practices, or 
     other product or process attributes that increase 
     marketability or value of an agricultural commodity.
       (2) Inclusions.--The Secretary shall include independent 
     third-party certification systems, including programs such as 
     Good Agricultural Practices, Good Handling Practices, and 
     Good Manufacturing Practices programs, that the Secretary 
     finds will provide 1 or more measurable social, 
     environmental, or marketing advantages.
       (b) Standards.--The Secretary shall set standards regarding 
     the types of certifications, and the types of certification-
     related expenses, that will qualify for reimbursement under 
     the program.
       (c) Limitation on Amount of Reimbursement.--An agricultural 
     producer or processor may not receive reimbursement for more 
     than 50 percent of the qualified expenses incurred by the 
     producer or processor related to accepted certifications.

     SEC. 6. NATIONWIDE EXPANSION OF RISK MANAGEMENT AGENCY 
                   ADJUSTED GROSS REVENUE INSURANCE PROGRAM.

       (a) Expansion.--Section 523(e) of the Federal Crop 
     Insurance Act (7 U.S.C. 1523(e)) is amended by adding at the 
     end the following:
       ``(3) Permanent nationwide operation.--
       ``(A) In general.--Effective beginning with the 2006 
     reinsurance year, the Corporation shall carry out the 
     adjusted gross revenue insurance pilot program as a permanent 
     program under this title and may expand the program to cover 
     any county in which crops are produced.
       ``(B) Temporary premium subsidies.--To facilitate the 
     expansion of the program nationwide, the Corporation may 
     grant temporary premium subsidies for the purchase of a 
     policy under the program to producers whose farm operations 
     are located in a county that has a high level of specialty 
     crop production and has not had a high-level of participation 
     in the purchase of crop insurance coverage.''.
       (b) Comptroller General Study.--The Comptroller General 
     shall conduct a study of the Federal crop insurance program--
       (1) to determine how well the program under section 
     523(e)(3) of the Federal Crop Insurance Act (as added by 
     subsection (a)) serves specialty crop producers; and
       (2) to recommend such changes as the Comptroller General 
     considers appropriate to improve the program for specialty 
     crop producers.

     SEC. 7. EXPANSION OF FRUIT AND VEGETABLE PROGRAM IN SCHOOL 
                   LUNCH PROGRAMS.

       The Richard B. Russell National School Lunch Act is 
     amended--
       (1) in section 18 (42 U.S.C. 1769), by striking subsection 
     (g); and
       (2) by inserting after section 18 the following:

     ``SEC. 19. FRUIT AND VEGETABLE PROGRAM.

       ``(a) In General.--The Secretary shall make available in 
     not more than 100 schools in each State, and in elementary 
     and secondary schools on 1 Indian reservation, free fresh and 
     dried fruits and vegetables and frozen berries to be served 
     to school children throughout the school day in 1 or more 
     areas designated by the school.
       ``(b) Priority in Allocation.--In selecting States to 
     participate in the program, the Secretary shall give priority 
     to States that produce large quantities of specialty crops.
       ``(c) Publicity.--A school participating in the program 
     authorized by this section shall publicize in the school the 
     availability of free fruits and vegetables under the program.
       ``(d) Authorization of Appropriations.--There is authorized 
     to be appropriated for to carry out this section $20,000,000 
     for each of fiscal years 2006 and 2007.''.

     SEC. 8. INCREASE IN LIMIT ON DIRECT OPERATING LOANS; 
                   INDEXATION TO INFLATION.

       Section 313 of the Consolidated Farm and Rural Development 
     Act (7 U.S.C. 1943) is amended--
       (1) in subsection (a)(1), by striking ``$200,000'' and 
     inserting ``$500,000 (increased, beginning with fiscal year 
     2007, by the inflation percentage applicable to the fiscal 
     year in which the loan is made)''; and
       (2) in subsection (b), by striking paragraph (2) and 
     inserting the following:
       ``(2) the average of such index (as so defined) for the 12-
     month period ending on--
       ``(A) in the case of a loan other than a loan guaranteed by 
     the Secretary, August 31, 2005; or
       ``(B) in the case of a loan guaranteed by the Secretary, 
     August 31, 1996.''.

     SEC. 9. TRADE OF SPECIALTY CROPS.

       (a) Assistant USTR for Specialty Crops.--Section 141(c) of 
     the Trade Act of 1974 (19 U.S.C. 2171(c)) is amended by 
     adding at the end the following:
       ``(6) Assistant ustr for specialty crops.--
       ``(A) Establishment.--There is established in the Office 
     the position of Assistant United States Trade Representative 
     for Specialty Crops.
       ``(B) Appointment.--The Assistant United States Trade 
     Representative for Specialty Crops shall be appointed by the 
     United States Trade Representative.
       ``(C) Primary function.--The primary function of the 
     Assistant United States Trade Representative for Specialty 
     Crops shall be--
       ``(i) to promote the trade interests of specialty crop 
     businesses;
       ``(ii) to remove foreign trade barriers that impede 
     specialty crop businesses; and
       ``(iii) to enforce existing trade agreements beneficial to 
     specialty crop businesses.
       ``(D) Pay.--The Assistant United States Trade 
     Representative for Specialty Crops shall be paid at the level 
     of a member of the Senior Executive Service with equivalent 
     time and service.''.
       (b) Study of Uruguay Round Table Agreement Benefits.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on the benefits of the agreements 
     approved by Congress under section 101(a)(1) of the Uruguay 
     Round Agreements Act (19 U.S.C. 3511(a)(1)) to specialty crop 
     businesses.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report describing the results of the study 
     conducted under paragraph (1).
       (c) Foreign Market Access Strategy.--Not later than 1 year 
     after the date of the enactment of this Act, the Secretary of 
     Agriculture shall develop and implement a foreign market 
     access strategy to increase exports of specialty crops to 
     foreign markets.

     SEC. 10. INCREASED AUTHORIZATION FOR TECHNICAL ASSISTANCE FOR 
                   SPECIALTY CROPS.

       Section 3205(d) of the Farm Security and Rural Investment 
     Act of 2002 (7 U.S.C. 5680(d)) is amended by striking 
     ``$2,000,000'' and inserting ``$10,000,000''.
                                 ______
                                 
      By Ms. COLLINS (for herself and Mr. Lieberman):
  S. 1558. A bill to amend the Ethics in Government Act of 1978 to 
protect family members of filers from disclosing sensitive information 
in a public filing and extend the public filing requirement for 5 
years; to the Committee on Homeland Security and Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today to introduce legislation 
that would preserve an important means of protecting the safety of 
those who work in the Federal judiciary system.
  This legislation, which I am pleased to sponsor with my distinguished 
colleague, Senator Lieberman, pertains to information on Federal 
financial disclosure forms.
  This legislation would amend the Ethics in Government Act to extend 
for five years the authority to redact financial disclosure statements 
filed by judges, and other officers and employees of the Federal 
judiciary. This redaction occurs after a finding is made by the 
Judicial Conference, in consultation with the United States Marshals 
Service, that revealing personal and sensitive information could 
endanger the filer. In such cases, this legislation would allow 
redactions of information that could put the filer or his or her family 
at risk.
  In 1988, Congress recognized the potential for threats against 
individual judges. As a result, Congress authorized the judicial branch 
to redact, when circumstances require, certain information from 
individual financial disclosure reports before they are released to the 
public. The redaction provision was set to expire at the end of 2001, 
but Congress extended the redaction authority for an additional four 
years. The current authority expires at the end of this year.
  The five-year extension in this legislation will help Congress ensure 
that the Judicial Conference carries out the authority in a manner that 
achieves the appropriate balance between safety measures and public 
disclosure. Given recent incidents of violence against

[[Page 19221]]

judges and their families, the inclusion of threats to the filer's 
family is necessary to provide security and peace of mind.
  The record shows that this redaction authority has been used 
sparingly and wisely. In its report to the Committee on Homeland 
Security and Governmental Affairs, the Judicial Conference reported 
that, of the 3,942 Federal judiciary employees required to file 
financial disclosure reports in 2004, only 177 reports were partially 
redacted before release.
  For 40 judges, the approved redaction requests were based on specific 
threats such as high-threat trials, ongoing protective investigations, 
identify theft, and continuing threats from criminal defendants and 
disgruntled civil litigants. For 137 judges, the approved redaction 
requests were based on general threats and the disclosure of a family 
member's unsecured place of work, the judge's regular presence at an 
unsecured location, or information that would reveal the residence of 
the judge or members of the judge's family.
  In response to a request by our Committee, the Government 
Accountability Office reviewed redaction requests from 1999 through 
2002. GAO found that less than 10 percent of annual judicial filers 
requested any type of redaction.
  In each instance where a report was redacted in its entirety, the 
determination was made that the judge who filed the report was subject 
to a specific, active security threat. Redactions of information 
identifying assets, gifts, reimbursements or creditor listings were 
allowed in only a very limited number of cases, and then only until the 
specifically identified threat ceased. According to the Judicial 
Conference, the most frequent redaction requests now relate to 
information that would reveal where a judge or a member of the judge's 
family can regularly be found.
  A fair and impartial judiciary requires a safe and secure 
environment. This legislation will help ensure the judicial branch has 
procedures in place to protect personal information while ensuring the 
public retains its right to access to the annual disclosure reports. I 
look forward to working with my colleagues on this important 
legislation.
                                 ______
                                 
      By Mr. SANTORUM:
  S. 1560. A bill to establish a Congressional Commission on Expanding 
Social Service Delivery Options; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. SANTORUM. Mr. President, I rise to introduce a bill that would 
establish a Congressional Commission to explore the expansion of social 
services delivery options.
  The bipartisan and bicameral Congressional Commission would undertake 
a thoughtful review of existing federal social service programs and 
make recommendations for program areas that would be appropriate for 
beneficiary-selected or beneficiary-directed options. The goal is to 
expand consumer choice and to minimize Constitutional concerns while 
partnering with faith-based and community providers. The importance of 
this commission is highlighted by its inclusion in the Senate's anti-
poverty agenda.
  Expanding options for social services is essential to help those in 
need. I have advocated similar proposals in the past during my time in 
the United States Senate as it relates to the Corporation for National 
and Community Service. In 2001, I introduced the AmeriCorps Reform and 
Charitable Expansion Act. The goal of this legislation was to 
dramatically increase the scope of service opportunities and charitable 
locations that would be eligible for voucher recipients and to focus 
efforts more on assisting low-income communities.
  A current example of the success of this type of program is Section 8 
Housing vouchers. The largest federal program designed to provide 
affordable housing to low-income families is the Section 8 Housing 
Choice Voucher program serving over 2 million households. Low-income 
families use Section 8 vouchers tenant-based subsidies in the private 
market to lower their rental costs to 30 percent of their incomes. As 
you know, the modern program began in the early 1980s and has grown to 
replace public housing as the primary tool for subsidizing the housing 
costs of low-income families. This approach, has opened up more 
communities and housing options for low-income families.
  Since the 1996 welfare reauthorization, I have worked to ensure that 
faith-based and community organizations are full partners in social 
service delivery. Our nation needs more, not less, involvement from 
faith and community organizations. Faith-based organizations are many 
times the best-equipped institutions in their community to improve the 
lives of those in need, but have not always been able to receive any 
help from the government. This bill provides an opportunity to level 
the playing field for these providers by determining where we can 
engage the community and allow beneficiaries to be full participants in 
choosing their provider. The current discrimination against faith-based 
programs at the federal level prevents our communities from using all 
our resources to improve and even save lives. And for those are most in 
need, we need to use every resource we have.
  Expanding social service delivery options should be a simple matter 
of common sense. The formula is simple: the more opportunity 
organizations have to deliver aid, the more options people have to get 
services, the more people we can help. For this reason, I encourage my 
colleagues to support the creation of this commission.
                                 ______
                                 
      By Mr. CORZINE (for himself, Mr. Lautenberg, and Ms. Landrieu):
  S. 1561. A bill to amend title 36, United States Code, to grant a 
Federal charter to the Irish American Cultural Institute; to the 
Committee on the Judiciary.
  Mr. CORZINE. Mr. President, today I am proud to introduce a bill, 
along with Senators Lautenberg and Landrieu, to grant a Federal Charter 
to the Irish American Cultural Institute, an organization that promotes 
appreciation and recognition of the important contributions Irish-
Americans have played throughout the history of the United States. A 
longstanding goal of the Irish American Cultural Institute been to 
establish a museum of Irish-American history and culture in Washington, 
DC, and I am pleased to help lay the foundation for achieving that 
goal.
  The Irish American Cultural Institute is a national organization 
founded in 1962, with local chapters in 17 States, including New 
Jersey. The Institute has spent the last 40 years fighting to promote, 
preserve and educate about Irish and Irish-American culture. Those 
involved with the Institute do this, in part, by fostering strong 
cultural and educational ties between the United States and Ireland--
sending American high school students to Ireland, and bringing Irish 
scholars, musicians, craftspeople, actors, and artists to the Untied 
States. They also fund academic research projects that raise awareness 
about Irish-American history, and provide fellowships for American 
professors to spend a year as a visiting scholar at the National 
University of Ireland. In short, the Irish American Cultural Institute 
serves as an important educational, informational, and financial 
resource for key initiatives important to the Irish and the Irish-
American community in the United States.
  Irish-Americans comprise more than 17 percent of the population of 
the United States, and have made enormous contributions to our Nation 
in countless ways. In my home State, more than 1.3 million New Jersey 
residents trace their roots back to Ireland. A Federal Charter would be 
an important step in the Irish American Cultural Institute's quest to 
promote activities that recognize and celebrate the heritage of Irish-
Americans. I ask my colleagues to join me in supporting this 
legislation, and 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. 1561

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

[[Page 19222]]



     SECTION 1. CHARTER FOR IRISH AMERICAN CULTURAL INSTITUTE.

       Part B of subtitle II of title 36, United States Code, is 
     amended--
       (1) by redesignating chapter 1001 as chapter 1003;
       (2) by redesignating sections 100101 through 100110, and 
     the items relating thereto in the table of sections, as 
     sections 100301 through 100310, respectively; and
       (3) by inserting after chapter 901 the following new 
     chapter:

           ``CHAPTER 1001--IRISH AMERICAN CULTURAL INSTITUTE

``Sec.
``100101. Organization.
``100102. Purposes.
``100103. Membership.
``100104. Governing body.
``100105. Powers.
``100106. Exclusive right to name, seals, emblems, and badges.
``100107. Restrictions.
``100108. Duty to maintain tax-exempt status.
``100109. Principal office.
``100110. Records and inspection.
``100111. Service of process.
``100112. Liability for acts of officers and agents.
``100113. Annual report.

     ``SECTION 100101. ORGANIZATION.

       ``(a) Federal Charter.--The Irish American Cultural 
     Institute (in this chapter, the `corporation'), incorporated 
     in New Jersey, is a federally chartered corporation.
       ``(b) Expiration of Charter.--If the corporation does not 
     comply with any provision of this chapter, the charter 
     granted by this chapter expires.

     ``SECTION 100102. PURPOSES.

       ``The purposes of the corporation are as provided in the 
     articles of incorporation and include--
       ``(1) establishing the Museum of Irish America in 
     Washington, DC, as the center of Irish American thought, 
     dialogue, debate, and reflection;
       ``(2) recognizing and recording a living memorial to the 
     contributions of Irish-born and Irish Americans to the 
     development of the United States;
       ``(3) providing a focal point for all Irish Americans, who 
     make up 17 percent of the United States population, according 
     to the 2000 census;
       ``(4) exploring past, current, and future events in Ireland 
     and the United States, as they relate to Irish Americans and 
     society as a whole;
       ``(5) documenting the tremendous contributions of Irish 
     immigrants to the United States in the areas of architecture, 
     military, politics, religion, labor, sports, literature, and 
     art;
       ``(6) providing ongoing studies to ensure that the 
     experiences of the past will benefit the future of both 
     Ireland and the United States; and
       ``(7) establishing an Irish American Studies Program for 
     students from both Ireland and the United States.

     ``SECTION 100103. MEMBERSHIP.

       ``Eligibility for membership in the corporation and the 
     rights and privileges of membership are as provided the 
     bylaws.

     ``SECTION 100104. GOVERNING BODY.

       ``(a) Board of Directors.--The board of directors and the 
     responsibilities of the board are as provided in the articles 
     of incorporation.
       ``(b) Officers.--The officers and the election of officers 
     are as provided in the articles of incorporation.

     ``SECTION 100105. POWERS.

       ``The corporation shall have only the powers provided in 
     its bylaws and articles of incorporation filed in each State 
     in which it is incorporated.

     ``SECTION 100106. EXCLUSIVE RIGHT TO NAME, SEALS, EMBLEMS, 
                   AND BADGES.

       ``The corporation has the exclusive right to use the name 
     `Irish American Cultural Institute' and any seals, emblems, 
     and badges relating thereto that the corporation adopts.

     ``SECTION 100107. RESTRICTIONS.

       ``(a) Stock and Dividends.--The corporation may not issue 
     stock or declare or pay a dividend.
       ``(b) Political Activities.--The corporation or a director, 
     or officer as such may not contribute to, support, or 
     participate in any political activity or in any manner 
     attempt to influence legislation.
       ``(c) Distribution of Income or Assets.--The income or 
     assets of the corporation may not inure to the benefit of, or 
     be distributed to, a director, officer, or member during the 
     life of the charter granted by this chapter. This subsection 
     does not prevent the payment of reasonable compensation to an 
     officer or member in an amount approved by the board of 
     directors.
       ``(d) Loans.--The corporation may not make any loan to a 
     director, officer, or employee.
       ``(e) Claim of Governmental Approval or Authorization.--The 
     corporation may not claim congressional approval or the 
     authority of the United States Government for any of its 
     activities.

     ``SECTION 100108. DUTY TO MAINTAIN TAX-EXEMPT STATUS.

       ``The corporation shall maintain its status as an 
     organization exempt from taxation under the Internal Revenue 
     Code of 1986 (26 U.S.C. 1 et seq.).

     ``SECTION 100109. PRINCIPAL OFFICE.

       ``The principal office of the corporation shall be in 
     Morristown, New Jersey, or another place decided by the board 
     of directors.

     ``SECTION 100110. RECORDS AND INSPECTION.

       ``(a) Records.--The corporation shall keep--
       ``(1) correct and complete books and records of account;
       ``(2) minutes of the proceedings of its members, board of 
     directors, and committees having any of the authority of its 
     board of directors; and
       ``(3) at its principal office, a record of the names and 
     addresses of its members entitled to vote.
       ``(b) Inspection.--A member entitled to vote, or an agent 
     or attorney of the member, may inspect the records of the 
     corporation for any proper purpose, at any reasonable time.

     ``SECTION 100111. SERVICE OF PROCESS.

       ``The corporation shall comply with the law on service of 
     process of each State in which it is incorporated and each 
     State in which it carries on activities.

     ``SECTION 100112. LIABILITY FOR ACTS OF OFFICERS AND AGENTS.

       ``The corporation is liable for the acts of its officers 
     and agents acting within the scope of their authority.

     ``SECTION 100113. ANNUAL REPORT.

       ``The corporation shall submit an annual report to Congress 
     on the activities of the corporation during the prior fiscal 
     year. The report shall be submitted at the same time as the 
     report of the audit required by section 10101 of this title. 
     The report shall not be printed as a public document.''.

     SEC. 2. CLERICAL AMENDMENTS.

       The table of chapters at the beginning of subtitle II of 
     title 36, United States Code, is amended--
       (1) in the item relating to chapter 1001, by striking 
     ``1001'' and inserting ``1003'' and by striking ``100101'' 
     and inserting ``100301''; and
       (2) by inserting after the item relating to chapter 901 the 
     following new item:

 ``1001.  Irish American Cultural Institute...................100101''.
                                 ______
                                 
      By Mr. ENZI (for himself, Mr. Johnson, Mr. Allard, and Mr. 
        Hagel):
  S. 1562. A bill to provide for the merger of the bank and savings 
association deposit insurance funds, to modernize and improve the 
safety and fairness of the Federal deposit insurance system, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. ENZI. Mr. President, today I rise to introduce the Safe and Fair 
Deposit Insurance Act of 2005. As many of us in this chamber know, 
reforming the operations of the Federal Deposit Insurance Corporation 
has been an important but unfinished matter before the United States 
Senate for many years. Today, we will take a step closer to a solution 
by introducing this Act.
  Wyoming is a rural State with small banks and lenders. Many people in 
Wyoming have limited choices when they need to safely deposit their 
hard-earned money. They usually depend on their local bank or credit 
union. These financial institutions in turn depend on deposit insurance 
to make sure that this money will be available in the case of a crisis. 
This is a relationship based on trust. Customers trust their bank, and 
banks trust their insurance.
  This relationship is even more important in places like Gillette, 
Wyoming. As Mayor of Gillette, I saw many coal miners retire with 
considerable pensions that reflected years of hard work in the mines 
around Gillette. However, these miners received their pensions as a 
lump sum. Their retirement accounts are often much higher than the 
maximum insurance levels under current law. In fact, more and more 
retirement accounts are reaching this upper limit, not just in Wyoming. 
Workers need a safe place to save their money and build retirement 
security. That place should be in a local financial institution that 
invests in its community and economy.
  The current FDIC system is in desperate need of improvement. Over the 
past twenty years, deposit insurance has been eroded by inflation and 
growing deposits. As newer financial institutions have sprung up, they 
have enjoyed this insurance without paying any premiums into the 
system. As time passes, current FDIC coverage continues to weaken, and 
so does the Agency's ability to respond to a deposit crisis, should one 
arise. That is why it is so important to reform the system now, before 
it is too late.
  This bill will make changes to the deposit insurance system that will 
make it more flexible and quicker to adapt to

[[Page 19223]]

the unexpected. It will apply an index that will protect coverage 
levels against future inflation, and raise retirement coverage to 
protect earnings made over a lifetime of hard work. It will also make 
premium charges fair by recognizing those institutions who have paid 
into the system and those who have not. Finally, it will merge the two 
primary deposit insurance funds. This consolidation will make the 
system stronger and prevent costly premium charges that will likely be 
assessed if the system is not reformed.
  I would like to thank Senator Johnson and Chairman Shelby for their 
cooperation and hard work on this bill. I urge my colleagues to support 
this bill and look forward to its passage with all deliberate speed.
                                 ______
                                 
      By Mr. DeWINE (for himself and Mrs. Lincoln):
  S. 1563. A bill to amend title XIX of the Social Security Act to 
protect and strengthen the safety net of children's public health 
coverage by extending the enhanced Federal matching rate under the 
State children's health insurance program to children covered by 
Medicaid at State option and by encouraging innovations in children's 
enrollment and retention, to advance quality and performance in 
children's public health insurance programs, to provide payments for 
children's hospitals to reward quality and performance, and for other 
purposes; to the Committee on Finance.
  Mr. DeWINE. Mr. President, today I join my friend and colleague from 
Arkansas, Senator Lincoln, to introduce a bill called the Advancing 
Better Coverage and Care for Children's Health Act or the ABCs for 
Children's Health Act. It is an important piece of legislation designed 
to help improve the access and quality of children's health services 
around the country,'' including children's hospitals.
  Children's Hospitals provide care to hundreds of thousands of 
children across our Nation every day. They care for the great majority 
of children who are seriously ill. They are the mainstay of the health 
care safety net for low-income children.
  But, a child who lacks health insurance is still much less likely to 
have timely access to the medical care they need. That's not right. 
Two-thirds of the more than 9 million uninsured children in the United 
States are eligible for Medicaid or SCHIP. They should be enrolled in 
public coverage when eligible, and we should streamline the eligibility 
process to make it easier, not more difficult.
  President Bush said in 2004, ``America's children must also have a 
healthy start in life . . . we will lead an aggressive effort to enroll 
millions of poor children who are eligible but not signed up for the 
government's health insurance programs. We will not allow a lack of 
attention or information to stand between these children and the health 
care they need.'' The bill we are introducing today would do just that.
  Our bill would provide the higher SCHIP federal match to states for 
children covered by Medicaid at the State option so that States think 
twice before removing children from the Medicaid rolls during State 
budget cuts. It also would provide a 90/10 administrative-match to help 
states update enrollment systems for children, including technology for 
``express lane'' enrollment, the determination of eligibility for 
Medicaid and SCHIP when a child applies for another public benefit, 
like the school lunch program, and the allowance for enrollment by mail 
or phone.
  We also need to do more to help strengthen the system of care to 
ensure quality and accountability for children's coverage. Our bill 
would do this by supporting innovative ideas at children's hospitals. 
Quality improvement funding shouldn't just be available to adult 
hospitals. Children's hospitals have good ideas, too, and we should 
support those good ideas.
  Cincinnati Children's Hospital in Ohio is leading the way in 
improving care for children with diabetes, cystic fibrosis and other 
chronic conditions. The hospital is deeply committed to transforming 
health care delivery to improve outcomes for children.
  In 2001, they were selected as one of just seven hospitals in the 
Pursuing Perfection initiative launched by the Robert Wood Johnson 
Foundation, and with this funding from the Foundation, they have made 
significant progress. They can document improvements in patient safety, 
in the effectiveness of care, in operational efficiency, in timely 
access to care, and in more patient-centered care. These are the 
reforms we need to pursue for children in Medicaid and for all 
children. Our bill would help Cincinnati Children's Hospital and our 
other Children's Hospitals speed their journey to better, safer, more 
cost-effective care.
  A hospital that makes the effort to improve care and outcomes for 
children should be compensated for that effort. We need to advance 
quality and performance for children in Medicaid, like we are doing for 
seniors in Medicare. The development of hospital quality measures, 
testing their ability to gauge effective care and rewarding 
performance, should apply to all hospitals, including children's 
hospitals.
  That's why we have worked with the National Association of Children's 
Hospitals to introduce a bill that would provide grants to help improve 
pediatric quality, so that Children's Hospitals can begin to establish 
measures for quality care and share what works--and what doesn't work--
across hospital services for children nationwide.
  Our bill would provide for a demonstration program in Medicaid to 
evaluate evidenced-based quality and performance measures in children's 
health services, with grants for States and/or providers in three 
areas: health information technology and evidenced-based outcome 
measures, disease management for children with chronic conditions, and 
evidenced-based approaches to improving the delivery of hospital care 
for children. The bill also would provide for a national Children's 
Hospital pay-for-performance demonstration program, rewarding 
Children's Hospitals, which provide critical access to services and 
voluntarily participate, for reporting and meeting quality and 
performance measures.
  Evaluating the national measures of quality in Children's Hospitals, 
their success in capturing performance, and their applicability to pay-
for-performance across States' varying methods of payments, would gives 
States, the Federal Government, and Children's Hospitals an essential 
base of information in measuring performance in children's hospital 
care. And that is something we vitally need.
  I urge my colleagues to support and co-sponsor this bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1563

       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 ``Advancing Better Coverage 
     and Care for Children's Health Act of 2005'' or the ``ABCs 
     for Children's Health Act of 2005''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.

                       TITLE I--COVERING CHILDREN

Sec. 101. Phased-in application of enhanced FMAP for children whose 
              eligibility is optional under medicaid.
Sec. 102. Enhanced matching rate for the effective enrollment and 
              retention of children under medicaid.
Sec. 103. Preserving comprehensive benefits appropriate to children's 
              needs.

    TITLE II--ADVANCING QUALITY AND PERFORMANCE: INNOVATIONS IN CARE

Sec. 201. Purpose.
Sec. 202. National quality forum; advancing consensus-based pediatric 
              quality and performance measures.
Sec. 203. Research grant program; developing new pediatric quality and 
              performance measures.
Sec. 204. Medicaid demonstration program; evaluating evidence-based 
              quality and performance measures for children's health 
              services.
Sec. 205. Funding.

                   TITLE III--ENSURING ACCESS TO CARE

Sec. 301. Pay for performance for children's critical access hospitals.

[[Page 19224]]

Sec. 302. Inclusion of children's hospitals as covered entities for 
              purposes of limitation of purchased drug price.

                       TITLE I--COVERING CHILDREN

     SEC. 101. PHASED-IN APPLICATION OF ENHANCED FMAP FOR CHILDREN 
                   WHOSE ELIGIBILITY IS OPTIONAL UNDER MEDICAID.

       (a) In General.--The first sentence of section 1905 of the 
     Social Security Act (42 U.S.C. 1396d) is amended--
       (1) in subsection (b)--
       (A) by striking ``and (4)'' and inserting ``(4)''; and
       (B) by inserting before the period the following: ``, and 
     (5) the Federal medical assistance percentage shall be equal 
     to the applicable percentage determined under subsection (y) 
     with respect to medical assistance provided to children who 
     are eligible for such assistance on the basis of subsection 
     (a)(10)(A)(ii), (a)(10)(C), (e)(3), or (e)(9) of section 
     1902, or a waiver under subsection (c) or (e) of section 
     1915, or who are eligible for such assistance during a 
     presumptive eligibility period under section 1920A (but only 
     if the child is not eligible for medical assistance on the 
     basis of section 1902(a)(10)(A)(i))''; and
       (2) by adding at the end the following:
       ``(y) For purposes of the fifth clause of the first 
     sentence of subsection (b), the applicable percentage 
     determined under this subsection is--
       ``(1) in the case of fiscal year 2006, the enhanced FMAP 
     determined under section 2105(b) by substituting `6 percent' 
     for `30 percent' in such section;
       ``(2) in the case of fiscal year 2007, the enhanced FMAP 
     determined under section 2105(b) by substituting `12 percent' 
     for `30 percent' in such section;
       ``(3) in the case of fiscal year 2008, the enhanced FMAP 
     determined under section 2105(b) by substituting `18 percent' 
     for `30 percent' in such section;
       ``(4) in the case of fiscal year 2009, the enhanced FMAP 
     determined under section 2105(b) by substituting `24 percent' 
     for `30 percent' in such section; and
       ``(5) in the case of fiscal year 2010 or any fiscal year 
     thereafter, the enhanced FMAP determined under section 
     2105(b).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on October 1, 2005.

     SEC. 102. ENHANCED MATCHING RATE FOR THE EFFECTIVE ENROLLMENT 
                   AND RETENTION OF CHILDREN UNDER MEDICAID.

       (a) In General.--Section 1903(a)(3) of the Social Security 
     Act (42 U.S.C. 1396b(a)(3)) is amended--
       (1) in subparagraph (E), by striking ``plus'' at the end 
     and inserting ``and''; and
       (2) by adding at the end the following:
       ``(F) 90 percent of the sums expended during such quarter 
     which are attributable to the design, development, 
     implementation, and evaluation of such enrollment systems as 
     the Secretary determines are likely to provide more efficient 
     and effective administration of the plan's enrollment and 
     retention of eligible children, including--
       ``(i) `express lane' enrollment for children through 
     procedures to ensure that children's eligibility for medical 
     assistance is determined and expedited through the use of 
     technology and shared information with other public benefit 
     programs, such as the school lunch program under the Richard 
     B. Russell National School Lunch Act and the food stamp 
     program under the Food Stamp Act of 1977;
       ``(ii) a single, simplified application form for medical 
     assistance under this title and for children's health 
     assistance under title XXI;
       ``(iii) procedures which allow for the enrollment of 
     children by mail or through the Internet;
       ``(iv) the timely evaluation, assistance, and determination 
     of presumptive eligibility under section 1920A;
       ``(v) procedures which allow for passive reenrollment of 
     children to protect against the loss of coverage among 
     eligible children; and
       ``(vi) such other enrollment system changes as the 
     Secretary determines are likely to provide more efficient and 
     effective administration of the plan's enrollment and 
     retention of eligible children; plus''.
       (b) Exclusion From Erroneous Excess Payment 
     Determination.--Section 1903(u)(1)(D) of such Act (42 U.S.C. 
     1396a(u)(1)(D)) is amended by adding at the end the 
     following:
       ``(vi)(I) Notwithstanding clauses (ii) and (iii), and 
     subject to subclause (II), in determining the amount of 
     erroneous excess payments, there shall not be included any 
     erroneous payments made with respect to medical assistance 
     provided to children who are erroneously enrolled or 
     erroneously provided with continued enrollment under this 
     title as a result of the application of enrollment systems 
     described in subsection (a)(3)(F).
       ``(II) Subclause (I) shall only apply with respect to 
     erroneous payments made during the first 5 fiscal years that 
     begin on or after the date of enactment of this clause.''.

     SEC. 103. PRESERVING COMPREHENSIVE BENEFITS APPROPRIATE TO 
                   CHILDREN'S NEEDS.

       (a) In General.--Title XIX of the Social Security Act is 
     amended by inserting after section 1925 the following:


            ``CLARIFICATION OF AUTHORITY UNDER SECTION 1115

       ``Sec. 1926. The Secretary may not impose or approve under 
     the authority of section 1115 an elimination or modification 
     of the amount, duration, or scope of the services described 
     in section 1905(a)(4)(B) (relating to early and periodic 
     screening, diagnostic, and treatment services (as defined in 
     section 1905(r))) or of the requirements of subparagraphs (A) 
     through (C) of section 1902(a)(43).''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), 
     section 1926 of the Social Security Act, as added by 
     subsection (a), shall apply to the approval on or after the 
     date of enactment of this Act of--
       (A) a waiver, experimental, pilot, or demonstration project 
     under section 1115 of the Social Security Act (42 U.S.C. 
     1315); and
       (B) an amendment or extension of such a project.
       (2) Exception.--Section 1926 of the Social Security Act, as 
     so added, shall not apply with respect to any extension of 
     approval of a waiver, experimental, pilot, or demonstration 
     project with respect to title XIX of the Social Security Act 
     that was first approved before 1994 and that provides a 
     comprehensive and preventive child health program under such 
     project that includes screening, diagnosis, and treatment of 
     children who have not attained age 21.

    TITLE II--ADVANCING QUALITY AND PERFORMANCE: INNOVATIONS IN CARE

     SEC. 201. PURPOSE.

       [The purpose of this title is to increase the quality of 
     the health care furnished to children under the health 
     insurance programs under titles XIX and XXI of the Social 
     Security Act].

     SEC. 202. NATIONAL QUALITY FORUM; ADVANCING CONSENSUS-BASED 
                   PEDIATRIC QUALITY AND PERFORMANCE MEASURES.

       (a) In General.--The Secretary of Health and Human Services 
     (in this title referred to as the ``Secretary''), acting 
     through the Director of the Center for Medicaid and State 
     Operations of the Centers for Medicare & Medicaid Services, 
     shall enter into agreements with the National Quality Forum 
     to facilitate the development of consensus-based pediatric 
     quality and performance measures.
       (b) Consultation.--In carrying out agreements under 
     subsection (a), the Director of the Center for Medicaid and 
     State Operations shall consult with--
       (1) the Agency for Healthcare Research and Quality; and
       (2) national pediatric provider groups.

     SEC. 203. RESEARCH GRANT PROGRAM; DEVELOPING NEW PEDIATRIC 
                   QUALITY AND PERFORMANCE MEASURES.

       (a) In General.--The Secretary, acting through the 
     Administrator of the Agency for Healthcare Research and 
     Quality, shall award grants to eligible entities for the 
     development and evaluation of pediatric quality and 
     performance measures.
       (b) Eligible Entity Defined.--In this section, the term 
     ``eligible entity'' means--
       (1) an institution or multiple institutions with 
     demonstrated expertise and capacity to evaluate pediatric 
     quality and performance measures;
       (2) a National nonprofit association of pediatric academic 
     medical centers with demonstrated experience in working with 
     other pediatric provider and accrediting organizations in 
     developing quality and performance measures for children's 
     inpatient and outpatient care; and
       (3) a collaboration of national pediatric organizations 
     working to improve quality and performance in pediatric 
     critical care.
       (c) Application.--Each eligible entity desiring a grant 
     under this section shall submit an application to the 
     Secretary at such time, in such manner, and accompanied by 
     such information as the Secretary may require.

     SEC. 204. MEDICAID DEMONSTRATION PROGRAM; EVALUATING 
                   EVIDENCE-BASED QUALITY AND PERFORMANCE MEASURES 
                   FOR CHILDREN'S HEALTH SERVICES.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary, acting through the 
     Director of the Center for Medicaid and State Operations of 
     the Centers for Medicare & Medicaid Services, shall establish 
     demonstration projects in each of the 3 categories described 
     in subsection (c) to advance quality and performance in the 
     delivery of medical assistance provided to children under the 
     medicaid program established under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.).
       (b) Authority.--
       (1) In general.--The Secretary is authorized to award 
     grants to States or providers to conduct such projects.
       (2) Use of funds.--Funds provided under a grant awarded 
     under this section may be used for administrative costs, 
     including costs associated with the design, data collection, 
     and evaluation of the demonstration project conducted with 
     such funds, and other expenditures that are not otherwise 
     eligible for reimbursement under the medicaid program.
       (3) Evidence of organizational commitment required for 
     award of grants.--A

[[Page 19225]]

     State or provider shall not be eligible to receive a grant to 
     conduct a demonstration project under this section unless the 
     State or provider demonstrates a commitment to the concept of 
     change and transformation in the delivery of children's 
     health services. Dedication of financial resources of the 
     State or provider to the project may be deemed to demonstrate 
     evidence of such a commitment.
       (c) Project Categories Described.--The 3 demonstration 
     project categories described in this subsection are the 
     following:
       (1) Projects that adopt and use health information 
     technology and evidenced-based outcome measures for pediatric 
     inpatient and sub-specialty physician care and evaluate the 
     impact of such technology and measures on the quality, 
     safety, and costs of such care.
       (2) Projects that demonstrate and evaluate care management 
     for children with chronic conditions to determine the extent 
     to which such management promotes continuity of care, 
     stabilization of medical conditions, and functional outcomes, 
     prevents or minimizes acute exacerbations of chronic 
     conditions, and reduces adverse health outcomes and avoidable 
     hospitalizations.
       (3) Projects that implement evidenced-based approaches to 
     improving efficiency, safety, and effectiveness in the 
     delivery of hospital care for children across hospital 
     services and evaluate the impact of such changes on the 
     quality and costs of such care.
       (d) Sites.--To the extent practicable, the Secretary shall 
     use multiple sites in different geographical locations in 
     conducting each of the 3 demonstration project categories 
     described in subsection (c).
       (e) Uniform Measures, Data, Project Evaluations.--Working 
     in consultation with experts described in subsection (f) and 
     with participating States or providers, the Secretary shall 
     establish uniform measures (adjusted for patient acuity), 
     collect data, and conduct evaluations with respect to the 3 
     demonstration project categories described in subsection (c).
       (f) Consultation.--In developing and implementing 
     demonstration projects under this section, the Secretary 
     shall consult with national pediatric provider organizations, 
     consumers, and such other entities or individuals with 
     relevant expertise as the Secretary deems necessary.
       (g) Report.--Not later than 6 months after the completion 
     of all demonstration projects conducted under this section, 
     the Secretary shall evaluate such projects and submit a 
     report to Congress that includes the findings of the 
     evaluation and recommendations with respect to--
       (1) expanding the projects to additional sites; and
       (2) the broad implementation of identified successful 
     approaches in advancing quality and performance in the 
     delivery of medical assistance provided to children under the 
     medicaid program.

     SEC. 205. FUNDING.

       In order to carry out the provisions of this title, out of 
     funds in the Treasury not otherwise appropriated, there are 
     appropriated to the Secretary--
       (1) $25,000,000 for fiscal year 2006;
       (2) $30,000,000 for fiscal year 2007; and
       (3) $35,000,000 for each of the fiscal years 2008, 2009, 
     and 2010.

                   TITLE III--ENSURING ACCESS TO CARE

     SEC. 301. PAY FOR PERFORMANCE FOR CHILDREN'S CRITICAL ACCESS 
                   HOSPITALS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary''), acting 
     through the Administrator of the Centers for Medicare & 
     Medicaid Services (in this section referred to as the 
     ``Administrator''), shall implement a 4-year program to 
     develop, implement, and evaluate a pay-for-performance 
     program for eligible children's hospitals providing critical 
     access to children eligible for medical assistance under the 
     medicaid program established under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.).
       (b) Consultation.--Measures of quality and performance 
     utilized in the program will be determined by the 
     Administrator in collaboration with participating eligible 
     children's hospitals and in consultation with States, the 
     National Association of Children's Hospitals and Related 
     Institutions, the Agency for Healthcare Research and Quality, 
     the National Quality Forum, and such other entities or 
     individuals with expertise in pediatric quality and 
     performance measures as the Administrator deems appropriate.
       (c) Eligible Children's Hospitals.--For purposes of this 
     section, an eligible children's hospital is a children's 
     hospital that, not later than January 1, 2006, has submitted 
     an application to the Secretary to participate in the program 
     established under this section and has been certified by the 
     Secretary as--
       (1) meeting the criteria described in subsection (d);
       (2) agreeing to report data on quality and performance 
     measures; and
       (3) meeting or exceeding such measures as are established 
     by the Secretary with respect to the provision of care by the 
     hospital.
       (d) Criteria Described.--In order to be certified as 
     meeting the criteria described in this subsection, a hospital 
     shall be a general acute care children's hospital or a 
     specialty children's hospital as defined under 
     1886(d)(1)(B)(iii) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)(iii)), or a non-freestanding general acute 
     care children's hospital which shares a provider number with 
     another hospital or hospital system that--
       (1) has 62 or more total pediatric beds;
       (2) has 38 or more total combined pediatric general medical 
     or surgical and pediatric intensive care beds;
       (3) has at least 4 pediatric intensive care beds;
       (4) has a pediatric emergency room in the hospital or 
     access to an emergency room with pediatric services through 
     the hospital system; and
       (5) provides a minimum of 25 percent of its days of care to 
     patients eligible for medical assistance under the medicaid 
     program.
       (e) Payment Methodology.--
       (1) In general.--An eligible children's hospital that 
     participates in the program established under this section 
     shall receive supplemental Federal payments for inpatient and 
     outpatient care (which shall be in addition to any other 
     payments the hospitals receive for such care under the 
     medicaid program) for cost reporting periods or portions of 
     such reporting periods occurring during fiscal years 2007 
     through 2010 in accordance with the following:
       (A) Fiscal years 2007 and 2008.--
       (i) In general.--For hospital cost reporting periods or 
     portions of such reporting periods occurring during fiscal 
     year 2007 or 2008, hospitals reporting data for quality and 
     performance measures established under the program and 
     participating in the development of pay-for-performance 
     methodology under this section, subject to clause (ii), shall 
     receive with respect to inpatient or outpatient care that is 
     determined to meet such measures, a Federal supplemental 
     payment increase equal to the amount received under the 
     medicaid program for such care multiplied by the market 
     basket percentage increase for the year (as defined under 
     section 1886(b)(3)(B)(iii) of the Social Security Act (42 
     U.S.C. 1395ww(b)(3)(B)(iii)).
       (ii) Limitation.--The total amount of all Federal 
     supplemental payments made with respect to cost reporting 
     periods or portions of such periods described in clause (i) 
     shall not exceed the amounts appropriated under this section 
     for fiscal years 2007 and 2008.
       (B) Fiscal years 2009 and 2010.--
       (i) In general.--For cost reporting periods or portions of 
     such periods occurring during fiscal year 2009 or 2010, 
     hospitals shall receive supplemental Federal payments 
     reflecting measures of quality and performance and a pay-for-
     performance methodology developed by the Secretary in 
     consultation with the entities described in subsection (b). 
     Such methodology shall recognize clinical measures, patient 
     satisfaction and adoption of information technology.
       (ii) Limitation.--The total amount of all Federal 
     supplemental payments made for cost reporting periods or 
     portions of such periods described in clause (i) shall not 
     exceed the amounts appropriated under this section for fiscal 
     years 2009 and 2010.
       (2) State maintenance of effort.--With respect to the 
     periods for payment of the Federal supplemental payments 
     established under paragraph (1), in no case shall a State--
       (A) pay a participating hospital less for services for 
     children eligible for medical assistance under the medicaid 
     program than the hospital was paid with respect to the most 
     recent cost reporting period ending before the date of 
     enactment of this Act; or
       (B) not provide an eligible children's hospital 
     participating in the program established under this section 
     (determined on a facility-specific basis) with the same 
     increase in payment that the State may provide to any other 
     hospital participating in the State medicaid program, 
     including any State-owned or operated hospital or any 
     hospital operated by a State university system.
       (f) Appropriations.--
       (1) In general.--Out of funds in the Treasury not otherwise 
     appropriated, there are appropriated for making payments 
     under this section--
       (A) for fiscal year 2007, $80,000,000;
       (B) for fiscal year 2008, $100,000,000; and
       (C) for each of fiscal years 2009 and 2010, $120,000,000.
       (2) Carryover.--Any amount appropriated under paragraph (1) 
     with respect to a fiscal year that remains unobligated as of 
     the end of that fiscal year, shall remain available for 
     obligation during the succeeding fiscal year, in addition to 
     the amount appropriated under that paragraph for such 
     succeeding fiscal year.
       (g) Evaluation and Report.--Not later than September 1, 
     2010, the Secretary shall report to Congress on the program 
     established under this section. In providing such a report, 
     the Secretary shall--
       (1) conduct an independent evaluation;
       (2) consult with States, eligible children's hospitals 
     participating in the program, the National Association of 
     Children's Hospitals

[[Page 19226]]

     and Related Institutions, and other national pediatric 
     organizations and individuals with expertise in pediatric 
     measures of quality and performance;
       (3) include a detailed description of the measures and 
     payment enhancements used in determining and rewarding 
     performance under the program;
       (4) assess the impact of rewarding performance through the 
     Federal supplemental payments provided under the program, 
     including with respect to any improvements and innovations in 
     the delivery of children's hospital care and children's 
     access to appropriate care;
       (5) assess how State hospital payment methodologies under 
     the medicaid program, including hospital and physician 
     payments and coverage, affect the capacity of the medicaid 
     program to reward performance; and
       (6) include recommendations to the Committee on Finance of 
     the Senate and the Committee on Energy and Commerce of the 
     House of Representatives regarding the implementation and 
     design of the performance-based payments made under the 
     program, whether to continue such program, and potential 
     alternative approaches to making performance-based payments 
     to such hospitals.

     SEC. 302. INCLUSION OF CHILDREN'S HOSPITALS AS COVERED 
                   ENTITIES FOR PURPOSES OF LIMITATION OF 
                   PURCHASED DRUG PRICE.

       (a) In General.--Section 340B(a)(4) of the Public Health 
     Services Act (42 U.S.C. 256b(a)(4)) is amended by adding at 
     the end the following new subparagraph:
       ``(M) A children's hospital described in section 
     1886(d)(1)(B)(iii) of the Social Security Act which meets the 
     requirements of clauses (i) and (iii) of subparagraph (L) and 
     which would meet the requirements of clause (ii) of such 
     subparagraph if that clause were applied by taking into 
     account the percentage of care provided by the hospital to 
     patients eligible for medical assistance under the medicaid 
     program.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs purchased on or after the date of 
     enactment of this Act.

  Mrs. LINCOLN. Mr. President, I am pleased to join my colleague 
Senator Mike DeWine to introduce ``The ABCs for Children's Health Act 
of 2005,'' which seeks to expand access to quality health care for all 
children who are eligible for Medicaid. The bill also ensures that 
children get the best health care at the right time.
  Medicaid is the single largest insurer for children. Twenty-five 
million children in America, one out of every four, depend on Medicaid 
for their health care coverage. In Arkansas, more than half of the 
births are financed by Medicaid. Over half of the children in Arkansas 
are on Medicaid or received Medicaid services in the last year. 
Medicaid covers half of the care, on average, that children's hospitals 
provide. As a result, the availability and quality of health care for 
all children relies greatly on Medicaid.
  As a result of progress in children's Medicaid coverage and the 
enactment of the State Children's Health Insurance Program, Congress 
has achieved an essential health care safety net for lower income 
children and children with special health care needs. Medicaid has 
saved millions of children from being uninsured when parents are faced 
with hard times and it has come to the aid of working families when 
children have exceptional medical costs. I believe that we must 
continue to build on that progress.
  The ABCs for Children's Health Act of 2005 encourages States to 
provide care for more children under Medicaid. It also helps states to 
ensure that all eligible children are enrolled and that they get the 
high quality care they need. The bill would provide the same 
investments in quality and performance in children's health care 
service's that are being made in Medicare. National quality and 
performance measures for children are far behind those for adults.
  I encourage my colleagues to join us as supporters of this important 
legislation to ensure that children get the quality health care they 
need to grow and prosper. Our Nation's children deserve the best health 
care we can offer. And this is a step in the right direction.
                                 ______
                                 
      By Mr. SARBANES:
  S. 1564. A bill to provide for the disposition of the Federal 
property located in Anne Arundel County, Maryland, a portion of which 
is currently used by the District of Columbia as the Oak Hill juvenile 
detention facility; to the Committee on Homeland Security and 
Governmental Affairs.
  Mr. SARBANES. Mr. President, today I am introducing legislation to 
facilitate the orderly disposition of an 800 acre parcel of Federal 
property located in Laurel, Maryland, a portion of which is currently 
used by the District of Columbia as the Oak Hills Juvenile Detention 
and Commitment Center. The legislation is a companion to a measure 
which has been introduced in the House by Representative Benjamin 
Cardin.
  The Oak Hill Youth Center, located adjacent to the National Security 
Agency and the Baltimore-Washington parkway, is a detention facility 
for juvenile offenders from the District of Columbia between the ages 
of 12 and 21. It has been plagued by facility and management problems 
for many years. The buildings at the center are in deplorable condition 
and fail to meet health and safety standards. Overcrowding, 
mismanagement, escapes, drug use and abuse of detainees at the center 
have been the subject of numerous investigations, press reports and 
lawsuits over the years, and are of great concern to juvenile justice 
advocates, families of detainees and local residents, alike. Nearly two 
decades ago, a consent decree stemming from the lawsuit Jerry M. v. 
District of Columbia, required the District to make improvements at the 
facility and address the chronic neglect of its adolescent detainees. 
Since the decree, ``sixty judicial orders, 44 monitoring reports and 
almost $3 million in court imposed fines'' have been issued in 
connection with the District's Youth Services Administration failure to 
fully comply with the decree, according to a July 2001 article in the 
Washington Post. Last year a report issued by the District's Inspector 
General's office found that, ``many of the same types of problems that 
resulted in the 1986 Jerry M. lawsuit still exist today . . .'' The 
report documented numerous security problems, health issues, 
deficiencies in management, failures to effectively maintain the safety 
of female youth housed at the center, and drugs being smuggled into the 
facility on a continual basis.
  There is a consensus that the Oak Hill Youth Center should be 
shutdown. A Blue Ribbon Commission on Youth Safety and Juvenile Justice 
Reform, established by Mayor Williams in August 2000, recommended in 
its final 2001 report that the Oak Hill Juvenile Detention center be 
closed and demolished. The Justice for DC Youth coalition, whose 
members include parents and juvenile justice advocates, has adamantly 
supported closing the existing Oak Hill facility and replacing it with 
a smaller, more homelike facility that is closer to the youth's homes.
  This measure seeks to ensure the closure of the facility and the 
orderly disposition of the property, while addressing the concerns of 
Anne Arundel County, the NSA, the District of Columbia and all 
surrounding neighborhoods and residences. Above all, it would serve the 
youth currently being held at the facility by helping to place them in 
an environment that is more suitable for successful rehabilitation. I 
hope this measure can be acted upon quickly by the Congress and 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. 1564

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

     SECTION 1. DISPOSITION OF OAK HILL PROPERTY.

       (a) In General.--The Oak Hill property shall be disposed of 
     as follows:
       (1) The portion of the property which is located west of 
     the Baltimore-Washington Parkway shall be transferred to the 
     jurisdiction of the Director of the National Park Service, 
     who shall use such portion for parkland purposes.
       (2) Subject to subsection (b), the portion of the property 
     which is located east of the Baltimore-Washington Parkway and 
     200 feet and further north of the Patuxent River shall be 
     transferred to the Secretary of the Army (acting through the 
     Chief of Engineers) for use by the Director of the National 
     Security Agency, who may lease such portion to the District 
     of Columbia.
       (3) The portion of the property which is located east of 
     the Baltimore-Washington

[[Page 19227]]

     Parkway and south of the portion described in paragraph (2) 
     shall be transferred to the jurisdiction of the Administrator 
     of General Services, who shall in turn convey such portion to 
     Anne Arundel County, Maryland, in accordance with subsection 
     (c).
       (b) Payment for Construction of New Juvenile Detention 
     Facility for District of Columbia.--As a condition of the 
     transfer under subsection (a)(2), the Director of the 
     National Security Agency shall enter into an agreement with 
     the Mayor of the District of Columbia under which--
       (1) the juvenile detention facility for the District of 
     Columbia currently located on the Oak Hill property shall be 
     closed; and
       (2) subject to appropriations, the Agency shall pay for the 
     construction of a replacement facility at a site to be 
     determined, with priority given to a location within the 
     District of Columbia.
       (c) Conveyance of Portion of Property to Anne Arundel 
     County.--
       (1) In general.--The Administrator of General Services 
     shall convey, without consideration, to Anne Arundel County, 
     Maryland, all right, title, and interest of the United States 
     in and to that portion of the Oak Hill property referred to 
     in subsection (a)(3).
       (2) Terms and conditions of conveyance.--The conveyance 
     under paragraph (1) shall be carried out under such terms and 
     conditions as may be agreed to by the Administrator and Anne 
     Arundel County, except that, as a condition of the 
     conveyance--
       (A) Anne Arundel County shall agree to dedicate a portion 
     of the property which is adjacent to the Patuxent River to 
     parkland and recreational use; and
       (B) Anne Arundel County shall agree to reimburse the 
     National Security Agency for the amounts paid by the Agency 
     under subsection (b) for the construction of a new juvenile 
     detention facility for the District of Columbia, but only if 
     the County makes 25 percent or more of the property conveyed 
     under this subsection available for purposes other than open 
     space or recreational use.

     SEC. 2. OAK HILL PROPERTY DEFINED.

       In this Act, the term ``Oak Hill property'' means the 
     Federal property consisting of approximately 800 acres near 
     Laurel, Maryland, a portion of which is currently used by the 
     District of Columbia as a juvenile detention facility, and 
     which is shown on Map Number 20 in the records of the 
     Department of Assessments and Taxation, Tax Map Division, of 
     Anne Arundel County.
                                 ______
                                 
      By Mr. LEVIN (for himself, Mr. Coleman, and Mr. Obama):
  S. 1565. A bill to restrict the use of abusive tax shelters and 
offshore tax havens to inappropriately avoid Federal taxation, and for 
other purposes; to the Committee on Finance.
  Mr. LEVIN. Mr. President, tax shelter and tax haven abuses are 
undermining the integrity of our tax system, robbing the Treasury of 
tens of billions of dollars each year, and shifting the tax burden from 
high income individuals and businesses onto the backs of middle income 
families. These abuses account for a significant portion of the more 
than $300 billion in taxes owed by individuals, businesses, and 
organizations that goes unpaid each year. As a matter of fairness, 
these abuses must be stopped. Today, I am introducing, with Senator 
Norm Coleman, a comprehensive tax reform bill called the Tax Shelter 
and Tax Haven Reform Act of 2005 that can help put an end to these 
abuses. Senator Barack Obama is also an original cosponsor.
  The Permanent Subcommittee on Investigations, on which I serve with 
Senator Coleman, has worked for years to expose and combat abusive tax 
shelters and tax havens. In the previous Congress, we introduced 
legislation confronting these twin threats to U.S. tax compliance; 
today's bill reflects not only the Subcommittee's additional 
investigative work but also innovative ideas to stop unethical tax 
advisers and tax havens from aiding and abetting U.S. tax evasion.
  Abusive tax shelters are very different from legitimate tax shelters, 
such as deducting the interest paid on your home mortgage or 
Congressionally approved tax deductions for building affordable 
housing. Abusive tax shelters are complicated transactions promoted to 
provide large tax benefits unintended by the tax code. Abusive tax 
shelters are marked by one characteristic: there is no real economic or 
business rationale other than tax avoidance. As Judge Learned Hand 
wrote in Gregory v. Helvering, they are ``entered upon for no other 
motive but to escape taxation.''
  Likewise, a tax haven is simply a country or jurisdiction that 
imposes little or no tax on income and offers non-residents the ability 
to escape taxes in their home country. The abuse of tax havens occurs 
when income is attributed to that country, even though little or no 
business activity actually occurs there. Tax havens are also 
characterized by corporate, bank, and tax secrecy laws that make it 
difficult for other countries to find out whether their citizens are 
using the tax haven to cheat on their taxes.
  Today's tax dodges are often tough to prosecute. Crimes such as 
terrorism, murder, and fraud produce instant recognition of the 
immorality involved. Abusive tax shelters and tax havens, by contrast, 
are often ``MEGOs,'' meaning ``My Eyes Glaze Over.'' Those who cook up 
these concoctions count on their complexity to escape scrutiny and 
public ire. But regardless of how complicated or eye-glazing, the 
hawking of abusive tax shelters by tax professionals like accountants, 
bankers, investment advisers, and lawyers to thousands of people like 
late-night, cut-rate T.V. bargains is scandalous and has got to stop. 
Hiding tax schemes through offshore companies and bank accounts in tax 
havens with secrecy laws also needs to be attacked with the full force 
of the law.
  Today, I would like to take a few minutes to try to cut through the 
haze of these schemes to see them for what they really are and explain 
what our bill would do to stop them. First, I will look at our 
investigation into abusive tax shelters and discuss the provisions we 
have included in this bill to combat them. Then, I will turn to tax 
haven abuses and our proposed remedies.
  For three years, the Permanent Subcommittee on Investigations has 
been conducting an investigation into the design, sale, and 
implementation of abusive tax shelters. While I initiated this 
investigation when I was Chairman of our Subcommittee in 2002, it has 
since had the support of our new Chairman, Senator Coleman.
  In November 2003, our Subcommittee held two days of hearings and 
released a report prepared by my staff that pulled back the curtain on 
how even some respected accounting firms, banks, investment advisors, 
and law firms had become the engines pushing the design and sale of 
abusive tax shelters to corporations and individuals across this 
country. In February 2005, the Subcommittee issued a report that 
provided further details on the role these professional firms played in 
the proliferation of these abusive shelters. Our Subcommittee report 
was endorsed by the full Committee on Homeland Security and 
Governmental Affairs in April.
  The Subcommittee investigation found that many abusive tax shelters 
were not dreamed up by the taxpayers who used them. Instead, most were 
devised by tax professionals, such as accountants, bankers, investment 
advisors, and lawyers, who then sold the tax shelter to clients for a 
fee. In fact, as our investigation widened, we found hordes of tax 
advisors cooking up one complex scheme after another, packaging them up 
as generic ``tax products'' with boiler-plate legal and tax opinion 
letters, and then undertaking elaborate marketing schemes to peddle 
these products to literally thousands of persons across the country. In 
return, these tax shelter promoters were getting hundreds of millions 
of dollars in fees, while diverting billions of dollars in tax revenues 
from the U.S. Treasury each year.
  For example, one shelter investigated by the Subcommittee and 
featured in the November 2003 Subcommittee hearings has since become 
part of an IRS effort to settle cases involving a set of abusive tax 
shelters known as ``Son of Boss.'' To date, more than 1,200 taxpayers 
have admitted wrongdoing and agreed to pay back taxes, interest and 
penalties totaling more than $3.7 billion. That's billions of dollars 
the IRS has collected on just one type of tax shelter, demonstrating 
both the depth of the problem and the potential for progress.
  The Tax Shelter and Tax Haven Reform Act of 2005 that we are 
introducing today contains a number of measures to curb abusive tax 
shelters. The bill strengthens the penalties on promoters of abusive 
tax shelters. It codifies and strengthens the economic

[[Page 19228]]

substance doctrine, which eliminates tax benefits for transactions that 
have no real business purpose apart from avoiding taxes. The bill 
deters banks' participation in abusive tax shelter activities by 
requiring regulators to develop new examination procedures to detect 
and stop such activities. It ends outdated communication barriers 
between key enforcement agencies to allow the exchange of information 
relating to tax evasion cases.
  The bill also requires the Treasury Department to issue tougher 
standards for tax shelter opinion letters. It increases incentives for 
whistleblowers to report tax evasion to the IRS. The bill also provides 
for increased disclosure of tax shelter information to Congress. It 
simplifies and clarifies an existing prohibition on accountants being 
paid contingent fees which increase as phony tax losses increase. And 
it expresses the sense of the Senate that the IRS needs more funding to 
combat tax shelter abuses.
  Let me be more specific about these key provisions to curb abusive 
tax shelters.
  Title I of the bill strengthens two very important penalties that the 
IRS can use in its fight against the professionals who make these 
complex abusive shelters possible. A year ago, the penalty for 
promoting an abusive tax shelter, as set forth in Section 6700 of the 
tax code, was the lesser of $1,000 or 100 percent of the promoter's 
gross income derived from the prohibited activity. That meant in most 
cases the maximum fine was just $1,000.
  Many abusive tax shelters sell for $100,000 or $250,000 apiece. Our 
investigation uncovered some tax shelters that were sold for as much as 
$2 million or even $5 million apiece, as well as instances in which the 
same cookie-cutter tax opinion letter was sold to 100 or even 200 
clients. There are big bucks to be made in this business, and a $1,000 
fine is laughable.
  The Senate acknowledged that last year when it adopted the Levin-
Coleman amendment to the JOBS Act, S. 1637, raising the Section 6700 
penalty on abusive tax shelter promoters to 100 pefcent of the fees 
earned by the promoter from the abusive shelter. A 100 percent penalty 
would have ensured that the abusive tax shelter hucksters would not get 
to keep a single penny of their ill-gotten gains. That figure, however, 
was cut in half in the conference report, setting the penalty at 50 
percent of the fees earned and allowing the promoters of abusive 
shelters get to keep half of their illicit profits.
  While 50 percent is an obvious improvement over $1000, this penalty 
still is inadequate and makes no sense. Why should anyone who pushes an 
illegal tax shelter that robs our Treasury of much needed revenues get 
to keep half of his ill-gotten gains? What deterrent effect is created 
by a penalty that allows promoters to keep half of their fees if 
caught, and of course, all of their fees if they are not caught? Tax 
shelter promoters ought to face a penalty that is at least as harsh as 
the penalty imposed on the person who purchased their tax product, not 
only because the promoter is usually as culpable as the taxpayer, but 
also so promoters think twice about pushing abusive tax schemes.
  Effective penalties should make sure that the peddler of an abusive 
tax shelter is deprived of every penny of profit earned from selling or 
implementing the shelter and then is fined on top of that. 
Specifically, Section 101 of this bill would increase the penalty on 
tax shelter promoters to an amount up to the greater of either 150 
percent of the promoters' gross income from the prohibited activity, or 
the amount assessed against the taxpayer--including back-taxes, 
interest and penalties.
  A second penalty provision in the bill addresses what our 
investigation found to be one of the biggest problems: the knowing 
assistance of accounting firms, law firms, banks, and others to help 
taxpayers understate their taxes. In addition to those who meet the 
definition of ``promoters'' of abusive shelters, there are professional 
firms that aid and abet the use of abusive tax shelters and enable 
taxpayers to carry out the abusive tax schemes. For example, law firms 
are often asked to write ``opinion letters'' to help taxpayers head off 
IRS questioning and fines that they might otherwise confront for using 
an abusive shelter. Currently, under Section 6701 of the tax code, 
these aiders and abettors face a maximum penalty of only $1,000, or 
$10,000 if the offender is a corporation. This penalty, too, is a joke. 
When law firms are getting $50,000 for each of these cookie-cutter 
opinion letters, it provides no deterrent whatsoever. A $1,000 fine is 
like a jaywalking ticket for robbing a bank.
  Section 102 of the bill would strengthen Section 6701 significantly, 
subjecting aiders and abettors to a maximum fine up to the greater of 
either 150 percent of the aider and abettor's gross income from the 
prohibited activity, or the amount assessed against the taxpayer for 
using the abusive shelter. This penalty would apply to all aiders and 
abettors not just tax return preparers.
  Again, the Senate has recognized the need to toughen this critical 
penalty. In last year's JOBS Act, Senator Coleman and I successfully 
increased this fine to 100 percent of the gross income derived from the 
prohibited activity. Unfortunately, the conference report completely 
omitted this change, allowing aiders and abettors to continue to profit 
without penalty from their wrongdoing.
  If further justification for toughening these penalties is needed, 
one document uncovered by our investigation shows the cold calculation 
engaged in by a tax advisor facing low fines. A senior tax professional 
at accounting giant KPMG compared possible tax shelter fees with 
possible tax shelter penalties if the firm were caught promoting an 
illegal tax shelter. This senior tax professional wrote the following: 
``[O]ur average deal would result in KPMG fees of $360,000 with a 
maximum penalty exposure of only $31,000.'' He then recommended the 
obvious: going forward with sales of the abusive tax shelter on a cost-
benefit basis.
  Title III of the bill would strengthen legal prohibitions against 
abusive tax shelters by codifying in Federal tax statutes for the first 
time what is known as the economic substance doctrine. This anti-tax 
abuse doctrine was fashioned by federal courts evaluating transactions 
that appeared to have little or no business purpose or economic 
substance apart from tax avoidance. It has become a powerful analytical 
tool used by courts to invalidate abusive tax shelters. At the same 
time, because there is no statute underlying this doctrine and the 
courts have developed and applied it differently in different judicial 
districts, the existing case law has many ambiguities and conflicting 
interpretations.
  Under the leadership of Senators Grassley and Baucus, the Chairman 
and Ranking Member of the Finance Committee, the Senate has voted on 
multiple occasions to enact this economic substance provision, but the 
House conferees have rejected it each time. Since no tax shelter 
legislation would be complete without addressing this issue, Title III 
of this comprehensive bill proposes once more to include the economic 
substance doctrine in the tax code. I hope that with continued 
pressure, it will become law in this Congress.
  The bill will also help fight abusive tax shelters that are disguised 
as complex investment opportunities and use financing or securities 
transactions provided by financial institutions. In reality, tax 
shelter schemes lack the economic risks and rewards associated with a 
true investment. These phony transactions instead often rely on the 
temporary use of significant amounts of money in low risk schemes 
mischaracterized as real investments. The financing or securities 
transactions called for by these schemes are often supplied by a bank, 
securities firm, or other financial institution.
  Currently the tax code prohibits financial institutions from 
providing products or services that aid or abet tax evasion or that 
promote or implement abusive tax shelters. The agencies that oversee 
these financial institutions on a daily basis, however, are experts in 
banking and securities law and generally lack the expertise to

[[Page 19229]]

spot tax issues. Section 202 would crack down on financial 
institutions' illegal tax shelter activities by requiring federal bank 
regulators and the SEC to work with the IRS to develop examination 
techniques to detect such abusive activities and put an end to them.
  These examination techniques would be used at least every 2 years, 
preferably in combination with routine regulatory examinations, and the 
regulators would report potential violations to the IRS. The agencies 
would also be required to prepare joint reports to Congress in 2007 and 
2010 on preventing the participation of financial institutions in tax 
evasion or tax shelter activities.
  During hearings before the Permanent Subcommittee on Investigations 
on tax shelters in November 2003, IRS Commissioner Mark Everson 
testified that his agency was barred by Section 6103 of the tax code 
from communicating information to other federal agencies that would 
assist those agencies in their law enforcement duties. He pointed out 
that the IRS was barred from providing tax return information to the 
SEC, federal bank regulators, and the Public Company Accounting 
Oversight Board (PCAOB)--even, for example, when that information might 
assist the SEC in evaluating whether an abusive tax shelter resulted in 
deceptive accounting in a public company's financial statements, might 
help the Federal Reserve determine whether a bank selling tax products 
to its clients had violated the law against promoting abusive tax 
shelters, or help the PCAOB judge whether an accounting firm had 
impaired its independence by selling tax shelters to its audit clients.
  A recent example demonstrates how ill-conceived these information 
barriers are. A few months ago the IRS offered a settlement initiative 
to companies and corporate executives who participated in an abusive 
tax shelter involving the transfer of stock options to family-
controlled entities. Over a hundred corporations and executives 
responded with admissions of wrongdoing. In addition to tax violations, 
their misconduct may be linked to securities law violations and 
improprieties by corporate auditors or banks, but the IRS has informed 
the Subcommittee that it is currently barred by law from sharing the 
names of the wrongdoers with the SEC, banking regulators, or PCAOB.
  These communication barriers are outdated, inefficient, and ill-
suited to stopping the torrent of tax shelter abuses now affecting or 
being promoted by so many public companies, banks, and accounting 
firms. To address this problem, Section 203 of this bill would 
authorize the Treasury Secretary, with appropriate privacy safeguards, 
to disclose to the SEC, Federal banking agencies, and the PCAOB, upon 
request, tax return information related to abusive tax shelters, 
inappropriate tax avoidance, or tax evasion. The agencies could then 
use this information only for law enforcement purposes, such as 
preventing accounting firms or banks from promoting abusive tax 
shelters, or detecting accounting fraud in the financial statements of 
public companies.
  Another finding of the Subcommittee investigation is that some tax 
practitioners are circumventing current State and Federal constraints 
on charging tax service fees that are dependent on the amount of 
promised tax benefits. Traditionally, accounting firms charged flat 
fees or hourly fees for their tax services. In the 1990s, however, they 
began charging ``value added'' fees based on, in the words of one 
accounting firm's manual, ``the value of the services provided, as 
opposed to the time required to perform the services.'' In addition, 
some firms began charging ``contingent fees'' that were calculated 
according to the size of the paper ``loss'' that could be produced for 
a client and used to offset the client's other taxable income--the 
greater the so-called loss, the greater the fee.
  In response, many States prohibited accounting firms from charging 
contingent fees for tax work to avoid creating incentives for these 
firms to devise ways to shelter substantial sums. The SEC and the 
American Institute of Certified Public Accountants also issued rules 
restricting contingent fees, allowing them in only limited 
circumstances. Recently, the Public Company Accounting Oversight Board 
sent the SEC for approval a similar rule prohibiting public accounting 
firms from charging contingent fees for tax services provided to the 
public companies they audit. Each of these Federal, State, and 
professional ethics rules seeks to limit the use of contingent fees 
under certain, limited circumstances.
  The Subcommittee investigation found that tax shelter fees, which are 
typically substantial and sometimes exceed $1 million, are often linked 
to the amount of a taxpayer's projected paper losses which can be used 
to shelter income from taxation. For example, in three tax shelters 
examined by the Subcommittee, documents show that the fees were equal 
to a percentage of the paper loss to be generated by the transaction. 
In one case, the fees were typically set at 7 percent of the 
transaction's generated ``tax loss'' that clients could use to reduce 
other taxable income. In other words, the greater the loss that could 
be concocted for the taxpayer or ``investor,'' the greater the profit 
for the tax promoter. Think about that--greater the loss, the greater 
the profit. How's that for turning capitalism on its head!
  In addition, evidence indicated that, in at least one instance, a tax 
advisor was willing to deliberately manipulate the way it handled 
certain tax products to circumvent contingent fee prohibitions. An 
internal document at an accounting firm related to a specific tax 
shelter, for example, identified the States that prohibited contingent 
fees. Then, rather than prohibit the tax shelter transactions in those 
States or require an alternative fee structure, the memorandum directed 
the firm's tax professionals to make sure the engagement letter was 
signed, the engagement was managed, and the bulk of services was 
performed ``in a jurisdiction that does not prohibit contingency 
fees.''
  Right now, the prohibitions on contingent fees are complex and must 
be evaluated in the context of a patchwork of Federal, State, and 
professional ethics rules. Section 201 of the bill would establish a 
single enforceable rule, applicable nationwide, that would prohibit tax 
practitioners from charging fees calculated according to a projected or 
actual amount of tax savings or paper losses.
  Past laws, such as the Whistleblower Protection Act and qui tam 
lawsuits under the False Claims Act, demonstrate that individuals with 
inside information can help expose serious misconduct that the U.S. 
government might otherwise miss. The tax arena is no different. Persons 
with inside information can help expose millions of dollars in tax 
fraud if they are willing to step forward and tell the IRS what they 
know about specific instances of misconduct.
  Under current law, potential whistleblowers with inside information 
about tax misconduct do not have an established IRS office that is 
sensitive to their concerns, provides consistent treatment, and 
oversees the calculation and payment of monetary rewards for important 
information. Section 206 of this bill, which is very similar to a 
provision developed by the Senate Finance Committee, would, among other 
measures, establish a Whistleblowers Office within the IRS, codify 
standards for the payment of monetary rewards, and exempt whistleblower 
monetary payments from the alternative minimum tax.
  Each of these measures is intended to increase incentives for persons 
to blow the whistle on tax misconduct. The one key difference between 
our bill and the Finance Committee provision is that we would continue 
to give the IRS the discretion to determine the amount of money paid to 
an individual whistleblower; our bill would not enable whistleblowers 
to appeal to a court to obtain additional sums. The fact-specific 
analysis that goes into evaluating a whistleblower's assistance and 
calculating a reward makes court review inadvisable. The existence of 
an appeal

[[Page 19230]]

also invites litigation and necessitates the expenditure of taxpayer 
dollars--not for tax enforcement but for a court dispute. The new 
Whistleblowers Office is intended to promote the consistent, equitable 
treatment of persons who report tax misconduct, without also inviting 
expensive and time-consuming litigation.
  Section 205 of the bill would direct the Treasury Department to issue 
new standards for tax practitioners issuing opinion letters on the tax 
implications of potential tax shelters as part of Circular 230. The 
public has traditionally relied on tax opinion letters to obtain 
informed and trustworthy advice about whether a tax-motivated 
transaction meets the requirements of the law. The Permanent 
Subcommittee on Investigations has found that, in too many cases, tax 
opinion letters no longer contain disinterested and reliable tax 
advice, even when issued by supposedly reputable accounting or law 
firms.
  Instead, some tax opinion letters have become marketing tools used by 
tax shelter promoters and their allies to sell clients on their latest 
tax products. In many of these cases, financial interests and biases 
were concealed, unreasonable factual assumptions were used to justify 
dubious legal conclusions, and taxpayers were misled about the risk 
that the proposed transaction would later be designated an illegal tax 
shelter. Reforms are essential to address these abuses and restore the 
integrity of tax opinion letters.
  The Treasury Department recently adopted standards that address a 
number of the abuses affecting tax shelter opinion letters; however, 
the standards do not take all the steps needed. Our bill would require 
Treasury to issue standards addressing a wider spectrum of tax shelter 
opinion letter problems, including: preventing concealed collaboration 
among supposedly independent letter writers; avoiding conflicts of 
interest that would impair auditor independence; ensuring appropriate 
fee charges; preventing practitioners and firms from aiding and 
abetting the understatement of tax liability by clients; and banning 
the promotion of potentially abusive tax shelters. By addressing each 
of these areas, a beefed-up Circular 230 could help reduce the ongoing 
abusive practices related to tax shelter opinion letters.
  The bill would also provide for increased disclosure of tax shelter 
information to Congress. Section 204 would make it clear that companies 
providing tax return preparation services to taxpayers cannot refuse to 
comply with a Congressional document subpoena by citing Section 7216, a 
consumer protection provision that prohibits tax return preparers from 
disclosing taxpayer information to third parties. Several accounting 
and law firms raised this claim in response to document subpoenas 
issued by the Permanent Subcommittee on Investigations, contending they 
were barred by the nondisclosure provision in Section 7216 from 
producing documents related to the sale of abusive tax shelters to 
clients for a fee.
  The accounting and law firms maintained this position despite an 
analysis provided by the Senate legal counsel showing that the 
nondisclosure provision was never intended to create a privilege or to 
override a Senate subpoena, as demonstrated in federal regulations 
interpreting the provision. This bill would codify the existing 
regulations interpreting Section 7216 and make it clear that 
Congressional document subpoenas must be honored.
  Section 204 would also ensure Congress has access to information 
about decisions by Treasury related to an organization's tax exempt 
status. A 2003 decision by the D.C. Circuit Court of Appeals, Tax 
Analysts v. IRS, struck down certain IRS regulations and held that the 
IRS must disclose letters denying or revoking an organization's tax 
exempt status. The IRS has been reluctant to disclose such information, 
not only to the public, but also to Congress, including in response to 
requests by the Permanent Subcommittee on Investigations.
  For example, earlier this year the IRS revoked the tax exempt status 
of four credit counseling firms, and, despite the Tax Analysts case, 
claimed that it could not disclose to the Subcommittee the names of the 
four firms or the reasons for revoking their tax exemption. Our bill 
would make it clear that, upon receipt of a request from a 
Congressional committee or subcommittee, the IRS must disclose 
documents, other than a tax return, related to the agency's 
determination to grant, deny, revoke or restore an organization's 
exemption from taxation.
  Section 208 of the bill would establish that it is the sense of the 
Senate that additional funds should be appropriated for IRS 
enforcement, and that the IRS should devote proportionately more of its 
enforcement funds to combat rampant tax shelter and tax haven abuses. 
Specifically, the bill would direct increased funding toward 
enforcement efforts combating the promotion of abusive tax shelters and 
the aiding and abetting of tax evasion; the involvement of accounting, 
law and financial firms in such promotion and aiding and abetting; and 
the use of offshore financial accounts to conceal taxable income.
  Tax enforcement is an area where a relatively small increase in 
spending pays for itself many times over. If we would hire adequate 
enforcement personnel, close the tax loopholes, and put an end to tax 
dodges, tens of billions in revenues that should support this country 
would actually reach the Treasury.
  In addition to abusive tax shelters, the bill addresses the abusive 
tax havens that help taxpayers dodge their U.S. tax obligations through 
using corporate, bank, and tax secrecy laws that impede U.S. tax 
enforcement. The London-based Tax Justice Network recently estimated 
that wealthy individuals worldwide have stashed $11.5 trillion of their 
assets in tax havens. At one Subcommittee hearing in 2001, a former 
owner of an offshore bank in the Cayman Islands testified that he 
believed 100 percent of his former clients were engaged in tax evasion. 
He said that almost all were from the United States and would take 
elaborate measures to avoid IRS detection of their money transfers. He 
also expressed confidence that the government that licensed his bank 
would vigorously defend client secrecy in order to continue attracting 
business to the islands.
  Corporations are also using tax havens to reduce their U.S. tax 
liability. A GAO report I released with Senator Dorgan last year found 
that nearly two-thirds of the top 100 companies doing business with the 
United States government now have one or more subsidiaries in a tax 
haven. One company, Tyco International, had 115.
  Data released by the Commerce Department further demonstrates the 
extent of U.S. corporate use of tax havens, indicating that, as of 
2001, almost half of all foreign profits of U.S. corporations were in 
tax havens. A study released by the journal Tax Notes in September 2004 
found that American companies were able to shift $149 billion of 
profits to 18 tax haven countries in 2002, up 68 percent from $88 
billion in 1999. Estimates show that funneling these profits from the 
U.S. to tax havens deprives the U.S. Treasury of anywhere from $10 
billion to $20 billion in lost tax revenue each year.
  Here's just one simplified example of the gimmicks being used by 
corporations to transfer taxable income from the United States to tax 
havens to escape taxation. Suppose a profitable U.S. corporation 
establishes a shell corporation in a tax haven. The shell corporation 
has no office or employees, just a mailbox address. The U.S. parent 
transfers a valuable patent to the shell corporation. Then, the U.S. 
parent and all of its subsidiaries begin to pay a hefty fee to the 
shell corporation for use of the patent, shifting taxable income out of 
the United States to the shell corporation. The shell corporation 
declares a portion of the fees as profit, but pays no tax since it is a 
tax haven resident. The icing on the cake is that the shell corporation 
can then ``lend'' the income it has accumulated from the fees back to 
the U.S. companies for their use. The companies, in turn, pay 
``interest'' on the ``loans'' to the shell corporation, shifting still 
more taxable income out of the United States to the tax haven. This 
example highlights just a few of the tax haven

[[Page 19231]]

ploys being used by some U.S. corporations to escape paying their fair 
share of taxes here at home.
  Sections 401 and 402 of our bill tackle the issue of tax havens by 
removing U.S. tax benefits associated with jurisdictions that fail to 
cooperate with U.S. tax enforcement efforts. Dozens of jurisdictions 
around the world have enacted corporate, bank, and tax secrecy laws 
that, in too many cases, have been used to justify failing to provide 
timely information to U.S. officials investigating tax misconduct. Some 
tax havens have refused to provide timely information about persons 
suspected of either hiding funds in the jurisdiction's offshore bank 
accounts or using offshore corporations and deceptive transactions to 
disguise their income or create phony losses to shelter their U.S. 
income from taxation.
  Section 401 of the bill would give the Treasury Secretary the 
discretion to designate such an offshore tax haven as ``uncooperative'' 
and to publish an annual list of these uncooperative tax havens. We 
intend that the Treasury Secretary will develop this list by evaluating 
the actual record of cooperation experienced by the United States in 
its dealings with specific jurisdictions around the world. While many 
offshore tax havens have signed treaties with the United States 
promising to cooperate with U.S. civil and criminal tax enforcement, 
the level of resulting cooperation varies. For example, after one 
country signed a tax treaty with the United States, the government that 
led the effort was voted out of office by treaty opponents. Treasury 
needs a way to ensure that tax treaty obligations are met and to send a 
message to jurisdictions that impede U.S. tax enforcement. This bill 
gives Treasury the tools it needs to get the cooperation it needs.
  Under Sections 401 and 402 of the bill, persons doing business in tax 
havens designated by Treasury as uncooperative would be denied U.S. tax 
benefits and incur increased disclosure requirements. First, the bill 
would disallow the tax benefits of deferral and foreign tax credits for 
income attributed to an uncooperative tax haven. Second, taxpayers 
would be required to provide greater disclosure of their activities, 
including disclosing on their returns any payment above $10,000 to a 
person or account located in a designated haven. These restrictions 
would not only deter U.S. taxpayers from doing business with 
uncooperative tax havens, they would also provide the United States 
with powerful weapons to convince tax havens to cooperate fully with 
U.S. tax enforcement efforts and help end offshore tax evasion abuses.
  Sections 403 and 404 further address offshore tax evasion. Section 
403 would toughen penalties on eligible taxpayers who did not 
participate in Treasury programs designed to encourage voluntary 
disclosure of previously unreported income placed by the taxpayer in 
offshore accounts and accessed by credit card or other financial 
arrangements. Section 404 would authorize Treasury to promulgate 
regulations to stop ongoing foreign tax credit abuses in which, among 
other schemes, taxpayers claim credit on their U.S. tax returns for 
paying foreign taxes, but then fail to report the income related to 
those foreign taxes. Under the leadership of Senators Grassley and 
Baucus, both Sections 403 and 404 passed the Senate earlier this year 
as part of the Highway Bill, H.R. 3, but were dropped in conference.
  The eyes of some people may glaze over when tax shelters and tax 
havens are discussed, but unscrupulous taxpayers and tax professionals 
see illicit dollar signs. Our commitment to crack down on their tax 
abuses must be as strong as their determination to get away with 
ripping off America and American taxpayers.
  Our bill provides our government the tools to end the use of abusive 
tax shelters and uncooperative tax havens and to punish the powerful 
professionals who push them.
  It's long past time for Congress to act to end the shifting of a 
disproportionate tax burden onto the shoulders of honest Americans.
  I ask unanimous consent that a summary of the bill's provisions and 
the text of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

        Summary of Tax Shelter and Tax Haven Reform Act of 2005


              TITLE I--Strengthening Tax Shelter Penalties

  Strengthens the penalties for: promoting abusive tax shelters; and 
knowingly aiding or abetting a taxpayer in understating tax liability.


         TITLE II--Preventing Abusive Tax Shelter Transactions

     Prohibit tax service fees dependant upon specific tax savings

  Prohibits charging a fee for tax services in an amount that is 
calculated according to or dependant upon a projected or actual amount 
of tax savings or losses offsetting taxable income. Builds on 
contingent fee prohibitions in more than 20 states, AICPA rules 
applicable to accountants, SEC regulations applicable to auditors of 
publicly traded corporations, and proposed PCAOB rules for auditors. 
Based upon investigation by Permanent Subcommittee on Investigations 
showing tax practitioners are circumventing current constraints.


   Deter Financial Institution Participation in Abusive Tax Shelter 
                               Activities

  Requires Federal bank regulators and the SEC to develop examination 
techniques to detect violations by financial institutions of the 
prohibition against providing products or services that aid or abet tax 
evasion or that promote or implement abusive tax shelters. Regulators 
must use such techniques at least every 2 years in routine or special 
examinations of specific institutions and report potential violations 
to the IRS. The agencies must also prepare a joint report to Congress 
in 2007 and 2010 on preventing the participation of financial 
institutions in tax evasion or tax shelter activities.


         Increase disclosure of certain tax shelter information

  Authorizes Treasury to share certain tax return information with the 
SEC, Federal bank regulators, or PCAOB, under certain circumstances, to 
enhance tax shelter enforcement or combat financial accounting fraud. 
Clarifies Congressional subpoena authority to obtain information (but 
not a taxpayer return) from tax return preparers. Clarifies 
Congressional authority to obtain certain tax information (but not a 
taxpayer return) from Treasury related to an IRS decision to grant, 
deny, revoke, or restore an organization's tax exempt status.


  Require Tougher Tax Shelter Opinion Standards for Tax Practitioners

  Codifies and expands Treasury's authority to beef up Circular 230 
standards for tax practitioners providing ``opinion letters'' on 
specific tax shelter transactions.


               Increase Incentives for IRS Whistleblowers

  Encourages persons to blow the whistle on tax misconduct by 
establishing a Whistleblowers Office within the IRS to provide 
consistent, equitable treatment of persons bringing information to the 
IRS. Codifies standards for awarding a portion of proceeds collected 
from actions based on information they bring to the IRS's attention. 
Modeled on provision passed by the Senate in the Highway Bill. 
Estimated to raise $407 million over 10 years.
     Deny tax deduction for fines, penalties and settlements.
  Clarifies that penalties, fines and settlements paid to the 
government are not deductible. Passed by the Senate in the Highway 
Bill. Estimated to raise $200 million over 10 years.
     ``Sense of the Senate'' on IRS Enforcement Priorities
  Establishes the Sense of the Senate that additional funds should be 
appropriated for IRS enforcement, and that the IRS should devote 
proportionately more of its enforcement funds to combat: (I) the 
promotion of abusive tax shelters for corporations and high net worth 
individuals and the aiding or abetting of tax evasion, (2) the 
involvement of accounting, law and financial firms in such promotion 
and aiding or abetting, and (3) the use of offshore financial accounts 
to conceal taxable income.

[[Page 19232]]




                TITLE III--Requiring Economic Substance

     Strengthen the Economic Substance Doctrine
  Strengthens and codifies the economic substance doctrine to 
invalidate transactions that have no economic substance or business 
purpose apart from tax avoidance or evasion. Also increases penalties 
for understatements attributable to a transaction lacking in economic 
substance. Passed by the Senate in the Highway Bill. Estimated to raise 
$15.9 billion over 10 years.


                TITLE IV--Deterring Offshore Tax Evasion

     Deter Use of Uncooperative Tax Havens
  Deters taxpayer use of uncooperative tax havens with corporate, bank 
or tax secrecy laws, procedures, or practices that impede U.S. 
enforcement of its tax laws by: (1) requiring disclosure on taxpayer 
returns of any payment above $10,000 to accounts or persons located in 
such tax havens, and (2) ending the tax benefits of deferral and 
foreign tax credits for any income earned in such tax havens. Gives 
Treasury Secretary discretion to designate a tax haven as uncooperative 
and publish an annual list of those jurisdictions. Estimated to raise 
$87 million over 10 years.
     Strengthen Penalties for Concealing Income in Offshore 
         Accounts
  Toughens penalties on taxpayers who, despite being eligible, did not 
participate in Treasury programs to encourage voluntary disclosure of 
previously unreported income placed by the taxpayer in offshore 
accounts and accessed through credit card or other financial 
arrangements. Passed by the Senate in the Highway Bill. Estimated to 
raise $10 million over 10 years.
     Stop Schemes to get Foreign Tax Credit Without Reporting 
         Related Income
  Authorizes Treasury to promulgate regulations to address abusive 
foreign tax credit (FTC) schemes that involve the inappropriate 
separation or stripping of foreign taxes from the related foreign 
income so taxpayers get the benefit of the FTC but don't report the 
related income. The provision becomes effective for transactions 
entered into after the date of enactment. Passed by the Senate in the 
Highway Bill. Estimated to raise $16 million over 10 years.
                                  ____


                                S. 1565

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

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Tax 
     Shelter and Tax Haven Reform Act of 2005''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title; etc.

              TITLE I--STRENGTHENING TAX SHELTER PENALTIES

Sec. 101. Penalty for promoting abusive tax shelters.
Sec. 102. Penalty for aiding and abetting the understatement of tax 
              liability.

               TITLE II--PREVENTING ABUSIVE TAX SHELTERS

Sec. 201. Prohibited fee arrangement.
Sec. 202. Preventing tax shelter activities by financial institutions.
Sec. 203. Information sharing for enforcement purposes.
Sec. 204. Disclosure of information to Congress.
Sec. 205. Tax opinion standards for tax practitioners.
Sec. 206. Whistleblower reforms.
Sec. 207. Denial of deduction for certain fines, penalties, and other 
              amounts.
Sec. 208. Sense of the Senate on tax enforcement priorities.

                TITLE III--REQUIRING ECONOMIC SUBSTANCE

Sec. 301. Clarification of economic substance doctrine.
Sec. 302. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.
Sec. 303. Denial of deduction for interest on underpayments 
              attributable to noneconomic substance transactions.

              TITLE IV--DETERRING UNCOOPERATIVE TAX HAVENS

Sec. 401. Disclosing payments to persons in uncooperative tax havens.
Sec. 402. Deterring uncooperative tax havens by restricting allowable 
              tax benefits.
Sec. 403. Doubling of certain penalties, fines, and interest on 
              underpayments related to certain offshore financial 
              arrangements.
Sec. 404. Treasury regulations on foreign tax credit.

              TITLE I--STRENGTHENING TAX SHELTER PENALTIES

     SEC. 101. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

       (a) Penalty for Promoting Abusive Tax Shelters.--Section 
     6700 (relating to promoting abusive tax shelters, etc.) is 
     amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively,
       (2) by striking ``a penalty'' and all that follows through 
     the period in the first sentence of subsection (a) and 
     inserting ``a penalty determined under subsection (b)'', and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 150 percent of the gross income derived (or to be 
     derived) from such activity by the person or persons subject 
     to such penalty, and
       ``(B) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with such activity.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of an activity described in 
     subsection (a), each instance in which income was derived by 
     the person or persons subject to such penalty, and each 
     person who participated in such an activity.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to such activity, 
     all such persons shall be jointly and severally liable for 
     the penalty under such subsection.
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Conforming Amendment.--Section 6700(a) is amended by 
     striking the last sentence.
       (c) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

     SEC. 102. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by inserting ``the tax liability or'' after ``respect 
     to,'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 150 percent of the gross income derived (or to be 
     derived) from such aid, assistance, procurement, or advice 
     provided by the person or persons subject to such penalty, 
     and
       ``(i) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with the understatement of 
     the liability for tax.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

[[Page 19233]]



               TITLE II--PREVENTING ABUSIVE TAX SHELTERS

     SEC. 201. PROHIBITED FEE ARRANGEMENT.

       (a) In General.--Section 6701, as amended by this Act, is 
     amended--
       (1) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively,
       (2) by striking ``subsection (a).'' in paragraphs (2) and 
     (3) of subsection (g) (as redesignated by paragraph (1)) and 
     inserting ``subsection (a) or (f).'', and
       (3) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Prohibited Fee Arrangement.--
       ``(1) In general.--Any person who makes an agreement for, 
     charges, or collects a fee which is for services provided in 
     connection with the internal revenue laws, and the amount of 
     which is calculated according to, or is dependent upon, a 
     projected or actual amount of--
       ``(A) tax savings or benefits, or
       ``(B) losses which can be used to offset other taxable 
     income,
     shall pay a penalty with respect to each such fee activity in 
     the amount determined under subsection (b).
       ``(2) Rules.--The Secretary may issue rules to carry out 
     the purposes of this subsection and may provide exceptions 
     for fee arrangements that are in the public interest.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to fee agreements, charges, and collections made 
     after the date of the enactment of this Act.

     SEC. 202. PREVENTING TAX SHELTER ACTIVITIES BY FINANCIAL 
                   INSTITUTIONS.

       (a) Examinations.--
       (1) Development of examination techniques.--Each of the 
     Federal banking agencies and the Commission shall, in 
     consultation with the Internal Revenue Service, develop 
     examination techniques to detect potential violations of 
     section 6700 or 6701 of the Internal Revenue Code of 1986, by 
     depository institutions, brokers, dealers, and investment 
     advisers, as appropriate.
       (2) Frequency.--Not less frequently than once in each 2-
     year period, each of the Federal banking agencies and the 
     Commission shall implement the examination techniques 
     developed under paragraph (1) with respect to each of the 
     depository institutions, brokers, dealers, or investment 
     advisers subject to their enforcement authority. Such 
     examination shall, to the extent possible, be combined with 
     any examination by such agency otherwise required or 
     authorized by Federal law.
       (b) Report to Internal Revenue Service.--In any case in 
     which an examination conducted under this section with 
     respect to a financial institution or other entity reveals a 
     potential violation, such agency shall promptly notify the 
     Internal Revenue Service of such potential violation for 
     investigation and enforcement by the Internal Revenue Service 
     in accordance with applicable provisions of law.
       (c) Report to Congress.--The Federal banking agencies and 
     the Commission shall submit a joint written report to 
     Congress in 2007 and 2010 on their progress in preventing 
     violations of sections 6700 and 6701 of the Internal Revenue 
     Code of 1986, by depository institutions, brokers, dealers, 
     and investment advisers, as appropriate.
       (d) Definitions.--For purposes of this section--
       (1) the terms ``broker'', ``dealer'', and ``investment 
     adviser'' have the same meanings as in section 3 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c);
       (2) the term ``Commission'' means the Securities and 
     Exchange Commission;
       (3) the term ``depository institution'' has the same 
     meaning as in section 3(c) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813(c));
       (4) the term ``Federal banking agencies'' has the same 
     meaning as in section 3(q) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813(q)); and
       (5) the term ``Secretary'' means the Secretary of the 
     Treasury.

     SEC. 203. INFORMATION SHARING FOR ENFORCEMENT PURPOSES.

       (a) Promotion of Prohibited Tax Shelters or Tax Avoidance 
     Schemes.--Section 6103(h) (relating to disclosure to certain 
     Federal officers and employees for purposes of tax 
     administration, etc.) is amended by adding at the end the 
     following new paragraph:
       ``(7) Disclosure of returns and return information related 
     to promotion of prohibited tax shelters or tax avoidance 
     schemes.--
       ``(A) Written request.--Upon receipt by the Secretary of a 
     written request which meets the requirements of subparagraph 
     (B) from the head of the United States Securities and 
     Exchange Commission, an appropriate Federal banking agency as 
     defined under section 1813(q) of title 12, United States 
     Code, or the Public Company Accounting Oversight Board, a 
     return or return information shall be disclosed to such 
     requestor's officers and employees who are personally and 
     directly engaged in an investigation, examination, or 
     proceeding by such requestor to evaluate, determine, 
     penalize, or deter conduct by a financial institution, 
     issuer, or public accounting firm, or associated person, in 
     connection with a potential or actual violation of section 
     6700 (promotion of abusive tax shelters), 6701 (aiding and 
     abetting understatement of tax liability), or activities 
     related to promoting or facilitating inappropriate tax 
     avoidance or tax evasion. Such disclosure shall be solely for 
     use by such officers and employees in such investigation, 
     examination, or proceeding.
       ``(B) Requirements.--A request meets the requirements of 
     this subparagraph if it sets forth--
       ``(i) the nature of the investigation, examination, or 
     proceeding,
       ``(ii) the statutory authority under which such 
     investigation, examination, or proceeding is being conducted,
       ``(iii) the name or names of the financial institution, 
     issuer, or public accounting firm to which such return 
     information relates,
       ``(iv) the taxable period or periods to which such return 
     information relates, and
       ``(v) the specific reason or reasons why such disclosure 
     is, or may be, relevant to such investigation, examination or 
     proceeding.
       ``(C) Financial institution.--For the purposes of this 
     paragraph, the term `financial institution' means a 
     depository institution, foreign bank, insured institution, 
     industrial loan company, broker, dealer, investment company, 
     investment advisor, or other entity subject to regulation or 
     oversight by the United States Securities and Exchange 
     Commission or an appropriate Federal banking agency.''.
       (b) Financial and Accounting Fraud Investigations.--Section 
     6103(i) (relating to disclosure to Federal officers or 
     employees for administration of Federal laws not relating to 
     tax administration) is amended by adding at the end the 
     following new paragraph:
       ``(9) Disclosure of returns and return information for use 
     in financial and accounting fraud investigations.--
       ``(A) Written request.--Upon receipt by the Secretary of a 
     written request which meets the requirements of subparagraph 
     (B) from the head of the United States Securities and 
     Exchange Commission or the Public Company Accounting 
     Oversight Board, a return or return information shall be 
     disclosed to such requestor's officers and employees who are 
     personally and directly engaged in an investigation, 
     examination, or proceeding by such requester to evaluate the 
     accuracy of a financial statement or report or to determine 
     whether to require a restatement, penalize, or deter conduct 
     by an issuer, investment company, or public accounting firm, 
     or associated person, in connection with a potential or 
     actual violation of auditing standards or prohibitions 
     against false or misleading statements or omissions in 
     financial statements or reports. Such disclosure shall be 
     solely for use by such officers and employees in such 
     investigation, examination, or proceeding.
       ``(B) Requirements.--A request meets the requirements of 
     this subparagraph if it sets forth--
       ``(i) the nature of the investigation, examination, or 
     proceeding,
       ``(ii) the statutory authority under which such 
     investigation, examination, or proceeding is being conducted,
       ``(iii) the name or names of the issuer, investment 
     company, or public accounting firm to which such return 
     information relates,
       ``(iv) the taxable period or periods to which such return 
     information relates, and
       ``(v) the specific reason or reasons why such disclosure 
     is, or may be, relevant to such investigation, examination or 
     proceeding.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures and to information and document 
     requests made after the date of the enactment of this Act.

     SEC. 204. DISCLOSURE OF INFORMATION TO CONGRESS.

       (a) Disclosure by Tax Return Preparer.--
       (1) In general.--Subparagraph (B) of section 7216(b)(1) 
     (relating to disclosures) is amended to read as follows:
       ``(B) pursuant to any 1 of the following documents, if 
     clearly identified:
       ``(i) The order of any Federal, State, or local court of 
     record.
       ``(ii) A subpoena issued by a Federal or State grand jury.
       ``(iii) An administrative order, summons, or subpoena which 
     is issued in the performance of its duties by--

       ``(I) any Federal agency, including Congress or any 
     committee or subcommittee thereof, or
       ``(II) any State agency, body, or commission charged under 
     the laws of the State or a political subdivision of the State 
     with the licensing, registration, or regulation of tax return 
     preparers.''.

       (2) Effective date.--The amendment made by this subsection 
     shall apply to disclosures made after the date of the 
     enactment of this Act pursuant to any document in effect on 
     or after such date.
       (b) Disclosure by Secretary.--Paragraph (2) of section 
     6104(a) (relating to inspection of applications for tax 
     exemption or notice of status) is amended to read as follows:
       ``(2) Inspection by congress.--

[[Page 19234]]

       ``(A) In general.--Upon receipt of a written request from a 
     committee or subcommittee of Congress, copies of documents 
     related to a determination by the Secretary to grant, deny, 
     revoke, or restore an organization's exemption from taxation 
     under section 501 shall be provided to such committee or 
     subcommittee, including any application, notice of status, or 
     supporting information provided by such organization to the 
     Internal Revenue Service; any letter, analysis, or other 
     document produced by or for the Internal Revenue Service 
     evaluating, determining, explaining, or relating to the tax 
     exempt status of such organization (other than returns, 
     unless such returns are available to the public under this 
     section or section 6103 or 6110); and any communication 
     between the Internal Revenue Service and any other party 
     relating to the tax exempt status of such organization.
       ``(B) Additional information.--Section 6103(f) shall apply 
     with respect to--
       ``(i) the application for exemption of any organization 
     described in subsection (c) or (d) of section 501 which is 
     exempt from taxation under section 501(a) for any taxable 
     year and any application referred to in subparagraph (B) of 
     subsection (a)(1) of this section, and
       ``(ii) any other papers which are in the possession of the 
     Secretary and which relate to such application,
     as if such papers constituted returns.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures and to information and document 
     requests made after the date of the enactment of this Act.

     SEC. 205. TAX OPINION STANDARDS FOR TAX PRACTITIONERS.

       Section 330(d) of title 31, United States Code, is amended 
     to read as follows:
       ``(d) The Secretary of the Treasury shall impose standards 
     applicable to the rendering of written advice with respect to 
     any listed transaction or any entity, plan, arrangement, or 
     other transaction which has a potential for tax avoidance or 
     evasion. Such standards shall address, but not be limited to, 
     the following issues:
       ``(1) Independence of the practitioner issuing such written 
     advice from persons promoting, marketing, or recommending the 
     subject of the advice.
       ``(2) Collaboration among practitioners, or between a 
     practitioner and other party, which could result in such 
     collaborating parties having a joint financial interest in 
     the subject of the advice.
       ``(3) Avoidance of conflicts of interest which would impair 
     auditor independence.
       ``(4) For written advice issued by a firm, standards for 
     reviewing the advice and ensuring the consensus support of 
     the firm for positions taken.
       ``(5) Reliance on reasonable factual representations by the 
     taxpayer and other parties.
       ``(6) Appropriateness of the fees charged by the 
     practitioner for the written advice.
       ``(7) Preventing practitioners and firms from aiding or 
     abetting the understatement of tax liability by clients.
       ``(8) Banning the promotion of potentially abusive or 
     illegal tax shelters.''.

     SEC. 206. WHISTLEBLOWER REFORMS.

       (a) In General.--Section 7623 (relating to expenses of 
     detection of underpayments and fraud, etc.) is amended--
       (1) by striking ``The Secretary'' and inserting ``(a) in 
     general.--The Secretary'',
       (2) by striking ``and'' at the end of paragraph (1) and 
     inserting ``or'',
       (3) by striking ``(other than interest)'', and
       (4) by adding at the end the following new subsections:
       ``(b) Awards to Whistleblowers.--
       ``(1) In general.--If the Secretary proceeds with any 
     administrative or judicial action described in subsection (a) 
     based on information brought to the Secretary's attention by 
     an individual, such individual shall, subject to paragraph 
     (2), receive as an award at least 15 percent but not more 
     than 30 percent of the collected proceeds (including 
     penalties, interest, additions to tax, and additional 
     amounts) resulting from the action (including any related 
     actions) or from any settlement in response to such action. 
     The determination of the amount of such award by the 
     Whistleblower Office shall depend upon the extent to which 
     the individual substantially contributed to such action, and 
     shall be determined at the sole discretion of the 
     Whistleblower Office.
       ``(2) Award in case of less substantial contribution.--
       ``(A) In general.--In the event the action described in 
     paragraph (1) is one which the Whistleblower Office 
     determines to be based principally on disclosures of specific 
     allegations (other than information provided by the 
     individual described in paragraph (1)) resulting from a 
     judicial or administrative hearing, from a governmental 
     report, hearing, audit, or investigation, or from the news 
     media, the Whistleblower Office may award such sums as it 
     considers appropriate, but in no case more than 10 percent of 
     the collected proceeds (including penalties, interest, 
     additions to tax, and additional amounts) resulting from the 
     action (including any related actions) or from any settlement 
     in response to such action, taking into account the 
     significance of the individual's information and the role of 
     such individual and any legal representative of such 
     individual in contributing to such action.
       ``(B) Nonapplication of paragraph where individual is 
     original source of information.--Subparagraph (A) shall not 
     apply if the information resulting in the initiation of the 
     action described in paragraph (1) was originally provided by 
     the individual described in paragraph (1).
       ``(3) Application of this subsection.--This subsection 
     shall apply with respect to any action--
       ``(A) against any taxpayer, but in the case of any 
     individual, only if such individual's gross income exceeds 
     $200,000 for any taxable year subject to such action, and
       ``(B) if the tax, penalties, interest, additions to tax, 
     and additional amounts in dispute exceed $20,000.
       ``(4) Additional rules.--
       ``(A) No contract necessary.--No contract with the Internal 
     Revenue Service is necessary for any individual to receive an 
     award under this subsection.
       ``(B) Representation.--Any individual described in 
     paragraph (1) or (2) may be represented by counsel.
       ``(C) Award not subject to individual alternative minimum 
     tax.--No award received under this subsection shall be 
     included in gross income for purposes of determining 
     alternative minimum taxable income.
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(B) shall monitor any action taken with respect to such 
     matter,
       ``(C) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(D) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(E) may ask for additional assistance from such 
     individual or any legal representative of such individual, 
     and
       ``(F) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--From the amounts available for 
     expenditure under subsection (a), the Whistleblower Office 
     shall be credited with an amount equal to the awards made 
     under subsection (b). These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(E) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). To the extent the 
     disclosure of any returns or return information to the 
     individual or legal representative is required for the 
     performance of such assistance, such disclosure shall be 
     pursuant to a contract entered into between the Secretary and 
     the recipients of such disclosure subject to section 6103(n).
       ``(B) Funding of assistance.--From the funds made available 
     to the Whistleblower Office under paragraph (2), the 
     Whistleblower Office may reimburse the costs incurred by any 
     legal representative in providing assistance described in 
     subparagraph (A).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to information provided on or after the date of 
     the enactment of this Act.

     SEC. 207. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to the violation of any law or the investigation or inquiry 
     by such government or entity into the potential violation of 
     any law.
       ``(2) Exception for amounts constituting restitution.--
     Paragraph (1) shall not apply to any amount which--
       ``(A) the taxpayer establishes constitutes restitution 
     (including remediation of property) for damage or harm caused 
     by or which may be caused by the violation of any law or the 
     potential violation of any law, and
       ``(B) is identified as restitution in the court order or 
     settlement agreement.
     Identification pursuant to subparagraph (B) alone shall not 
     satisfy the requirement under subparagraph (A). This 
     paragraph shall not apply to any amount paid or incurred as 
     reimbursement to the government or entity for the costs of 
     any investigation or litigation.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any

[[Page 19235]]

     amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendment 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 208. SENSE OF THE SENATE ON TAX ENFORCEMENT PRIORITIES.

       It is the sense of the Senate that additional funds should 
     be appropriated for Internal Revenue Service enforcement 
     efforts and that the Internal Revenue Service should devote 
     proportionately more of its enforcement funds--
       (1) to combat the promotion of abusive tax shelters for 
     corporations and high net worth individuals and the aiding 
     and abetting of tax evasion,
       (2) to stop accounting, law, and financial firms involved 
     in such promotion and aiding and abetting, and
       (3) to combat the use of offshore financial accounts to 
     conceal taxable income.

                TITLE III--REQUIRING ECONOMIC SUBSTANCE

     SEC. 301. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 is amended by redesignating 
     subsection (o) as subsection (p) and by inserting after 
     subsection (n) the following new subsection:
       ``(o) Clarification of Economic Substance Doctrine; Etc.--
       ``(1) General rules.--
       ``(A) In general.--In any case in which a court determines 
     that the economic substance doctrine is relevant for purposes 
     of this title to a transaction (or series of transactions), 
     such transaction (or series of transactions) shall have 
     economic substance only if the requirements of this paragraph 
     are met.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal tax effects) the taxpayer's economic position, 
     and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

     In applying subclause (II), a purpose of achieving a 
     financial accounting benefit shall not be taken into account 
     in determining whether a transaction has a substantial nontax 
     purpose if the origin of such financial accounting benefit is 
     a reduction of income tax.
       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction is substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.
       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying paragraph 
     (1)(B)(ii) to the lessor of tangible property subject to a 
     lease--
       ``(i) the expected net tax benefits with respect to the 
     leased property shall not include the benefits of--

       ``(I) depreciation,
       ``(II) any tax credit, or
       ``(III) any other deduction as provided in guidance by the 
     Secretary, and

       ``(ii) subclause (II) of paragraph (1)(B)(ii) shall be 
     disregarded in determining whether any of such benefits are 
     allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law, and the requirements of 
     this subsection shall be construed as being in addition to 
     any such other rule of law.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection. Such regulations may include 
     exemptions from the application of this subsection.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 302. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662A the following new section:

     ``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       ``(a) Imposition of Penalty.--If a taxpayer has an 
     noneconomic substance transaction understatement for any 
     taxable year, there shall be added to the tax an amount equal 
     to 40 percent of the amount of such understatement.
       ``(b) Reduction of Penalty for Disclosed Transactions.--
     Subsection (a) shall be applied by substituting `20 percent' 
     for `40 percent' with respect to the portion of any 
     noneconomic substance transaction understatement with respect 
     to which the relevant facts affecting the tax treatment of 
     the item are adequately disclosed in the return or a 
     statement attached to the return.
       ``(c) Noneconomic Substance Transaction Understatement.--
     For purposes of this section--
       ``(1) In general.--The term `noneconomic substance 
     transaction understatement' means any amount which would be 
     an understatement under section 6662A(b)(1) if section 6662A 
     were applied by taking into account items attributable to 
     noneconomic substance transactions rather than items to which 
     section 6662A would apply without regard to this paragraph.
       ``(2) Noneconomic substance transaction.--The term 
     `noneconomic substance transaction' means any transaction 
     if--
       ``(A) there is a lack of economic substance (within the 
     meaning of section 7701(o)(1)) for the transaction giving 
     rise to the claimed benefit or the transaction was not 
     respected under section 7701(o)(2), or
       ``(B) the transaction fails to meet the requirements of any 
     similar rule of law.
       ``(d) Rules Applicable to Compromise of Penalty.--
       ``(1) In general.--If the 1st letter of proposed deficiency 
     which allows the taxpayer an opportunity for administrative 
     review in the Internal Revenue Service Office of Appeals has 
     been sent with respect to a penalty to which this section 
     applies, only the Commissioner of Internal Revenue may 
     compromise all or any portion of such penalty.
       ``(2) Applicable rules.--The rules of paragraphs (2) and 
     (3) of section 6707A(d) shall apply for purposes of paragraph 
     (1).
       ``(e) Coordination With Other Penalties.--Except as 
     otherwise provided in this part, the penalty imposed by this 
     section shall be in addition to any other penalty imposed by 
     this title.
       ``(f) Cross References.--


[[Page 19236]]


``(1) For coordination of penalty with understatements under section 
  6662 and other special rules, see section 6662A(e)...................
``(2) For reporting of penalty imposed under this section to the 
  Securities and Exchange Commission, see section 6707A(e).''..........
       (b) Coordination With Other Understatements and 
     Penalties.--
       (1) The second sentence of section 6662(d)(2)(A) is amended 
     by inserting ``and without regard to items with respect to 
     which a penalty is imposed by section 6662B'' before the 
     period at the end.
       (2) Subsection (e) of section 6662A is amended--
       (A) in paragraph (1), by inserting ``and noneconomic 
     substance transaction understatements'' after ``reportable 
     transaction understatements'' both places it appears,
       (B) in paragraph (2)(A), by inserting ``and a noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'',
       (C) in paragraph (2)(B), by inserting ``6662B or'' before 
     ``6663'',
       (D) in paragraph (2)(C)(i), by inserting ``or section 
     6662B'' before the period at the end,
       (E) in paragraph (2)(C)(ii), by inserting ``and section 
     6662B'' after ``This section'',
       (F) in paragraph (3), by inserting ``or noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'', and
       (G) by adding at the end the following new paragraph:
       ``(4) Noneconomic substance transaction understatement.--
     For purposes of this subsection, the term `noneconomic 
     substance transaction understatement' has the meaning given 
     such term by section 6662B(c).''.
       (3) Subsection (e) of section 6707A is amended--
       (A) by striking ``or'' at the end of subparagraph (B), and
       (B) by striking subparagraph (C) and inserting the 
     following new subparagraphs:
       ``(C) is required to pay a penalty under section 6662B with 
     respect to any noneconomic substance transaction, or
       ``(D) is required to pay a penalty under section 6662(h) 
     with respect to any transaction and would (but for section 
     6662A(e)(2)(C)) have been subject to penalty under section 
     6662A at a rate prescribed under section 6662A(c) or under 
     section 6662B,''.
       (c) Clerical Amendment.--The table of sections for part II 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6662A the following new item:

``Sec. 6662B. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 303. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS 
                   ATTRIBUTABLE TO NONECONOMIC SUBSTANCE 
                   TRANSACTIONS.

       (a) In General.--Section 163(m) (relating to interest on 
     unpaid taxes attributable to nondisclosed reportable 
     transactions) is amended--
       (1) by striking ``attributable'' and all that follows and 
     inserting the following: ``attributable to--
       ``(1) the portion of any reportable transaction 
     understatement (as defined in section 6662A(b)) with respect 
     to which the requirement of section 6664(d)(2)(A) is not met, 
     or
       ``(2) any noneconomic substance transaction understatement 
     (as defined in section 6662B(c)).'', and
       (2) by inserting ``and noneconomic substance transactions'' 
     after ``transactions''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act in taxable years ending after such date.

              TITLE IV--DETERRING UNCOOPERATIVE TAX HAVENS

     SEC. 401. DISCLOSING PAYMENTS TO PERSONS IN UNCOOPERATIVE TAX 
                   HAVENS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6038C the 
     following new section:

     ``SEC. 6038D. DETERRING UNCOOPERATIVE TAX HAVENS THROUGH 
                   LISTING AND REPORTING REQUIREMENTS.

       ``(a) In General.--Each United States person who transfers 
     money or other property directly or indirectly to any 
     uncooperative tax haven, to any financial institution 
     licensed by or operating in any uncooperative tax haven, or 
     to any person who is a resident of any uncooperative tax 
     haven shall furnish to the Secretary, at such time and in 
     such manner as the Secretary shall by regulation prescribe, 
     such information with respect to such transfer as the 
     Secretary may require.
       ``(b) Exceptions.--Subsection (a) shall not apply to a 
     transfer by a United States person if the amount of money 
     (and the fair market value of property) transferred is less 
     than $10,000. Related transfers shall be treated as 1 
     transfer for purposes of this subsection.
       ``(c) Uncooperative Tax Haven.--For purposes of this 
     section--
       ``(1) In general.--The term `uncooperative tax haven' means 
     any foreign jurisdiction which is identified on a list 
     maintained by the Secretary under paragraph (2) as being a 
     jurisdiction--
       ``(A) which imposes no or nominal taxation either generally 
     or on specified classes of income, and
       ``(B) has corporate, business, bank, or tax secrecy or 
     confidentiality rules and practices, or has ineffective 
     information exchange practices which, in the judgment of the 
     Secretary, effectively limit or restrict the ability of the 
     United States to obtain information relevant to the 
     enforcement of this title.
       ``(2) Maintenance of list.--Not later than November 1 of 
     each calendar year, the Secretary shall issue a list of 
     foreign jurisdictions which the Secretary determines qualify 
     as uncooperative tax havens under paragraph (1).
       ``(3) Ineffective information exchange practices.--For 
     purposes of paragraph (1), a jurisdiction shall be deemed to 
     have ineffective information exchange practices if the 
     Secretary determines that during any taxable year ending in 
     the 12-month period preceding the issuance of the list under 
     paragraph (2)--
       ``(A) the exchange of information between the United States 
     and such jurisdiction was inadequate to prevent evasion or 
     avoidance of United States income tax by United States 
     persons or to enable the United States effectively to enforce 
     this title, or
       ``(B) such jurisdiction was identified by an 
     intergovernmental group or organization of which the United 
     States is a member as uncooperative with international tax 
     enforcement or information exchange and the United States 
     concurs in the determination.
       ``(d) Penalty for Failure to File Information.--If a United 
     States person fails to furnish the information required by 
     subsection (a) with respect to any transfer within the time 
     prescribed therefor (including extensions), such United 
     States person shall pay (upon notice and demand by the 
     Secretary and in the same manner as tax) an amount equal to 
     20 percent of the amount of such transfer.
       ``(e) Simplified Reporting.--The Secretary may by 
     regulations provide for simplified reporting under this 
     section for United States persons making large volumes of 
     similar payments.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by inserting after the item relating to 
     section 6038C the following new item:

``Sec. 6038D. Deterring uncooperative tax havens through listing and 
              reporting requirements.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date which is 180 days 
     after the date of the enactment of this Act.

     SEC. 402. DETERRING UNCOOPERATIVE TAX HAVENS BY RESTRICTING 
                   ALLOWABLE TAX BENEFITS.

       (a) Limitation on Deferral.--
       (1) In general.--Subsection (a) of section 952 (defining 
     subpart F income) is amended by striking ``and'' at the end 
     of paragraph (4), by striking the period at the end of 
     paragraph (5) and inserting ``, and'', and by inserting after 
     paragraph (5) the following new paragraph:
       ``(6) an amount equal to the applicable fraction (as 
     defined in subsection (e)) of the income of such corporation 
     other than income which--
       ``(A) is attributable to earnings and profits of the 
     foreign corporation included in the gross income of a United 
     States person under section 951 (other than by reason of this 
     paragraph or paragraph (3)(A)(i)), or
       ``(B) is described in subsection (b).''.
       (2) Applicable fraction.--Section 952 is amended by adding 
     at the end the following new subsection:
       ``(e) Identified Tax Haven Income Which Is Subpart F 
     Income.--
       ``(1) In general.--For purposes of subsection (a)(6), the 
     term `applicable fraction' means the fraction--
       ``(A) the numerator of which is the aggregate identified 
     tax haven income for the taxable year, and
       ``(B) the denominator of which is the aggregate income for 
     the taxable year which is from sources outside the United 
     States.
       ``(2) Identified tax haven income.--For purposes of 
     paragraph (1), the term `identified tax haven income' means 
     income for the taxable year which is attributable to a 
     foreign jurisdiction for any period during which such 
     jurisdiction has been identified as an uncooperative tax 
     haven under section 6038D(c).
       ``(3) Regulations.--The Secretary shall prescribe 
     regulations similar to the regulations issued under section 
     999(c) to carry out the purposes of this subsection.''.
       (b) Denial of Foreign Tax Credit.--Section 901 (relating to 
     taxes of foreign countries and of possessions of United 
     States) is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Reduction of Foreign Tax Credit, Etc., for Identified 
     Tax Haven Income.--
       ``(1) In general.--Notwithstanding any other provision of 
     this part--

[[Page 19237]]

       ``(A) no credit shall be allowed under subsection (a) for 
     any income, war profits, or excess profits taxes paid or 
     accrued (or deemed paid under section 902 or 960) to any 
     foreign jurisdiction if such taxes are with respect to income 
     attributable to a period during which such jurisdiction has 
     been identified as an uncooperative tax haven under section 
     6038D(c), and
       ``(B) subsections (a), (b), (c), and (d) of section 904 and 
     sections 902 and 960 shall be applied separately with respect 
     to all income of a taxpayer attributable to periods described 
     in subparagraph (A) with respect to all such jurisdictions.
       ``(2) Taxes allowed as a deduction, etc.--Sections 275 and 
     78 shall not apply to any tax which is not allowable as a 
     credit under subsection (a) by reason of this subsection.
       ``(3) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, including regulations which 
     treat income paid through 1 or more entities as derived from 
     a foreign jurisdiction to which this subsection applies if 
     such income was, without regard to such entities, derived 
     from such jurisdiction.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 403. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of an offshore payment mechanism (including credit, 
     debit, or charge cards) issued by a bank or other entity in a 
     foreign jurisdiction, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has not signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 or 
     voluntarily disclosed its participation in such arrangement 
     by notifying the Internal Revenue Service of such arrangement 
     prior to the issue being raised by the Internal Revenue 
     Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) for any taxpayer if the Secretary or the 
     Secretary's delegate determines that--
       (i) the use of such offshore payment mechanism or financial 
     arrangement was incidental to the transaction,
       (ii) in the case of a trade or business, such use took 
     place in the ordinary course of the trade or business of the 
     taxpayer, and
       (iii) such waiver would serve the public interest.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Definitions and Rules.--For purposes of this section--
       (1) Applicable penalty.--The term ``applicable penalty'' 
     means any penalty, addition to tax, or fine imposed under 
     chapter 68 of the Internal Revenue Code of 1986.
       (2) Fees and expenses.--The Secretary of the Treasury may 
     retain and use an amount not in excess of 25 percent of all 
     additional interest, penalties, additions to tax, and fines 
     collected under this section to be used for enforcement and 
     collection activities of the Internal Revenue Service. The 
     Secretary shall keep adequate records regarding amounts so 
     retained and used. The amount credited as paid by any 
     taxpayer shall be determined without regard to this 
     paragraph.
       (c) Report by Secretary.--The Secretary shall each year 
     conduct a study and report to Congress on the implementation 
     of this section during the preceding year, including 
     statistics on the number of taxpayers affected by such 
     implementation and the amount of interest and applicable 
     penalties asserted, waived, and assessed during such 
     preceding year.
       (d) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 404. TREASURY REGULATIONS ON FOREIGN TAX CREDIT.

       (a) In General.--Section 901 (relating to taxes of foreign 
     countries and of possessions of United States), as amended by 
     section 402, is amended by redesignating subsection (n) as 
     subsection (o) and by inserting after subsection (m) the 
     following new subsection:
       ``(n) Regulations.--The Secretary may prescribe regulations 
     disallowing a credit under subsection (a) for all or a 
     portion of any foreign tax, or allocating a foreign tax among 
     2 or more persons, in cases where the foreign tax is imposed 
     on any person in respect of income of another person or in 
     other cases involving the inappropriate separation of the 
     foreign tax from the related foreign income.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

  Mr. COLEMAN. Mr. President, today I rise to join Senator Levin in 
introducing the Tax Shelter and Tax Haven Reform Act of 2005. This bill 
addresses abusive tax shelters and offshore tax havens which allow tax 
evaders to avoid paying their fair share. These abuses increase the 
amount of taxes for everyone else. By increasing the penalty for these 
shelters, this legislation will do much to ensure that the public trust 
in our tax laws is restored.
  Two years ago, as Chairman of the Permanent Subcommittee on 
Investigations, I held Subcommittee hearings on abusive tax shelters. 
It became clear to the Subcommittee that some tax avoidance schemes are 
clearly abusive. These abusive shelters relied on sham transactions 
with no financial or economic utility other than to manufacture tax 
benefits.
  Abusive tax shelters hurt the American people. For example, a recent 
IRS study estimates the Nation's ``tax gap''--the difference between 
the amount of taxes owed and the amount collected was $353 billion in 
2001. The study also found that over 80 percent of the ``tax gap'' is 
due to taxpayers underreporting their taxes. This means that honest 
taxpayers are forced to pay more to make up for those taxpayers who 
dodge Uncle Sam.
  The use of abusive tax shelters exploded during the high-flying 
1990s, when many firms were awash in cash and were more concerned with 
generating fees than remaining compliant with the code. The lure of 
millions of dollars in fees clearly played a role in the decision on 
the part of tax professionals to drive a Brinks truck through any 
purported tax loophole.
  Abusive tax shelters require accountants and financial advisors who 
develop and structure transactions to take advantage of loopholes in 
the tax code. Lawyers provide cookie cutter tax opinions deeming the 
transactions to be legal. Bankers provide loans with little or no 
credit risk, yet the amount of the loan creates a multi-million dollar 
tax loss.
  This became a game. Reputable professionals were able to earn huge 
profits by providing services that offered a ``veneer of legitimacy'' 
to the transactions. The parties involved were careful to hide the 
transactions from IRS detection by failing to register and failing to 
provide lists of clients who used the transactions to the IRS.
  It was clear to the Subcommittee that the promoters of these tax 
shelters failed to register transactions with the IRS partly because 
the penalties for failing to register were so low compared to the 
expected profits. In other words, the risk-benefit ratio was entirely 
lopsided in the favor of the promoters. This bill will end this 
advantage and will strengthen the enforcement tools that are at Uncle 
Sam's disposal.
  Current law provides for penalties that amount to 50 percent of the 
gains of those who market, plan, implement and sell sham tax shelters 
to individuals and corporations. However, I agree with my esteemed 
colleague, Senator Levin, that even stronger penalties are needed. The 
provision to substantially

[[Page 19238]]

increase penalties to the promoters and aiders and abettors who 
manufacture and implement these sham transactions so that they must 
give back more than just half of their ill-gotten gains is vital to 
restoring the integrity of our tax laws and deterring future tax 
avoidance.
  This is not a victimless crime. It is not the government that loses 
the money. It is working moms and dads who bear the brunt of lost 
revenue so that a handful of lawyers, accountants, investment advisors, 
bankers and their clients can manipulate legitimate business practices 
to make a profit.
  We need to give honest, hard working Americans a better deal--by 
cracking down on those who choose not to pay their fair share of taxes. 
This bill is a step in the right direction.
  Mr. OBAMA. Mr. President, I rise today to speak about the ``Tax 
Shelter and Tax Haven Reform Act of 2005,'' of which I am a cosponsor. 
This bill seeks to improve the fairness of our tax system by deterring 
the use of tax avoidance strategies with no economic justification 
other than to reduce tax liability and shirk responsibility.
  Abusive tax shelters and tax havens cost this country tens of 
billions of dollars each year and may be the largest single source of 
the $300 billion tax gap between what is owed and what is collected by 
the U.S. Treasury. The investigation by my colleagues on the Senate 
Permanent Subcommittee on Investigations found that more than half of 
all federal contractors may have subsidiaries in tax havens and that 
almost half of all foreign profits of U.S. corporations in a recent 
year were in tax havens. My esteemed colleagues also heard testimony 
that between 1-2 million individual taxpayers may be hiding funds in 
offshore tax havens. Many of these tax havens refuse to cooperate with 
U.S. tax enforcement officials.
  This is not a political issue of how low or high taxes ought to be. 
This is a basic issue of fairness and integrity. Corporate and 
individual taxpayers alike must have confidence that those who 
disregard the law will be identified and adequately punished. Those who 
enforce the law need the tools and resources to do so. We cannot 
reasonably expect an American business to subject itself to a 
competitive disadvantage by following the law while watching its 
competitors defy the law without repercussion.
  This bill cracks down on those individuals and businesses that 
establish virtual residences in tax havens abroad while taking unfair 
advantage of the very real advantages of actual residence here in the 
United States.
  This bill clarifies that the sole purpose of a transaction cannot 
legitimately be to evade tax liability.
  This bill increases the penalties for those who profit by 
manipulating and exploiting our tax laws, resulting in higher rates and 
greater complexity for the rest of us.
  My mother taught me that there is no such thing as a free lunch--
someone always has to pay. And when one of us shirks our duty to pay, 
the burden gets shifted to others, in this case to ordinary taxpayers 
and working Americans without access to sophisticated tax preparers or 
corporate loopholes.
  This bill strengthens our ability to stop shifting the tax burden to 
working families. The money saved by this bill, for example, can reduce 
the burden on American children of unnecessary budget deficits being 
financed by rising debt to foreign nations.
  The money saved by this bill can also be used to protect children in 
low income families from unfair tax increases caused by inequities in 
the child tax credit. In fact, this fall, I intend to introduce 
legislation to ensure that the child tax credit is not reduced solely 
because a family's income fails to keep pace with inflation. With less 
than half of the savings generated by this bill, we can shield more 
than four million children from the annual tax increase their families 
face as a result of stagnant wages and inflation under current law.
  All of us should pay our fair share of American taxes. There is no 
excuse for benefiting from the laws and services, institutions and 
economic structure of our nation while evading your responsibility to 
do your part for this country. I believe it is our job to keep the 
system fair, and that's what this bill seeks to do.
  I commend Senator Levin and Senator Coleman for their leadership on 
this important issue. I am proud to be a cosponsor of this bill and 
urge my colleagues to support it.
                                 ______
                                 
      By Mr. ROBERTS (for himself and Mr. Kennedy):
  S. 1570. A bill to promote employment of individuals with severe 
disabilities through Federal Government contracting and procurement 
processes, and for other purposes; to the Committee on Homeland 
Security and Governmental Affairs.
  Mr. ROBERTS. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1570

         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 ``Employer Work Incentive Act 
     for Individuals with Severe Disabilities''.

     SEC. 2. PURPOSE.

       The purpose of this Act is to promote employment 
     opportunities for individuals with severe disabilities, by 
     requiring Federal agencies to offer incentives to Government 
     contractors and subcontractors that employ substantial 
     numbers of individuals with severe disabilities.

     SEC. 3. JOBS INITIATIVE FOR INDIVIDUALS WITH SEVERE 
                   DISABILITIES.

       (a) Preference for Contractors Employing Individuals With 
     Severe Disabilities.--The Office of Federal Procurement 
     Policy Act (41 U.S.C. 403 et seq.) is amended by adding at 
     the end the following new section:

     ``SEC. 42. PREFERENCE FOR CONTRACTORS EMPLOYING INDIVIDUALS 
                   WITH SEVERE DISABILITIES.

       ``(a) Preference.--In entering into a contract, the head of 
     an executive agency shall give a preference in the source 
     selection process to each offeror that submits with its offer 
     for the contract a written pledge that the contractor is an 
     eligible business for purposes of this section.
       ``(b) Uniform Pledge.--The Federal Acquisition Regulation 
     shall set forth the pledge that is to be used in the 
     administration of this section.
       ``(c) Responsibility of the Secretary of Labor.--(1) The 
     Secretary of Labor shall maintain on the Internet web site of 
     the Department of Labor a list of contractors that have 
     submitted the pledge as described in subsection (a).
       ``(2) The head of each executive agency receiving a pledge 
     as described in subsection (a) shall transmit a copy of the 
     pledge to the Secretary of Labor.
       ``(d) Definitions.--In this section:
       ``(1)(A) The term `eligible business' means a nonprofit or 
     for-profit business entity that--
       ``(i) except as provided in subparagraph (B), demonstrates 
     that it has established an integrated employment setting, as 
     defined by the Secretary of Labor;
       ``(ii) employs individuals with severe disabilities in not 
     less than 25 percent of the full-time equivalent positions of 
     the business, on average;
       ``(iii)(I) pays wages to each of the individuals with 
     severe disabilities at not less than the applicable rate 
     described in section 6(a)(1) of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206(a)(1)), regardless of whether the 
     individuals are engaged in supported employment, or training, 
     under a contract with an executive agency or a program that 
     receives Federal funds; and
       ``(II) does not employ any individual with a severe 
     disability pursuant to a special certificate issued under 
     section 14(c) of the Fair Labor Standards Act of 1938 (29 
     U.S.C. 214(c)); and
       ``(iv) makes contributions for at least 50 percent of the 
     total cost of the annual premiums for health insurance 
     coverage for its employees.
       ``(B) In the case of an entity that has a contract with an 
     executive agency in effect on the date of enactment of the 
     Employer Work Incentive Act for Individuals with Severe 
     Disabilities, subparagraph (A)(i) shall not apply until 3 
     years after that date of enactment.
       ``(2)(A) The term `individual with a severe disability' 
     means an individual who is a disabled beneficiary (as defined 
     in section 1148(k)(2) of the Social Security Act (42 U.S.C. 
     1320b-19(k)(2)) or an individual who would be considered to 
     be such a disabled beneficiary but for having income or 
     assets in excess of the income or asset eligibility limits 
     established under title II or XVI of the Social Security Act, 
     respectively (42 U.S.C. 401 et seq., 1381 et seq.).
       ``(B) The term `individuals with severe disabilities' means 
     more than 1 individual with a severe disability.''.

[[Page 19239]]

       (b) Clerical Amendment.--The table of contents in section 
     1(b) of such Act is amended by adding at the end the 
     following new item:

``Sec. 42. Preference for contractors employing individuals with severe 
              disabilities.''.
                                 ______
                                 
      By Mr. CORZINE (for himself and Mr. Lautenberg):
  S. 1571. A bill to amend title 38, United States Code, to establish a 
comprehensive program for testing and treatment of veterans for the 
Hepatitis C virus; to the Committee on Veterans' Affairs.
  Mr. CORZINE. Mr. President, I rise today along with my colleague, 
Senator Lautenberg, to introduce the Veterans Comprehensive Hepatitis C 
Health Care Act. This bill would fundamentally change the way the 
Department of Veterans Affairs is addressing the growing Hepatitis C 
epidemic, and would create a national standard for testing and treating 
veterans with the virus.
  Hepatitis C is a disease of the liver caused by contact with the 
Hepatitis C virus. It is primarily spread by contact with infected 
blood. The CDC estimates that 1.8 percent of the population is infected 
with the Hepatitis C virus, and that number is much higher among 
veterans. Vietnam-era veterans are considered to be at greater risk 
because many were exposed to Hepatitis C-infected blood as a result of 
combat-related surgical care during the Vietnam War. In fact, data from 
the Veterans Administration suggests that as many as 18 percent of all 
veterans and 64 percent of Vietnam veterans are infected with the 
Hepatitis C Virus (HCV). Veterans living in the New York-New Jersey 
metropolitan area have the highest rate of Hepatitis C in the Nation. 
For many of those infected, Hepatitis C leads to liver failure, 
transplants, liver cancer, and death.
  And yet, most veterans who have Hepatitis C don't even know it--and 
often do not get treatment until it's too late. Despite recent advances 
in treating Hepatitis C, the VA still lacks a comprehensive, 
consistent, uniform approach to testing and treating veterans for the 
virus. Only a fraction of the eight million veterans enrolled 
nationally in the VA Health Care System have been tested to date. Part 
of the problem stems from a lack of qualified, full-time medical 
personnel to administer and analyze the tests. Most of the 172 VA 
hospitals in this country have only one doctor, working a half day a 
week, to conduct and analyze all the tests. At this rate, it will take 
years to test the entire enrolled population--years that many of these 
veterans may not have.
  To address this growing problem, I am again introducing the Veterans 
Comprehensive Hepatitis C Health Care Act. This legislation will 
improve access to Hepatitis C testing and treatment for all veterans, 
ensure that the VA spends all allocated Hepatitis C funds on testing 
and treatment, and sets new, national policies for Hepatitis C care. 
Congressman Rodney Frelinghuysen from New Jersey has introduced 
companion legislation in the House of Representatives.
  The bill would improve testing and treatment for veterans by 
requiring annual screening tests for Vietnam-era veterans enrolled in 
the VA health system, and providing annual tests, upon request, to 
other veterans enrolled in the system. Further, it would require the VA 
to treat any enrolled veteran who tests positive for the Hepatitis C 
virus, regardless of service-connected disability status or priority 
group categorization. The VA would be required to provide at least one 
dedicated health care professional--a doctor and a nurse--at each VA 
Hospital for testing and treatment of this disease.
  This bill would also increase the amount of money dedicated to 
Hepatitis C testing and treatment, and would make sure these funds are 
spent where they are needed most. Beginning in FY06, Hepatitis C 
funding would be shifted to the Specific Purpose account under the 
Veterans Health Administration, and would be dedicated solely for the 
purpose of paying for the costs associated with treating veterans with 
the Hepatitis C virus. The bill would allocate these funds to the 22 
Veterans Integrated Service Networks (VISN) based on each VISN's 
Hepatitis C incidence rate, or the number of veterans infected with the 
virus.
  In addition, this bill will end the confusing patchwork of policies 
governing the care of veterans with Hepatitis C throughout the nation. 
This legislation directs the VA to develop and implement a 
standardized, national Hepatitis C policy for its testing protocol, 
treatment options and education and notification efforts. The bill 
further directs the VA to develop an outreach program to notify 
veterans who have not been tested for the Hepatitis C virus of the need 
for such testing and the availability of such testing through the VA. 
And finally, this legislation would establish Hepatitis C Centers of 
Excellence in geographic areas with high incidence of Hepatitis C 
infection.
  The VA currently lacks a comprehensive national strategy for 
combating this deadly disease. The Veterans Comprehensive Hepatitis C 
Health Care Act will ensure that veterans will finally be provided with 
the access to testing and treatment that they have more than earned and 
deserve. And, the Federal Government will actually save money in the 
long run by testing and treating this infection early. The alternative 
is much more costly treatment of end-stage liver disease and the 
associated complications, or other disorders.
  The VA has known about the problem of Hepatitis C among veterans 
since 1992, but they have not acted. We must address this critical 
issue for the brave men and women who have placed their lives in danger 
to protect the United States. I urge my colleagues to join me in 
supporting this crucial 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. 1571

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans Comprehensive 
     Hepatitis C Health Care Act''.

     SEC. 2. COMPREHENSIVE HEPATITIS C HEALTH CARE TESTING AND 
                   TREATMENT PROGRAM FOR VETERANS.

       (a) In General.--Chapter 17 of title 38, United States 
     Code, is amended by inserting after section 1720E the 
     following new section:

     ``Sec. 1720F. Hepatitis C testing and treatment

       ``(a) Initial Testing.--(1) During the 1-year period 
     beginning on the date of the enactment of the Veterans 
     Comprehensive Hepatitis C Health Care Act, the Secretary 
     shall provide a blood test for the Hepatitis C virus to--
       ``(A) each veteran who--
       ``(i)(I) served in the active military, naval, or air 
     service during the Vietnam era; or
       ``(II) is considered to be `at risk,';
       ``(ii) is enrolled to receive care under section 1710 of 
     this title; and
       ``(iii)(I) requests the test; or
       ``(II) is otherwise receiving a physical examination or any 
     care or treatment from the Secretary; and
       ``(B) any other veteran who requests the test.
       ``(2) After the end of the period referred to in paragraph 
     (1), the Secretary shall provide a blood test for the 
     Hepatitis C virus to any veteran who requests the test.
       ``(b) Followup Testing and Treatment.--In the case of any 
     veteran who tests positive for the Hepatitis C virus, the 
     Secretary shall provide--
       ``(1) such followup tests as are considered medically 
     appropriate; and
       ``(2) appropriate treatment for that veteran in accordance 
     with the national protocol for the treatment of Hepatitis C.
       ``(c) Status of Care.--(1) Treatment shall be provided 
     under subsection (b) without regard to whether the Hepatitis 
     C virus is determined to be service-connected and without 
     regard to priority group categorization of the veteran. No 
     copayment may be charged for treatment under subsection (b), 
     and no third-party reimbursement may be sought or accepted, 
     under section 1729 of this title or under any other provision 
     of law, for testing or treatment under subsection (a) or (b).
       ``(2) Paragraph (1) shall cease to be in effect upon the 
     effective date of a determination by the Secretary or by 
     Congress that the occurrence of the Hepatitis C virus in 
     specified veterans shall be presumed to be service-connected.
       ``(d) Staffing.--(1) The Secretary shall require that each 
     Department medical center employ at least 1 full-time 
     gastroenterologist, hepatologist, or other qualified 
     physician to provide tests and treatment for the Hepatitis C 
     virus under this section.

[[Page 19240]]

       ``(2) The Secretary shall, to the extent practicable, 
     ensure that each Department medical center has at least 1 
     staff member assigned to work, in coordination with Hepatitis 
     C medical personnel, to coordinate treatment options for 
     Hepatitis C patients and provide information and counseling 
     for those patients and their families. Such a staff member 
     should preferably be trained in psychology or psychiatry or 
     be a social worker.
       ``(3) In order to improve treatment provided to veterans 
     with the Hepatitis C virus, the Secretary shall provide 
     increased training options to Department health care 
     personnel.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 1720E the following new item:

``1720F. Hepatitis C testing and treatment.''.

     SEC. 3. FUNDING FOR HEPATITIS C PROGRAMS OF THE DEPARTMENT OF 
                   VETERANS AFFAIRS.

       (a) Program Account.--Beginning with fiscal year 2006, 
     amounts appropriated for the Department of Veterans Affairs 
     for Hepatitis C detection and treatment shall be provided, 
     within the ``Medical Care'' account, through the ``Specific 
     Purpose'' subaccount, rather than the ``VERA'' subaccount.
       (b) Allocation of Funds to VISNs.--In allocating funds 
     appropriated for the Department of Veterans Affairs for the 
     ``Medical Care'' account to the Veterans Integrated Service 
     Networks, the Secretary of Veterans Affairs shall allocate 
     funds for detection and treatment of the Hepatitis C virus 
     based upon incidence rates of that virus among veterans 
     (rather than based upon the overall population of veterans) 
     in each such network.
       (c) Limitation on Use of Funds.--Amounts appropriated for 
     the Department of Veterans Affairs for Hepatitis C detection 
     and treatment through the ``Specific Purpose'' subaccount may 
     not be used for any other purpose.

     SEC. 4. NATIONAL POLICY.

       (a) Standardized Nationwide Policy.--The Secretary of 
     Veterans Affairs shall develop and implement a standardized 
     policy to be applied throughout the Department of Veterans 
     Affairs health care system with respect to the Hepatitis C 
     virus. The policy shall include the testing protocol for the 
     Hepatitis C virus, treatment options, education and 
     notification efforts, and establishment of a specific 
     Hepatitis C diagnosis code for measurement and treatment 
     purposes.
       (b) Outreach.--The Secretary shall, on an annual basis, 
     take appropriate actions to notify veterans who have not been 
     tested for the Hepatitis C virus of the need for such testing 
     and the availability of such testing from the Department of 
     Veterans Affairs.

     SEC. 5. HEPATITIS C CENTERS OF EXCELLENCE.

       (a) Establishment.--The Secretary of Veterans Affairs shall 
     establish at least 1, and not more than 3, additional 
     Hepatitis C centers of excellence or additional sites at 
     which activities of Hepatitis C centers of excellence are 
     carried out. Each such additional center or site shall be 
     established at a Department of Veterans Affairs medical 
     center in 1 of the 5 geographic service areas (known as a 
     Veterans Integrated Service Network) with the highest case 
     rate of Hepatitis C in fiscal year 1999.
       (b) Funding.--Funding for the centers or sites established 
     under subsection (a) shall be provided from amounts available 
     to the Central Office of the Department of Veterans Affairs 
     and shall be in addition to amounts allocated for Hepatitis C 
     pursuant to section 3.
                                 ______
                                 
      By Mr. JOHNSON (for himself and Mr. Bingaman):
  S. 1572. A bill to amend title XIX of the Social Security Act to 
clarify the application of the 100 percent Federal medical assistance 
percentage under the Medicaid program for services provided by the 
Indian Health Service or an Indian tribe or tribal organization 
directly or through referral, contract, or other arrangement; to the 
Committee on Finance.
  Mr. JOHNSON. Mr. President, today I am introducing legislation that 
will make a necessary clarification to current law regarding the 
application of the federal medical assistance percentage or FMAP. I am 
joined by Senator Bingaman in introducing this bill.
  The Indian Health Care Improvement Act, IHCIA, provides for 100 
percent Federal medical assistance percentage, FMAP, applicable to 
Medicaid services ``received through an Indian Health Service 
facility.'' This definition has created some issues for state Medicaid 
programs when applying for the full FMAP rate for services provided to 
Native Americans that are referred by an Indian Health Service facility 
to a non-IRS facility.
  North Dakota and South Dakota have been in the courts with the 
Centers for Medicare and Medicaid Services or CMS over this issue. 
Since last year when CMS determined that the 100 percent FMAP was not 
allowable for referred services, North Dakota and South Dakota appealed 
and prevailed in a lawsuit at the district court level. The Federal 
appeals court has now reversed the district court's decision and 
affirmed that those states must repay CMS for the excess payments. 
While the court sided in favor of CMS, the decision states that there 
is a lack of clarity in the statute pertaining to how referred patients 
are covered through the Federal match.
  CMS disallowed $4 million in payments that South Dakota's Department 
of Social Services had billed Medicaid through the 100 percent FMAP for 
Indian patients seen in non-IHS facilities through referrals. At issue 
is a lack of specificity regarding how far ``received through'' should 
extend. The most recent court decision even states ``the statutory 
language is susceptible to multiple interpretations.''
  The legislation I am introducing today will clarify the statute and 
make it completely clear that any services provided under a state 
Medicaid plan which are referred by any Indian Health Service facility, 
whether operated by the IHS or by and Indian tribe or tribal 
organization are to be covered by the 100 percent FMAP amount. Any 
previous disallowance of a claim or claims by CMS will be reviewed by 
the Department of Health and Human Services within 90 days of enactment 
of this legislation and payments adjusted accordingly if the claim 
meets the standards set forth in this bill.
  The Senate Indian Affairs Committee, of which I am a member, will be 
considering the IHCIA this fall. It is my hope that this legislation 
will be considered within the broader context of the debate on IHCIA. 
Clearly the Federal government has an obligation to live up to the 
treaties and responsibilities to our tribes and all Native Americans. I 
see this legislation as an extension of the obligation.
                                 ______
                                 
      By Ms. CANTWELL (for herself, Mr. Bingaman, Mr. Rockefeller, Mrs. 
        Lincoln, Mrs. Murray, and Mr. Corzine):
  S. 1574. A bill to amend title XVIII of the Social Security Act to 
provide for a minimum update for physicians' services for 2006 and 
2007; to the Committee on Finance.
  Ms. CANTWELL. Mr. President, I am proud to rise today with my 
colleagues Senators Bingaman, Rockefeller, Lincoln, Murray and Corzine 
to introduce the ``Affordable Access to Medicare Providers Act.''
  Securing access to affordable healthcare, especially for our Nation's 
seniors, is critical and it remains to be one of my top priorities. 
Access to healthcare is impacted by two key factors: we must have 
enough well qualified healthcare providers that are willing and able to 
accept Medicare patients, and the beneficiaries must be able to afford 
the premiums required to utilize their Medicare benefits. This bill 
addresses both of these issues--it will provide some stability in 
physician Medicare payment rates so that physicians can continue to 
offer high quality healthcare services while ensuring that the Medicare 
beneficiaries are not saddled with the cost and even higher premiums 
for physicians services.
  Medicare was written to cover the most basic health care for seniors. 
When the original bill passed in 1965, the legislation's conference 
report explicitly stated that the intent of the program is to provide 
adequate ``medical aid . . . for needy people, and should ``make the 
best of modem medicine more readily available to the aged.''
  While the Medicare Modernization Act provided some improvements such 
as: It also had some unfortunate consequences on the Medicare 
beneficiaries in Washington State. Medicare payments per beneficiary 
will be further exacerbated and continue to penalize Washington state 
for our efficient healthcare system. Fifty-seven percent of Washington 
state physicians are limiting or dropping Medicare patients from their 
practices. Washington falling to 45th in the Nation on reimbursements 
will not help the situation.

[[Page 19241]]

  A survey conducted by the Medicare Payment Advisory Council, MedPAC, 
found that 22 percent of patients already have some problems finding a 
primary care physician and 27 percent report delays getting an 
appointment. Physicians are the foundation of our Nation's health care 
system. Continual cuts, or even the threat of repeated cuts, put 
Medicare patient access to physicians' services at risk. They also 
threaten to destabilize the Medicare program and create a ripple effect 
across other programs. Indeed, Medicare cuts jeopardize access to 
medical care for millions of our active duty military family members 
and military retirees because their TRICARE insurance ties its payment 
rates to Medicare.
  Now we are told by the Medicare board of Trustees that if Congress 
does not act by the end of the year, the Medicare physician payment 
formula will likely produce a 4.3 percent decrease next year with 
similar reductions to follow in the years to come. The Medicare Board 
of Trustees also estimates that the cost of providing medical care will 
increase by an estimated 15 percent over the next six years, while 
current reimbursement levels are scheduled to drop by an estimated 26 
percent over the same time period.
  After adjusting for inflation, Medicare payments to physicians in 
2013 will be less than half of what they were in 1991. That declining 
reimbursement rate would likely mean a growing percentage of family 
physicians would decline to see new Medicare patients and, as a result, 
access to care would suffer.
  Washington stands to lose $39 million in 2006 and 1.9 billion from 
2006-2014 if these cuts go through. For physicians in Washington, the 
cuts over this period will average $13,000 per year for each physician 
in the State.
  The American Medical Association conducted a survey of physicians in 
February and March 2005 concerning significant Medicare pay cuts from 
2006 through 2013 (as forecast in the 2004 Medicare Trustees report). 
Results from the survey indicate that if the projected cuts in Medicare 
physician payment rates begin in 2006: more than a third of physicians 
(38 percent) plan to decrease the number of new Medicare patients they 
accept; more than half of physicians (54 percent) plan to defer the 
purchase of information technology, which is necessary to make value-
based purchasing work; a majority of physicians (53 percent) will be 
less likely to participate in a Medicare Advantage plan; about a 
quarter of physicians plan to close satellite offices (24 percent) and/
or discontinue rural outreach services (29 percent) if payments are cut 
in 2006. If the pay cuts continue through 2013, close to half of 
physicians plan to close satellite offices (42 percent) and/or 
discontinue rural outreach (44 percent); and one-third of physicians 
(34 percent) plan to discontinue nursing home visits if payments are 
cut in 2006. By the time the cuts end, half (50 percent) of physicians 
will have discontinued nursing home visits.
  Physicians can simply not absorb cuts these cuts and still deliver 
high quality care. We must ensure our doctors have the resources they 
need to ensure that our seniors have access to their physicians.
  There have been efforts made to address the physician payment issue 
however; they have not addressed the impact on Medicare beneficiaries 
and their premiums. I'm concerned some of the proposals would result in 
an additional burden being placed on the Medicare beneficiary by way of 
a $24 billion increase in part B premiums in 2006 and a $60 billion 
increase in 2007.
  This happens because by law, the monthly Part B premium is set at 25 
percent of the part B Trust Fund costs. Administrative or legal changes 
to increase physician payment rates that don't include a hold-harmless 
clause, increase Medicare part B expenditures and ultimately, the Part 
B premiums paid by beneficiaries.
  This is not a viable solution either as the beneficiaries are already 
being hit with premium increases and additional cost sharing due to 
implementation of the prescription drug benefit. For this reason, along 
with my colleagues, I have chosen to introduce legislation that 
provides the update for physician reimbursement rates but also holds 
the part B premiums harmless.
  I look forward to working my colleagues to pass this legislation to 
ensure that access to care for our seniors is preserved and enhanced.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1574

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Affordable Access to 
     Medicare Providers Act of 2005''.

     SEC. 2. MINIMUM UPDATE FOR PHYSICIANS' SERVICES FOR 2006 AND 
                   2007.

       (a) Minimum Update.--
       (1) In general.--Section 1848(d) of the Social Security Act 
     (42 U.S.C. 1395w-4(d)) is amended by adding at the end the 
     following new paragraphs:
       ``(6) Update for 2006.--The update to the single conversion 
     factor established in paragraph (1)(C) for 2006 shall not be 
     less than 2.7 percent.
       ``(7) Update for 2007.--
       ``(A) In general.--The update to the single conversion 
     factor established in paragraph (1)(C) for 2007 shall not be 
     less than the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the value of the input price index (as provided 
     under subparagraph (B)(ii)) for 2007 (divided by 100); and
       ``(ii) 1 minus the Secretary's estimate of the productivity 
     adjustment factor under subparagraph (C) for 2007.
       ``(B) Input price index.--
       ``(i) Establishment.--Taking into account the mix of goods 
     and services included in computing the medicare economic 
     index (referred to in the fourth sentence of section 
     1842(b)(3)), the Secretary shall establish an index that 
     reflects the weighted-average input prices for physicians' 
     services for 2006. Such index shall only account for input 
     prices and not changes in costs that may result from other 
     factors (such as productivity).
       ``(ii) Annual estimate of change in index.--The Secretary 
     shall estimate, before the beginning of 2007, the change in 
     the value of the input price index under clause (i) from 2006 
     to 2007.
       ``(C) Productivity adjustment factor.--The Secretary shall 
     estimate, and cause to be published in the Federal Register 
     not later than November 1, 2006, a productivity adjustment 
     factor for 2007 that reflects the Secretary's estimate of 
     growth in multifactor productivity in the national economy, 
     taking into account growth in productivity attributable to 
     both labor and nonlabor factors. Such adjustment may be based 
     on a multi-year moving average of productivity (based on data 
     published by the Bureau of Labor Statistics).''.
       (2) Conforming amendment.--Section 1848(d)(4)(B) of the 
     Social Security Act (42 U.S.C. 1395w-4(d)(4)(B)) is amended, 
     in the matter preceding clause (i), by striking ``and 
     paragraph (5)'' and inserting ``paragraphs (5), (6), and 
     (7)''.
       (b) Exclusion of Costs From Determination of Part B Monthly 
     Premium.--Section 1839(g) (42 U.S.C. 1395r(g)) is amended--
       (1) in paragraph (1), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(3) the application of the amendments made by section 
     2(a) of the Affordable Access to Medicare Providers Act of 
     2005 (relating to a minimum update for physicians' services 
     in 2006 and 2007).''.
                                 ______
                                 
      Mr. BINGAMAN (for himself, Mr. Cornyn, Ms. Mikulski, Ms. Collins, 
        Mr. Jeffords, Mrs. Murray, Mr. Reed, Mr. Nelson of Nebraska, 
        Ms. Cantwell, Mr. Durbin, Mr. Corzine, Ms. Landrieu, Mr. Kerry, 
        Mr. Lautenberg, and Mr. Inouye):
  S. 1575. A bill to amend the Public Health Service Act to authorize a 
demonstration program to increase the number of doctorally-prepared 
nurse faculty; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. BINGAMAN. Mr. President, today I introduce legislation that will 
help address the critical nurse faculty shortage facing our Nation 
today. The Bureau of Labor statistics estimates that 1,000,000 new and 
replacement nurses will be needed by 2012. With a nurse faculty 
workforce that averages 53.5 years of age, we cannot and must not wait 
any longer to address nurse faculty shortages. Quite simply, we

[[Page 19242]]

need to educate more doctoral level faculty, or we, as a Nation, will 
not have enough trained nurses to meet the needs of our aging society.
  In a 2002 report, the Commission on Higher Education and the 
University of New Mexico Health Sciences Center assembled nursing 
educators, healthcare providers, business organizations, professional 
associations, legislators, and New Mexico state agencies to develop a 
statewide strategic framework for addressing New Mexico's nursing 
shortage. The initiative revealed that 72 percent of hospitals have 
curtailed services, 38 percent of home care agencies have refused 
referrals, 15 percent of long term care facilities have refused 
admissions, and public health offices have decreased public health 
services. The number one priority listed in the statewide initiative 
was to double the number of licensed nursing graduates in the State. 
And yet, this one simple priority is not so simple. With a doctoral 
nurse faculty of 53.4 years of age, on average, and 46 vacant nurse 
faculty positions, in New Mexico, the necessary expansion of programs 
is not possible. New Mexico is not alone in facing nurse and nurse 
faculty shortages. The nationwide nursing shortage is expected to more 
than triple, because the average age of the workforce is near 
retirement, the population is aging and has increasing healthcare 
needs, and the shortage is one that affects the entire nation.
  There is a well-known saying, ``a problem clearly stated is a problem 
half solved.'' In 2004-2005, over 30,000 qualified nursing school 
applicants were not accepted into nursing baccalaureate programs. 
Estimates from the National League for Nursing indicate that over 
123,000 qualified applications could not be accommodated in registered 
nurse educational programs in 2004. The primary reason students are not 
admitted is lack of trained faculty, funds, and program resources. The 
real nursing workforce problem that we need to address at the current 
time is lack of an adequate number of qualified nurse faculty members.
  The Nurse Faculty Education Act will amend the Nurse Reinvestment 
Act, P.L. 107-205, to help alleviate the faculty shortage by providing 
funds to help nursing schools increase enrollment and graduation from 
nursing doctoral programs. The act will increase partnering 
opportunities, enhance cooperative education, help support marketing 
outreach, and strengthen mentoring programs. The bill will increase the 
number of nurses who complete nursing doctoral programs and seek 
employment as faculty members and nursing leaders in academic 
institutions. By addressing the faculty shortage, we are addressing the 
nursing shortage.
  The provisions of the Nurse Faculty Education Act are vital to 
overcoming nursing workforce challenges. By addressing nurse faculty 
shortages, we will enhance both access to care and the quality of care. 
Our families and our Nation will be well-served by integration of the 
Nurse Faculty Education Act into the Nurse Reinvestment Act.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed the Record at this point.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1575

       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 ``Nurse Faculty Education Act 
     of 2005''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) The Nurse Reinvestment Act (Public Law 107-205) has 
     helped to support students preparing to be nurse educators. 
     Yet, nursing schools nationwide are forced to deny admission 
     to individuals due to lack of qualified nurse faculty.
       (2) According to the February 2004 Monthly Labor Review of 
     the Bureau of Labor Statistics, more than 1,000,000 new and 
     replacement nurses will be needed by 2012.
       (3) According to the American Association of Colleges of 
     Nursing, in the 2004-2005 academic year, 29,425 individuals, 
     or 35 percent of the qualified applicants were not accepted 
     into nursing baccalaureate programs. 2,748 potential nursing 
     master's students and over 200 nurses qualified for admission 
     to doctoral programs were not accepted. Estimates from the 
     National League of Nursing indicate that over 123,000 
     qualified applications could not be accommodated in associate 
     degree, diploma, and baccalaureate registered nurse 
     educational programs in 2004.
       (4) Seventy-six percent of schools report insufficient 
     faculty as the primary reason for not accepting qualified 
     applicants. The primary reasons for lack of faculty are lack 
     of funds to hire new faculty, inability to identify, recruit 
     and hire faculty in the current competitive job market, and 
     lack of nursing faculty available in different geographic 
     areas.
       (5) Despite the fact that 75 percent of graduates of 
     doctoral nursing program enter education roles (versus about 
     5 percent of graduates of nursing master's programs), the 93 
     doctoral programs nationwide produce only 400 graduates. This 
     annual graduation rate is insufficient to meet current needs 
     for nurse faculty. In keeping with other professional 
     academic disciplines, nurse faculty at colleges and 
     universities are typically doctorally-prepared.
       (6) With the average age of nurse faculty at retirement at 
     62.5 years of age and the average age of doctorally-prepared 
     faculty currently at 53.5 years, the health care system faces 
     unprecedented workforce and health access challenges with 
     current and future shortages of deans, nurse educators, and 
     nurses.

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

       Part D of title VIII of the Public Health Service Act (42 
     U.S.C. 296p et seq.) is amended by adding at the end the 
     following:

     ``SEC. 832. NURSE FACULTY EDUCATION.

       ``(a) Establishment.--The Secretary, acting through the 
     Health Resources and Services Administration, shall establish 
     a Nurse Faculty Education Program to ensure an adequate 
     supply of nurse faculty through the awarding of grants to 
     eligible entities to--
       ``(1) provide support for the hiring of new faculty, the 
     retaining of existing faculty, and the purchase of 
     educational resources;
       ``(2) provide for increasing enrollment and graduation 
     rates for students from doctoral programs; and
       ``(3) assist graduates from the entity in serving as nurse 
     faculty in schools of nursing;
       ``(b) Eligibility.--To be eligible to receive a grant under 
     subsection (a), an entity shall--
       ``(1) be a school of nursing that offers a doctoral degree 
     in nursing in a State or territory;
       ``(2) submit to the Secretary an application at such time, 
     in such manner, and containing such information as the 
     Secretary may require;
       ``(3) develop and implement a plan in accordance with 
     subsection (c);
       ``(4) agree to submit an annual report to the Secretary 
     that includes updated information on the doctoral program 
     involved, including information with respect to--
       ``(A) student enrollment;
       ``(B) student retention;
       ``(C) graduation rates;
       ``(D) the number of graduates employed part-time or full-
     time in a nursing faculty position; and
       ``(E) retention in nursing faculty positions within 1 year 
     and 2 years of employment;
       ``(5) agree to permit the Secretary to make on-site 
     inspections, and to comply with the requests of the Secretary 
     for information, to determine the extent to which the school 
     is complying with the requirements of this section. and
       ``(6) meet such other requirements as determined 
     appropriate by the Secretary.
       ``(c) Use of Funds.--Not later than 1 year after the 
     receipt of a grant under this section, an entity shall 
     develop and implement a plan for using amounts received under 
     this grant in a manner that establishes not less than 2 of 
     the following:
       ``(1) Partnering opportunities with practice and academic 
     institutions to facilitate doctoral education and research 
     experiences that are mutually beneficial.
       ``(2) Partnering opportunities with educational 
     institutions to facilitate the hiring of graduates from the 
     entity into nurse faculty, prior to, and upon completion of 
     the program.
       ``(3) Partnering opportunities with nursing schools to 
     place students into internship programs which provide hands-
     on opportunity to learn about the nurse faculty role.
       ``(4) Cooperative education programs among schools of 
     nursing to share use of technological resources and distance 
     learning technologies that serve rural students and 
     underserved areas.
       ``(5) Opportunities for minority and diverse student 
     populations (including aging nurses in clinical roles) 
     interested in pursuing doctoral education.
       ``(6) Pre-entry preparation opportunities including 
     programs that assist returning students in standardized test 
     preparation, use of information technology, and the 
     statistical tools necessary for program enrollment.
       ``(7) A nurse faculty mentoring program.
       ``(8) A Registered Nurse baccalaureate to Ph. D. program to 
     expedite the completion of a doctoral degree and entry to 
     nurse faculty role.

[[Page 19243]]

       ``(9) Career path opportunities for 2nd degree students to 
     become nurse faculty.
       ``(10) Marketing outreach activities to attract students 
     committed to becoming nurse faculty.
       ``(d) Priority.--In awarding grants under this section, the 
     Secretary shall give priority to entities from States and 
     territories that have a lower number of employed nurses per 
     100,000 population.
       ``(e) Number and Amount of Grants.--Grants under this 
     section shall be awarded as follows:
       ``(1) In fiscal year 2006, the Secretary shall award 10 
     grants of $100,000 each.
       ``(2) In fiscal year 2007, the Secretary shall award an 
     additional 10 grants of $100,000 each and provide continued 
     funding for the existing grantees under paragraph (1) in the 
     amount of $100,000 each.
       ``(3) In fiscal year 2008, the Secretary shall award an 
     additional 10 grants of $100,000 each and provide continued 
     funding for the existing grantees under paragraphs (1) and 
     (2) in the amount of $100,000 each.
       ``(4) In fiscal year 2009, the Secretary shall provide 
     continued funding for each of the existing grantees under 
     paragraphs (1) through (3) in the amount of $100,000 each.
       ``(5) In fiscal year 2010, the Secretary shall provide 
     continued funding for each of the existing grantees under 
     paragraphs (1) through (3) in the amount of $100,000 each.
       ``(f) Limitations.--
       ``(1) Payment.--Payments to an entity under a grant under 
     this section shall be for a period of not to exceed 5 years.
       ``(2) Improper use of funds.--An entity that fails to use 
     amounts received under a grant under this section as provided 
     for in subsection (c) shall, at the discretion of the 
     Secretary, be required to remit to the Federal Government not 
     less than 80 percent of the amounts received under the grant.
       ``(g) Reports.--
       ``(1) Evaluation.--The Secretary shall conduct an 
     evaluation of the results of the activities carried out under 
     grants under this section.
       ``(2) Reports.--Not later than 3 years after the date of 
     the enactment of this section, the Secretary shall submit to 
     Congress an interim report on the results of the evaluation 
     conducted under paragraph (1). Not later than 6 months after 
     the end of the program under this section, the Secretary 
     shall submit to Congress a final report on the results of 
     such evaluation.
       ``(h) Study.--
       ``(1) In general.--Not later than 3 years after the date of 
     the enactment of this section, the Comptroller General of the 
     United States shall conduct a study and submit a report to 
     Congress concerning activities to increase participation in 
     the nurse educator program under the section.
       ``(2) Contents.--The report under paragraph (1) shall 
     include the following:
       ``(A) An examination of the capacity of nursing schools to 
     meet workforce needs on a nationwide basis.
       ``(B) An analysis and discussion of sustainability options 
     for continuing programs beyond the initial funding period.
       ``(C) An examination and understanding of the doctoral 
     degree programs that are successful in placing graduates as 
     faculty in schools of nursing.
       ``(D) An analysis of program design under this section and 
     the impact of such design on nurse faculty retention and 
     workforce shortages.
       ``(E) An analysis of compensation disparities between 
     nursing clinical practitioners and nurse faculty and between 
     higher education nurse faculty and higher education faculty 
     overall.
       ``(F) Recommendations to enhance faculty retention and the 
     nursing workforce.
       ``(i) Authorization of Appropriations.--
       ``(1) In general.--For the costs of carrying out this 
     section (except the costs described in paragraph (2), there 
     are authorized to be appropriated $1,000,000 for fiscal year 
     2006, $2,000,000 for fiscal year 2007, and $3,000,000 for 
     each of fiscal years 2008 through 2010.
       ``(2) Administrative costs.--For the costs of administering 
     this section, including the costs of evaluating the results 
     of grants and submitting reports to the Congress, there are 
     authorized to be appropriated such sums as may be necessary 
     for each of fiscal years 2006 through 2010.''.
                                 ______
                                 
      By Mr. BURNS (for himself, Mr. Dorgan, Mr. Johnson, Mr. Dayton, 
        Mr. Baucus, and Mr. Conrad):
  S. 1579. A bill to amend the Federal Insecticide, Fungicide, and 
Rodentcide Act to permit the distribution and sale of certain 
pesticides that are registered in both the United States and another 
country; to the Committee on Agriculture, Nutrition, and Forestry.
  Mr. BURNS. Mr. President, today I am introducing, along with my 
colleague Senator Dorgan, a bill that addresses a persistent inequity 
in the agriculture industry.
  Since the passage of the North American Free Trade Agreement--in 
fact, even before then--Montana farmers have battled against false 
barriers to trade that harm their ability to compete in a global 
market. While most inputs to production agriculture--fertilizer, seed, 
equipment--can move easily across the U.S.-Canadian border, pesticides 
remain segmented. The pesticide industry has a vested interest in 
preserving these borders, because the barriers allow for price 
distortions that harm producers on both sides of the border.
  The legislation I am introducing today is designed to tear down these 
barriers, and begin the process of harmonizing the pesticide 
registration process. The bill establishes a process by which 
interested growers can petition the Environmental Protection Agency to 
require a pesticide to be jointly labeled, if the product is already 
registered in both countries. See--there's the problem. We are talking 
here about the exact same chemical, produced by the same company, but 
priced at very different levels. Because the products have two 
different labels, the lower-price chemical remains out of reach of U.S. 
growers. When Montana farmers have to compete against Canadian growers 
who are getting their pesticides at a substantially lower price, that 
is an example of free trade gone wrong. In addition, this bill gives 
EPA the authority needed to require a joint label on a new product that 
is being introduced into the market.
  It is important to note that this legislation is not restricted to 
Canada, so as not to violate U.S. trade agreements. The bill authorizes 
EPA to enter into negotiations to harmonize regulatory processes and 
requirements with other countries, as appropriate. The United States 
and Canada have been working for over a decade to streamline their 
registration processes, harmonize the requirements, and develop 
protocols for work sharing and joint reviews. A lot of groundwork has 
already been done between the U.S. and Canada, so we can move quickly 
towards development of a joint label between our two countries.
  And there is no reason not to. Again, we are talking about the exact 
same product, being sold at two different prices to growers who have to 
compete against each other in the world market. NAFTA was supposed to 
tear down borders between the U.S., Canada, and Mexico, and yet this 
barrier remains. It is an irritant to Montana growers who are farming 
along the border.
  It is also a problem for Canadian growers, and I look forward to 
working with Canada to resolve this issue in a mutually beneficial way. 
There are times when pesticides are cheaper in the U.S., and U.S. 
growers often have access to a wider variety of products. So there is a 
shared interest in tearing down this barrier to free trade.
  A recent study done by Montana State University underscored this 
point. For 13 pesticides widely used in Montana and Alberta, seven were 
less expensive in Canada, five were less expensive in the U.S., and 
one, glyphosate, showed little or no difference in price. False 
barriers that prevent pesticides from moving across the border are 
creating significant price distortions in the market, and those 
barriers need to come down.
  Certainly, there are a number of factors that impact pricing, but 
there can be no doubt that trade barriers allow price differentiation, 
and that's not right. There will always be some price fluctuations--
they exist now, between states, even between communities in the same 
state. But for a person farming along the Montana-Alberta border, who 
can see his competitor across that border and knows that his 
competitor's input costs are lower for no other reason than a trade 
barrier that should have been eliminated, that's going to bother him. 
If the guy one town over has better prices on pesticides, I can drive 
to get those, or negotiate with my local dealer. But if the guy across 
the border has better prices, I have no options, no bargaining power. 
That's just not right.
  This is not an anti-industry bill. Growers need the crop protection 
industry, and it is important that the research and innovation in that 
sector continue. This bill will help to streamline regulatory processes 
and reduce

[[Page 19244]]

the obstacles to registration, by requiring only one label. It 
simplifies distribution systems, by allowing companies to have just one 
label for the same product, even when it is being sold in two 
countries. So while this bill will address the sort of price 
distortions that farmers on the northern border find unfair, it also 
reduces cost to industry, and will ideally result in smoother 
registration processes.
  In fact, representatives of the crop protection industry have said 
that the solution to trade barriers along the northern border is a 
joint label, and have testified in support of regulatory harmonization 
before the Senate Agriculture Committee. Since the passage of NAFTA, a 
technical working group on pesticide harmonization has worked 
diligently on the development of joint registration and labeling 
procedures, and has enjoyed the cooperation of the industry in those 
discussions. This bill accomplishes what both the industry and the 
producers have said is needed: regulatory harmonization between two 
nations, joint registration, and joint labeling.
  This legislation is supported by the National Association of Wheat 
Growers, the National Barley Growers Association, the U.S. Durum 
Growers Association, the National Farmers Union, the Montana Grain 
Growers Association, and the North Dakota Grain Growers Association. It 
is time these barriers be eliminated. If we are going to have free 
trade in grain, then we need free train in the input costs for 
production agriculture. This bill accomplishes that. I ask Members to 
take a close look at this bill, and consider it seriously. Our growers 
deserve an end to the practice of artificially inflating the price of 
pesticides simply to take advantage of false barriers.
  Mr. DORGAN. Mr. President, today I am reintroducing bipartisan 
legislation to remedy a long-standing and glaring inequity in our so-
called free-trade system. There are significant and costly differences 
in prices between agricultural chemicals sold in Canada and similar--
and in some cases, identical--chemicals sold in the United States. This 
disparity in prices puts an extra burden on American farmers, and it 
puts them at a distinct disadvantage when it comes to competing in the 
world market.
  Currently, American and Canadian farmers use many of the same 
products on their fields. These products use the same chemicals, are 
made by the same company, and are sometimes even marketed under the 
same name; but they are often sold at a much lower cost north of the 
border.
  For example, U.S. farmers use the pesticide Garlon, which is sold as 
Remedy in Canada. It is manufactured by the same company, with the same 
chemicals. But American farmers pay $8.02 more per acre than their 
Canadian counterparts. The pesticide Puma, which is widely used on 
wheat and barley, costs farmers in North Dakota $2.82 more per acre 
than Canadian farmers pay for Puma 120 Super, which is the same 
product, made by the same company. That means North Dakota farmers paid 
nearly $7.9 million more to treat their fields with Puma than they 
would have paid if they could have accessed it at prices paid by 
Canadian farmers.
  This legislation would address that inequity by setting up a process 
that would allow American farmers to access these chemicals, which are 
lower priced, but identical to those already approved for use in the 
United States.
  Data collected by the North Dakota Department of Agriculture show 
that farmers in just my home State of North Dakota alone would have 
saved nearly $11 million last year if they had been able to access 
agricultural chemicals at Canadian prices.
  But this problem does not just affect farmers in North Dakota. 
Farmers all across the northern tier of the United States would benefit 
if they were able to access U.S.-approved pesticides at Canadian 
prices.
  I have come before the Senate time and again to talk about the hidden 
inequities of trade. For trade to benefit our country, it must be fair. 
But the pricing inequities in the Canadian and U.S. pesticide markets 
are a failure of our current trade system.
  This legislation I am introducing today, along with the Senator from 
Montana, Mr. Burns, authorizes the Environmental Protection Agency to 
require that certain agricultural chemicals which have already been 
approved in the U.S. carry a joint label, which would allow them to 
cross the border freely.
  The new labels would still be under the strict scrutiny of the 
Environmental Protection Agency, as would the use of these products. 
The EPA would continue to insure the health and safety standards that 
govern the products we use in our food supply. This bill keeps those 
priorities intact.
  This bill is not an ending but a beginning. Hidden trade barriers and 
schemes riddle the fabric of our trade agreements. We cannot continue 
to accept trade practices that, on the one hand, hamstring Americans, 
and on the other hand, unduly promote our competitors. We ought not 
accept second best all of the time, and this bill is a step in bringing 
American producers back to a level playing field.
                                 ______
                                 
      By Mr. AKAKA (for himself, Mr. Reid, Mr. Durbin, Mr. Bingaman, 
        Mr. Corzine, Mrs. Murray, Mr. Kennedy, Ms. Landrieu, Mr. 
        Lautenberg, Mr. Inouye, Mr. Pryor, Ms. Mikulski, Mr. Obama, Mr. 
        Dodd, Mr. Lieberman, and Mrs. Clinton):
  S. 1580. A bill to improve the health of minority individuals; to the 
Committee on Finance.
  Mr. AKAKA. Mr. President, I am proud to introduce the Healthcare 
Equality and Accountability Act, along with my colleagues Senators 
Reid, Durbin, Bingaman, Corzine, Murray, Kennedy, Landrieu, Lautenberg, 
Inouye, Pryor, Mikulski, Obama, Dodd, Lieberman, and Clinton. I want to 
thank them, as well as my colleagues in the other body, for all of 
their contributions to this important legislation.
  This bill will improve access to and the quality of health care for 
indigenous people and racial and ethnic minorities who often lack 
access and suffer disproportionately from certain diseases. It is 
essential that we expand and improve the health care safety net so that 
everyone can access the health care services that they need. This 
legislation will expand health coverage and includes provisions that 
will increase access to culturally-appropriate and relevant services 
for our communities.
  In addition to improving treatments for the diseases that 
disproportionately effect indigenous people and racial and ethnic 
minorities, we need to also focus on preventing these diseases in the 
first place. This legislation will help combat heart disease, asthma, 
HIV/AIDS, and diabetes. Diabetes is a disease that disproportionately 
affects Pacific Islanders, including Native Hawaiians. Among 
populations in Hawaii, Native Hawaiians had the highest age-adjusted 
mortality rates due to diabetes for the years 2000 to 2002.
  Statistics for U.S.-related Pacific Jurisdictions are difficult to 
obtain due to underdeveloped reporting and data collection systems. 
However, available data suggests that diabetes and its complications 
are growing problems that are creating a greater burden on the health 
care delivery systems of the Pacific Jurisdictions. For example, in the 
Republic of the Marshall Islands, mortality data for 1996-2000 reflects 
that complications from diabetes are the leading cause of death and 
accounted for 30 percent of all deaths during that period. In American 
Samoa, mortality data for 1998-2001 shows that diabetes is the third 
leading cause of death accounting for nine percent of all deaths for 
that period. In Guam, diabetes has been identified as the fifth leading 
cause of death and the prevalence rate has been estimated to be seven 
times that of the United States. Local governments have had to focus on 
expensive off-island tertiary hospital care and curative services, 
resulting in the reduction of funds available for community-based 
primary preventive care and pnblic health services throughout the 
Pacific Jurisdictions.

[[Page 19245]]

  There is a need for more comprehensive diabetes awareness education 
efforts targeted at communities with Native Hawaiian and other Pacific 
Islander populations. Papa Ola Lokahi, a non-profit agency created in 
1988 that functions as a consortium with private and state agencies in 
Hawaii to improve the health status of Native Hawaiians and other 
Pacific Islanders, has established the Pacific Diabetes Today Resource 
Center. Pacific Diabetes Today is designed to provide community members 
with basic knowledge and skills to plan and implement community-based 
diabetes prevention and control activities. Since 1998, the Pacific 
Diabetes Today program has provided training and technical assistance 
to 11 communities in Hawaii and the Pacific Jurisdictions. However, 
more can be done to ensure that the diabetic health needs of Native 
Hawaiians and other Pacific Islanders are being met.
  Community-based diabetes programs need to be better integrated into 
the larger infrastructure of diabetes prevention and control. 
Comprehensive, specific programs are needed to mobilize Native Hawaiian 
and other Pacific Islander communities and develop appropriate 
interventions for diabetes complications prevention and improve 
diabetes care. My bill, therefore, includes a provision that would 
authorize a comprehensive program to prevent and better manage the 
overlapping health problems that are often related to diabetes such as 
obesity, hypertension, and cardiovascular disease.
  I am also pleased that a provision has been included in this bill 
that would restore Medicaid eligibility for Freely Associated States, 
FAS, citizens in the United States. The political relationship between 
the United States and the FAS is based on mutual support. In exchange 
for the United States having strategic denial and a defense veto over 
the FAS, the United States provides military and economic assistance to 
the Republic of Marshall Islands, Federated States of Micronesia and 
Palau with the goal of assisting these countries in achieving economic 
self-sufficiency following the termination of their status as U.N. 
Trust territories. Pursuant to the Compact, FAS citizens are allowed to 
freely enter the United States. They come to seek economic opportunity, 
education, and health care. Unfortunately, FAS citizens lost many of 
their public benefits as a result of the Personal Responsibility and 
Work Opportunity Act, PRWORA, of 1996, including Medicaid coverage. FAS 
citizens were previously eligible for Medicaid as aliens permanently 
residing under color of law in the United States.
  After the enactment of PRWORA, the State of Hawaii was informed that 
it could not claim Federal matching funds for services rendered to FAS 
citizens. Since then, the State of Hawaii, and the territories of Guam, 
American Samoa, and the Commonwealth of the Northern Mariana Islands, 
CNMI, have continued to incur substantial costs to meet the health care 
needs of FAS citizens that have immigrated to these areas.
  The Federal Government must provide Federal resources to help States 
meet the healthcare needs of the FAS citizens that have been brought 
about by a Federal commitment. It is inequitable for a state or 
territory to be responsible for all of the financial burden of 
providing necessary social services to individuals that are residing 
there due to a Federal commitment. Mr. President, FAS citizen 
eligibility must be restored. Furthermore, the State of Hawaii, and the 
territories of Guam, American Samoa, and the CNMI, should be reimbursed 
for all of the Medicaid expenses of FAS citizens, and must not be 
responsible for the costs of providing essential health care services 
for FAS citizens.
  Finally, there is another provision in this bill is of extreme 
importance to the State of Hawaii, taken from legislation that my 
colleague from Hawaii, Senator Inouye, has introduced. The provision 
would provide a 100 percent Federal Medicaid Assistance Percentage, 
FMAP, of health care costs of Native Hawaiians who receive health care 
from Federally Qualified Health Centers or the Native Hawaiian Health 
Care System. This would provide similar treatment for Native Hawaiians 
as already granted to Native Alaskans by the Indian Health Service or 
tribal organizations. The increased FMAP will ensure that Native 
Hawaiians have access to the essential health services provided by 
community health centers and the Native Hawaiian Health Care System.
  This bill would significantly improve the quality of life for 
indigenous people and ethnic and racial minorities, and I encourage all 
of my colleagues to support this legislation.
  Mr. KENNEDY. Mr. President, it is a privilege to join Senator Akaka 
and Senator Reid in introducing the Healthcare Equality and 
Accountability Act. Our goal is to eliminate racial and ethnic 
disparities in health care, so that all citizens, regardless of income 
or background, have the best possible health care our Nation can 
provide.
  The Institute of Medicine has documented the severity of ethnic and 
racial disparities in health care. People of color face unequal 
treatment and unequal outcomes in heart disease, infant mortality, HIV/
AIDS, diabetes, asthma, and other serious illnesses. The health care 
needs of communities of color are often more severe than those of white 
Americans. Minorities often face significant obstacles, including 
poverty and the lack of health insurance. We need to attack disparities 
in all their forms.
  A critical first step is to see that health insurance and decent 
health care are available and affordable for all Americans. This bill 
strengthens the health care safety net by expanding access to Medicaid 
and the Children's Health Insurance Program, and improving health care 
for Indian tribes, migrant workers, and farm workers.
  The bill also contains essential measures for removing cultural and 
linguistic barriers to good care. The United States is a Nation of 
immigrants, and all Americans deserve to understand what their doctor 
is telling them. Interpreter and translator services save money in the 
long run by avoiding harm when patients do not understand their 
diagnosis or the health advice they receive. Health care institutions 
deserve to be reimbursed for providing these critically needed 
services.
  Other important initiatives to reduce health disparities include 
diversifying the health care workforce. Minority providers are more 
likely to serve low-income communities of color, and this bill 
addresses the shortage of these providers.
  Federal agencies can do more in this battle too. The bill requires 
all Federal health agencies to develop specific plans to eliminate 
disparities. The bill expands the Office of Civil Rights and the Office 
of Minority Health at the Department of Health and Human Services, and 
creates minority health offices within the Food and Drug Administration 
and the Centers for Medicare and Medicaid Services.
  In addition, the bill strengthens investments in prevention and 
behavioral health and improves research and data collection. It 
strengthens health institutions that serve communities of color, 
provides grants for community initiatives, and funds programs on 
chronic disease. In each of these ways, we can reduce the gap in health 
care between people of color and whites, so that all Americans can 
benefit from the remarkable advances being made in modern health care.
  It's time for Congress, the administration, and the Nation to end the 
shameful inequality in health care that plagues the lives of so many 
people in our society. This bill contains numerous provisions intended 
to make that happen, and it can have a major impact on the lives of 
millions of Americans. I commend Senators Akaka and Reid for their 
leadership on this important health issue. We intend to do all we can 
in this Congress to see that effective legislation to combat health 
disparities is enacted into law and funded adequately to do the job.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Mr. Bunning):
  S. 1581. A bill to facilitate the development of science parks, and 
for other purposes; to the Committee on Finance.

[[Page 19246]]


  Mr. BINGAMAN. Mr. President, I rise today with my colleague, Senator 
Bunning, to introduce the Science Park Administration Act of 2005.
  This legislation is a result of my travels to Taiwan, China, Hong 
Kong, and India to learn more about their science and technology 
policies, as well as to discover how they have successfully encouraged 
similar industries and research entities to work so closely together in 
these research parks.
  Let me discuss some findings from my fact finding trips regarding the 
role of science parks in economic development.
  Last summer, I visited the Hong Kong Science and Technology Park 
which the Hong Kong Government is funding at $423 million. By 2006, 
this investment will help construct 10 buildings, over 1 million square 
feet of office and laboratory space, that will cluster IC design, 
photonics, biotechnology and information technology.
  This science park, like the others I visited in Asia, teams up with 
the local universities on collaborative research efforts. It has an 
incubation center with 83 start-up companies, and provides them low 
cost space, business planning, marketing, and employee training, as 
well as research and development grants from the Hong Kong Government 
to overcome the ``valley of death'' challenges so many new technology 
companies frequently face.
  One of the most impressive features of this park is the Integrated 
Circuit, IC, Design and Development Support Center. This is a user 
facility with shared state of the art equipment to support the entire 
IC product development cycle, from initiation design to production 
release. For example, as many as 16 vendors can combine their designs 
onto a single wafer, thus reducing initial prototype foundry costs by 
94 percent.
  I was also briefed on the Hong Kong Cyber Port, another science park 
devoted solely to information technology, IT, and multimedia companies 
that trains employees and conducts collaborative research. The Hong 
Kong Government is investing $2 billion between 2000 and 2007 to house 
10,000 IT professionals and 100 IT companies in over 1 million square 
feet of work space.
  The Hong Kong Government's combined investment in developing the 
infrastructure to attract science-based companies to these two parks is 
about $400 million annually over a period of six years. On a comparable 
GDP scale, the United States would have to spend $31 billion annually 
for that same period for a total of $186 billion.
  This past January, I spent 10 days in India reviewing their science 
and technology policies, and was particularly impressed with their 
development of Software Technology Parks. These parks were first 
developed in 1991 by the Ministry of Information Technology and 
Communications as a semiautonomous entity to promote India's developing 
IT industry. They provide the infrastructure in terms of space, 
internet access, tax breaks and-one stop clearances for government 
approvals. Generous tax considerations exempt companies until 2010 from 
corporate income tax and excise duties on purchased goods.
  As my colleagues are aware, the growth rate of India's IT industry 
have been phenomenal. There are now more than 1,000 companies in 44 
such software parks in India, the largest located around Hyderabad and 
Bangalore considered to be India's ``Silicon Valleys.''. Last year 
these parks had a combined net export value of $50 billion, up 37 
percent from the prior year.
  Companies such as Infosys, which maintains software for large firms 
overseas, are located in these parks, and their 2004 revenues jumped by 
50 percent. Last year, they received 1.2 million online job 
applications; they gave a standardized test to 300,000, interviewed 
30,000, and hired 10,000. Much of India's success in the IT industry 
can be attributed not only to their universities, but to the 
government's decision 1991 to establish these Software Technology 
Parks.
  Building on that success, and with the government's encouragement, 
these Software Parks are now set to launch biotechnology parks.
  Taiwan's success in the global market place is a result of building 
the Hsinchu Science Park in the 1980s. Today, Hsinchu has over 100,000 
technically trained people, 325 companies, 6 national labs and $22 
billion in gross revenue. The government has duplicated these parks in 
two other locations of the island. The science parks being built 
throughout Asia are modeled after Taiwan's Hsinchu Science Park.
  Let me note that these Asian science parks have several common 
features:
  First the Government commits to provide a first-class infrastructure 
to accommodate all levels of science-based companies, from small start-
ups in incubators to large manufacturing plants.
  Second, these parks align companies of similar interests to mutually 
reinforce each other along the supply and management chain.
  Third, the Government provides virtually one-stop shopping for 
government approvals, even including loans.
  Fourth, the Government provides tax incentives, usually in the form 
of waiving taxes on the first several years of profit, and capital 
gains on acquired stock.
  Fifth, and most importantly, the Government takes the long view of 
partnering with the local governments to ensure that a trained 
workforce is readily available to support the parks' growth, by teaming 
with universities and national laboratories.
  If we fail to learn from these Asian success stories, we are in 
danger of losing the very high technology industries we first started, 
because the low cost manufacturing operations in Asia are now moving up 
the value chain to research intensive industries, which the Government 
facilitates by building science parks.
  That leads me to the legislation we are introducing today.
  The premise of the legislation is straight forward. It does not pick 
industry winners or losers. Rather, it simply provides a synergistic 
science-based infrastructure that companies may compete for and thrive 
in. Just like in Asia, the government acts as a facilitator not 
micromanager.
  The legislation first proposes a series of competitively peer-
reviewed science park planning grants to local governments.
  A revolving loan fund in six regional centers is proposed to allow 
existing science parks to upgrade their infrastructure.
  The legislation proposes a loan guarantee fund for the construction 
of new science parks.
  Additionally, the legislation proposes a Science Park Venture Capital 
Fund similar to SBIC's, that would guarantee debentures issued by the 
Fund to raise capital for start-up companies trying to bridge that 
valley of death, where ideas must move from the laboratory to working 
prototype.
  Moreover, the legislation proposes several tax incentives to locate 
in the park. The full cost of property placed in the park could be 
deducted in the year it was purchased without regard to the existing 
caps. Many times high-tech equipment is expensive and loses its value 
quickly, and this provision would cover that loss. The legislation 
proposes a flat 20 percent R&D tax credit without regard to any 
expenditure in the base period to spur greater research investment on a 
broader range of projects. Finally, the legislation ensures that the 
status of tax exempt bonds used to fund science park infrastructure 
remain tax exempt eliminating the uncertainty associated with its 
interpretation under the Bayh-Dole Act.
  I believe this legislation combines many of the best ideas I have 
discovered on my Asian fact finding trips. I hope it attracts the 
support from both sides of the aisle as a truly bipartisan effort as we 
need this type of infrastructure investment more than ever before if we 
are to successfully compete in today's global environment.
  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:

[[Page 19247]]



                                S. 1581

       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 ``Science Park Administration 
     Act of 2005''.

     SEC. 2. DEVELOPMENT OF SCIENCE PARKS.

       (a) Finding.--Section 2 of the Stevenson-Wydler Technology 
     Innovation Act of 1980 (15 U.S.C. 3701) is amended by adding 
     at the end the following new paragraph:
       ``(12) It is in the best interests of the Nation to 
     encourage the formation of science parks to promote the 
     clustering of innovation through high technology 
     activities.''.
       (b) Definition.--Section 4 of such Act (15 U.S.C. 3703) is 
     amended by adding at the end the following new paragraphs:
       ``(14) `Science park' means a group of interrelated 
     companies and institutions, including suppliers, service 
     providers, institutions of higher education, start-up 
     incubators, and trade associations that cooperate and compete 
     and are located in a specific area whose administration 
     promotes real estate development, technology transfer, and 
     partnerships between such companies and institutions, and 
     does not mean a business or industrial park.
       ``(15) `Business or industrial park' means primarily a for-
     profit real estate venture of businesses or industries which 
     do not necessarily reinforce each other through supply chain 
     or technology transfer mechanisms.
       ``(16) `Science park infrastructure' means facilities that 
     support the daily economic activity of a science park.''.
       (c) Promotion of Development of Science Parks.--Section 
     5(c) of such Act (15 U.S.C. 3704(c)) is amended--
       (1) in paragraph (14), by striking ``and'' at the end;
       (2) in paragraph (15), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(16) promote the formation of science parks.''.
       (d) Science Parks.--Such Act is further amended by adding 
     at the end the following new section:

     ``SEC. 24. SCIENCE PARKS.

       ``(a) Development of Plans for Construction of Science 
     Parks.--
       ``(1) In general.--The Secretary shall award grants for the 
     development of feasibility studies and plans for the 
     construction of new or expansion of existing science parks.
       ``(2) Limitation on amount of grants.--The amount of a 
     grant awarded under this subsection may not exceed $750,000.
       ``(3) Award.--
       ``(A) Competition required.--The Secretary shall award any 
     grant under this subsection pursuant to a full and open 
     competition.
       ``(B) Advertising.--The Secretary shall advertise any 
     competition under this paragraph in the Commerce Business 
     Daily.
       ``(C) Selection criteria.--The Secretary shall publish the 
     criteria to be utilized in any competition under this 
     paragraph for the selection of recipients of grants under 
     this subsection. Such criteria shall include requirements 
     relating to--
       ``(i) the number of jobs to be created at the science park 
     each year for a period of 5 years;
       ``(ii) the funding to be required to construct or expand 
     the science park over the first 5 years;
       ``(iii) the amount and type of cost matching by the 
     applicant;
       ``(iv) the types of businesses and research entities 
     expected in the science park and surrounding community;
       ``(v) letters of intent by businesses and research entities 
     to locate in the science park;
       ``(vi) the capacity of the science park for expansion over 
     a period of 25 years;
       ``(vii) the quality of life at the science park for 
     employees at the science park;
       ``(viii) the capability to attract a well trained workforce 
     to the science park;
       ``(ix) the management of the science park;
       ``(x) expected risks in the construction and operation of 
     the science park;
       ``(xi) risk mitigation;
       ``(xii) transportation and logistics;
       ``(xiii) physical infrastructure, including 
     telecommunications;
       ``(xiv) ability to collaborate with other science parks 
     throughout the world.
       ``(4) Authorization of appropriations.--There is authorized 
     to be appropriated for each of fiscal years 2006 through 
     2011, $7,500,000 to carry out this subsection.
       ``(b) Revolving Loan Program for Development of Science 
     Park Infrastructure.--
       ``(1) In general.--The Secretary shall make grants to six 
     regional centers for the development of existing science park 
     infrastructure through the operation of revolving loan funds 
     by such centers.
       ``(2) Selection of centers.--
       ``(A) In general.--The Secretary shall select the regional 
     centers to be awarded grants under this subsection utilizing 
     such criteria as the Secretary shall prescribe.
       ``(B) Criteria.--The criteria prescribed by the Secretary 
     under this paragraph shall include criteria relating to 
     revolving loan funds and revolving loan fund operators under 
     paragraph (4), including--
       ``(i) the qualifications of principal officers;
       ``(ii) non-Federal cost matching requirements; and
       ``(iii) conditions for the termination of loan funds.
       ``(3) Limitation on loan amount.--The amount of any loan 
     for the development of existing science park infrastructure 
     that is funded under this subsection may not exceed 
     $3,000,000.
       ``(4) Revolving loan funds.--
       ``(A) In general.--A regional center receiving a grant 
     under this subsection shall fund the development of existing 
     science park infrastructure through the utilization of a 
     revolving loan fund.
       ``(B) Operation and integrity.--The Secretary shall 
     prescribe regulations to maintain the proper operation and 
     financial integrity of revolving loan funds under this 
     paragraph.
       ``(C) Efficient administration.--The Secretary may--
       ``(i) at the request of a grantee, amend and consolidate 
     grant agreements governing revolving loan funds to provide 
     flexibility with respect to lending areas and borrower 
     criteria;
       ``(ii) assign or transfer assets of a revolving loan fund 
     to a third party for the purpose of liquidation, and a third 
     party may retain assets of the fund to defray costs related 
     to liquidation; and
       ``(iii) take such actions as are appropriate to enable 
     revolving loan fund operators to sell or securitize loans 
     (except that the actions may not include issuance of a 
     Federal guaranty by the Secretary).
       ``(D) Treatment of actions.--An action taken by the 
     Secretary under this paragraph with respect to a revolving 
     loan fund shall not constitute a new obligation if all grant 
     funds associated with the original grant award have been 
     disbursed to the recipient.
       ``(E) Preservation of securities laws.--
       ``(i) Not treated as exempted securities.--No securities 
     issued pursuant to subparagraph (C)(iii) shall be treated as 
     exempted securities for purposes of the Securities Act of 
     1933 or the Securities Exchange Act of 1934, unless exempted 
     by rule or regulation of the Securities and Exchange 
     Commission.
       ``(ii) Preservation.--Except as provided in clause (i), no 
     provision of this paragraph or any regulation issued by the 
     Secretary under this paragraph shall supersede or otherwise 
     affect the application of the securities laws (as such term 
     is defined in section 2(a)(47) of the Securities Exchange Act 
     of 1934) or the rules, regulations, or orders of the 
     Securities and Exchange Commission or a self-regulatory 
     organization thereunder.
       ``(5) Authorization of appropriations.--There is authorized 
     to be appropriated for each of fiscal years 2006 through 
     2011, $60,000,000 to carry out this subsection.
       ``(c) Loan Guarantees for Science Park Infrastructure.--
       ``(1) In general.--The Secretary shall guarantee up to 80 
     percent of the loan amount for loans exceeding $10,000,000 
     for projects for the construction of science park 
     infrastructure.
       ``(2) Limitations on guarantee amounts.--The maximum amount 
     of loan principal guaranteed under this subsection may not 
     exceed--
       ``(A) $50,000,000 with respect to any single project; and
       ``(B) $500,000,000 with respect to all projects.
       ``(3) Selection of guarantee recipients.--The Secretary 
     shall select recipients of loan guarantees under this 
     subsection based upon the ability of the recipient to 
     collateralize the loan amount through bonds, equity, 
     property, and other such criteria as the Secretary shall 
     prescribe.
       ``(4) Terms and conditions for loan guarantees.--For 
     purposes of this section, the loans guaranteed shall be 
     subject to such terms and conditions as the Secretary may 
     prescribe, except that--
       ``(A) the final maturity of such loans made or guaranteed 
     shall not exceed (as determined by the Secretary) the lesser 
     of--
       ``(i) 30 years and 32 days, or
       ``(ii) 90 percent of the useful life of any physical asset 
     to be financed by such loan;
       ``(B) no loan made or guaranteed may be subordinated to 
     another debt contracted by the borrower or to any other 
     claims against the borrowers in the case of default;
       ``(C) no loan may be guaranteed unless the Secretary 
     determines that the lender is responsible and that adequate 
     provision is made for servicing the loan on reasonable terms 
     and protecting the financial interest of the United States;
       ``(D) no loan may be guaranteed if the income from such 
     loan is excluded from gross income for purposes of chapter 1 
     of the Internal Revenue Code of 1986, or if the guarantee 
     provides significant collateral or security, as determined by 
     the Secretary, for other obligations the income from which is 
     so excluded;
       ``(E) any guarantee shall be conclusive evidence that said 
     guarantee has been properly obtained, that the underlying 
     loan qualified for such guarantee, and that, but for fraud or 
     material misrepresentation by the holder, such guarantee 
     shall be presumed to be valid, legal, and enforceable;
       ``(F) the Secretary shall prescribe explicit standards for 
     use in periodically assessing

[[Page 19248]]

     the credit risk of new and existing direct loans or 
     guaranteed loans;
       ``(G) the Secretary must find that there is a reasonable 
     assurance of repayment before extending credit assistance; 
     and
       ``(H) new loan guarantees may not be committed except to 
     the extent that appropriations of budget authority to cover 
     their costs are made in advance, as required in section 504 
     of the Federal Credit Reform Act of 1990.
       ``(5) Payment of losses.--For purposes of this section--
       ``(A) In general.--If, as a result of a default by a 
     borrower under a guaranteed loan, after the holder thereof 
     has made such further collection efforts and instituted such 
     enforcement proceedings as the Secretary may require, the 
     Secretary determines that the holder has suffered a loss, the 
     Secretary shall pay to such holder the percentage of such 
     loss (not more than 80 percent) specified in the guarantee 
     contract. Upon making any such payment, the Secretary shall 
     be subrogated to all the rights of the recipient of the 
     payment. The Secretary shall be entitled to recover from the 
     borrower the amount of any payments made pursuant to any 
     guarantee entered into under this section.
       ``(B) Enforcement of rights.--The Attorney General shall 
     take such action as may be appropriate to enforce any right 
     accruing to the United States as a result of the issuance of 
     any guarantee under this section.
       ``(C) Forbearance.--Nothing in this section may be 
     construed to preclude any forbearance for the benefit of the 
     borrower which may be agreed upon by the parties to the 
     guaranteed loan and approved by the Secretary, if budget 
     authority for any resulting subsidy costs (as defined under 
     the Federal Credit Reform Act of 1990) is available.
       ``(D) Management of property.--Notwithstanding any other 
     provision of law relating to the acquisition, handling, or 
     disposal of property by the United States, the Secretary 
     shall have the right in the Secretary's discretion to 
     complete, recondition, reconstruct, renovate, repair, 
     maintain, operate, or sell any property acquired by the 
     Secretary pursuant to the provisions of this section.
       ``(6) Review.--The Comptroller General of the United States 
     shall, within 2 years of the date of enactment of this 
     section, conduct a review of the subsidy estimates for the 
     loan guarantees under this subsection, and shall submit to 
     Congress a report on the review conducted under this 
     paragraph.
       ``(7) Termination.--No loan may be guaranteed under this 
     subsection after September 30, 2011.
       ``(8) Authorization of appropriations.--There is authorized 
     to be appropriated--
       ``(A) such sums as may be necessary for the cost, as 
     defined in section 502(5) of the Federal Credit Reform Act of 
     1990, of guaranteeing $500,000,000 of loans under this 
     subsection, and
       ``(B) $6,000,000 for administrative expenses for fiscal 
     year 2006 and such sums as necessary thereafter for 
     administrative expenses in subsequent years.
       ``(d) National Academy of Sciences Evaluation.--
       ``(1) In general.--The Secretary shall enter into an 
     agreement with the National Academy of Sciences under which 
     the Academy shall evaluate, on a tri-annual basis, the 
     activities under this section.
       ``(2) Tri-annual report.--Under the agreement under 
     paragraph (1), the Academy shall submit to the Secretary a 
     report on its evaluation of science park development under 
     that paragraph. Each report may include such recommendations 
     as the Academy considers appropriate for additional 
     activities to promote and facilitate the development of 
     science parks in the United States.
       ``(e) Tri-annual Report.--Not later than March 31 of every 
     third year, the Secretary shall submit to Congress a report 
     on the activities under this section during the preceding 3 
     years, including any recommendations made by the National 
     Academy of Sciences under subsection (d)(2) during such 
     period. Each report may include such recommendations for 
     legislative or administrative action as the Secretary 
     considers appropriate to further promote and facilitate the 
     development of science parks in the United States.
       ``(f) Regulations.--
       ``(1) Regulations.--Consistent with Office of Management 
     and Budget Circular A-129, `Policies for Federal Credit 
     Programs and Non-Tax Receivables', the Secretary shall 
     prescribe regulations to carry out this section.
       ``(2) Deadline.--The Secretary shall prescribe such 
     regulations not later than one year after the date of 
     enactment of this section.''.

     SEC. 3. SCIENCE PARK VENTURE CAPITAL FUND PILOT PROGRAM.

       Title III of the Small Business Investment Act of 1958 (15 
     U.S.C. 681 et seq.) is amended by adding at the end the 
     following:

       ``PART C--SCIENCE PARK VENTURE CAPITAL FUND PILOT PROGRAM

     ``SEC. 1. DEFINITIONS.

       ``As used in this part, the following definitions shall 
     apply:
       ``(1) Business or industrial park.--The term `Business or 
     industrial park' means primarily a for-profit real estate 
     venture of businesses or industries which do not necessarily 
     reinforce each other through supply chain or technology 
     transfer mechanisms.
       ``(2) Equity capital.--The term `equity capital' means 
     common or preferred stock or a similar instrument, including 
     subordinated debt with equity features.
       ``(3) High-technology.--The term `high-technology' means 
     any of the high technology industries in the North American 
     Industrial Classification System, as listed in table 8-25 of 
     the National Science Board publication entitled `Science and 
     Engineering Indicators 2004', or as listed in any succeeding 
     editions of such publication.
       ``(4) Leverage.--The term `leverage' includes--
       ``(A) debentures purchased or guaranteed by the 
     Administrator;
       ``(B) participating securities purchased or guaranteed by 
     the Administrator; and
       ``(C) preferred securities outstanding as of the date of 
     enactment of this part.
       ``(5) Mezzanine financing.--The term `mezzanine financing' 
     means late-stage venture capital usually associated with the 
     final round of financing prior to an initial public offering.
       ``(6) Operational assistance.--The term `operational 
     assistance' means management, marketing, and other technical 
     assistance that assists high-technology start-up companies 
     with business development.
       ``(7) Participation agreement.--The term `participation 
     agreement' means an agreement, between the Administrator and 
     a company granted final approval by the Administrator under 
     section 374(e), that--
       ``(A) details the operating plan and investment criteria of 
     the company; and
       ``(B) requires the company to make investments in high-
     technology start-up companies within a science park.
       ``(8) Private capital.--The term `private capital'--
       ``(A) means the total of--
       ``(i)(I) the paid-in capital and paid-in surplus of a 
     corporate science park venture capital company;
       ``(II) the contributed capital of the partners of a 
     partnership science park venture capital company; or
       ``(III) the equity investment of the members of a limited 
     liability company science park venture capital company; and
       ``(ii) unfunded binding commitments from investors that 
     meet criteria established by the Administrator to contribute 
     capital to the science park venture capital company, except 
     that--

       ``(I) unfunded commitments may be counted as private 
     capital for purposes of approval by the Administrator of any 
     request for leverage; and
       ``(II) leverage shall not be funded based on the 
     commitments; and

       ``(B) does not include--
       ``(i) any funds borrowed by a science park venture capital 
     company from any source;
       ``(ii) any funds obtained through the issuance of leverage; 
     or
       ``(iii) any funds obtained directly or indirectly from 
     Federal, State, or local government, except for--

       ``(I) funds obtained from the business revenues of any 
     federally chartered or government-sponsored enterprise 
     established before the date of enactment of this part;
       ``(II) funds invested by an employee welfare benefit plan 
     or pension plan; and
       ``(III) any qualified nonprivate funds, if the investors of 
     such funds do not directly or indirectly control the 
     management, board of directors, general partners, or members 
     of the science park venture capital company.

       ``(9) Program.--The term `Program' means the Science Park 
     Venture Capital Program established under section 372.
       ``(10) Qualified nonprivate funds.--The term `qualified 
     nonprivate funds' means--
       ``(A) any funds directly or indirectly invested in any 
     applicant or science park venture capital company on or 
     before the date of enactment of this part, by any Federal 
     agency other than the Administration, under a law explicitly 
     mandating the inclusion of those funds in the definition of 
     the term private capital; and
       ``(B) any funds invested in any applicant or science park 
     venture capital company by 1 or more entities of any State, 
     including any guarantee extended by any such entity, in an 
     aggregate amount not to exceed 33 percent of the private 
     capital of the applicant or science park venture capital 
     company.
       ``(11) Science park.--The term `science park' means a group 
     of interrelated companies and institutions, including 
     suppliers, service providers, institutions of higher 
     education, start-up incubators, and trade associations that 
     cooperate and compete and are located in a specific area 
     whose administration promotes real estate development, 
     technology transfer, and partnerships between such companies 
     and institutions, and does not mean a business or industrial 
     park.
       ``(12) Science park venture capital.--The term `science 
     park venture capital' means equity capital investments in 
     high-technology start-up businesses located in science parks 
     to foster economic development and technological innovation.
       ``(13) Science park venture capital company.--The term 
     `science park venture capital company' means a company that--
       ``(A) meets the requirements under section 373;

[[Page 19249]]

       ``(B) has been granted final approval by the Administrator 
     under section 374(e); and
       ``(C) has entered into a participation agreement with the 
     Administrator.
       ``(14) Start-up company.--The term `start-up company' means 
     a company that has developed intellectual property protection 
     of research and development, but has not reached the stage 
     associated with equity or securitized investments typical of 
     venture capital or mezzanine financing.
       ``(15) State.--The term `State' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, the Commonwealth of the Northern Mariana 
     Islands, and any other commonwealth, territory, or possession 
     of the United States.

     ``SEC. 2. ESTABLISHMENT.

       ``There is established a Science Park Venture Capital 
     Program, under which the Administrator may--
       ``(1) enter into participation agreements with companies 
     granted final approval under section 374(e);
       ``(2) guarantee the debentures issued by science park 
     venture capital companies under section 375; and
       ``(3) award grants to science park venture capital 
     companies under section 377.

     ``SEC. 3. REQUIREMENTS FOR SCIENCE PARK VENTURE CAPITAL 
                   COMPANIES.

       ``(a) Organization.--For purposes of this part, a science 
     park venture capital company--
       ``(1) shall be an incorporated body, a limited liability 
     company, or a limited partnership organized and chartered, or 
     otherwise existing under State law solely for the purpose of 
     performing the functions and conducting the activities 
     authorized by this part;
       ``(2) if incorporated, shall have succession for a period 
     of not less than 30 years unless earlier dissolved by the 
     shareholders of the company;
       ``(3) if a limited partnership or a limited liability 
     company, shall have succession for a period of not less than 
     10 years; and
       ``(4) shall possess the powers reasonably necessary to 
     perform the functions and conduct the activities.
       ``(b) Articles.--The articles of any science park venture 
     capital company--
       ``(1) shall specify in general terms--
       ``(A) the purposes for which the company is formed;
       ``(B) the name of the company;
       ``(C) the area or areas in which the operations of the 
     company are to be carried out;
       ``(D) the place where the principal office of the company 
     is to be located; and
       ``(E) the amount and classes of the shares of capital stock 
     of the company;
       ``(2) may contain any other provisions consistent with this 
     part that the science park venture capital company may 
     determine to be appropriate to adopt for the regulation of 
     the business of the company and the conduct of the affairs of 
     the company; and
       ``(3) shall be subject to the approval of the 
     Administrator.
       ``(c) Capital Requirements.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     private capital of each science park venture capital company 
     shall be not less than--
       ``(A) $5,000,000; or
       ``(B) $10,000,000, with respect to each science park 
     venture capital company authorized or seeking authority to 
     issue participating securities to be purchased or guaranteed 
     by the Administrator under this part.
       ``(2) Exception.--The Secretary may, in the discretion of 
     the Administrator, and based on a showing of special 
     circumstances and good cause, permit the private capital of 
     science park venture capital company described in paragraph 
     (1)(B) to be less than $10,000,000, but not less than 
     $5,000,000, if the Administrator determines that the action 
     would not create or otherwise contribute to an unreasonable 
     risk of default or loss to the Federal Government.
       ``(3) Adequacy.--In addition to the requirements under 
     paragraph (1), the Administrator shall--
       ``(A) determine whether the private capital of each science 
     park venture capital company is adequate to ensure a 
     reasonable prospect that the company will be operated soundly 
     and profitably, and managed actively and prudently in 
     accordance with the articles of the company;
       ``(B) determine that the science park venture capital 
     company will be able to comply with the requirements of this 
     part; and
       ``(C) ensure that the science park venture capital company 
     is designed primarily to meet equity capital needs of the 
     businesses in which the company invests and not to compete 
     with traditional financing by commercial lenders of high-
     technology startup businesses.
       ``(d) Diversification of Ownership.--The Administrator 
     shall ensure that the management of each science park venture 
     capital company licensed after the date of enactment of this 
     part is sufficiently diversified from, and unaffiliated with, 
     the ownership of the company so as to ensure independence and 
     objectivity in the financial management and oversight of the 
     investments and operations of the company.

     ``SEC. 4. SELECTION OF SCIENCE PARK VENTURE CAPITAL 
                   COMPANIES.

       ``(a) Eligibility.--A company is eligible to participate as 
     a science park venture capital company in the Program if the 
     company--
       ``(1) is a newly formed for-profit entity or a newly formed 
     for-profit subsidiary of an existing entity;
       ``(2) has a management team in the science park with 
     experience in development financing or relevant venture 
     capital financing;
       ``(3) has a primary objective of economic development of 
     the science park and its surrounding geographic area; and
       ``(4) promotes innovation of science and technology in the 
     science park.
       ``(b) Application.--Any eligible company that desires to 
     participate as a science park venture capital company in the 
     Program shall submit an application to the Administrator, 
     which shall include--
       ``(1) a business plan describing how the company intends to 
     make successful venture capital investments in start up 
     companies within the science park;
       ``(2) a description of the qualifications and general 
     reputation of the management of the company;
       ``(3) an estimate of the ratio of cash to in-kind 
     contributions of binding commitments to be made to the 
     company under the Program;
       ``(4) a description of the criteria to be used to evaluate 
     whether, and to what extent, the company meets the objectives 
     of the Program;
       ``(5) information regarding the management and financial 
     strength of any parent firm, affiliated firm, or other firm 
     essential to the success of the business plan of the company; 
     and
       ``(6) such other information as the Administrator may 
     require.
       ``(c) Status.--Not later than 90 days after the initial 
     receipt by the Administrator of an application under this 
     section, the Administrator shall provide to the applicant a 
     written report that describes the status of the applicants 
     and any requirements remaining for completion of the 
     application.
       ``(d) Matters Considered.--In reviewing and processing any 
     application under this section, the Administrator--
       ``(1) shall determine if--
       ``(A) the applicant meets the requirements under subsection 
     (e); and
       ``(B) the management of the applicant is qualified and has 
     the knowledge, experience, and capability necessary to comply 
     with this part;
       ``(2) shall take into consideration--
       ``(A) the need for and availability of financing for high-
     technology start-up companies in the science park in which 
     the applicant is to commence business;
       ``(B) the general business reputation of the owners and 
     management of the applicant; and
       ``(C) the probability of successful operations of the 
     applicant, including adequate profitability and financial 
     soundness;
       ``(3) shall not take into consideration any projected 
     shortage or unavailability of grant funds or leverage; and
       ``(4) shall emphasize the promotion of regional science 
     park venture capital companies to serve multiple research 
     parks in order to avoid geographic dilution of management and 
     capital.
       ``(e) Approval; License.--The Administrator may approve an 
     applicant to operate as a science park venture capital 
     company under this part and license the applicant as a 
     science park venture capital company, if--
       ``(1) the Administrator determines that the application 
     satisfies the requirements under subsection (b);
       ``(2) the Administrator approves--
       ``(A) the area in which the science park venture capital 
     company is to conduct its operations; and
       ``(B) the establishment of branch offices or agencies (if 
     authorized by the articles); and
       ``(3) the applicant enters into a participation agreement 
     with the Administrator.

     ``SEC. 5. DEBENTURES.

       ``(a) Guarantees.--The Administrator may guarantee the 
     timely payment of principal and interest, as scheduled, on 
     debentures issued by any science park venture capital 
     company.
       ``(b) Terms and Conditions.--The Administrator may make 
     guarantees under this section on such terms and conditions as 
     the Administrator determines to be appropriate, except that 
     the term of any debenture guaranteed under this section shall 
     not exceed 15 years.
       ``(c) Full Faith and Credit of the United States.--The full 
     faith and credit of the United States is pledged to pay all 
     amounts that may be required to be paid under any guarantee 
     under this part.
       ``(d) Maximum Guarantee.--The Administrator may--
       ``(1) guarantee the debentures issued by a science park 
     venture capital company only to the extent that the total 
     face amount of outstanding guaranteed debentures of such 
     company does not exceed the lesser of--
       ``(A) 300 percent of the private capital of the company, or
       ``(B) $100,000,000; and
       ``(2) provide for the use of discounted debentures.

[[Page 19250]]



     ``SEC. 6. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

       ``(a) Issuance.--The Administrator may issue trust 
     certificates representing ownership of all or a part of 
     debentures issued by a science park venture capital company 
     and guaranteed by the Administrator under this part, if such 
     certificates are based on and backed by a trust or pool 
     approved by the Administrator and composed solely of 
     guaranteed debentures.
       ``(b) Guarantee.--
       ``(1) In general.--The Administrator may, under such terms 
     and conditions as it deems appropriate, guarantee the timely 
     payment of the principal of and interest on trust 
     certificates issued by the Administrator or its agents for 
     purposes of this section.
       ``(2) Limitation.--Each guarantee under this subsection 
     shall be limited to the extent of principal and interest on 
     the guaranteed debentures that compose the trust or pool.
       ``(3) Prepayment or default.--
       ``(A) In general.--In the event that a debenture in a trust 
     or pool is prepaid, or in the event of default of such a 
     debenture, the guarantee of timely payment of principal and 
     interest on the trust certificates shall be reduced in 
     proportion to the amount of principal and interest such 
     prepaid debenture represents in the trust or pool.
       ``(B) Interest.--Interest on prepaid or defaulted 
     debentures shall accrue and be guaranteed by the 
     Administrator only through the date of payment of the 
     guarantee.
       ``(C) Redemption.--At any time during its term, a trust 
     certificate may be called for redemption due to prepayment or 
     default of all debentures.
       ``(c) Full Faith and Credit.--The full faith and credit of 
     the United States is pledged to pay all amounts that may be 
     required to be paid under any guarantee of a trust 
     certificate issued by the Administrator or its agents under 
     this section.
       ``(d) Subrogation and Ownership Rights.--
       ``(1) Subrogation.--If the Administrator pays a claim under 
     a guarantee issued under this section, it shall be subrogated 
     fully to the rights satisfied by such payment.
       ``(2) Ownership rights.--No provision of Federal, State, or 
     local law shall preclude or limit the exercise by the 
     Administrator of its ownership rights in the debentures 
     residing in a trust or pool against which 1 or more trust 
     certificates are issued under this section.
       ``(e) Management and Administration.--
       ``(1) Registration.--The Administrator may provide for a 
     central registration of all trust certificates issued under 
     this section.
       ``(2) Contracting of functions.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, the Administrator may contract with an agent or agents 
     to carry out on behalf of the Administrator the pooling and 
     the central registration functions provided for in this 
     section, including--
       ``(i) maintenance, on behalf of and under the direction of 
     the Administrator, of such commercial bank accounts or 
     investments in obligations of the United States as may be 
     necessary to facilitate the creation of trusts or pools 
     backed by debentures guaranteed under this part; and
       ``(ii) the issuance of trust certificates to facilitate the 
     creation of such trusts or pools.
       ``(B) Fidelity bond or insurance requirement.--Any agent 
     performing functions on behalf of the Administrator under 
     this paragraph shall provide a fidelity bond or insurance in 
     such amounts as the Administrator determines necessary to 
     fully protect the interests of the United States.
       ``(C) Regulation of brokers and dealers.--The Administrator 
     may regulate brokers and dealers in trust certificates issued 
     under this section.
       ``(D) Electronic registration.--Nothing in this subsection 
     may be construed to prohibit the use of a book entry or other 
     electronic form of registration for trust certificates issued 
     under this section.

     ``SEC. 7. OPERATIONAL ASSISTANCE GRANTS.

       ``(a) In General.--
       ``(1) Grants authorized.--The Administrator may award 
     grants to science park venture capital companies and other 
     entities to provide operational assistance to high-technology 
     start-up companies financed, or expected to be financed, by 
     such companies.
       ``(2) Terms.--Grants under this subsection shall be made 
     over a period not to exceed 10 years, under such other terms 
     as the Administrator may require.
       ``(3) Grant amount.--Each grant awarded under this 
     subsection shall be equal to the lesser of--
       ``(A) 10 percent of the private capital raised by the 
     science park venture capital company; or
       ``(B) $1,000,000.
       ``(4) Other entities.--The amount of a grant made under 
     this subsection to any entity other than a science park 
     venture capital company shall be equal to the resources (in 
     cash or in kind) raised by the entity in accordance with the 
     requirements applicable to science park venture capital 
     companies under this part.
       ``(b) Supplemental Grants.--
       ``(1) In general.--The Administrator may award supplemental 
     grants to science park venture capital companies and other 
     entities, under such terms as the Administrator may require, 
     to provide additional operational assistance to start-up 
     companies financed, or expected to be financed, by such 
     companies or entities.
       ``(2) Matching requirement.--The Administrator may require, 
     as a condition of any supplemental grant made under this 
     subsection, that the company or entity receiving the grant 
     provide a matching contribution equal to 50 percent of the 
     amount of the supplemental grant from non-Federal cash or in-
     kind resources.
       ``(c) Limitation.--None of the assistance made available 
     under this section may be used for any overhead or general 
     and administrative expense of a science park venture capital 
     company or other entity.

     ``SEC. 8. REPORTING REQUIREMENTS.

       ``(a) Science Park Venture Capital Companies.--Each science 
     park venture capital company shall provide the Administrator 
     with such information as the Administrator may require, 
     including information relating to the criteria described in 
     section 374(b)(4).
       ``(b) Public Reports.--
       ``(1) In general.--The Administrator shall prepare and make 
     available to the public an annual report on the Program, 
     which shall include detailed information on--
       ``(A) the number of science park venture capital companies 
     licensed by the Administrator during the previous fiscal 
     year;
       ``(B) the aggregate amount of leverage that science park 
     venture capital companies have received from the Federal 
     Government during the previous fiscal year;
       ``(C) the aggregate number of each type of leveraged 
     instruments used by science park venture capital companies 
     during the previous fiscal year, and how each such number 
     compares to the number in previous fiscal years;
       ``(D) for the previous fiscal year, the number of--
       ``(i) science park venture capital company licenses 
     surrendered; and
       ``(ii) the number of science park venture capital companies 
     placed in liquidation;
       ``(E) the amount and type of leverage each such company has 
     received from the Federal Government;
       ``(F) the amount of losses sustained by the Federal 
     Government as a result of operations under this part during 
     the previous fiscal year and an estimate of the total losses 
     that the Federal Government can reasonably expect to incur as 
     a result of the operations during the current fiscal year;
       ``(G) actions taken by the Administrator to maximize 
     recoupment of funds of the Federal Government expended to 
     implement and administer the Program during the previous 
     fiscal year and to ensure compliance with the requirements of 
     this part, including implementing regulations;
       ``(H) the amount of Federal Government leverage that each 
     licensee received in the previous fiscal year and the types 
     of leverage instruments used by each licensee;
       ``(I) for each type of financing instrument, the sizes, 
     types of geographic locations, and other characteristics of 
     the small business investment companies using the instrument 
     during the previous fiscal year, including the extent to 
     which the investment companies have used the leverage from 
     each instrument to make loans or equity investments in 
     science parks; and
       ``(J) the actions of the Administrator to carry out this 
     part.
       ``(2) Prohibition.--In compiling the report required under 
     paragraph (1), the Administrator may not--
       ``(A) compile the report in a manner that permits 
     identification of any particular type of investment by an 
     individual science park venture capital company in which a 
     science park venture capital company invests; or
       ``(B) release any information that is prohibited under 
     section 1905 of title 18, United States Code.

     ``SEC. 9. EXAMINATIONS.

       ``(a) In General.--Each science park venture capital 
     company that participates in the Program shall be subject to 
     examinations made at the direction of the Administrator, in 
     accordance with this section.
       ``(b) Assistance of Private Sector Entities.--An 
     examination under this section may be conducted with the 
     assistance of a private sector entity that has the 
     qualifications and expertise necessary to conduct such an 
     examination.
       ``(c) Costs.--
       ``(1) In general.--The Administrator may assess the cost of 
     an examination under this section, including compensation of 
     the examiners, against the science park venture capital 
     company examined.
       ``(2) Payment.--Any science park venture capital company 
     against which the Administrator assesses costs under this 
     subsection shall pay the costs assessed.
       ``(d) Deposit of Funds.--Funds collected under this 
     section--
       ``(1) shall be deposited in the account that incurred the 
     costs for carrying out this section;
       ``(2) shall be made available to the Administrator to carry 
     out this section, without further appropriation; and
       ``(3) shall remain available until expended.

     ``SEC. 10. BANK PARTICIPATION.

       ``(a) In General.--Except as provided under subsection (b), 
     any national bank, any member bank of the Federal Reserve 
     System, and, to the extent permitted under applicable State 
     law, any insured bank that is

[[Page 19251]]

     not a member of such system, may invest in--
       ``(1) any science park venture capital company; or
       ``(2) any entity established to invest solely in science 
     park venture capital companies.
       ``(b) Limitation.--No bank described in subsection (a) may 
     make investments described in that subsection that are 
     greater than 5 percent of the capital and surplus of the 
     bank.

     ``SEC. 11. FEES.

       ``(a) In General.--Except as provided under subsection (b), 
     the Administrator may charge such fees as it determines to be 
     appropriate with respect to any guarantee or grant issued 
     under this part.
       ``(b) Exception.--The Administrator shall not collect a fee 
     for any guarantee of a trust certificate under this section. 
     Any agent of the Administrator may collect a fee, upon the 
     approval of the Administrator, for the functions described in 
     section 376(e)(2).

     ``SEC. 12. APPLICABLE LAW.

       ``(a) In General.--The provisions relating to New Market 
     Venture Capital companies under sections 361 through section 
     366 shall apply to science park venture capital companies.
       ``(b) Purchase of Guaranteed Obligations.--Section 318 
     shall not apply to any debenture issued by a science park 
     venture capital company under this part.

     ``SEC. 13. REGULATIONS.

       ``Not later than 12 months after the date of enactment of 
     this part, the Administrator shall issue such regulations as 
     it determines necessary to carry out this part.

     ``SEC. 14. AUTHORIZATIONS OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to the Administration for each of the fiscal years 2006 
     through 2011, to remain available until expended--
       ``(1) such sums as may be necessary for the cost, as 
     defined in section 502(5) of the Federal Credit Reform Act of 
     1990, of guaranteeing $500,000,000 of debentures under this 
     part; and
       ``(2) $50,000,000 to make grants under this part.
       ``(b) Funds Collected for Examinations.--Funds deposited 
     pursuant to section 362(d) may only be used for--
       ``(1) examinations under section 362; and
       ``(2) other oversight activities of the Program.''.

     SEC. 4. TAX INCENTIVES FOR INVESTMENT IN SCIENCE PARKS.

       (a) Expensing.--
       (1) In general.--Section 179(d) of the Internal Revenue 
     Code of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following new paragraph:
       ``(11) Application of section to property placed in service 
     in science parks.--
       ``(A) In general.--In the case of any section 179 property 
     placed in service in any science park, this section shall be 
     applied without regard to paragraphs (1) and (2) of 
     subsection (b).
       ``(B) Science park.--
       ``(i) In general.--The term `science park' means a group of 
     interrelated companies and institutions, including suppliers, 
     service providers, institutions of higher education, start-up 
     incubators, and trade associations that cooperate and compete 
     and are located in a specific area whose administration 
     promotes real estate development, technology transfer, and 
     partnerships between such companies and institutions, and 
     does not mean a business or industrial park.
       ``(ii) Business or industrial park.--The term `business or 
     industrial park' means primarily a for-profit real estate 
     venture of businesses or industries which do not necessarily 
     reinforce each other through supply chain or technology 
     transfer mechanisms.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply with respect to property placed in service after 
     the date of the enactment of this Act.
       (b) Tax Credit for Research Activities.--
       (1) In general.--Section 41(a) of the Internal Revenue Code 
     of 1986 (relating to credit for increasing research 
     activities) is amended by striking ``and'' at the end of 
     paragraph (1)(B), by striking the period at the end of 
     paragraph (2) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(3) 20 percent of the qualified research expenses paid or 
     incurred by the taxpayer during the taxable year in carrying 
     on any trade or business located in a science park.''.
       (2) Science park.--Section 41(f) of such Code (relating to 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(6) Science park.--
       ``(A) In general.--The term `science park' means a group of 
     interrelated companies and institutions, including suppliers, 
     service providers, institutions of higher education, start-up 
     incubators, and trade associations that cooperate and compete 
     and are located in a specific area whose administration 
     promotes real estate development, technology transfer, and 
     partnerships between such companies and institutions, and 
     does not mean a business or industrial park.
       ``(B) Business or industrial park.--The term `business or 
     industrial park' means primarily a for-profit real estate 
     venture of businesses or industries which do not necessarily 
     reinforce each other through supply chain or technology 
     transfer mechanisms.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
       (c) Private Business Use of a Bond-financed Facility Does 
     Not Include Performance of Research Using Federal Government 
     Funding in Such Facility.--
       (1) In general.--Subparagraph (A) of section 141(b)(6) of 
     the Internal Revenue Code of 1986 (defining private business 
     use) is amended by inserting ``or use in the performance of 
     research using, in whole or in part, funds of the United 
     States or any agency or instrumentality thereof'' before 
     ``shall not be taken into account''.
       (2) Effective date.--
       (A) In general.--The amendment made by this subsection 
     shall apply to any use on or after the date of the enactment 
     of this Act.
       (B) No inference.--Nothing in the amendment made by this 
     subsection shall be construed to create any inference with 
     respect to the use of tax-exempt bond financed facilities 
     before the effective date of such amendment.
                                 ______
                                 
      By Mr. CHAMBLISS (for himself and Mr. Roberts):
  S. 1582. A bill to reauthorize the United States Grain Standards Act, 
to facilitate the official inspection at export port locations of grain 
required or authorized to be inspected under such Act, and for other 
purposes; to the Committee on Agriculture, Nutrition, and Forestry.
  Mr. CHAMBLISS. Mr. President, today I introduce legislation to 
reauthorize the U.S. Grain Standards Act, which expires September 30, 
2005.
  The Secretary of Agriculture was granted authority by Congress to 
establish grain standards in 1916. Sixty years later, Congress 
authorized the Federal Grain Inspection Service in order to ensure the 
development and maintenance of uniform U.S. standards, to develop 
inspection and weighing procedures for grain in domestic and export 
trade, and to facilitate grain marketing. The U.S. grain inspection 
system is recognized worldwide for its accuracy and reliability.
  On May 25, 2005, the Agriculture Committee held a hearing to review 
the reauthorization of the Act during which the industry expressed its 
desire to provide authority to the United States Department of 
Agriculture, USDA, to utilize third-party entities at export terminals. 
Inspections at these terminals are currently conducted by Federal 
inspectors or employees of State Departments of Agriculture. Industry 
proposes, and commodity groups support, granting USDA the authority to 
utilize third-party entities at U.S. export terminals in order to 
improve competitiveness of U.S. agriculture worldwide.
  Congress has a unique opportunity to provide this authority to USDA, 
and I have included the industry's proposal in this legislation. USDA 
estimates that by 2009, 75 percent of Federal grain inspectors will be 
eligible for retirement. The short-term staffing situation facing USDA 
should ease the Department's transition in delivering inspection and 
weighing services at export terminals.
  In addition to providing USDA the authority to use third-party 
entities at export terminal locations, this 5-year reauthorization bill 
that I am introducing contains measures to ensure the integrity of the 
Federal grain inspection system. The bill clearly states that official 
inspections continue to be the direct responsibility of USDA. USDA will 
also have the ability to issue rules and regulations to further enhance 
the work and supervision of these entities. The ability of the U.S. to 
increase long-term competitiveness coupled with a system that can 
maintain its strong reputation worldwide certainly holds great 
potential for success.
  This bill is identical to the reauthorization bill recently 
considered and approved unanimously by the Committee on Agriculture in 
the House of Representatives. It is my hope that this measure will 
garner equivalent support in this body as reauthorization of the U.S. 
Grain Standards Act moves forward.
                                 ______
                                 
      By Mr. SMITH (for himself, Mr. Dorgan, and Mr. Pryor):

[[Page 19252]]

  S. 1583. A bill to amend the Communications Act of 1934 to expand the 
contribution base for universal service, establish a separate account 
within the universal service fund to support the deployment of 
broadband service in unserved areas of the United States, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.
  Mr. SMITH. Mr. President, I rise today with Senators Dorgan and Pryor 
to introduce the ``Universal Service for the 21st Century Act.'' For 
more than 70 years, the preservation and advancement of universal 
service has been a fundamental goal of our telecommunications laws. In 
order to ensure the long term sustainability of the fund and to add 
support for broadband services that are increasingly important to our 
Nation's economic development, our bill reforms the system of payments 
into the universal service fund and creates a $500 million account to 
bring broadband to unserved areas of the country.
  The achievements of the universal service fund are undeniable. 
Affordable telephone services are available in many remote and high 
cost areas of the country, including Oregon, because of the fund. Large 
and small telecommunications carriers serve sparsely populated rural 
communities and schools and libraries receive affordable Internet 
services because of the fund. The need for a robust and sustainable 
universal service system certainly remains, but it has become 
increasingly clear that major reforms are needed if the fund is to meet 
the evolving communications needs of the American people.
  In Section 706 of the Telecommunications Act of 1996, Congress 
directed the Federal Communications Commission, FCC, and the States to 
encourage deployment of advanced telecommunications services, including 
broadband, on a reasonable and timely basis. Earlier this month, the 
FCC released data on broadband connections that shows significant 
gains, in deployment. According to the report, there were nearly 29 
million broadband connections throughout the country in 2004.
  But we can do more. Although there have been well documented 
successes in the deployment of broadband services in many parts of the 
country, others remain unserved, whether due to geography, low 
population density or other reasons. These largely rural areas deserve 
the benefits of an advanced communications infrastructure and 
increasingly need that infrastructure to build and maintain robust 
economies.
  Accordingly, to meet the needs of these communities, we have created 
a $500 million ``Broadband for Unserved Areas Account'' within the 
universal service fund that will be used solely for the deployment of 
broadband networks in unserved areas. This funding will be awarded 
competitively based on merit to a single broadband provider in each 
unserved area. The FCC will establish the guidelines for this new 
account. All technologies will be eligible for funding.
  The bill also directs the FCC to update its definition of broadband 
to ensure that our communications policies are forward-looking and 
competitive with the speeds and capabilities available in other 
industrialized countries. The FCC will revisit its definition annually 
and will prepare reports for Congress regarding gains in broadband 
penetration in unserved areas and the need for an increase or decrease 
in funding.
  In addition, the bill addresses a crisis in the structure of the 
universal service fund which has threatened its long term viability. 
Currently, the burden of universal service fund contributions is placed 
on a limited class of carriers, causing inequities in the system and 
incentives to avoid contribution. As demands on the fund increase, 
contributors are being forced to pay more. This tension threatens to 
cripple the fund. Our bill therefore authorizes and directs the FCC to 
establish a permanent mechanism to support universal service.
  By reforming the universal service system and spurring the deployment 
of broadband services, our legislation will ensure that our Nation's 
communications infrastructure will continue to grow, and to be the 
robust and connected network that Americans expect and deserve.
  I ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1583

       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 ``Universal Service for the 
     21st Century Act''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) The preservation and advancement of universal service 
     is a fundamental goal of the Communications Act of 1934 and 
     the Telecommunications Act of 1996.
       (2) Access throughout the nation to high-quality and 
     advanced telecommunications and information services is 
     essential to secure the many benefits of our modern society.
       (3) As the Internet becomes a critical element of any 
     economic and social growth, universal service should shift 
     from sustaining voice grade infrastructure promoting the 
     development of efficient and advanced networks that can 
     sustain advanced communications services.
       (4) The current structure established by the Federal 
     Communications Commission has placed the burden of universal 
     service support on only a limited class of carriers, causing 
     inequities in the system, incentives to avoid contribution, 
     and a threat to the long term sustainability of the universal 
     service fund.
       (5) Current fund contributors are paying an increasing 
     portion of their interstate and international service revenue 
     into the universal service fund.
       (6) Any fund contribution system should be equitable, 
     nondiscriminatory and competitively neutral, and the funding 
     mechanism must be sufficient to ensure affordable 
     communications services for all.

     SEC. 3. UNIVERSAL SERVICE FUND CONTRIBUTION REQUIREMENTS.

       (a) Inclusion of Intrastate Revenues.--Section 254(d) of 
     the Communications Act of 1934 (47 U.S.C. 254(d)) is 
     amended--
       (1) by striking ``Every'' and inserting ``Notwithstanding 
     section 2(b) of this Act, a'';
       (2) by striking ``interstate'' each place it appears; and
       (3) by adding at the end ``Nothing in this subsection 
     precludes a State from adopting rules or regulations to 
     preserve and advance universal service within that State as 
     permitted by section 2(b) and subsections (b) and (f) of this 
     section.''.
       (b) Universal Service Proceeding.--
       (1) Proceeding.--The Federal Communications Commission 
     shall initiate a proceeding, or take action pursuant to any 
     proceeding on universal service existing on the date of 
     enactment of this Act, to establish a permanent mechanism to 
     support universal service, that will preserve and enhance the 
     long term financial stability of universal service, and will 
     promote the public interest.
       (2) Criteria.--In establishing such a permanent mechanism, 
     the Commission may include collection methodologies such as 
     total telecommunications revenues, the assignment of 
     telephone numbers and any successor identifier, connections 
     (which could include carriers with a retail connection to a 
     customer), and any combination thereof if the methodology--
       (A) promotes competitive neutrality among providers and 
     technologies;
       (B) to the greatest extent possible ensures that all 
     communications services that are capable of supporting 2-way 
     voice communications be included in the assessable base for 
     universal service support;
       (C) takes into account the impact on low volume users, and 
     proportionately assesses high volume users, through a 
     capacity analysis or some other means; and
       (D) ensures that a carrier is not required to contribute 
     more than once for the same transaction, activity, or 
     service.
       (3) Excluded providers.--If a provider of communications 
     services that are capable of supporting 2-way voice 
     communications would not contribute under the methodology 
     established by the Commission, the Commission shall require 
     such a provider to contribute to universal service under an 
     equitable alternative methodology if exclusion of the 
     provider from the contribution base would jeopardize the 
     preservation, enhancement, and long term sustainability of 
     universal service.
       (4) Deadline.--The Commission shall complete the proceeding 
     and issue a final rule not more than 6 months after the date 
     of enactment of this Act.

     SEC. 4. INTERCARRIER COMPENSATION.

       (a) Jurisdiction.--Notwithstanding section 2(b) of the 
     Communications Act of 1934 (47 U.S.C. 152(b)), the Federal 
     Communications Commission shall have exclusive jurisdiction 
     to establish rates for inter-carrier compensation payments 
     and shall establish rules providing a comprehensive, unified 
     system of

[[Page 19253]]

     inter-carrier compensation, including compensation for the 
     origination and termination of intrastate telecommunications 
     traffic.
       (b) Criteria.--In establishing these rules, and in 
     conjunction with its action in its universal service 
     proceeding under section 3, the Commission, in consultation 
     with the Federal-State Joint Board on Universal Service, 
     shall--
       (1) ensure that the costs associated with the provision of 
     interstate and intrastate telecommunications services are 
     fully recoverable;
       (2) examine whether sufficient requirements exist to ensure 
     traffic contains necessary identifiers for the purposes of 
     inter-carrier compensation; and
       (3) to the greatest extent possible, minimize opportunities 
     for arbitrage.
       (c) Sufficient Support.--The Commission should, to the 
     greatest extent possible, ensure that as a result of its 
     universal service and inter-carrier compensation proceedings, 
     the aggregate amount of universal service support and inter-
     carrier compensation provided to local exchange carriers with 
     fewer than 2 percent of the Nation's subscriber lines will be 
     sufficient to meet the just and reasonable costs of such 
     local exchange carriers.
       (d) Negotiated Agreements.--Nothing in this section 
     precludes carriers from negotiating their own inter-carrier 
     compensation agreements.
       (e) Deadline.--The Commission shall complete the pending 
     Intercarrier Compensation proceeding in Docket No. 01-92 and 
     issue a final rule not more than 6 months after the date of 
     enactment of this Act.

     SEC. 5. ESTABLISHMENT OF BROADBAND ACCOUNT WITHIN UNIVERSAL 
                   SERVICE FUND.

       Part I of title II of the Communications Act of 1934 (47 
     U.S.C. 201 et seq.) is amended by inserting after section 254 
     the following:

     ``SEC. 254A. BROADBAND FOR UNSERVED AREAS ACCOUNT.

       ``(a) Account Established.--
       ``(1) In general.--There shall be, within the universal 
     service fund established pursuant to section 254, a separate 
     account to be known as the `Broadband for Unserved Areas 
     Account'.
       ``(2) Purpose.--The purpose of the account is to provide 
     financial assistance for the deployment of broadband 
     communications services to unserved areas throughout the 
     United States.
       ``(b) Implementation.--
       ``(1) In general.--The Commission shall by rule establish--
       ``(A) guidelines for determining which areas may be 
     considered to be unserved areas for purposes of this section;
       ``(B) criteria for determining which facilities-based 
     providers of broadband communications service, and which 
     projects, are eligible for support from the account;
       ``(C) procedural guidelines for awarding assistance from 
     the account on a merit-based and competitive basis;
       ``(D) guidelines for application procedures, accounting and 
     reporting requirements, and other appropriate fiscal controls 
     for assistance made available from the account; and
       ``(E) a procedure for making funds in the account available 
     among the several States on an equitable basis.
       ``(2) Study and annual reports on unserved areas.--
       ``(A) In general.--Within 6 months after the date of 
     enactment of the Universal Service for the 21st Century Act, 
     the Commission shall conduct a study to determine which areas 
     of the United States may be considered to be `unserved areas' 
     for purposes of this section. For purposes of the study and 
     for purposes of the guidelines to be established under 
     subsection (a)(1), the availability of broadband 
     communications services by satellite in an area shall not 
     preclude designation of that area as unserved if the 
     Commission determines that subscribership to the service in 
     that area is de minimis.
       ``(B) Annual updates.--The Commission shall update the 
     study annually.
       ``(C) Report.--The Commission shall transmit a report to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Energy and 
     Commerce setting forth the findings and conclusions of the 
     Commission for the study and each update under this paragraph 
     and making recommendations for an increase or decrease, if 
     necessary, in the amounts credited to the account under this 
     section.
       ``(3) State involvement.--The Commission may delegate the 
     distribution of funding under this section to States subject 
     to Commission guidelines and approval by the Commission.
       ``(c) Limitations.--
       ``(1) Annual amount.--Amounts obligated or expended under 
     subsection (c) for any fiscal year may not exceed 
     $500,000,000.
       ``(2) Use of funds.--To the extent that amounts in the 
     account are not obligated or expended for financial 
     assistance under this section, they shall be used to support 
     universal service under section 254.
       ``(3) Support limited to facilities-based single provider 
     per unserved area.--Assistance under this section may be 
     provided only to--
       ``(A) facilities-based providers of broadband 
     communications service; and
       ``(B) 1 facility-based provider of broadband communications 
     service in any unserved area.
       ``(d) Application With Sections 214, 254, and 410.--
       ``(1) Section 214(e).--Section 214(e) shall not apply to 
     the Broadband for Unserved Areas Account.
       ``(2) Section 254.--Section 254 shall be applied to the 
     Broadband for Unserved Areas Account--
       ``(A) by disregarding--
       ``(i) subsections (a) and (e) thereof; and
       ``(ii) any other provision thereof determined by the 
     Commission to be inappropriate or inapplicable to 
     implementation of this section; and
       ``(B) by reconciling, to the maximum extent feasible and in 
     accordance with guidelines prescribed by the Commission, the 
     implementation of this section with the provisions of 
     subsections (h) and (l) thereof.
       ``(3) Section 410.--Section 410 shall not apply to the 
     Broadband for Unserved Areas Account.
       ``(e) Definitions.--In this section:
       ``(1) Broadband.--
       ``(A) In general.--The term `broadband' shall be defined by 
     the Commission in accordance with the requirements of this 
     paragraph.
       ``(B) Revision of initial definition.--Within 30 days after 
     the date of enactment of the Universal Service for the 21st 
     Century Act, the Commission shall revise its definition of 
     broadband to require a data rate--
       ``(i) greater than the 200 kilobits per second standard 
     established in its Section 706 Report (14 FCC Rec. 2406); and
       ``(ii) consistent with data rates for broadband 
     communications services generally available to the public on 
     the date of enactment of that Act.
       ``(C) Annual review of definition.--The Commission shall 
     review its definition of broadband no less frequently than 
     once each year and revise that definition as appropriate.
       ``(2) Broadband communications service defined.--The term 
     `broadband communications service' means a high-speed 
     communications capability that enables users to originate and 
     receive high-quality voice, data, graphics, and video 
     communications using any technology.''.

     SEC. 6. IMPLEMENTATION OF SECTION 254A.

       The Federal Communications Commission shall complete a 
     proceeding and issue a final rule to implement section 254A 
     of the Communications Act of 1934 not more than 6 months 
     after the date of enactment of this Act.

  Mr. DORGAN. Mr. President, today my colleagues Senators Smith, Pryor 
and I are introducing legislation to ensure the sustainability and 
longevity of the Universal Service Fund and to support the deployment 
of broadband to unserved areas.
  Section 254 of the 1996 Telecommunications Act sets forth the 
principles of universal service. Section 254 states that all citizens, 
including rural consumers, deserve access to telecommunications 
services that are reasonably comparable to those services provided in 
urban areas, at reasonably comparable rates.
  This goal to ensure that rural consumers are not left behind 
continues to be critical, particularly as technology advances in leaps 
and bounds in this 21st century. Access to a robust communications 
infrastructure is a necessity for all Americans.
  Our bill will further that goal in two ways. First, it will ensure 
that the Federal Communications Commission, FCC, will address reform of 
universal service and intercarrier compensation to support the cost of 
a national, quality communications network.
  Over time, the Universal Service Fund has become increasingly 
strained, with the burden of support placed on only a limited class of 
carriers, creating inequities in the system and incentives to avoid 
contribution.
  Reform is needed, and our bill directs the FCC to embark upon this 
reform, with specific guidelines to ensure equity and fairness and 
continuing sufficient support for networks.
  In addition, our legislation will set up an account within the 
Universal Service Fund for broadband deployment to unserved areas. This 
will enable deployment of broadband to areas of the country that remain 
prohibitively expensive to serve, leaving consumers in those areas 
behind the technological curve.
  This legislation is only a starting point. I believe more dialogue is 
necessary among my colleagues and industry, in order to achieve 
comprehensive universal service reform. I invite my colleagues to join 
me in this dialogue and in cosponsoring this bill.

[[Page 19254]]

  Mr. President, I ask unanimous consent that a summary of this bill be 
printed in the Record following my statement.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Mr. Inouye):
  S. 1585. A bill to amend title XIX of the Social Security Act to 
reduce the costs of prescription drugs for enrollees of medicaid 
managed care organizations by extending the discounts offered under 
fee-for-service medicaid to such organizations; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, I am introducing legislation today with 
Senator Inouye entitled the Medicaid Health Plan Rebate Act of 2005.
  I ask unanimous consent that a summary of the legislation developed 
by the Association for Community Affiliated Plans, a policy statement 
by the American Public Human Services Association on the issue, and a 
letter of support from the Medicaid Health Plans of America be printed 
in the Record.
  I further ask for unanimous consent that the text of the legislation 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Association for Community Affiliated plans--Reducing Medicaid Costs 
  Without Cutting Benefits or Beneficiaries: Congress Should Equalize 
   Description Drug Costs for Beneficiaries in Medicaid Managed Care


                                Request

       As Congress and the States struggle to control the 
     skyrocketing costs of Medicaid, the Association for Community 
     Affiliated Plans (ACAP) supports a solution that will save 
     Federal, State governments and Medicaid Managed Care 
     Organizations (MCOs) up to $2 billion over ten years by 
     equalizing the treatment of prescription drug discounts 
     between Medicaid managed care and Medicaid fee- for-service. 
     In offering Medicaid managed care plans access to the 
     Medicaid drug rebate, Congress will provide relief for 
     federal and state budgets, thereby mitigating the need for 
     added cuts to Medicaid benefits or populations.


                               background

       Created by the Omnibus Budget Reconciliation Act (OBRA) of 
     1990, the Medicaid Drug Rebate Program requires a drug 
     manufacturer to have a rebate agreement with the Secretary of 
     the Department of Health and Human Services for States to 
     receive federal funding for outpatient drugs dispensed to 
     Medicaid patients. At the time the law was enacted, managed 
     care organizations were excluded from access to the drug 
     rebate program. In 1990, only 2.8 million people were 
     enrolled in Medicaid managed care and so the savings lost by 
     the carve-out were relatively small. Today, 12 million people 
     are enrolled in capitated managed care plans. This migration 
     of beneficiaries into managed care has, in turn, increased 
     States' Medicaid pharmacy costs because fewer beneficiaries 
     have access to the drug rebate.


                      challenge for medicaid plans

       Under the drug rebate, States receive between 18 and 20 
     percent discount on brand name drug prices and between 10 and 
     11 percent for generic drug prices. At the time the rebate 
     was enacted, many of the plans in Medicaid were large 
     commercial plans who believed that they could get better 
     discounts than the federal rebate. Today, Medicaid-focused 
     plans are the fastest growing sector in Medicaid managed 
     care. According to a study by the Lewin Group, Medicaid-
     focused MCOs typically only receive about a 6 percent 
     discount on brand name drugs and no discount on generics. 
     Because many MCOs (particularly smaller Medicaid-focused 
     MCOs) do not have the capacity to negotiate deeper discounts 
     with drug companies, Medicaid is overpaying for prescription 
     drugs for enrollees in Medicaid health plans.


                    Opportunity or Medicaid Savings

       The Lewin Group estimates that this proposal could save up 
     to $2 billion over 10 years. This legislation has been 
     endorsed by organizations representing both state government 
     and the managed care industry, including the National 
     Association of State Medicaid Directors, and the Association 
     for Community Affiliated Plans.
       As Congress is forced to make tough choices to control the 
     costs of the Medicaid program, this proposal offers a ``no-
     harm'' option to control costs and ensure that there is not a 
     prima facie pharmacy cost disadvantage states using managed 
     care as a cost effective alternative to Medicaid fee-for-
     service.
                                  ____


               American Public Human Services Association

            National Association of State Medicaid Directors


  Policy Statement: MCO Access to the Medicaid Pharmacy Rebate Program

     Background
       The Omnibus Budget Reconciliation Act of 1990 (OBRA `90) 
     established a Medicaid drug rebate program that requires 
     pharmaceutical manufacturers to provide a rebate to 
     participating state Medicaid agencies. In return, states must 
     cover all prescription drugs manufactured by a company that 
     participates in the rebate program. At the time of this 
     legislation, only a small percentage of Medicaid 
     beneficiaries were enrolled in capitated managed care plans 
     and were primarily served by plans that also had commercial 
     lines of business. These plans requested to be excluded from 
     the drug rebate program as it was assumed that they would be 
     able to secure a better rebate on their own. Though 
     regulations have not yet been promulgated, federal 
     interpretation to date has excluded Medicaid managed care 
     organizations from participating in the federal rebate 
     program.
       Today, the situation is quite different. 58% of all 
     Medicaid beneficiaries are enrolled in some type of managed 
     care delivery system, many in capitated health plans. Some 
     managed care plans, especially Medicaid-dominated plans that 
     make up a growing percentage of the Medicaid marketplace, are 
     looking at the feasibility of gaining access to the Medicaid 
     pharmacy rebate. However, a number of commercial plans remain 
     content to negotiate their own pharmacy rates and are not 
     interested in pursuing the Medicaid rebate.
     Policy Statement
       The National Association of State Medicaid Directors is 
     supportive of Medicaid managed care organizations (MCOs), in 
     their capacity as an agent of the state, being able to 
     participate fully in the federal Medicaid rebate program. To 
     do so, the MCO must adhere to all of the federal rebate rules 
     set forth in OBRA '90 and follow essentially the same 
     ingredient cost payment methodology used by the state. The 
     state will have the ability to make a downward adjustment in 
     the MCO's capitation rate based on the assumption that the 
     MCO will collect the full rebate instead of the state. 
     Finally, if a pharmacy benefit manager (PBM) is under 
     contract with an MCO to administer the Medicaid pharmacy 
     benefit for them, then the same principal shall apply, but in 
     no way should both the MCO and the PBM be allowed to claim 
     the rebate.
                                  ____



                             Medicaid Health Plans of America,

                                    Washington, DC, April 7, 2005.
     Margaret A. Murray,
     Executive Director, Association for Community Affiliated 
         Plans, Washington, DC.
       Dear Ms. Murray: The Medicaid Health Plans of America 
     (MHPOA) supports your proposed initiative to provide Medicaid 
     managed care organizations with access to the Medicaid drug 
     rebate found in Section 1927 of the Social Security Act. We 
     support this effort and urge Congress to enact this common 
     sense provision.
       Medicaid Health Plans of America, formed in 1993 and 
     incorporated in 1995, is a trade association representing 
     health plans and other entities participating in Medicaid 
     managed care throughout the country It's primary focus is to 
     provide research, advocacy, analysis, and organized forums 
     that support the development of effective policy solutions to 
     promote and enhance the delivery of quality healthcare. The 
     Association initially coalesced around the issue of national 
     healthcare reform, and as the policy debate changed from 
     national healthcare reform to national managed care reform, 
     the areas of focus shifted to the changes in Medicaid managed 
     care.
       Your proposal to allow Medicaid managed care organizations 
     access to the Medicaid drug rebate makes sense given the 
     migration of Medicaid beneficiaries from fee-for-service to 
     managed care since 1990. Increasingly, states have not been 
     able to take advantage of the drug rebate for those enrollees 
     in managed care, thus driving up federal and state Medicaid 
     costs. The savings estimated in the Lewin Group study are 
     significant and may help to mitigate the needs for other cuts 
     in the program. In addition, it demonstrates a proactive 
     effort to offer solutions to improving the Medicaid program. 
     We applaud this effort.
       MHPOA is proud to support this legislative proposal and 
     will endorse any legislation in Congress to enact this 
     proposal.
           Sincerely,
                                                   Thomas Johnson,
     Executive Director.
                                  ____


                                S. 1585

       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 ``Medicaid Health Plan Rebate 
     Act of 2005''.

     SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES 
                   OF MEDICAID MANAGED CARE ORGANIZATIONS.

       (a) In General.--Section 1927(j) of the Social Security Act 
     (42 U.S.C. 1396r-8(j)) is amended--
       (1) by striking paragraph (1);
       (2) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively, and

[[Page 19255]]

     realigning the left margins of such paragraphs accordingly;
       (3) in paragraph (1) (as redesignated by paragraph (2) of 
     this section), by striking ``The State'' and inserting ``In 
     general.--The State''; and
       (4) in paragraph (2) (as so redesignated), by striking 
     ``Nothing'' and inserting ``Rule of construction.--Nothing''.
       (b) Effective Date.--The amendments made by this section 
     take effect on the date of enactment of this Act and apply to 
     rebate agreements entered into or renewed under section 1927 
     of the Social Security Act (42 U.S.C. 1396r-8) on or after 
     such date.

  Mr. REID. Mr. President, I rise to express my support for the 
Healthcare Equality and Accountability Act that Senator Akaka and I are 
introducing today. We are pleased that Congressman Honda, Chair of the 
Congressional Asian Pacific American Caucus, is introducing this 
legislation in the House of Representatives with the support of the 
Congressional Black Caucus, the Congressional Hispanic Caucus, and the 
Congressional Native American Caucus.
  My first elected position was on the board of trustees of the largest 
public hospital in Southern Nevada--a hospital known today as 
University Medical Center (UMC) of Southern Nevada.
  Since my time on the hospital board, Nevada has become not just one 
of the fastest growing states in the nation, but one of the most 
diverse. The Asian and Hispanic populations have grown by over 200 
percent, and the African-American population in Nevada has increased by 
91 percent. As a result, health care providers are struggling to meet 
the needs of Nevada's diverse population.
  In one example, a woman arrived at a Las Vegas emergency room 
hemorrhaging. Doctors determined that she needed a hysterectomy, but 
she did not speak English. Her young son had to interpret, but was 
embarrassed to explain the diagnosis, so instead he told his mother she 
had a tumor in her stomach.
  In areas with rapidly growing diverse populations, miscommunications 
like this one are all too common.
  In another incident, a woman at a lab in Las Vegas was diagnosed with 
breast cancer, but lab employees couldn't find anyone to explain her 
test results to her in Spanish.
  Unfortunately, a shortage of interpreters and translated material is 
just one problem that contributes to the high rate of health 
disparities among racial and ethnic groups.
  According to a recent report by the Centers for Disease Control, 
African-Americans are 30 percent more likely to die from heart disease 
and cancer than whites, and 40 percent more likely to die from stroke.
  Yet, despite a substantial need for health care, minority groups are 
less likely to have health insurance and are less likely to receive 
appropriate care.
  If we do nothing, the health care divide will only get worse. Since 
2000, millions more Americans are without health insurance and health 
care cost have skyrocketed. About 33 percent of Hispanics, 19 percent 
of African Americans and 19 percent of Asians are uninsured.
  In just one year--from 2002 to 2003--the number of Hispanics without 
health insurance increased by one million people.
  And for the first time in four decades, infant mortality rates in 
this nation have increased. The infant mortality rate for African 
Americans is more than twice as high than for whites; and is 70 percent 
higher for American Indian and Alaska Native infants.
  The legislation we are introducing today will help to: expand the 
health care safety net, diversify the health care work force, combat 
diseases that disproportionately affect racial and ethnic minorities, 
emphasize prevention and behavioral health, promote the collection and 
dissemination of data and enhance medical research, and provide 
interpreters and translation services in the delivery of health care.
  Everyone deserves equal treatment in health care. I hope that all of 
my colleagues will support the Healthcare Equality and Accountability 
Act so we may begin to close the health care divide.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Domenici, Mrs. Murray, Mr. 
        Jeffords, Mr. Alexander, Ms. Cantwell, Mr. Akaka, Mr. Reed, Mr. 
        Chafee, Mr. Leahy, Mr. Dodd, and Mr. Dayton):
  S. 1587. A bill to amend title XXI of the Social Security Act to 
permit qualifying States to use a portion of their allotments under the 
State children's health insurance program for any fiscal year for 
certain medicaid expenditures; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, today with Senators Domenici, Murray, 
Jeffords, Alexander, Cantwell, Akaka, Reed, Chafee, Leahy, Dodd, and 
Dayton we introduce legislation entitled the ``Children's Health Equity 
Act of 2005.''
  This legislation would extend provisions that were included in Public 
Laws #108-74 and 108-127 that amended the State Children's Health 
Insurance Program, or SCHIP, to permit the states of Connecticut, 
Hawaii, Maryland, Minnesota, New Hampshire, New Mexico, Rhode Island, 
Tennessee, Vermont, Washington, and Wisconsin to apply some of their 
enhanced SCHIP matching funds toward the coverage of certain children 
enrolling in Medicaid that were part of expansions of coverage to 
children through Medicaid in those 11 states prior to the enactment of 
SCHIP.
  As a article in the September/October 2004 issue of Health Affairs by 
Genevieve Kenney and Debbie Chang points out, when SCHIP was created, 
``Inequities were . . . introduced across states because those that had 
already expanded Medicaid coverage to children could not receive the 
higher SCHIP matching rate for these children . . . [and this] meant 
that states that had been ahead of the curve in expanding Medicaid 
eligibility for children were penalized financially relative to states 
that expanded coverage after SCHIP.''
  The article adds that ``additional cross-state inequities were 
introduced'' during the creation of SCHIP because three states had 
their prior expansions grandfathered in during the bill's 
consideration. Left behind were the aforementioned 11 states.
  Fortunately, with the passage of Public Laws #108-74 and 108-127 in 
2003, the inequity was recognized and the 11 states, including New 
Mexico, were allowed to use up to 20 percent of our State's enhanced 
SCHIP allotments to pay for Medicaid eligible children above 150 
percent of poverty that were part of Medicaid expansions prior to the 
enactment of SCHIP. As the Congressional Research Service notes, ``The 
primary purpose of the 20 percent allowance was to enable qualifying 
states to receive the enhanced FMAP [Federal Medical Assistance 
Percentage] for certain children who likely would have been covered 
under SCHIP had the state not expanded their regular Medicaid coverage 
before SCHIP's enactment in August 1997.''
  Unfortunately, one major problem with the compromise was that it only 
allowed the 11 states flexibility with their SCHIP funds for allotments 
between 1998 and 2001 and not in the future. Therefore, the inequity 
continues with SCHIP allotments from 2002 and on. In fact, with the 
expiration of SCHIP funds from FY 1998-2000 as of September 2004, that 
leaves the 11 states with only the ability to spend FY 2001 SCHIP 
allotments on expansion children. For those states, such as Vermont and 
Rhode Island, that have already spent their 2001 SCHIP allotments, they 
no longer benefit from the passage of this provision. Furthermore, the 
FY 2001 funds will also expire at the end of September 2005. Thus, 
under current law, no spending under these provisions will be permitted 
in fiscal year 2006 or thereafter.
  Therefore, our legislation today prevents the full expiration of this 
provision for our 11 states and ensures that the compromise language is 
extended in the future. It is important to states such as New Mexico 
that have been severely penalized for having expanded coverage to 
children through Medicaid prior to the enactment of SCHIP. In fact, due 
to the SCHIP inequity, New Mexico has been allocated $266 million from 
SCHIP between fiscal years 1998 and 2002, and yet, has only been able 
to spend slightly over $26 million as of the

[[Page 19256]]

end of last fiscal year. In other words, New Mexico has been allowed to 
spend less than 10 percent of its federal SCHIP allocations because the 
expansion children have been previously ineligible for the enhanced 
SCHIP matching funds.
  As the health policy statement by the National Governors' Association 
reads, ``The Governors believe that it is critical that innovative 
states not be penalized for having expanded coverage to children before 
the enactment of S-CHIP, which provides enhanced funding to meet these 
goals. To this end, the Governors support providing additional funding 
flexibility to states that had already significantly expanded coverage 
to the majority of uninsured children in their states.''
  It is important to note the bill does not take money from other 
states' CHIP allotments. It simply allows our states to spend our 
States' specific CHIP allotments from the federal government on our 
uninsured children--just as other states across the country are doing.
  According to an analysis by the Congressional Research Service, thus 
far eight states have benefited financially from the passage of the 
legislation. In the fourth quarter of 2003 and for all four quarters in 
2004, Hawaii reported federal SCHIP expenditures using the 20 percent 
allowance in the amount of $380,000, Maryland received $106,000, New 
Hampshire received $2.1 million, New Mexico received $2.3 million, 
Rhode Island received $485,000, Tennessee received $4.5 million, 
Vermont received $475,000, and Washington received $22.2 million.
  I urge that this very important provision for our states be included 
in the budget reconciliation package the Congress is preparing to 
consider in September and 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. 1587

       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 ``Children's Health Equity 
     Technical Amendment Act of 2005''.

     SEC. 2. AUTHORITY FOR QUALIFYING STATES TO USE PORTION OF 
                   SCHIP ALLOTMENT FOR ANY FISCAL YEAR FOR CERTAIN 
                   MEDICAID EXPENDITURES.

       (a) In General.--Section 2105(g)(1)(A) of the Social 
     Security Act (42 U.S.C. 1397ee(g)(1)(A)) is amended by 
     striking ``fiscal year 1998, 1999, 2000, or 2001'' and 
     inserting ``a fiscal year''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if enacted on October 1, 2004.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Rockefeller, Mr. Feingold, Mr. 
        Corzine, Mr. Kohl, Ms. Mikulski, Mr. Durbin, and Mr. Harkin):
  S. 1589. A bill to amend title XVIII of the Social Security Act to 
provide for reductions in the medicare part B premium through 
elimination of certain overpayments to Medicare Advantage 
organizations; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, I am introducing legislation today with 
Senators Rockefeller and Feingold that is similar to S. 2906 in the 
108th Congress and will have more to say about this legislation when we 
return in September.
  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. 1589

       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 ``Affordability in Medicare 
     Premiums Act of 2005''.

     SEC. 2. REDUCTION OF MEDICARE PART B PREMIUM FOR INDIVIDUALS 
                   NOT ENROLLED IN A MEDICARE ADVANTAGE PLAN.

       Section 1839(a) of the Social Security Act (42 U.S.C. 
     1395r(a)) is amended--
       (1) in paragraph (3), in the first sentence, by striking 
     ``The Secretary'' and inserting ``Subject to paragraph (5), 
     the Secretary''; and
       (2) by adding at the end the following new paragraph:
       ``(5)(A) For each year (beginning with 2006), the Secretary 
     shall reduce the monthly premium rate determined under 
     paragraph (3) for each month in the year for individuals who 
     are not enrolled in a Medicare Advantage plan (including such 
     individuals subject to an increased premium under subsection 
     (b) or (i)) so that the aggregate amount of such reductions 
     in the year is equal to the aggregate amount of reduced 
     expenditures from the Federal Supplementary Medicare 
     Insurance Trust Fund that the Secretary estimates would 
     result in the year if the annual Medicare+Choice capitation 
     rate for the year was equal to the amount specified under 
     subparagraph (D) of section 1853(c)(1), and not subparagraph 
     (A), (B), or (C) of such section.
       ``(B) In order to carry out subsections (a)(1) and (b)(1) 
     of section 1840, the Secretary shall transmit to the 
     Commissioner of Social Security and the Railroad Retirement 
     Board by the beginning of each year (beginning with 2006), 
     such information determined appropriate by the Secretary, in 
     consultation with the Commissioner of Social Security and the 
     Railroad Retirement Board, regarding the amount of the 
     monthly premium rate determined under paragraph (3) for 
     individuals after the application of subparagraph (A).''.

     SEC. 3. FUNDING REDUCTIONS IN THE MEDICARE PART B PREMIUM 
                   THROUGH REDUCTIONS IN PAYMENTS TO MEDICARE 
                   ADVANTAGE ORGANIZATIONS.

       Section 1839(a) of the Social Security Act (42 U.S.C. 
     1395r(a)), as amended by section 2, is amended--
       (1) in paragraph (3), in the first sentence, by striking 
     ``paragraph (5)'' and inserting ``paragraphs (5) and (6)''; 
     and
       (2) by adding at the end the following new paragraph:
       ``(6) For each year (beginning with 2006), the Secretary 
     shall reduce the monthly premium rate determined under 
     paragraph (3) for each month in the year for each individual 
     enrolled under this part (including such an individual 
     subject to an increased premium under subsection (b) or (i)) 
     so that the aggregate amount of such reductions in the year 
     is equal to an amount equal to--
       ``(A) the aggregate amount of reduced expenditures from the 
     Federal Supplementary Medicare Insurance Trust Fund in the 
     year that the Secretary estimates will result from the 
     provisions of, and the amendments made by, sections 4 and 5 
     of the Affordability in Medicare Premiums Act of 2005; minus
       ``(B) the aggregate amount of reductions in the monthly 
     premium rate in the year pursuant to paragraph (5)(A).''.

     SEC. 4. APPLICATION OF RISK ADJUSTMENT REFLECTING 
                   CHARACTERISTICS FOR THE ENTIRE MEDICARE 
                   POPULATION IN PAYMENTS TO MEDICARE ADVANTAGE 
                   ORGANIZATIONS.

       Effective January 1, 2006, in applying risk adjustment 
     factors to payments to organizations under section 1853 of 
     the Social Security Act (42 U.S.C. 1395w-23), the Secretary 
     of Health and Human Services shall ensure that payments to 
     such organizations are adjusted based on such factors to 
     ensure that the health status of the enrollee is reflected in 
     such adjusted payments, including adjusting for the 
     difference between the health status of the enrollee and 
     individuals enrolled under the original medicare fee-for-
     service program under parts A and B of title XVIII of such 
     Act. Payments to such organizations must, in aggregate, 
     reflect such differences.

     SEC. 5. ELIMINATION OF MA REGIONAL PLAN STABILIZATION FUND 
                   (SLUSH FUND).

       (a) In General.--Subsection (e) of section 1858 of the 
     Social Security Act (42 U.S.C. 1395w-27a) is repealed.
       (b) Conforming Amendment.--Section 1858(f)(1) of the Social 
     Security Act (42 U.S.C. 1395w-27a(f)(1)) is amended by 
     striking ``subject to subsection (e),''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of section 
     221(c) of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2181).
                                 ______
                                 
      By Mr. BAUCUS (for himself and Mr. Grassley):
  S. 1591. A bill to amend the Internal Revenue Code of 1986 to modify 
the rules relating to the suspension of interest and certain penalties 
where the taxpayer is not contacted by the Internal Revenue Service 
within 18 months; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, last year, the Senate passed significant 
legislation aimed at shutting down tax shelters. We ramped up 
disclosure requirements that make it easier for IRS to find those who 
promoted and invested in these deals. We greatly increased penalties. 
We made law firms and accounting firms responsible for their part in 
perpetuating this distasteful business.
  Another thing we did was to take a break on interest expense away 
from participants in listed transactions and those who fail to disclose 
a reportable transaction.

[[Page 19257]]

  Usually, if the IRS audits your tax return and doesn't tell you about 
any adjustments to your tax bill within 18 months after the return is 
filed, the interest on that tax bill stops. It stops until the IRS does 
tell you what you owe. It is called ``the 18 month interest suspension 
rule'' and became law so taxpayers wouldn't have to pay excessive 
interest if the IRS took a long time to figure out what they owed.
  But, people who get involved with tax shelters play hide and seek 
with the IRS. They hope the game lasts until the time for auditing a 
tax return has passed. This means that the IRS often doesn't know a 
taxpayer has bought into a tax shelter until well after 18 months has 
gone by.
  And, this problem is made even worse by those who sell the shelters. 
Promoters are supposed to keep a list of those who buy their shelters. 
The IRS can ask for the list--it's one way the IRS can find those who 
get into these bad deals.
  But, often the promoter won't turn that list over to the IRS right 
away. Once again, it is well after that 18 month mark before the IRS 
learns about the investment and can do the audit.
  It is not right that taxpayers benefit from this 18 month interest 
suspension rule when the delays are the result of their own hand. 
Taxpayers involved in deals that abuse our tax system should not 
benefit from their own fun and games.
  That is why we took the interest suspension break away from these 
taxpayers in last year's Jobs Act. But we only took it away for 
interest charges after October 3, 2004.
  Today, my good friend Chuck Grassley and I introduce a proposal that 
takes this one step further and eliminates the interest suspension 
break for interest charges on or before October 3, 2004. Why should 
these folks get any break when they have manipulated the system in the 
first place?
  The only exception is for taxpayers who have decided to take the IRS 
up on a published settlement initiative to unwind their transaction. 
Those taxpayers would continue to qualify for suspension of their 
accrued interest expense through the October 3 date. The IRS has found 
these settlement initiatives are a useful way to get these old cases 
resolved and off the table. I think we should help this process along 
so the IRS can deal with other aspects of the tax gap.
  Our proposal also will plug up another unintended loophole in the 
interest suspension rules. Earlier this year, the IRS ruled that 
taxpayers filing amended returns showing a balance due more than 18 
months after the original return was filed were also entitled to 
interest suspension--this applies to all taxpayers, not just those with 
tax shelters. Since the IRS wouldn't have any way of knowing these 
taxpayers even owed more tax, it doesn't make sense to give them a 
break on interest charges.
  Over the past several years this country has experienced a scourge of 
tax shelters. With hard work, we have come a long way in our fight 
against them. We must be relentless in our quest to wipe them out. We 
need to remove any incentives that might encourage people to get into 
these abusive deals. Our proposal is one more blow in our fight to 
maintain fairness and integrity in our system of tax administration. We 
request your support for this bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1591

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

     SECTION 1. MODIFICATIONS OF SUSPENSION OF INTEREST AND 
                   PENALTIES WHERE INTERNAL REVENUE SERVICE FAILS 
                   TO CONTACT TAXPAYER.

       (a) Effective Date of Exception From Suspension Rules for 
     Certain Listed and Reportable Transactions.--
       (1) In general.--Paragraph (2) of section 903(d) of the 
     American Jobs Creation Act of 2004 is amended to read as 
     follows:
       ``(2) Exception for reportable or listed transactions.--
       ``(A) In general.--The amendments made by subsection (c) 
     shall apply with respect to interest accruing after October 
     3, 2004.
       ``(B) Special rule for certain listed and reportable 
     transactions.--
       ``(i) In general.--Except as provided in clause (ii) or 
     (iii), the amendments made by subsection (c) shall also apply 
     with respect to interest accruing on or before October 3, 
     2004.
       ``(ii) Participants in settlement initiatives.--Clause (i) 
     shall not apply to any transaction if, pursuant to a 
     published settlement initiative which is offered by the 
     Secretary of the Treasury to a group of similarly situated 
     taxpayers claiming benefits from the transaction, the 
     taxpayer has entered into a settlement agreement with respect 
     to the tax liability arising in connection with the 
     transaction.
       ``(iii) Closed transactions.--Clause (i) shall not apply to 
     a transaction if, as of July 29, 2005 (May 9, 2005 in the 
     case of a listed transaction)--

       ``(I) the assessment of all Federal income taxes for the 
     taxable year in which the tax liability to which the interest 
     relates arose is prevented by the operation of any law or 
     rule of law, or
       ``(II) a closing agreement under section 7121 has been 
     entered into with respect to the tax liability arising in 
     connection with the transaction.''.

       (2) Effective date.--The amendment made by this subsection 
     shall take effect as if included in the provisions of the 
     American Jobs Creation Act of 2004 to which it relates.
       (b) Treatment of Amended Returns and Other Similar Notices 
     of Additional Tax Owed.--
       (1) In general.--Section 6404(g)(1) of the Internal Revenue 
     Code of 1986 (relating to suspension) is amended by adding at 
     the end the following new sentence: ``If, after the return 
     for a taxable year is filed, the taxpayer provides to the 
     Secretary 1 or more signed written documents showing that the 
     taxpayer owes an additional amount of tax for the taxable 
     year, clause (i) shall be applied by substituting the date 
     the last of the documents was provided for the date on which 
     the return is filed.''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to documents provided on or after July 29, 2005.
                                 ______
                                 
      By Ms. SNOWE (for herself, Mr. Conrad, Mrs. Lincoln, and Ms. 
        Collins):
  S. 1592. A bill to amend title XIX of the Social Security Act to 
permit States to obtain reimbursement under the Medicaid program for 
care or services required under the Emergency Medical Treatment and 
Active Labor Act that are provided in a nonpublicly owned or operated 
institution for mental diseases; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today to introduce the Medicaid 
Emergency Psychiatric Care Act of 2005, which will serve to improve 
access to mental health treatment and remove an unfunded mandate on our 
private mental health treatment centers. I am particularly pleased to 
introduce this bill with several of my colleagues, Senators Conrad, 
Lincoln, and Collins, who share my belief that we must improve access 
to treatment for many of the 18.5 million Americans who are afflicted 
with a mental health disorder.
  Our bill will move a step closer to achieving this goal by requiring 
the Medicaid program to provide reimbursement to private mental health 
facilities that receive patients under the Emergency Medical Treatment 
and Labor Act, known as EMTALA. EMTALA requires hospitals to provide 
emergency care to patients, regardless of their ability to pay. 
However, this stands in conflict with Medicaid law, which in most cases 
prohibits payment for psychiatric treatment for people between the ages 
of 21 to 65 years. Our legislation will remedy that situation by 
providing Medicaid coverage for emergency treatment for mental illness, 
thus expanding access for acute psychiatric care and ensuring that 
patients with mental disorders receive the assistance they vitally need 
in a timely fashion.
  Under current law, Medicaid payment for psychiatric treatment for 
patients between the ages of 21 and 65 years is restricted to hospitals 
that have an in house psychiatric ward. If a patient seeks care from a 
private psychiatric hospital or is transferred to a private facility 
from a community hospital, Medicaid does not provide reimbursement due 
to the so-called Institutions for Mental Disease, IMD, exclusion. In 
comparison, if the same patient seeks care under EMTALA from a hospital 
because of a physical ailment,

[[Page 19258]]

Medicaid provides coverage regardless of the type of facility that 
provides the treatment. I have therefore joined together with Senator 
Conrad, Senator Lincoln, and Senator Collins to introduce legislation 
that will require Medicaid to pay for the cost of care associated with 
emergency psychiatric treatment necessary to comply with EMTALA. No 
longer will private entities be required to shoulder the burden of this 
Federal mandate, and no longer will Medicaid-eligible beneficiaries go 
without access to necessary and appropriate emergency care.
  This bipartisan legislation has been carefully crafted with input 
from both the provider and beneficiary communities to ensure that 
assistance is directed to those who are most in need and to ensure that 
the coverage only extends to people who require emergency treatment. 
The definition in the EMTALA statute of an emergency is straightforward 
for psychiatric patients. Patients must present as a danger to 
themselves or others--for example, as being suicidal or threatening 
physical harm to others.
  Our bill also offers a targeted and low-cost solution to ease the 
crisis in emergency departments. Emergency department overcrowding is a 
growing and severe problem in the United States, and dedicated 
physicians and nurses who work in emergency rooms are reaching a 
breaking point where they may not have the resources or surge capacity 
to respond effectively. Patients often face a long wait in the 
emergency room, sometimes for days, because there is no bed or other 
appropriate setting available. Tens of thousands of dollars every day 
are being spent inefficiently on extended treatment in emergency rooms 
that is not the most appropriate or clinically effective care.
  This crisis in emergency departments impacts everyone's access to 
lifesaving care. According to a May 2005 report by the Centers for 
Disease Control and Prevention, the number of annual emergency 
department visits increased 26 percent over a 10-year period, from 90.3 
million in 1993 to 113.9 million visits in 2003--an average increase of 
more than 2 million visits per year. During the same time, the number 
of hospital emergency departments decreased by more than 12 percent, 
resulting in a greater number of visits to emergency departments that 
remain open.
  How do these problems affect emergency care for all of us? 
Overcrowded emergency rooms result in reduced availability of 
physicians, nurses, and healthcare staff; fewer available examination 
areas and beds; longer waits for patients and their families; and 
hospitals more frequently having to divert patients by ambulance to 
other hospitals.
  The existing situation is not only jeopardizing access to emergency 
rooms and treatment but ultimately, in many cases, it is overwhelming 
the criminal justice system. The U.S. Department of Justice estimates 
that, on average, 16 percent of inmates in local jails suffer from a 
mental illness, and in Maine, the National Alliance for the Mentally 
III, NAMI, an advocacy group for persons with mental illness, estimates 
that figure is as high as 50 percent. In my home state of Maine, 65,000 
people have a severe mental illness but with the severe shortage of 
psychiatric beds in the State, many people go without treatment. We 
must take action to provide the mentally ill with better access to 
care, and we must start by ensuring that Medicaid reimburses the 
facilities that provide treatment.
  Passing the Medicaid Emergency Psychiatric Care Act and providing 
Medicaid coverage for emergency psychiatric treatment in both general 
and psychiatric hospitals will accomplish several goals. First, and 
most importantly, it will result in better psychiatric emergency care 
for patients. Second, it will result in more efficient and effective 
use of both Federal and State Medicaid dollars. Third, by resolving the 
current conflict in Federal law between EMTALA requirements and the 
Medicaid IMD exclusion from reimbursement, the bill will enable 
freestanding psychiatric hospitals to receive reimbursement for 
Medicaid psychiatric patients on the same basis as general hospitals 
and help preserve the viability of these hospitals.
  We have received strong support from a number of leading national 
mental health and medical associations who confirm the critical need 
for this legislation, including NAMI, the National Association of 
County Behavioral Health Directors, the American Psychiatric 
Association, the American College of Emergency Physicians, the American 
Hospital Association, and the National Association of Psychiatric 
Health Systems. I am especially pleased to have also received 
endorsements from a number of Maine organizations, including the Maine 
Hospital Association, Spring Harbor Hospital, and NAMI Maine.
  This legislative change is vitally important to ensure that Medicaid 
patients with mental illness receive the right care at the right time 
in the right setting, instead of prolonged stays in emergency rooms and 
in hospital settings without psychiatric specialty care. The cost of 
achieving a more efficient, effective, and clinically appropriate care 
system for psychiatric emergencies is small and well worth it. I urge 
my colleagues to join us in cosponsoring the bill.
  I ask unanimous consent that these letters of support be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                 National Alliance


                                         for the Mentally Ill,

                                     Arlington, VA, July 11, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the 210,000 members and 
     1,200 affiliates of the National Alliance for the Mentally 
     Ill (NAMI), I am writing to express support for your 
     legislation, the Medicaid Emergency Psychiatric Care Act of 
     2005. NAMI strongly supports this important effort to address 
     the growing crisis in access to acute care services for non-
     elderly adults living with severe mental illness. As the 
     nation's largest organization representing individuals with 
     severe mental illness and their families, NAMI is pleased to 
     support this important measure.
       As NAMI's consumer and family membership knows first-hand, 
     the acute care crisis for inpatient psychiatric care is 
     growing in this country. This disturbing trend was identified 
     in the recently released Bush Administration New Freedom 
     Initiative Mental Health Commission report. Over the past 15-
     20 years, states have closed inpatient units and drastically 
     reduced the number of acute care beds. Also, general 
     hospitals, due to severe budget constraints, have had to 
     close psychiatric units or reduce the number of beds. This 
     has resulted in a growing shortage of acute inpatient 
     psychiatric beds in many communities.
       The Medicaid Emergency Psychiatric Care Act will address an 
     important conflict in federal policy that has contributed to 
     restricted access to needed inpatient services--the Medicaid 
     Institution for Mental Diseases (IMD) Exclusion and the 
     Emergency Medical and Labor Treatment Act (EMTALA). EMTALA 
     requires hospitals to stabilize patients in an emergency 
     medical condition, while the IMD exclusion prevents certain 
     hospitals (psychiatric hospitals) from receiving Medicaid 
     reimbursement for Medicaid beneficiaries between the ages of 
     21-64 in these circumstances.
       This important measure will allow Medicaid funding to be 
     directed to non-publicly owned and operated psychiatric 
     hospitals (IMDs) for Medicaid beneficiaries between the ages 
     of 21-64 who require stabilization in these settings as 
     required by EMTALA. Today, these hospitals are denied payment 
     for care required under the EMTALA rules. The result is that 
     psychiatric hospitals are forced to absorb these added costs 
     of care to their already growing un-reimbursed care even 
     though these patients have insurance through Medicaid.
       This legislation will go a long way in addressing the 
     growing psychiatric acute inpatient crisis, while creating 
     fairness in the reimbursement structure for psychiatric 
     hospitals under the limited circumstances required by the 
     EMTALA law. Your leadership in carefully crafting and 
     introducing this targeted legislation addressing a critical 
     problem for persons with serious mental illnesses is much 
     appreciated. NAMI looks forward to working with you and your 
     Senate colleagues to ensure passage of this important 
     legislation.
           Sincerely, 
                                           Michael J. Fitzpatrick,
     Executive Director.
                                  ____

                                                    July 26, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: The National Association of County 
     Behavioral Health and Developmental Disability Directors 
     (NACBHD),

[[Page 19259]]

     which is the behavioral health affiliate of the National 
     Association of Counties, and the National Association of 
     Counties (NACo) are writing to strongly support The Medicaid 
     Emergency Psychiatric Care Act--legislation you are 
     introducing to alleviate the crisis in access to acute 
     hospital inpatient psychiatric services. A lack of acute 
     inpatient services was recently highlighted in President 
     Bush's New Freedom Commission on Mental Health report and is 
     a problem in many counties. In twenty of the most populous 
     states, counties have the designated responsibility to plan 
     and implement mental health services.
       Over the past 20 years most states have closed many of 
     their state hospitals and returned individuals to the 
     community for care. General hospitals have over the past 10-
     15 years have also begun to close psychiatric inpatient 
     units. Freestanding psychiatric hospitals have been 
     significantly reduced due to the reimbursements rates brought 
     about with the advent of managed care. Overall, the 
     availability of acute psychiatric beds, in many states, has 
     decreased dramatically in the last 10 years. Given the 
     shortage of inpatient acute beds, many individuals with 
     serious psychiatric disorders end up in county jails or 
     homeless rather than receiving basic psychiatric services in 
     hospital.
       Your legislation specifically addresses the conflict in 
     federal law between the Emergency Medical Treatment and Labor 
     Act (EMTALA) Medicaid Institution for Mental Disease (IMD). 
     Your legislation will enable psychiatric hospitals to receive 
     reimbursement on the same basis as general hospitals for 
     Medicaid patients who meet EMTALA standards of a medical 
     crisis. The legislation offers a low-cost solution to 
     alleviate the crisis in emergency rooms in general hospitals 
     caused by an overflow of individuals in need of psychiatric 
     care because inpatient beds are not available.
       NACBHD and NACo appreciate your leadership in introducing 
     this specific legislation that will address this inherent 
     conflict in federal requirements and will assist in promoting 
     access to acute psychiatric inpatient services. We look 
     forward to working with you and your colleagues in getting 
     this legislation passed through this Congress.
           Sincerely,
     Larry E. Naake,
       Executive Director, National Association of Counties.
     Melissa Staats,
       President & CEO, National Association of County Behavioral 
     Health and Developmental Disability Directors.
                                  ____



                                American Hospital Association,

                                    Washington, DC, July 20, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the American Hospital 
     Association's (AHA) members--4,800 hospitals, health systems 
     and other health care organizations, and 33,000 individuals--
     I am writing to express our support for your bill, the 
     Medicaid Emergency Psychiatric Care Act of 2005.
       As you know, the Emergency Medical and Labor Treatment Act 
     (EMTALA) require all hospitals, including psychiatric 
     hospitals, to stabilize patients who come in with an 
     emergency medical condition. But Medicaid's Institution for 
     Mental Diseases (IMD) exclusion does not allow Medicaid 
     reimbursement to non-public psychiatric hospitals for 
     stabilizing care delivered to Medicaid patients between the 
     ages of 21-64. This exclusion burdens these facilities with 
     an unfunded mandate in fulfilling their EMTALA obligations 
     for this patient population.
       Your legislation would eliminate the IMD exclusion and 
     allow non-public psychiatric hospitals to receive appropriate 
     reimbursement for care provided under EMTALA to Medicaid 
     beneficiaries between the ages of 21-64. This will relieve 
     overcrowding in emergency departments and provide the 
     appropriate care these patients deserve in a more timely 
     manner.
       Thank you for addressing this important issue. We support 
     the Medicaid Emergency Psychiatric Care Act of 2005 and look 
     forward to working with you and your colleagues to ensure 
     swift passage of this legislation. If you have further 
     questions, please contact the AHA's Curtis Rooney.
           Sincerely,
                                                     Rick Pollack,
     Executive Vice President.
                                  ____

                                              American Psychiatric


                                                  Association,

                                     Arlington, VA, July 19, 2005.
     Hon. Olympia Snowe,
     U.S. Senator, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the 36,000 physician 
     members of the American Psychiatric Association (APA), and 
     most particularly on behalf of the patients they treat, 
     please accept my gratitude for your Senate sponsorship of the 
     Medicaid Emergency Psychiatric Care Act.
       The Emergency Medical and Labor Treatment Act, which 
     requires hospitals to stabilize patients in an emergency 
     medical condition, directly conflicts with the Medicaid 
     Institution for Mental Diseases (IMD) exclusion. The IMD 
     exclusion prevents non-public psychiatric hospitals from 
     receiving Medicaid reimbursement for Medicaid patients 
     between the ages of 21-64 that have required stabilization as 
     a result of EMTALA regulations.
       Your legislation will allow non-public psychiatric 
     hospitals to receive appropriate reimbursement for Medicaid 
     beneficiaries between the ages of 21-64 who require emergency 
     treatment and stabilization as required by EMTALA.
       Thank you for your foresight and leadership in your lead 
     sponsorship of the Medicaid Emergency Psychiatric Care Act. 
     Thanks are also due to the outstanding work by Sue Walden, 
     who ably represents you. The APA looks forward to continue 
     working with you to progress this important legislation for 
     Medicaid psychiatric patients and providers.
           Sincerely, 
                                             Steven S. Sharfstein,
     President.
                                  ____

                                                  American College


                                      of Emergency Physicians,

                                    Washington, DC, July 11, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the 23,000 members and 53 
     chapters of the American College of Emergency Physicians 
     (ACEP), I am writing to express support for your legislation, 
     the Medicaid Emergency Psychiatric Care Act of 2005. ACEP 
     strongly support this important effort to address the growing 
     crisis in access to acute care services for non-elderly 
     adults living with severe mental illness. As the nation's 
     largest emergency medicine organization, we believe your 
     legislation will provide needed attention and support to an 
     area inadequately addressed to date.
       The Medicaid Emergency Psychiatric Care Act will address an 
     important conflict in federal policy that has contributed to 
     restricted access to needed inpatient services--the Medicaid 
     Institution for Mental Diseases (IMD) Exclusion and the 
     Emergency Medical and Labor Treatment Act (EMTALA). EMTALA 
     requires hospitals to stabilize patients in an emergency 
     medical condition, while the IMD exclusion prevents certain 
     hospitals (psychiatric hospitals) from receiving Medicaid 
     reimbursement for Medicaid beneficiaries between the ages of 
     21-64 in these circumstances. Your bill will allow Medicaid 
     funding to be directed to non-publicly owned and operated 
     psychiatric hospitals (IMDs) for Medicaid beneficiaries 
     between those ages who require stabilization in these 
     settings as required by EMTALA.
       We commend you and the many colleagues we hope will support 
     this important measure and we stand prepared to do what we 
     can to ensure its enactment.
           Sincerely yours,
                                                  Robert E. Suter,
     President.
                                  ____

                                           National Association of


                                   Psychiatric Health Systems,

                                    Washington, DC, July 19, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the members of the 
     National Association of Psychiatric Health Systems (NAPHS) 
     and the individuals and families that our members serve, we 
     strongly endorse the Medicaid Emergency Psychiatric Care Act 
     of 2005. This legislation, if approved by Congress, would 
     result in patients receiving appropriate care for psychiatric 
     emergencies instead of prolonged stays in emergency rooms.
       We want to recognize your leadership in developing this 
     legislation, which provides a targeted and cost-effective 
     solution to the problem of overcrowding in emergency rooms 
     for all, but particularly for those with mental illness. The 
     measure has won bipartisan support from members of Congress 
     as well as the support of key national organizations for its 
     thoughtful approach.
       Every day patients with serious mental illness are being 
     ``boarded'' in hospital emergency departments or transferred 
     to other hospitals by ambulance because of a lack of 
     appropriate care.
       This bill will enable psychiatric hospitals to receive 
     reimbursement on the same basis as general hospitals for 
     Medicaid patients who are in a crisis and present a danger to 
     themselves or others. This will help general hospitals to 
     address part of their overflow issues and ensure that 
     patients receive appropriate treatment. It will resolve a 
     current conflict in federal law between the Emergency Medical 
     Treatment and Labor Act (EMTALA) and the Medicaid Institution 
     for Mental Disease (IMD) exclusion.
       Passage of the Medicaid Emergency Psychiatric Care Act is 
     an investment that will pay off in more appropriate care for 
     patients and more effective use of Medicaid dollars.
           Sincerely,
                                                      Mark Covall,
                                               Executive Director.

[[Page 19260]]

     
                                  ____
                                   Maine Hospital Association,

                                       Augusta, ME, July 29, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the Maine Hospital 
     Association's 39 acute-care and specialty hospitals, I am 
     writing in support of your bill, the Medicaid Emergency 
     Psychiatric Care Act of 2005.
       As you know, the Medicaid program, through the Institution 
     for Mental Diseases (IMD) exclusion, prevents non-public 
     psychiatric hospitals from receiving Medicaid reimbursement 
     for Medicaid patients between the ages of 21-64 who require 
     stabilization. When the Federal Government created Medicaid 
     they prohibited Medicaid funding for services at IMDs because 
     Washington viewed mental health services to be the 
     responsibility of the State--particularly since at that time 
     most psychiatric hospitals were State-owned hospitals. The 
     Federal Government did provide funding through the DSH-IMD 
     (Disproportionate Share Hospital Fund for Institutes for 
     Mental Disease). Initially these funds were used solely by 
     the private IMDs, however, in 1991, Maine, in response to a 
     severe budget shortfall, began to shift costs associated with 
     Augusta Mental Health Institute (AMHI) and Bangor Mental 
     Health Institute (BMHI) into the Federal DSH-IMD pool rather 
     than funding those costs with all general fund dollars.
       In the mid-1990s the State passed a rule that entitled AMHI 
     and BMHI to be paid first out of the DSH-IMD pool leaving the 
     remainder for the two private hospitals. With a declining 
     Federal cap on the DSH-IMD pool and increasing hospital 
     expenses, there was less and less money with which to 
     reimburse the two private psychiatric hospitals for services 
     provided to this indigent population.
       Maine has two private psychiatric hospitals: Spring Harbor 
     Hospital in South Portland and The Acadia Hospital in Bangor. 
     For fiscal year 2005, Acadia had inpatient admissions of 
     1,731 and Spring Harbor had 3,208. Adults between the ages of 
     21 and 64 represented nearly 75 percent of all Spring Harbor 
     admissions in fiscal year 2005, up from 69% in 2004. In 
     addition, Spring Harbor estimates that in fiscal year 2006, 
     patients between the ages of 21 and 64 who cannot afford to 
     pay for their care at Spring Harbor will receive close to $6 
     million in free hospital services. Both hospitals also 
     provide a significant amount of outpatient services.
       The two private hospitals play a pivotal role in the 
     delivery of mental health services especially for low-income 
     individuals. As the State has desired to encourage greater 
     behavior services within communities, the Department of 
     Behavioral and Developmental Services worked with both of 
     these hospitals to increase the number of beds and services 
     available to allow for certain patients to be placed in these 
     hospitals rather than the State institutes. The inability of 
     these two hospitals to effectively meet these patient needs 
     would have a detrimental impact throughout the State 
     especially because communities are already stressed 
     attempting to develop needed community-based services.
       Your legislation will allow non-public psychiatric 
     hospitals to receive appropriate reimbursement for Medicaid 
     beneficiaries between the ages of 21-64 who require emergency 
     treatment and stabilization as required by EMTALA. This will 
     relieve overcrowding in emergency departments and provide the 
     appropriate care these patients deserve in a more timely 
     manner.
       Thank you for addressing this important issue. We support 
     the Medicaid Emergency Psychiatric Care Act of 2005 and look 
     forward to working with you and your colleagues to ensure 
     swift passage of this legislation.
           Sincerely, 
                                                Steven R. Michaud,
     President.
                                  ____



                                       Spring Harbor Hospital,

                                     Westbrook, ME, July 26, 2005.
     Hon. Olympia J. Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: Writing as CEO on behalf of Spring 
     Harbor Hospital in Maine, and a past President of the 
     National Association of Psychiatric Health Systems, I would 
     like to thank you for supporting legislation to enable 
     freestanding private psychiatric hospitals in the US to 
     receive payment for the emergency stabilization services they 
     provide each year to thousands of Medicaid-eligible adult 
     clients under the Emergency Medical Treatment And Labor Act 
     (EMTALA).
       As you know, it is becoming increasingly difficult for 
     freestanding private psychiatric facilities to absorb the 
     cost of treating Medicaid-eligible adults between the ages of 
     21 and 64 who are referred to them for emergency 
     stabilization under EMTALA. At Spring Harbor alone, the cost 
     of serving this population last year was close to $6 million.
       Faced with both diminishing reimbursement streams and a 
     concurrent rise in demand for inpatient stabilization 
     services from overflowing emergency rooms across the country, 
     private freestanding psychiatric facilities are quite 
     literally caught between a rock and a hard place. In Maine 
     and in many other places, freestanding private psychiatric 
     hospitals are protecting their financial health by offering 
     fewer and fewer adult psychiatric services in the inpatient 
     setting. This tactic simply skirts the issue and creates a 
     further void of services for individuals with acute mental 
     illness, precisely at a time when it is widely accepted that 
     the availability of mental health services in this country is 
     substandard.
       When all is said and done, these financial figures pale in 
     comparison to the ultimate cost to our society when these 
     adults fail to receive the treatment they deserve. It has 
     been estimated that the lifetime cost of providing for an 
     individual with an untreated serious mental illness is $10 
     million. Though this figure includes the financial impact of 
     lost work days and the cost of providing Social Security 
     disability benefits, it does not even begin to speak to the 
     emotional toll of mental illness on friends or the scars 
     mental illness can have on loved ones for generations to 
     come. If we could quantify these numbers adequately, I am 
     certain that I would not need to be writing to you today.
       In closing, I would like to acknowledge the receptiveness 
     of your office and that of Senator Collins to issues 
     concerning the plight of the one in four adults and one in 
     ten children in the US who will experience a mental illness 
     this year. It is high time that the issues surrounding this 
     illness were addressed with understanding, compassion, and a 
     concern for our country's long-term mental health. I am both 
     pleased and proud that the Maine congressional delegation is 
     leading the way on these critical Issues.
           Best regards,
                                                   Dennis P. King,
         Chief Executive Officer, Past President (2003), National 
           Association of Psychiatric Health Systems.
                                  ____

                                                 National Alliance


                                for the Mentally Ill of Maine,

                                       Augusta, ME, July 27, 2005.
     Hon. Olympia Snowe,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the 1.400 members and 20 
     affiliates of the National Alliance for the Mentally Ill of 
     Maine (NAMI Maine), I write to express support for your 
     legislation, the Medicaid Emergency Psychiatric Care Act of 
     2005. NAMI Maine strongly supports your effort to address the 
     growing crisis in access to acute care services for non-
     elderly adults living with severe mental illness. NAMI 
     Maine's mission is to improve the quality of life of all 
     people affected by mental illness and in this regard, we see 
     this legislation as an attempt to address an important issue.
       We know firsthand in Maine the dire consequences that occur 
     when access to psychiatric care is not available. Like the 
     rest of the country, Maine has dramatically reduced the 
     number of state run psychiatric beds. One of the most 
     appalling results of this has been the significant increase 
     in the numbers of people with mental illness who are living 
     in Maine's jails. A snapshot review of the Cumberland County 
     jail last spring showed that 60 percent of the inmates were 
     taking medication for mental health problems; a spring survey 
     of the Kennebec County jail had the same result. Sadly, most 
     of these people are in jail for non-violent crimes connected 
     to their illness and their inability to obtain services to 
     treat that illness. Maine is one of the states with the 
     highest rates in the nation of incarceration for people with 
     mental illness. Unfortunately, the outcomes for people with 
     mental illness who are jailed instead of treated are 
     abysmal--and the financial costs are also very high. It is 
     not unusual for a person in need of a psychiatric bed in 
     Maine t0 wait several days in the emergency room for a bed to 
     open. Despite these statistics, the recent state budget has 
     significantly reduced funding for mental health services. 
     This will result in a growing shortage of community mental 
     health services--placing additional stress on hospitals, 
     emergency rooms, and people with mental illness and their 
     families. The inadequate number of acute inpatient 
     psychiatric beds will continue to be a significant problem.
       Tne Medicaid Emergency Psychiatric Care Act will address an 
     important conflict in federal policy that has contributed to 
     restricted access to needed inpatient services--the Medicaid 
     Institution for Mental Diseases (IMD) Exclusion and the 
     Emergency Medical and Labor Treatment Act (EMTALA). EMTALA 
     requires hospitals to stabilize patients in an emergency 
     medical condition, while the IMD exclusion prevents certain 
     hospitals (psychiatric hospitals) from receiving Medicaid 
     reimbursement for Medicaid beneficiaries between the ages of 
     21-64 in these circumstances.
       This important measure will allow Medicaid funding to be 
     directed to non-publicly owned and operated psychiatric 
     hospitals (IMDs) for Medicaid beneficiaries between the ages 
     of 21-64 who require stabilization in these settings as 
     required by EMTALA. Today, these hospitals are denied payment 
     for care required under the EMTALA rules. The result is that 
     psychiatric hospitals are forced to absorb these added costs 
     of care to their already growing un-reimbursed care even 
     though these patients have insurance through Medicaid. 
     Sometimes it means that patients are discharged too soon, as 
     a cost

[[Page 19261]]

     savings measure, only to return them to their families in a 
     similar condition to when they were admitted.
       This legislation will go a long way in addressing the 
     growing psychiatric acute inpatient crisis, while creating 
     fairness in the reimbursement structure for psychiatric 
     hospitals under the limited circumstances required by the 
     EMTALA law. Your leadership in carefully crafting and 
     introducing this targeted legislation addressing a critical 
     problem for persons with serious mental illness is much 
     appreciated. NAMI looks forward to working with you and your 
     Senate colleagues to ensure passage of this important 
     legislation.
           Sincerely, 
                                                  Carol Carothers,
                                               Executive Director.
                                 ______
                                 
      By Ms. SNOWE (for herself and Mr. Bingaman):
  S. 1593. A bill to amend title XVIII of the Social Security Act to 
enhance the access of Medicare beneficiaries who live in medically 
underserved areas to critical primary and preventive health care 
benefits at Federally qualified health centers; to the Committee on 
Finance.
  Ms. SNOWE. Mr. President, I rise today to introduce the Medicare 
Payment Adjustment To Community Health Centers, PATCH, Act of 2005. I 
am particularly pleased to introduce this bill with my good friend and 
colleague, Senator Bingaman. Two years ago we introduced a more 
comprehensive version of this legislation, S. 654. I am happy to report 
that many of the provisions in S. 654 were included in the Medicare 
Modernization Act of 2003. The bill I am introducing today reflects two 
key provisions which remain the priorities of our community health 
centers.
  This legislation will improve Medicare beneficiaries' access to 
primary care services and preventive treatments by increasing access to 
Community Health Centers. Local, non-profit, commnnity-owned health 
centers, also known as Federally Qualified Health Center, FCHQs, 
furnish essential primary and preventive care services to low income 
and medically underserved communities. In many cases, community health 
centers are the only source of primary and preventive services to which 
Medicare beneficiaries have access. This is especially true for people 
living in America's medically underserved rural areas.
  For nearly 40 years, the national network of health centers has 
provided high-quality, affordable primary care and preventive services. 
Community health centers are located in areas where care is needed but 
scarce, and they improve access to care for millions of Americans 
regardless of their insurance status or ability to pay. Their costs of 
care rank among the lowest, and they reduce the need for more expensive 
emergency, in-patient, and specialty care, saving billions for dollars 
for taxpayers.
  Community health centers are increasingly becoming important 
providers of primary care and prevent1ve services to seniors--as well 
as providers of on-site dental, pharmaceu ical, and mental health 
services. In short, community health centers provide the ease of ``one-
stop health care shopping,'' meaning that seniors, instead of moving 
from location to location to receive comprehensive primary hearh 
services, can usually receive all of their essential primary care in 
one place.
  The PATCH Act will ensure that community health centers can fully 
participate in the Medicare program and provide seniors with these 
vital services. Ensuring that Medicare pays its fair share is important 
to the stability of community health centers. While 17 percent of 
health center patients in Maine are Medicare beneficiaries, the 
Medicare program pays only 78 cents on the dollar for the health center 
costs incurred in delivering comprehensive primary care services to 
them. For health centers to remain a viable part of the health care 
delivery system, we must make changes.
  Over the last 15 years, Congress has made many improvements to the 
Medicare program through the addition of new primary and preventive 
benefits, including screening mammograms, pap smears, colorectal and 
prostate cancer screenings, flu and pneumococcal vaccinations, bone 
mass measurement, and glucose monitoring and nutrition therapy for 
diabetics. However, Congress has not updated the Medicare law to add 
these crucial services to the health center reimbursement package, so 
health centers are denied payment for these services when provided to 
Medicare beneficiaries. This lack of reimbursement has caused 
significant losses for health centers every time they deliver these 
services to Medicare patients. Our bill will add these essential 
services to the health center package of benefits so that they can 
receive payment for these services.
  The Medicare law has also neglected to include health care for the 
homeless grantees as Federal qualified health centers. The bill would 
also restore these centers for recognition within the Medicare statute. 
Our legislation is strongly supported by the National Association of 
Community Health Centers, and I ask unanimous consent that their letter 
of support be printed in the Record at the conclusion of my remarks.
  The PATCH Act makes these two technical and straightforward changes 
to the Medicare program to ensure that Community Health Centers can 
fully participate in Medicare and provide seniors with these vital 
primary and preventive services. These changes are vitally important in 
my state of Maine and also to health centers throughout our nation. By 
making these two straightforward changes, we will be able to enhance 
the care that all Medicare beneficiaries receive, especially those 
living in rural and medically underserved communities. I urge my 
colleagues to cosponsor the bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                           National Association of


                               Community Health Centers, Inc.,

                                    Washington, DC, July 29, 2005.
     Hon. Olympia Snowe,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Snowe: On behalf of the National Association 
     of Community Health Centers (NACHC), I am writing to express 
     our support for your bill, the Medicare Payment Adjustment to 
     Community Health Centers (PATCH) Act of 2005. We sincerely 
     appreciate your continued commitment to improve the Medicare 
     program for all health centers.
       Community health centers are local, non-profit, community-
     oriented health care providers serving low income and 
     medically underserved communities. For nearly 40 years, the 
     national network of health centers has provided high-quality, 
     affordable primary care and preventive services, and often 
     provide on-site dental, pharmaceutical, mental health and 
     substance abuse services. America's health centers provide 
     care to nearly one million Medicare beneficiaries; furnishing 
     essential primary and preventive care services in underserved 
     areas of the country. Health centers provide ``one-stop 
     health care,'' allowing seniors to receive all of their 
     essential primary care in one convenient location.
       Over the last 15 years, Congress has made many improvements 
     to the Medicare program through the addition of new primary 
     and preventive benefits, including: screening mammograms, pap 
     smears, colorectal & prostate cancer screenings, flu/
     pneumococcal vaccinations, glucose monitoring and self 
     management training for diabetics, bone mass measurement, and 
     medical nutrition therapy for diabetics. Unfortunately, 
     Congress did not update the Medicare law to add these vital 
     services to the health center reimbursement package, thus 
     denying health centers payment for these services when 
     provided to Medicare beneficiaries. This lack of 
     reimbursement has caused significant losses for health 
     centers every time they deliver these services to Medicare 
     patients, even though it was the clear intent of Congress to 
     cover these services for all beneficiaries.
       Health Centers are pleased that your bill remedies this 
     issue by updating the Medicare law to add these essential 
     services to the health center package of benefits. We 
     strongly believe that this will allow health centers to build 
     on their record of providing quality care to seniors.
       We also are appreciative that your legislation would 
     correct a long-standing oversight relating to Health Care for 
     the Homeless grantees. Your legislation would ensure that the 
     original intent of Congress was reflected in the law.
       Thank you for your leadership in addressing these critical 
     issues and we stand ready to assist you in your efforts to 
     enact this important legislation.
           Sincerely,

                                       Daniel R. Hawkins, Jr.,

                                Vice President for Federal, State,
                                               and Public Affairs.

[[Page 19262]]


                                 ______
                                 
      By Mr. CORZINE:
  S. 1594. A bill to require financial services providers to maintain 
customer information security systems and to notify customers of 
unauthorized access to personal information, and for other purposes; to 
the Committee on Banking, Housing, and Urban Affairs.
  Mr. CORZINE. Mr. President, identity theft is a serious and growing 
concern facing our Nation's consumers. According to the Federal Trade 
Commission, nearly 10 million Americans were the victims of identity 
theft in 2003, which represents a tripling of the number of victims 
from just 3 years earlier. Research shows that there are more than 13 
identity thefts every minute.
  According to the Identity Theft Resource Center, identity theft 
victims spend on average nearly 600 hours recovering from the crime. 
Additional research indicates the costs of lost wages and income as a 
result of the crime can soar as high as $16,000 per incident. No one 
wants to suffer this kind of hardship.
  Technological innovation has delivered tremendous benefits to our 
economy in the form of increased efficiency, expanded access, and lower 
costs. And it has spurred the creation of an entire industry of data 
collectors and brokers who profit from the packaging and 
commoditization of one's personal and financial information. But, 
regrettably, this technology has also provided identity thieves with an 
attractive target, and relative anonymity, with which to ply their 
sinister trade.
  While many sectors of our economy are affected, financial 
institutions face a particularly difficult challenge. By definition, 
the information they use to conduct their daily business is sensitive, 
because it is tied so closely to their customers' finances. A breach of 
this data has the potential to cause large and damaging losses in a 
very short amount of time.
  Events over the past several months have further served to highlight 
how serious this risk has become. The announcement not long ago by 
Citigroup that a box of computer tapes containing information on 3.9 
million customers was lost by United Parcel Service in my own state of 
New Jersey while in transit to a credit reporting agency is the latest 
in a line of recent, high profile incidents. In fact, I myself was a 
victim of a similar loss of computer tapes by Bank of America earlier 
this year.
  In both of these cases, Citigroup and Bank of America acted 
responsibly and notified possible victims in a prompt and timely 
manner. But this is not always the case. And both of these cases 
involved accidental loss--not even active attempts to steal personal 
financial information.
  At the very least consumers deserve to be made aware when their 
personal information has been compromised. Right now, they must hope 
that the laws of a few individual states, such as California, apply to 
their case, or that victimized institutions will act responsibly on 
their own.
  In the event that an information breach does occur, the legislation I 
am introducing today, the ``Financial Privacy Protection Act of 2005,'' 
would require prompt notification of all victims in all cases, subject, 
of course, to the concerns of law enforcement agencies. Based on this 
notification, victims could then take immediate action to include an 
extended fraud alert in their credit files to minimize the damage done.
  But on top of notification, customers need to know that if they trust 
a bank with their sensitive personal information--which they must do in 
order to engage in a financial transaction--that that bank will be 
doing everything in its power to protect their information.
  For that purpose, the ``Financial Privacy Protection Act of 2005'' 
would also direct financial regulators, in concert with the Federal 
Trade Commission, to establish strong and meaningful standards for the 
protection of information maintained by financial institutions on 
behalf of their customers. Because these measures are so important, the 
chief executive officer or the chief compliance officer of every 
institution must personally attest as to the effectiveness of these 
safeguards.
  It is imperative that we take action to combat the growing threat of 
identity theft. This crime harms individuals and families, and drags 
down our economy in the form of lost productivity and capital. We can 
do more and we must do more.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1594

       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 ``Financial Privacy Protection 
     Act of 2005''.

     SEC. 2. PREVENTION OF IDENTITY THEFT; NOTIFICATION OF 
                   UNAUTHORIZED ACCESS TO CUSTOMER INFORMATION.

       Subtitle B of title V of the Gramm-Leach-Bliley Act (15 
     U.S.C. 6821 et seq.) is amended--
       (1) by striking section 525;
       (2) by redesignating sections 522 through 524 as sections 
     523 through 525, respectively;
       (3) in section 525, as redesignated, by striking ``section 
     522'' and inserting ``section 523''; and
       (4) by inserting after section 521 the following:

     ``SEC. 522. PREVENTION OF IDENTITY THEFT; NOTIFICATION OF 
                   UNAUTHORIZED ACCESS TO CUSTOMER INFORMATION.

       ``(a) Customer Information Security System Required.--
       ``(1) In general.--In accordance with regulations issued 
     under paragraph (2), each financial institution shall develop 
     and maintain a customer information security system, 
     including policies, procedures, and controls designed to 
     prevent any breach with respect to the customer information 
     of the financial institution.
       ``(2) Regulations.--
       ``(A) In general.--Each of the Federal functional 
     regulators shall issue regulations regarding the policies, 
     procedures, and controls required by paragraph (1) applicable 
     to the financial institutions that are subject to their 
     respective enforcement authority under section 523.
       ``(B) Specific requirements.--The regulations required by 
     subparagraph (A) shall--
       ``(i) require the chief compliance officer or chief 
     executive officer of a financial institution to personally 
     attest that the customer information security system of the 
     financial institution is in compliance with Federal and other 
     applicable standards and is subject to an ongoing system of 
     monitoring;
       ``(ii) require audits by the issuing agency (or submitted 
     to the issuing agency by an independent auditor paid for by 
     the financial institution to audit the financial institution 
     on behalf of the issuing agency) of the customer information 
     security system of a financial institution not less 
     frequently than once every 5 years;
       ``(iii) require the imposition by the issuing agency of 
     appropriate monetary penalties for failure to comply with 
     applicable customer information security standards; and
       ``(iv) include such other requirements or restrictions as 
     the issuing agency considers appropriate to carry out this 
     section.
       ``(C) Effective date.--Regulations issued under this 
     paragraph shall become effective 6 months after the effective 
     date of the Financial Privacy Protection Act of 2005.
       ``(b) Notification to Customers of Unauthorized Access to 
     Customer Information.--
       ``(1) Financial institution requirement.--In any case in 
     which there has been a breach at a financial institution, or 
     such a breach is reasonably believed to have occurred, the 
     financial institution shall promptly notify--
       ``(A) each customer whose customer information was or is 
     reasonably believed to have been accessed in connection with 
     the breach or suspected breach;
       ``(B) the appropriate Federal functional regulator or 
     regulators with respect to the financial institutions that 
     are subject to their respective enforcement authority;
       ``(C) each consumer reporting agency described in section 
     603(p) of the Fair Credit Reporting Act; and
       ``(D) appropriate law enforcement agencies, in any case in 
     which the financial institution has reason to believe that 
     the breach or suspected breach affects a large number of 
     customers, including as described in paragraph (5)(A)(iii), 
     subject to regulations of the Federal Trade Commission.
       ``(2) Other entities.--For purposes of paragraph (1), any 
     person that maintains customer information for or on behalf 
     of a financial institution shall promptly notify the 
     financial institution of any case in which such customer 
     information has been, or is reasonably believed to have been, 
     breached.
       ``(3) Timeliness of notification.--Notification required by 
     this subsection shall be made--
       ``(A) promptly and without unreasonable delay, upon 
     discovery of the breach or suspected breach; and
       ``(B) consistent with--

[[Page 19263]]

       ``(i) the legitimate needs of law enforcement, as provided 
     in paragraph (4); and
       ``(ii) any measures necessary to determine the scope of the 
     breach or restore the reasonable integrity of the customer 
     information security system of the financial institution.
       ``(4) Delays for law enforcement purposes.--Notification 
     required by this subsection may be delayed if a law 
     enforcement agency determines that the notification would 
     seriously impede a criminal investigation, and in any such 
     case, notification shall be made promptly after the law 
     enforcement agency determines that it would not compromise 
     the investigation.
       ``(5) Form of notice.--Notification required by this 
     subsection may be provided--
       ``(A) to a customer--
       ``(i) in writing;
       ``(ii) in electronic form, if the notice provided is 
     consistent with the provisions regarding electronic records 
     and signatures set forth in section 101 of the Electronic 
     Signatures in Global and National Commerce Act;
       ``(iii) if the number of people affected by the breach 
     exceeds 500,000 or the cost of notification exceeds $500,000, 
     or a higher number or numbers determined by the Federal Trade 
     Commission, such that the cost of providing notifications 
     relating to a single breach or suspected breach would make 
     other forms of notification prohibitive, or in any case in 
     which the financial institution certifies in writing to the 
     Federal Trade Commission that it does not have sufficient 
     customer contact information to comply with other forms of 
     notification with respect to some customers, then for those 
     customers, in the form of--

       ``(I) a conspicuous posting on the Internet website of the 
     financial institution, if the financial institution maintains 
     such a website; and
       ``(II) notification through major media in all major cities 
     and regions in which the customers whose customer information 
     is suspected to have been breached reside, that a breach has 
     occurred, or is suspected, that compromises the security, 
     confidentiality, or integrity of customer information of the 
     financial institution; or

       ``(iv) in such additional forms as the Federal Trade 
     Commission may by rule prescribe; and
       ``(B) to consumer reporting agencies and law enforcement 
     agencies (where appropriate), in such form as the Federal 
     Trade Commission shall by rule prescribe.
       ``(6) Content of notification.--Each notification to a 
     customer under this subsection shall include--
       ``(A) a statement that--
       ``(i) credit reporting agencies have been notified of the 
     relevant breach or suspected breach; and
       ``(ii) notwithstanding any other provision of law, the 
     customer may elect to place a fraud alert in the file of the 
     consumer to make creditors aware of the breach or suspected 
     breach, and to inform creditors that the express 
     authorization of the customer is required for any new 
     issuance or extension of credit (in accordance with section 
     605A of the Fair Credit Reporting Act); and
       ``(B) such other information as the Federal Trade 
     Commission determines is appropriate.
       ``(7) Compliance.--Notwithstanding paragraph (5), a 
     financial institution shall be deemed to be in compliance 
     with this subsection, if--
       ``(A) the financial institution has established a 
     comprehensive customer information security system that is 
     consistent with the standards prescribed by the appropriate 
     Federal functional regulator under subsection (a);
       ``(B) the financial institution notifies affected customers 
     and consumer reporting agencies in accordance with its own 
     internal information security policies in the event of a 
     breach or suspected breach; and
       ``(C) such internal security policies incorporate 
     notification procedures that are consistent with the 
     requirements of this subsection and the rules of the Federal 
     Trade Commission under this subsection.
       ``(8) Rules of construction.--
       ``(A) In general.--Compliance with this subsection by a 
     financial institution shall not be construed to be a 
     violation of any provision of subtitle A, or any other 
     provision of Federal or State law prohibiting the disclosure 
     of financial information to third parties.
       ``(B) Limitation.--Except as specifically provided in this 
     subsection, nothing in this subsection requires or authorizes 
     a financial institution to disclose information that it is 
     otherwise prohibited from disclosing under subtitle A or any 
     other applicable provision of Federal or State law.
       ``(c) Civil Penalties.--
       ``(1) Damages.--Any customer adversely affected by an act 
     or practice that violates this section may institute a civil 
     action to recover damages arising from that violation.
       ``(2) Injunctions.--Actions of a financial institution in 
     violation or potential violation of this section may be 
     enjoined.
       ``(3) Cumulative effect.--The rights and remedies available 
     under this section are in addition to any other rights and 
     remedies available under any other provision of applicable 
     State or Federal law.
       ``(d) Civil Actions by State Attorneys General.--
       ``(1) Authority of state attorneys general.--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--
       ``(A) to enjoin that act or practice;
       ``(B) to enforce compliance with this section;
       ``(C) to 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) Rule of construction.--For purposes of bringing any 
     civil action under paragraph (1), nothing in this section 
     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--
       ``(A) to conduct investigations;
       ``(B) to administer oaths and affirmations; or
       ``(C) to compel the attendance of witnesses or the 
     production of documentary and other evidence.
       ``(3) 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.
       ``(4) Service of process.--In an action brought under this 
     subsection, process may be served in any district in which 
     the defendant--
       ``(A) is an inhabitant; or
       ``(B) may be found.''.

     SEC. 3. DEFINITIONS.

       Section 527 of the Gramm-Leach-Bliley Act (15 U.S.C. 6827) 
     is amended--
       (1) by redesignating paragraph (4) as paragraph (6);
       (2) by redesignating paragraphs (1) through (3) as 
     paragraphs (2) through (4), respectively;
       (3) by inserting before paragraph (2), as redesignated, the 
     following:
       ``(1) Breach.--The term `breach'--
       ``(A) means the unauthorized acquisition, disclosure, or 
     loss of computerized data or paper records which compromises 
     the security, confidentiality, or integrity of customer 
     information, including activities proscribed under section 
     521; and
       ``(B) does not include a good faith acquisition of customer 
     information by an employee or agent of a financial 
     institution for a business purpose of the institution, if the 
     customer information is not subject to further unauthorized 
     disclosure.'';
       (4) in paragraph (2), as redesignated--
       (A) by striking ``person) to whom'' and inserting the 
     following: ``person)--
       ``(A) to whom''; and
       (B) by striking the period at the end and inserting the 
     following: ``; and
       ``(B) with respect to whom the financial institution 
     maintains information in any form, regardless of whether the 
     financial institution is providing a product or service to or 
     on behalf of that person.'';
       (5) in paragraph (3), as redesignated--
       (A) by striking ``institution' means any'' and inserting 
     the following: ``institution'--
       ``(A) means any'';
       (B) by inserting ``(regardless of whether the financial 
     institution is providing any product or service to or on 
     behalf of that customer)'' before ``and is identified''; and
       (C) by striking the period at the end and inserting the 
     following: ``; and
       ``(B) for purposes of section 522, includes the last name 
     of an individual in combination with any 1 or more of the 
     following data elements, when either the name or the data 
     elements are not encrypted:
       ``(i) Social security number.
       ``(ii) Driver's license number or State identification 
     number.
       ``(iii) Account number, credit or debit card number, or any 
     required security code, access code, or password that would 
     permit access to a financial account of the individual.
       ``(iv) Such other information as the Federal functional 
     regulators determine is appropriate with respect to the 
     financial institutions that are subject to their respective 
     enforcement authority.''; and
       (6) by inserting before paragraph (6), as redesignated, the 
     following:
       ``(5) Federal functional regulator.--The term `Federal 
     functional regulator' has the same meaning as in section 509, 
     and includes the Federal Trade Commission.''.

     SEC. 4. INCLUSION OF FRAUD ALERTS IN CONSUMER CREDIT REPORTS.

       Section 605A of the Fair Credit Reporting Act (15 U.S.C. 
     1681c-1) is amended--
       (1) in subsection (b)(1), by inserting ``or proof of a 
     notification of a breach or suspected breach under section 
     522(b)(1)(C) of the Gramm-Leach-Bliley Act'' after ``theft 
     report''; and
       (2) by adding at the end the following:
       ``(i) No Adverse Action Based Solely on Fraud Alert.--It 
     shall be a violation of this

[[Page 19264]]

     title for the user of a consumer report to take any adverse 
     action with respect to a consumer based solely on the 
     inclusion of a fraud alert, extended alert, or active duty 
     alert in the file of that consumer, as required by this 
     subsection.''.

     SEC. 5. STUDIES AND REPORTS ON IMPROVING PROTECTION OF 
                   CUSTOMER INFORMATION.

       (a) Alternative Information Storage Methods.--
       (1) Study.--The Federal Trade Commission shall conduct a 
     study of alternative technologies, including biometrics, that 
     may be used by financial institutions and other businesses to 
     enhance the safeguarding of the customer information of 
     financial institutions and other sensitive personal 
     information. Such study shall include an analysis of how to 
     ensure that such information does not become widespread or 
     subject to theft.
       (2) Report to congress.--The Commission shall submit a 
     report to the Congress on the results of the study conducted 
     under paragraph (1) not later than 6 months after the date of 
     enactment of this Act.
       (b) Transportation of Customer Information.--
       (1) Study.--The Comptroller General of the United States, 
     in consultation with the Federal functional regulators and 
     appropriate law enforcement agencies, shall conduct a study 
     of the cross country transport of the customer information of 
     financial institutions and other sensitive personal 
     information by or on behalf of financial institutions and 
     other businesses.
       (2) Report to congress.--The Comptroller General shall 
     submit a report to the Congress on the results of the study 
     conducted under paragraph (1) not later than 6 months after 
     the date of enactment of this Act, including any 
     recommendations on ways that financial institutions may best 
     reduce the risk of compromise, breach, or loss of the 
     customer information of financial institutions and other 
     sensitive personal information during transport.

     SEC. 6. EFFECTIVE DATE.

       This Act and the amendments made by this Act shall take 
     effect 6 months after the date of enactment of this Act.
                                 ______
                                 
      By Mr. ENZI:
  S. 1597. A bill to award posthumously a Congressional gold medal to 
Constantino Brumidi; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. ENZI. Mr. President, it is a special pleasure for me, as an 
Italian American to introduce legislation to the Senate that will mark 
the 200th anniversary of the birth of Constantino Brumidi.
  As I introduce this legislation, I do so to recognize not only 
Constantino Brumidi, but all those who have come to our shores to 
pursue a dream and share in the blessings of liberty and freedom that 
is our birthright as American citizens.
  For Constantino Brumidi, there was no higher honor or greater calling 
than to be an American citizen. It was a title he sought and then 
signed with pride on some of his best work.
  That experience is by no means unique to Constantino Brumidi. The 
same call that he heard to come to America continues to be heard every 
day as more and more people from all over the world come to the United 
States in the pursuit of a dream and the freedom that marks our way of 
life.
  For my own family, it wasn't all that long after Constantino Brumidi 
left for America that my own ancestors heard the call for freedom and 
came here as well. Just like Constantino Brumidi they left the beauty 
of Italy--its mountains and its sunny shores--to come and be a part of 
the great adventure that is the United States.
  That is my background, and when I came to Washington to serve in the 
Senate, I found a renewed sense of purpose and inspiration every time I 
walked through the corridors of the Capitol Building and saw 
Constantino Brumidi's artwork so prominently and proudly displayed. 
This is a special place and if you walk through these halls late at 
night you can almost hear the whispers of the past and the hushed 
echoes of the voices of our Founding Fathers and past Senators and 
Representatives as they debated and discussed the issues of the day. 
Statuary Hall, home to so many of our Nation's heroes particularly 
draws you near as the Chamber's historical record calls to mind the 
legends of our past--Washington, Jefferson, Lincoln, Adams and 
Franklin.
  That is when it hits you--that the story of the United States isn't a 
random series of events, but the result of the vision and heartfelt 
commitment of those who played an active role in our history. As an 
Italian American it gives me a great sense of pride to know that one of 
those great Americans was Constantino Brumidi.
  The history books tell us that Constantino Brumidi was born in Rome 
of Italian and Greek heritage. He had a great talent for painting that 
revealed itself at an early age, and it was already beginning to earn 
him a reputation as one of Europe's great artists when he heard a 
different call--a call to make beautiful the home of democracy and 
liberty--the United States of America.
  One day, after completing a commission, Constantino Brumidi stopped 
in Washington, DC, to visit the Capitol on his way home. Looking at its 
tall, blank walls and empty corridors, he must have felt the excitement 
and inspiration only an artist facing an empty canvas can know. On that 
day he began what was more than an assignment for him--it was a labor 
of love--as he brought to life the great moments in American history 
for all to see on the walls and ceiling of this great building. His 
efforts were destined to earn him the title of America's Michelangelo.
  There aren't many quotes that are attributed to Constantino Brumidi, 
but one that appears on the marker where he is buried is a beautiful 
expression of his love for our country:
  ``My one ambition and my daily prayer is that I may live long enough 
to make beautiful the Capitol of the one country on earth in which 
there is liberty.''
  That is the philosophy that guided Constantino Brumidi's hand as it 
fired his imagination and inspired his creations in the Capitol. 
Imagine what he would think if he could walk these corridors today. He 
would see that his beautiful work has stood the test of time and gained 
the appreciation and admiration of countless visitors to our shores and 
our Capitol Building. He would see that it continues to thrill the 
millions who flock here every year. I believe he would be both proud 
and humbled to be the center of such attention.
  It is only fitting that over the years Constantino Brumidi has become 
a symbol of all those who came to the United States in pursuit of a 
dream that we all too often take for granted. It was freedom and 
liberty that drew Constantino Brumidi to our land and it is what 
continues to draw us together, American, Italian, Greek, Irish and 
every other nationality you can name to make this world a better place 
for us all to live.
  Throughout the Capitol, each carefully planned stroke of Brumidi's 
brush will continue to remind us that we are blessed and truly 
fortunate to live in a land of promise and opportunity where we are all 
called to greatness. Constantino Brumidi dared to be great and he will 
be forever remembered for the gifts and talents he shared with us.
  The legislation I am introducing today will ensure that the legacy he 
left us all as Americans is never forgotten. Constantino Brumidi wanted 
one thing--to be forever remembered as an Artist Citizen of the United 
States--the home of liberty that he loved. We must all ensure his story 
continues to be told so that it may continue to serve as a source of 
inspiration and encouragement to all those who come to our shores that 
any one of them can make a difference in the world by making the most 
of the opportunities that are available to them here in America.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Craig, Mr. Burns, Mr. Smith, Mrs. 
        Lincoln, and Mr. Schumer):
  S. 1598. A bill to amend the Internal Revenue Code of 1986 to provide 
for a nonrefundable tax credit against income tax for individuals who 
purchase a residential safe storage device for the safe storage of 
firearms; to the Committee on Finance.
  Mr. HATCH. Mr. President, if I may, I would like to speak very 
briefly on another topic. I am an unqualified supporter of the 
``Protection of Lawful Commerce in Arms Act,'' on which we will be 
voting later today.
  My colleague, Senator Craig, should be commended for his hard work on

[[Page 19265]]

this important legislation, which will protect gun manufacturers and 
distributors from unwarranted lawsuits.
  While we must always be vigilant in protecting our rights--including 
our Second Amendment rights--it is also critical that we encourage 
responsible exercise of those rights. For that reason, I want to say a 
few words in support of the ``Child Protection and Home Safety Act of 
2005,'' which I am introducing today. This Act would promote the safe 
storage of firearms by providing a 25 percent tax credit toward the 
purchase of a gun safe, up to a maximum of $250. I am pleased that my 
colleagues, Senators Schumer, Craig, Burns, Lincoln, and Smith, are 
cosponsoring this important bipartisan legislation. Our bill will 
encourage gun owners to purchase gun safes for the safe storage of 
firearms, thereby preventing the mishandling of guns and keeping our 
families and communities safer.
  This bill has widespread support from numerous national 
organizations, including the National Association of Police 
Organizations, the American Association of Suicidology, the American 
Ethical Union, the National Black Police Officers Association, and 
SAVE, the Suicide Awareness Voice of Education. In my home State of 
Utah, law enforcement has given this bill unqualified support. In 
addition to the Utah Sheriff's Association and the Utah Police Corps, 
the Utah Highway Patrol Association has enthusiastically endorsed this 
legislation.
  Mr. President, I will ask unanimous consent to include a copy of 
their letter of support in the Record.
  Many of the guns used in violent acts are acquired on the black 
market, having been stolen from the homes of law abiding Americans. 
Nearly 10 percent of state prison inmates incarcerated on gun crimes 
say the weapons they used were stolen. Safely securing a firearm within 
a person's home is a fundamental way to help ensure that firearms do 
not fall into the wrong hands. One important step that can be taken in 
this regard is for families to lock firearms within a theft-resistant 
safe. This bill, by encouraging the purchase and use of gun safes, will 
significantly reduce the rate of stolen guns, thereby reducing the 
incidents of homicides and violent crimes.
  Another problem plaguing America today is that of children gaining 
access to their parents' firearms and using those firearms to commit 
homicide or suicide. The school shootings in Columbine, Santee, Lake 
Worth, Florida, Fort Gibson, Oklahoma and Deming, New Mexico, are a sad 
legacy we hope to leave far behind us. It is the responsibility of gun 
owners to ensure that our children cannot gain access to firearms and 
unintentionally or intentionally use those firearms to harm themselves 
or someone else. This bill, by encouraging gun owners to lock up their 
firearms in gun safes, will make it more difficult for children to 
access their parents' guns.
  Utah is home to several fine manufacturers of gun safes. The 
employees at companies such as Liberty, Fort Knox, and others know that 
while there are many ways to attempt to secure a firearm, gun safes are 
the best way to reliably secure firearms and keep them out of the hands 
of those who should not have access to them. Other methods of securing 
firearms may only give the purchaser a false sense of security.
  Trigger locks do not prevent loading and can easily be opened by a 
child with a screwdriver. Cable locks can easily be cut open with a 
simple wire-cutter. Locked case boxes are small and light and can 
easily be picked up and carried away by a thief.
  Quality gun safes can provide the security our children and our 
communities deserve. And through the vehicle of a tax credit, this bill 
encourages gun safety while preserving Second Amendment liberties.
  I want to thank everyone who has worked with us to craft this bill. 
By encouraging gun owners to purchase residential gun safes for the 
safe storage of firearms we move a little bit closer to creating a 
safer America.
  Mr. President, I urge all of my colleagues to support the ``Child 
Protection and Home Safety Act of 2005,'' and I ask unanimous consent 
that the text of the bill and the letter to which I referred be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1598

       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 ``Child Protection and Home 
     Safety Act of 2005''.

     SEC. 2. CREDIT FOR RESIDENTIAL GUN SAFE PURCHASES.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25B the following new section:

     ``SEC. 25C. PURCHASE OF RESIDENTIAL GUN SAFES.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to 25 
     percent of the amount paid or incurred by the taxpayer during 
     such taxable year for the purchase of a qualified residential 
     gun safe.
       ``(b) Limitations.--
       ``(1) Maximum credit.--The credit allowed under subsection 
     (a) with respect to any qualified residential gun safe shall 
     not exceed $250.
       ``(2) Carryforward of unused credit.--If the credit 
     allowable under subsection (a) for any taxable year exceeds 
     the limitation imposed by section 26(a) for such taxable year 
     reduced by the sum of the credits allowable under this 
     subpart (other than this section and section 23), such excess 
     shall be carried to the succeeding taxable year and added to 
     the credit allowable under subsection (a) for such taxable 
     year. No credit may be carried forward under this subsection 
     to any taxable year following the third taxable year after 
     the taxable year in which the purchase or purchases are made. 
     For purposes of the preceding sentence, credits shall be 
     treated as used on a first-in first-out basis.
       ``(c) Qualified Residential Gun Safe.--For purposes of this 
     section, the term `qualified residential gun safe' means a 
     container not intended for the display of firearms which is 
     specifically designed to store or safeguard firearms from 
     unauthorized access and which meets a performance standard 
     for an adequate security level established by objective 
     testing.
       ``(d) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under this chapter with respect to any expense which 
     is taken into account in determining the credit under this 
     section.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and taxpayer's spouse file a joint return for the 
     taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.
       ``(e) Election To Have Credit Not Apply.--A taxpayer may 
     elect to have this section not apply for any taxable year.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to ensure that residential 
     gun safes qualifying for the credit meet design and 
     performance standards sufficient to ensure the provisions of 
     this section are carried out.
       ``(g) Statutory Construction; Evidence; Use of 
     Information.--
       ``(1) Statutory construction.--Nothing in this section 
     shall be construed--
       ``(A) as creating a cause of action against any firearms 
     dealer or any other person for any civil liability, or
       ``(B) as establishing any standard of care.
       ``(2) Evidence.--Notwithstanding any other provision of 
     law, evidence regarding the use or nonuse by a taxpayer of 
     the tax credit under this section shall not be admissible as 
     evidence in any proceeding of any court, agency, board, or 
     other entity for the purposes of establishing liability based 
     on a civil action brought on any theory for harm caused by a 
     product or by negligence, or for purposes of drawing an 
     inference that the taxpayer owns a firearm.
       ``(3) Use of information.--No database identifying gun 
     owners may be created using information from tax returns on 
     which the credit under this section is claimed.''.
       (b) Conforming Amendment.--Section 6501(m) of the Internal 
     Revenue Code of 1986 is amended by inserting ``25C(e),'' 
     before ``30(d)(4),''.
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter I of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 25B the following new item:

``Sec. 25C. Purchase of residential gun safes.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

[[Page 19266]]

     
                                  ____
                                 Heber City Police Department,

                                                   Heber City, UT.
     Hon. Orrin G. Hatch,
     U.S. Senate,
     Washington, DC.
       Dear Senator Hatch: The Utah Chiefs of Police Association 
     enthusiastically endorses legislation which would provide a 
     25% tax credit toward the purchase of a gun safe, up to a 
     maximum of $250.
       This legislation would encourage gun owners to purchase gun 
     safes for the safe storage of firearms. An increase in the 
     use of gun safes will help prevent the theft of firearms, 
     reducing incidents of suicide, homicide and violent crimes.
       Senator Hatch, we urge you to introduce this legislation in 
     the Senate, support it and use your best efforts to see that 
     it gets passed. The passage of this vital legislation will 
     prevent the mishandling of guns and keep our families and 
     communities safer.
       Thank you in advance for all your work and your support of 
     this matter.
           Sincerely,

                                             Chief Ed Rhoades,

                                                        President,
                                Utah Chiefs of Police Association.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Ensign, and Mr. Kyl):
  S. 1599. A bill to repeal the perimeter rule for Ronald Reagan 
Washington National Airport, and for other purposes; to the Committee 
on Commerce, Science, and Transportation.
  Mr. McCAIN. Mr. President, I am pleased to be joined by Senators 
Ensign and Kyl in introducing the Abolishing Aviation Barriers Act of 
2005. This bill would remove the arbitrary restrictions that prevent 
Americans from having an array of options for nonstop air travel 
between airports in western States and LaGuardia International Airport 
``LaGuardia'', and Ronald Reagan Washington National Airport, 
``Washington National''.
  LaGuardia restricts the departure or arrival of nonstop flights to or 
from airports that are farther than 1,500 miles from LaGuardia. 
Washington National has a similar restriction for nonstop flights to or 
from airports 1,250 miles from Washington National. These restrictions 
are commonly referred to as the ``perimeter rule.'' This bill would 
abolish these archaic limitations that reduce consumers' options for 
convenient flights and competitive fares.
  The original purpose of the perimeter rule was to promote LaGuardia 
and Washington National as airports for business travelers flying to 
and from East Coast and Midwest cities and to promote traffic to other 
airports by diverting long haul flights to Newark and Kennedy airports 
in the New York area and the Dulles airport in the Washington area. 
However, over the years, Congress has rightly granted numerous 
exceptions to the perimeter rule because the air traveling public is 
eager for travel options. Today, there are nonstop flights between 
LaGuardia and Denver and between Washington National and Denver, Las 
Vegas, Los Angeles, Phoenix, Salt Lake City and Seattle. Rather than 
continuing to take a piecemeal approach to promoting consumer choice, I 
urge Congress to take this opportunity once and for all to do away with 
this outdated rule.
  As many in this body know, I have been fighting against the perimeter 
rule for years. I continue to believe that Americans should have access 
to air travel at the lowest possible cost and with the most convenience 
for their schedule. Therefore, I have always advocated for the removal 
of any artificial barrier that prevents free market competition. Last I 
co-sponsored legislation to repeal the ``Wright Amendment'' which 
prohibits flights from Dallas'' Love Field airport to 43 States. This 
week I am proud to come together with colleagues once again to 
eliminate another unnecessary restraint through the Abolishing Aviation 
Barriers Act of 2005.
  Some opponents, mainly those with parochial interests, have 
criticized me over the years for my efforts to remove the perimeter 
rule for Washington National, particularly because such removal would 
allow flights between Phoenix and Tucson and Washington National. Due 
to such criticism, I made a pledge in 1998 that I would not take such 
flights if they were made available. Shortly thereafter, the Federal 
Aviation Administration granted an exemption for two nonstop flights 
per day between Washington National and Phoenix. I have never taken 
these flights. Instead I have routinely used connecting flights or 
flown out of Dulles International Airport. Being a frequent flier and 
having flown from both Dulles and Kennedy in the past few months, I can 
assure my colleagues, that both airports have enormous business and no 
longer need to be ``fed'' long haul traffic to promote airport usage.
  In fact, a 1999 study by the Transportation Research Board stated 
that perimeter rules ``no longer serve their original purpose and have 
produced too many adverse side effects, including barriers to 
competition . . . The rules arbitrarily prevent some airlines from 
extending their networks to these airports; they discourage competition 
among the airports in the region and among the airlines that use these 
airports; and they are subject to chronic attempts by special interest 
groups to obtain exemptions.''
  That same year, the Government Accountability Office, GAO, stated 
that the ``practical effect'' of the perimeter rule ``has been to limit 
entry'' of other carriers. The GAO found that airfares at LaGuardia and 
Washington National are approximately 50 percent higher on average than 
fares at similar airports unconstrained by the perimeter rule. Such an 
anticompetitive rule should not remain in effect, particularly where 
its anticompetitive impact has long been recognized. For this reason, I 
will continue the struggle to try to remove the perimeter rule and 
other anticompetitive restrictions that increase consumer costs and 
decrease convenience for no apparent benefit.
  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. 1599

       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 ``Abolishing Aviation Barriers 
     Act of 2005''.

     SEC. 2. RONALD REAGAN WASHINGTON NATIONAL AIRPORT.

       (a) In General.--Chapter 449 of title 49, United States 
     Code, is amended by striking section 49109.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     449 of title 49, United States Code, is amended by striking 
     the item relating to section 49109 and inserting the 
     following:

``44901. Repealed''.

     SEC. 3. TERMINATION OF FEDERAL SUPPORT FOR PERIMETER RULE AT 
                   NEW YORK LAGUARDIA AIRPORT.

       Notwithstanding any other provision of law, no Federal 
     funds may be obligated or expended after the date of 
     enactment of this Act to enforce the Port Authority of New 
     York and New Jersey rule banning flights beyond 1,500 miles 
     (or any other flight distance related restriction), from 
     arrival or departure at New York LaGuardia Airport.
                                 ______
                                 
      By Ms. SNOWE (for herself and Mr. Hatch):
  S. 1600. A bill to amend the Communications Act of 1934 to ensure 
full access to digital television in areas served by low-power 
television, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.
  Ms. SNOWE. Mr. President, I have the support of many of my colleagues 
on the Senate Committee on Commerce, Science and Transportation to 
introduce legislation to help rural America transition to an age of 
digital television. Television is an important media outlet for local 
news, weather and information. Years ago, it was decided that the 
United States should transition to a higher standard of television 
service. Digital television is much more than simply a sharper picture; 
it allows for an increase in the number of channels, more efficient use 
of spectrum and many new features for consumers. As the Senate 
considers broader digital television transition legislation, it is 
important not to leave rural America behind.
  The bill I introduce today is aimed to assist translator stations and 
low power analog stations. Translator stations are small stations that 
repeat a signal from full power stations so that the signal may be 
reached in remote areas. Low power analog TV stations

[[Page 19267]]

are television stations that typically serve smaller, rural 
communities. While translators and low power analog TV stations are 
located in many parts of the country, most are concentrated in rural 
areas, including many parts of Maine.
  There has been a long time understanding that low power stations 
would not be a part of the full power digital television transition. 
This understanding, however, does not mean that Congress can simply 
look away. We must ensure that low power stations have the necessary 
time and adequate funds to move into the digital age. The Digital Low 
Power Television Transition Act aims to address these needs.
  First, the bill I am introducing today puts a deadline for the low 
power digital televison transition four years out from whatever the 
hard date is that Congress ultimately decides for the full power 
digital television transition. Full power stations have had years to 
transition to digital. Low power stations have yet to even receive 
their digital allocations, and therefore need additional time to 
upgrade equipment. This delay will also allow consumers in rural areas 
to continue to use analog television sets to receive over-the-air 
signals until digital television equipment becomes more prevalent in 
small town consumer electronics stores.
  Second, the Digital Translator and Low Power Television Transition 
bill establishes a grant program within the National Telecommunications 
and Information Agency, NTIA, to help defray the cost of upgrading 
translators and low power television stations from analog to digital. 
This money for the grant program would come from a trust fund set up 
with proceeds of the spectrum auctions that will take place because of 
the full power digital television transition. The Federal 
Communications Commission, FCC, estimates that approximately $100 
million will be needed for the 4474 translators and 2071 low power 
analog and to upgrade. The trust fund's size reflects the FCC's 
estimate.
  The goal of this Act is to assist the rural, low power stations 
without interrupting the greater digital televison transition. Because 
of the secondary status of translators and low power stations, the 
auction of full power analog spectrum will remain unaffected. These 
stations do play an important role in rural communities, therefore this 
bill calls upon the FCC to report to Congress on the status of 
translators and low power analog.
  This bill is not meant to be a comprehensive approach to the digital 
television transition. It is merely a solution to one of the many 
questions Congress will face this Congress. Rural America deserves the 
same benefits that digital televison will bring that will be available 
in urban areas. This Act gives translators, low power analog and Class 
A stations the assistance they need to smoothly transition to digital.
                                 ______
                                 
      By Mr. GRASSLEY (for himself, Mr. Bayh, and Mrs. Clinton):
  S. 1602. A bill to amend title XIX of the Social Security Act require 
States to disregard benefits paid under long-term care insurance for 
purposes of determining medicaid eligibility, to expand long-term care 
insurance partnerships between States and insurers, to amend the 
Internal Revenue Code of 1986 to allow individuals a deduction for 
qualified long-term care insurance premiums, the use of such insurance 
under cafeteria plans and flexible spending arrangements, and a credit 
for individuals with long-term care needs, to establish home and 
community based services as an optional medicaid benefit, and for other 
purposes; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, I am pleased to join my colleagues 
Senator Bayh and Senator Clinton in introducing the Improving Long-term 
Care Choices Act. This legislation sets forth a series of proposals 
aimed at improving the accessibility of long-term care insurance and 
promoting awareness about the protection that long-term care insurance 
can offer. It also seeks to broaden the availability of the types of 
long-term care services such as home- and community-based care, which 
many folks prefer to institutional care.
  Before I begin my discussion of the merits of the legislation that I 
am introducing today, I want to take this opportunity to once again 
emphasize my commitment to enacting the Family Opportunity Act. I have 
worked to get the Family Opportunity Act enacted for many years now.
  I have been motivated to work so hard because I have been deeply 
moved by a number of stories from families, both from my State of Iowa 
and elsewhere, who have had to turn down promotions, or even put their 
child with a disability up for adoption in order to secure for these 
children the medical services they so desperately need.
  The Family Opportunity Act would provide a State option to allow 
families with disabled children to ``buy in'' to the Medicaid program; 
establish mental health parity in Medicaid Home and Community Based 
Waiver programs; establish Family to Family Health Information Centers 
and restore Medicaid eligibility for certain SSI beneficiaries.
  As part of the on-going negotiations relative to the FOA, many 
stakeholders have agreed that a modification of a feature of the 
President's New Freedom Initiative, a demonstration program known as 
``Money Follows the Person'' should be enacted along with the FOA. 
Money Follows the Person allows the Secretary to provide grants to 
states to increase the use of home and community based care and 
provides States a financial incentive for the first year to do so.
  I want stakeholders in the disability community as well as the many 
organizations who support the Family Opportunity Act to understand that 
the legislation I am introducing today compliments rather than 
supplants my efforts to enact FOA and Money Follows the Person. I 
believe that we should provide a wide array of options to the states to 
encourage them to identify and eliminate barriers to community living 
including access to consumer direction and respite care.
  Long-term care services can be prohibitively expensive. Just one year 
in a nursing home can cost well over $50,000. In many cases, 
individuals deplete their savings and resources paying for long-term 
and ultimately qualify for Medicaid coverage. Right now, Medicaid pays 
for the bulk of long-term care services in this country. In 2002 alone, 
we spent nearly $93 billion on long-term care services under Medicaid. 
With our aging population, one thing is clear: spending will only 
increase.
  When most people think about purchasing long-term care insurance, 
they think, ``that's something I can put off until tomorrow.'' We need 
to change the perception because the older you are when you first buy 
coverage, the more expensive the premiums are.
  Our legislation calls for the Secretary to educate folks about the 
protection that long-term care insurance can offer. We envision people 
having the opportunity to compare policies available in their States. 
Among other means, this could be accomplished through an internet 
website for example.
  Making people aware of long-term care insurance won't go very far 
though, unless we make some other changes to enhance the value and 
protection that long-term care insurance can bring. Our bill takes 
several steps in this regard.
  First, the legislation would require that States disregard benefits 
paid under a long-term care insurance policy when determining 
eligibility for Medicaid. Second, it incorporates a series of consumer 
protections recommended by the National Association of Insurance 
Commissioner, NAIC, into the definition of `qualified long-term care 
services.' Individuals who purchase a policy that have these consumer 
protections will be eligible for an above the line tax deduction and a 
tax credit for out-of-pocket expenses made by caregivers. Third, the 
bill would expand the long-term care partnership program, which 
currently operates as a demonstration in four states. The long-term 
care partnerships combine private long-term care insurance with 
Medicaid coverage once individuals exhaust their insurance benefits.

[[Page 19268]]

Several States would like to pursue their own long-term care 
partnerships and this legislation will enable them to do that.
  The Improving Long-term Care Choices Act also builds on the 
President's New Freedom Initiative by taking further steps toward 
removing the ``institutional bias'' in Medicaid, giving States the 
option of providing home- and community-based services as part of their 
State Medicaid Plan.
  In doing so, the bill gives States the flexibility to design long-
term care benefits that will reduce the reliance on costly 
institutional settings and meet the needs of elderly and disabled 
individuals who overwhelmingly wish to remain in their homes and 
communities.
  In his New Freedom Initiative announced shortly after taking office, 
President George W. Bush outlined a plan to tear down barriers 
preventing people with disabilities from fully participating in 
American society.
  The President also endorses the idea of shifting Medicaid's delivery 
system towards one that promotes cost-effective, community-based care 
instead of one weighted so heavily towards institutional settings.
  This legislation also challenges us to think beyond funding and 
program silos and directs the Secretary to address administrative 
barriers that impede the integration of acute and long-term care 
services. The Secretary also must develop recommendations for statutory 
changes that will make it easier for States to offer better coordinated 
acute and long-term care services.
  The Improving Long-Term Care Choices Act is consistent with our 
ideals about families, individual choices in health care and financial 
responsibility. This bill aims high. But it is sorely evident that we 
need to think creatively and comprehensively, even boldly, if we hope 
to make the type of inroads in promoting the availability of good long-
term care insurance policies and in rebalancing the institutional bias 
in long-term care services that no longer reflects the needs and 
preferences of many stakeholders.
  The Improving Long-Term Care Choices Act is a good bill. The American 
Network of Community Options and Resources, the Arc & United Cerebral 
Palsy Disability Policy Collaboration, and the National Disability 
Rights Network, the United Spinal Association, and the Association of 
University Centers on Disabilities support the bill. I urge my 
colleagues to do the same.
  I ask unanimous consent that a section-by-section summary of the 
legislation and letters of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             Improving Long-Term Care Choices Act--Summary


         TITLE I: LONG-TERM CARE INSURANCE CONSUMER PROTECTIONS

     Subtitle A
       Section 101: State Medicaid Plan requirements regarding 
           Medicaid eligibility determination, long-term care 
           insurance reciprocity, and consumer education
       Requires each state in its Medicaid plan to exclude 
     benefits, including assigned benefits, paid under a 
     qualified-long term care policy in determining income for 
     purposes of determining eligibility for medical assistance.
       Requires that states with a long-term care insurance 
     partnership program to meet requirements for reciprocity to 
     with other long-term care insurance partnership states. 
     Reciprocity rules to be developed as specified in section 
     103.
       Requires the Secretary to educate consumers on the 
     advisability of obtaining long-term care insurance that meets 
     federal standards and the potential interaction between 
     coverage under a policy and federal and state health 
     insurance programs.
       Section 102: Additional consumer protections for long-term 
           care insurance
       Establishes additional consumer protections with respect to 
     long-term care insurance policies based on the October 2000 
     National Association of Insurance Commissioners (NAIC) model 
     regulations including non-cancellability, prohibitions on 
     limitations and exclusions, extension of benefits, 
     continuation of conversion coverage, discontinuance and 
     replacement, prohibitions on post-claim underwriting, 
     inflation protection, and prohibitions on pre-existing 
     condition and probationary periods in replacement policies or 
     certificates.
       Issuers of long-term care insurance policies must also 
     comply with NAIC model provisions related to disclosure of 
     rating practices, application forms and replacement coverage, 
     reporting, filing requirements for marketing, suitability, 
     standard format outline of coverage, and delivery of 
     shopper's guide.
       Issuers must comply with model act policies related to 
     right to return, outline of coverage, certificates under 
     group plans, monthly reports on accelerated death benefits, 
     and incontestability period.
       Applies to policies issued more than 1 year after 
     enactment.
       Section 103: Expansion of State Long-term Care Partnerships
       Permits the expansion of long-term care partnership 
     insurance policies to all states.
       Requires all new partnership policies to be ``qualified 
     long-term care insurance policies'' defined as a policy that: 
     (1) disregards any assets or resources in the amount equal 
     payments made under the policy; (2) requires the holder, upon 
     the policy's effective date, to reside in the state or a 
     state with a qualified long-term care partnership; (3) 
     includes the consumer protections specified in 7702B of the 
     tax code as amended by Section 102 (additional consumer 
     protections); (4) requires compound inflation protection; and 
     (5) requires that any agent selling such policies receive 
     training and demonstrate knowledge of such policies,
       Medicaid asset protection would apply in an equal amount to 
     the insurance benefit paid under the policy, referred to as a 
     dollar-for-dollar model. [The four states (NY, IN, CT, and 
     CA) that currently offer long-tenn care partnership policies 
     that are not dollar-for-dollar may continue to offer those 
     policies.]
       Directs the Secretary to set standards for reciprocity in 
     conjunction with states, insurers, NAIC, and other groups as 
     deemed necessary by the Secretary not later than 12 months 
     after enactment to provide for the portability of long-term 
     care partnership policies from one partnership state to 
     another partnership state.
       Establishes minimum uniform reporting requirements.
       Section 104: National Clearinghouse for Long-term Care 
           Information
       Provides for: (1) development of a national clearinghouse 
     on long-term care information to educate consumers on the 
     importance of purchasing long-term care insurance, and, where 
     appropriate, to assist consumers in comparing long-term care 
     insurance policies offered in their states, including 
     information on benefits, pricing (including historic 
     increases in premiums) as well as other options for financing 
     long-term care and (2) establishment of a website to 
     facilitate comparison of long-term care policies.
       Authorizes such sums a necessary for the clearinghouse in 
     fiscal year 2006 and each year thereafter.
     Subtitle B
       Section 121: Treatment of premiums on qualified long-term 
           care insurance contracts
       Provides individuals an above-the-line tax deduction for 
     the cost of their qualified LTC insurance policy (as defined 
     by HIPAA, section 7702B(b)). Phases in applicable percentage 
     of the deduction based on the number of years of continuous 
     coverage under a qualified LTC policy.
       Section 122: Credit for taxpayers with long-term care needs
       Provides applicable individuals with LTC needs or their 
     eligible caregivers a $3000 tax credit to help cover LTC 
     expenses. An applicable individual is one who has been 
     certified by a physician as needing help with at least 3 
     activities of daily living, such as eating, bathing, 
     dressing. LTC tax credit would be phased-in over 4 years as 
     follows: $1000 in 2005, $1500 in 2006, $2000 in 2007, $2500 
     in 2008, and $3000 in 2009 or thereafter. The credit phases 
     out by $100 for each $1000 (or fraction thereof) by which the 
     taxpayer's modified adjusted gross income exceeds the 
     threshold amount set at $150,000 for a joint return and 
     $75,000 for an individual return.
       Section 123: Treatment of exchanges of long-term care 
           insurance contracts
       Includes a waiver of limitations, allowing individuals to 
     make claims if there are changes to law.


 TITLE II: MEDICAID HOME AND COMMUNITY-BASED SERVICES OPTIONAL BENEFIT

       Section 201: Medicaid Home and Community-Based Services 
           Optional Benefit
       Provides states with a new option to offer home and 
     community-based services to Medicaid-eligible individuals 
     without obtaining a federal waiver. Under this option states 
     may include one or more home and community-based services 
     currently available under existing waiver authority. States 
     would also be permitted to allow individuals to choose to 
     self-direct services. Under this option, states must 
     establish a more stringent eligibility standard for placement 
     of individuals in institutions, than for placement in a home 
     and community-based setting. States would be permitted to 
     offer a limited benefit consisting of home and community-
     based services only, to certain populations not otherwise 
     eligible for Medicaid, but not to exceed

[[Page 19269]]

     individuals whose income exceeds 300% of SSI income and 
     resource standards. At states option, provides presumptive 
     eligibility for aged, blind and disabled for home and 
     community-based services. If enrollment under the state plan 
     exceeds state projections, the state would be permitted to 
     change eligibility standards to limit enrollment for new 
     applicants, while grandfathering those individuals already 
     receiving services.


  TITLE III: INTEGRATED ACUTE AND LONG-TERM CARE SERVICES FOR DUALLY 
                          ELIGIBLE INDIVIDUALS

       Section 301: Removal of barriers to integrated acute and 
           long-term care services for dually eligible individuals
       Directs the Secretary, in collaboration with directors of 
     State Medicaid programs, health care issuers, managed care 
     plans, and others to issue regulations removing 
     administrative barriers that impede the offering of 
     integrated acute, home and community-based, nursing facility, 
     and mental health services, and to the extent consistent with 
     the enrollee's coverage for such services under Part D, 
     prescription drugs. The Secretary also must submit 
     recommendations to address legislative barriers to offering 
     integrated services. The Medicare Payment Advisory Commission 
     (MedPAC) will comment on the Secretary's recommendations.
                                  ____

                                     American Network of Community


                                        Options and Resources,

                                    Alexandria, VA, July 29, 2005.
     Hon. Charles Grassley,
     Hon. Evan Bayh,
     U.S. Senate, Washington, DC.
       Dear Senators Grassley and Bayh: On behalf of the American 
     Network of Community Options and Resources (ANCOR)--the 
     national association representing more than 850 private 
     providers of supports and services to more than 380,000 
     people with significant disabilities--we extend our 
     appreciation and offer our support in the introduction today 
     of your ``Improving Long-Term Care Choices Act of 2005.''
       It is especially noteworthy that you introduced this bill 
     on the eve of Medicaid's 40th anniversary. Medicaid has 
     worked for millions of people with disabilities, improving 
     their lives over the past four decades. However, Medicaid can 
     and should do better on behalf of the 8 million individuals 
     with disabilities that depend daily upon this program for 
     their health services and long-term supports. This is a 
     propitious moment to send a message to the nation--people 
     with disabilities can count on Medicaid. It makes clear to 
     all that Congress intends to maintain its commitment for a 
     strong federal role in enhancing the lives of people with 
     disabilities.
       People with disabilities, their families, and providers 
     have for years called for the removal of Medicaid's 
     institutional bias. ANCOR provided testimony in. September of 
     2001 in conjunction with the President's New Freedom 
     Initiative that the Congress must change the structure of 
     Medicaid to include state plan home and community-based 
     services. Your bill builds upon the President's initiative, 
     the Supreme Court's Olmstead decision, and ANCOR's commitment 
     to community integration.
       In addition to helping millions of people of all ages who 
     depend upon Medicaid for long-term supports, your legislation 
     will assist millions of moderate-income Americans to address 
     their future long-term needs. By encouraging reliable long-
     term care insurance and tax incentives to defray costs for 
     long-term needs, your bill begins the important process to 
     adopt a national comprehensive long-term care policy. This 
     step is critical as the nation stands on the precipice of the 
     fast approaching ``sleeping giant''--the retirement of the 
     baby boom generation and shift in demographics. In this way, 
     the bill will help reduce the financial pressures on Medicaid 
     and our nation's reliance on it as the only public long-term 
     care program.
       ANCOR is pleased and proud to offer its support to you on 
     this momentous day and to pledge our help in making the 
     ``Improving Long-Term Care Choices Act of 2005'' a reality 
     this session. We are grateful for your leadership and ongoing 
     commitment to people with disabilities and those who provide 
     them with daily supports.
           Sincerely,
                                             Suellen R. Galbraith,
     Director for Government Relations.
                                  ____



                              Disability Policy Collaboration,

                                    Washington, DC, July 29, 2005.
     Hon. Charles Grassley,
     Hon. Evan Bayh,
     U.S. Senate.
       Dear Chairman Grassley and Senator Bayh: The Arc of the 
     United States and United Cerebral Palsy strongly support your 
     introduction of the Improving Long-Term Care Choices Act. The 
     Arc is the national organization of and for people with 
     mental retardation and related developmental disabilities and 
     their families. United Cerebral Palsy is a nationwide network 
     of organizations providing advocacy and direct services to 
     people with disabilities and their families.
       The creation of a Medicaid home and community-based 
     services optional benefit is an important improvement in the 
     federal/state Medicaid program and one for which we have 
     advocated for many years. We believe that the addition of 
     this benefit as an option for states will make it easier for 
     states to serve people with severe disabilities where they 
     want to be served--in their own home communities, rather than 
     in institutions or other facilities. This will increase 
     opportunities for improved quality of life for many children 
     and adults with severe disabilities and their families.
       We applaud your efforts and are grateful for your 
     leadership in introducing this important legislation and 
     pledge to work with you to secure its passage and enactment.
           Sincerely,
                                                    Paul Marchand,
     Staff Director.
                                  ____

                                               National Disability


                                               Rights Network,

                                    Washington, DC, July 29, 2005.
     Hon. Charles Grassley,
     U.S. Senate,
     Washington, DC.
       Dear Senator Grassley: The National Disability Rights 
     Network (NDRN) is the nonprofit membership organization for 
     the federally mandated Protection and Advocacy (P&A) Systems 
     and the Client Assistance Programs (CAP) for individuals with 
     disabilities. Through training and technical assistance, 
     legal support, and legislative advocacy, NDRN works to create 
     a society in which children and adults with all types of 
     disabilities are afforded equality of opportunity and are 
     able to fully participate by exercising choice and self-
     determination.
       NDRN strongly supports your introduction of the Improving 
     Long Term Care Choices Act of 2005. One of the major goals of 
     the P&A/CAP network is for all individuals with disabilities 
     to live in their own communities--independently, with their 
     families, or with other individuals of their choice. Your 
     determination in bringing forward this bill--with the 
     critical component of establishing home and community-based 
     services and supports as a optional Medicaid benefit, instead 
     of only available through a waiver--is a major step in the 
     right direction.
       NDRN and the entire P&A/CAP network look forward to the day 
     when community-based supports and services for children and 
     adults with disabilities are the norm and institutional 
     services are non-existent or require a waiver.
       We believe that this bill also is very important because it 
     will shine a light on the need for a true long-term care 
     system in our nation. While long-term care insurance is not 
     the answer for everyone, it can be useful--if affordable and 
     if it covers people for a long enough span of time; The 
     availability of long-term care insurance also could help to 
     take the pressure off of the Medicaid program.
       Thank you again for your continuing recognition of the 
     needs of children and adults with disabilities and their 
     families. The disability community looks upon you as one of 
     its leading advocates in the U.S. Congress. NDRN is pleased 
     to offer any help it can in moving the Long-Term Care Choices 
     Act through this session of Congress. Please contact Dr. 
     Kathleen McGinley.
           Sincerely,

                                               Lynn Breedlove,

                                                        President,
     NDRN Board of Directors.
                                  ____



                                    United Spinal Association,

                                    Washington, DC, July 29, 2005.
     Hon. Charles Grassley,
     Hon. Evan Bayh,
     U.S. Senate,
     Washington, DC.
       Dear Senators Grassley and Bayh: United Spinal Association, 
     a national disability advocacy organization dedicated to 
     enhancing the quality of life for individuals with spinal 
     cord injury or spinal cord disease by assuring quality health 
     care, promoting research, and advocating for civil rights and 
     independence, thanks you for introducing the Improving Long 
     Term Care Choices Act of 2005. United Spinal applauds your 
     leadership in bringing forward such an important measure, 
     which will assist thousands of Americans with disabilities 
     become more fully integrated and participating members of 
     their communities.
       The Improving Long Term Care Choices Act would help states 
     rebalance their long term supports systems away from an 
     institutional bias by giving states the flexibility to offer 
     community services and supports as a state plan option under 
     Medicaid. The proposal would also encourage individuals to 
     purchase private long-term care insurance, which could help 
     elevate some of the financial pressures off of state Medicaid 
     programs. In addition, this bill will help states in their 
     efforts to comply with the Supreme Court Olmstead decision.
       People with disabilities should be able to live and work in 
     their communities, not segregated in large and costly 
     institutions. This system reform is long overdue. Thank you 
     again for your vision, courage and ongoing leadership to 
     create public policy that promotes independence, productivity 
     and integration of people with disabilities in their 
     communities. United Spinal would like to offer any assistance 
     you need in moving the Improving Long Term Care Choices Act

[[Page 19270]]

     through this session of Congress. Please contact me for 
     assistance.
           Sincerely,
                                            Kimberly Ruff-Wilbert,
     Policy Analyst.
                                  ____

                                         Association of University


                                      Centers on Disabilities,

                                 Silver Spring, MD, July 29, 2005.
     Hon. Charles Grassley,
     Hon. Evan Bayh,
     U.S. Senate,
     Washington, DC.
       Dear Senators Grassley and Bayh: On behalf of the 
     Association of University Centers on Disabilities (AUCD), a 
     national network that provides education, training and 
     service in developmental disabilities, we want to thank you 
     for introducing the Improving Long Term Care Choices Act of 
     2005. The Association of University Centers on Disabilities 
     (AUCD) applauds your leadership in bringing forward such an 
     important measure, which will assist thousands of Americans 
     with disabilities to be more fully integrated and 
     participating members of their communities.
       The Improving Long Term Care Choices Act would help states 
     rebalance their long term supports systems away from an 
     institutional bias by giving states the flexibility to offer 
     community services and supports as a state plan option under 
     Medicaid. The proposal would also encourage individuals to 
     purchase private long-term care insurance which will help 
     take some of the financial pressure off the Medicaid program. 
     It will also help states in their efforts to comply with the 
     Supreme Court Olmstead decision.
       People with disabilities should be able to live and work in 
     the community with or close to family and friends, not 
     segregated in large and costly institutions. This system 
     reform is long overdue.
       Thank you again for your vision, courage and ongoing 
     leadership to create public policy that promotes 
     independence, productivity and integration of people with 
     disabilities in their communities. AUCD would like to offer 
     any assistance you need in moving the Improving Long Term 
     Care Choices Act through this session of Congress. Please 
     contact Kim Musheno for assistance,
           Sincerely,
     Robert Bacon,
       Co-Chair, AUCD Governmental Affairs Committee.
     Lucille Zeph,
       Co-Chair, AUCD Governmental Affairs Committee.

  Mrs. CLINTON: Mr. President, I am proud to rise today to introduce 
the Improving Long-Term Care Choices Act with Senator Grassley and 
Senator Bayh. This legislation would take several important steps 
toward assisting Americans and their caregivers to meet their long-term 
care needs.
  Issues related to long-term care are of growing concern to many in 
New York and around the Nation. Individuals and families are struggling 
to afford costly care, obtain appropriate information regarding long-
term care insurance, and maintain dignity and choice regarding these 
important services. As I talk with seniors around the State of New York 
and throughout the country, what I hear most is that people want to 
stay in their homes with their loved ones for as long .as they can. 
However, too many individuals and families struggle to be able to 
afford quality home and community based care. In addition, families are 
unsure where to find the resources they need to purchase long-term care 
insurance.
  That is why I have joined with my colleagues to introduce this 
legislation. The Improving Long-Term Care Choices Act will assist 
individuals in meeting their long-term care needs, while reducing 
Medicaid costs.
  This bill will improve access to home and community based services 
through Medicaid that will help seniors remain in their homes and 
communities. It will also expand long-term care insurance consumer 
protections, provide tax deductions for the cost of long-term care 
insurance, and allow tax credits for individuals and their caregivers 
to help cover long-term care expenses not covered by insurance. 
Finally, this legislation would establish a national clearinghouse on 
long-term care information.
  This legislation takes some important steps to assist individuals and 
families in gathering the resources necessary to prepare for their 
long-term care needs and gain access to services in their preferred 
choice of setting.
  I look forward to continuing to work with Senators Grassley and Bayh 
and all of my colleagues to ensure that all Americans have access to 
the resources that help them access high quality long-term care.
                                 ______
                                 
      By Ms. SNOWE:
  S. 1603. A bill to establish a National Preferred Lender Program, 
facilitate the delivery of financial assistance to small businesses, 
and for other purposes; to the Committee on Small Business and 
Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to discuss a bill, the Small 
Business Lending Improvement Act of 2005, which I have introduced today 
to provide small businesses with easier access to loans and to increase 
efficiency in the Small Business Administration's largest loan program, 
the 7(a) program, which provided $12.7 billion in small business loans 
in 2004.
  As Chair of the Senate Committee on Small Business and 
Entrepreneurship, I am committed to supporting our Nation's Main Street 
small business community by increasing its access to capital. This 
legislation will reform a cumbersome SBA lender licensing process that 
does not provide our small businesses with the most efficient means of 
accessing the capital they must have to start and sustain their firms. 
The bill would allow the SBA's 7(a) loan program to better capitalize 
on the demonstrated potential small business have to create jobs and 
economic growth.
  As our Nation continues to prosper from economic growth, low 
inflation, and low unemployment, we should not forget the critical role 
played by our small businesses. Without strong and successful small 
businesses, our prosperity would not be what it is today.
  Under current law, the most prolific lenders in the SBA's 7(a) loan 
program can participate in the ``Preferred Lender Program'' (PLP 
Program), which allows them to use their own processing facilities and 
therefore both increases lenders' efficiency and reduces costs for the 
SBA. However, PLP lenders are required to apply for PLP status in each 
of the 71 SBA districts nationwide to obtain PLP status in that 
district, and they must re-apply each year in each district. This is 
extremely inefficient and wasteful, and creates enormous unnecessary 
administrative costs.
  Section 2 of this bill would allow qualifying lenders to participate 
in the PLP Program on a nationwide basis after just one licensing 
process. This provision was in S. 1375, the Small Business 
Administration 50th Anniversary Reauthorization Act of 2003, which I 
introduced in 2003 and which the Senate approved unanimously in 
September 2003.
  This provision would drastically reduce administrative costs and 
would standardize the operation of the PLP program. A National 
Preferred Lenders Program would eliminate the inefficiencies and cost 
of applying for PLP status in each district, and would increase the 
ease with which loans are made to small businesses, thereby improving 
small businesses' access to capital. Competition among lenders for 
small business customers would increase, increasing financing 
alternatives and lowering costs for small businesses.
  In addition to simplifying licensing processes for both lenders and 
the SBA, the bill would allow the SBA's lender oversight to be done 
more efficiently and effectively, on a national basis. The current 
process of having to renew licenses in each district is extremely time-
consuming and administratively burdensome for the lenders and the SBA. 
A National Preferred Lenders Program could remedy the inefficiencies 
and cost of applying for PLP status in each district and save a 
tremendous amount of taxpayer dollars.
  Section 3 of the act increases the maximum size of a 7(a) loan to $3 
million, from the current $2 million, and increase the maximum size of 
a 7(a) guarantee to $2.25 million, from the current $1.5 million. This 
would maintain the maximum 75 percent guarantee. Small businesses' 
financing needs are increasing and, especially with the high cost of 
real estate and new equipment, it is appropriate to respond to those 
needs by offering larger loans.

[[Page 19271]]

  In the SBA's 504 Loan Program, loans may now be as large as $10 
million, with $4 million guaranteed, for manufacturing projects, $5 
million (with $2 million guaranteed) for loans that serve an enumerated 
public policy goal (such as rural development), and $3.75 million (with 
$1.5 million guaranteed) for all other ``regular'' 504 Program loans. 
Thus, this increase in 7(a) Program loans to $3 million would bring 
7(a) loans closer in size to 504 Program loans, while still leaving 
7(a) loans smaller than 504 Program loans.
  Section 4 of the bill increases the program's authorization level to 
$18 billion for fiscal year 2006, instead of the $17 billion authorized 
for fiscal year 2006 in the Omnibus Appropriations Act, enacted in 
December 2004. The program is on pace to achieve loan volume of between 
$14 and $15 billion in fiscal year 2005, and this provision would allow 
the program adequate ability to grow unimpeded in fiscal year 2006, 
especially if the maximum loan size is increased.
  Section 5 of the bill requires the SBA to implement an alternative 
size standard, in addition to the program's current standard, for the 
7(a) program. The SBA would create an alternative size standard for the 
7(a) program, as it has already done for the 504 program, that 
considers a business's net worth and income. This provision would bring 
the 7(a) program into conformity with the 504 Program. This provision 
was also in S. 1375 in the 108th Congress, passed unanimously by the 
Senate in 2003.
  Currently, in the 7(a) program a small business's eligibility to 
receive a loan is determined by reference to a multipage chart that has 
different size standards for every industry that can be very confusing, 
especially for small lenders that do not make many 7(a) loans. In the 
504 Program, however, lenders can use either the industry-specific 
standards or an ``alternative size standard'' that the SBA created, 
which simply says a small business is eligible for a loan if it has 
gross income of less than $7 million or net worth of less than $2 
million.
  This would simplify the 7(a) lending process and provide small 
businesses with a streamlined procedure for determining if they are 
eligible for 7(a) loans, and it would conform the standards used by the 
7(a) and 504 programs. It would make the program far more accessible to 
small businesses and small lenders.
  All of these improvements to the SBA's largest loan program will 
support our national goal of building a vibrant and growing economy. 
Small businesses are the heart of our economy, and this bill will help 
to improve small businesses' economic prospects.
  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. 1603

       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 ``Small Business Lending 
     Improvement Act of 2005''.

     SEC. 2. NATIONAL PREFERRED LENDERS PROGRAM.

       Section 7(a)(2) of the Small Business Act (15 U.S.C. 
     636(a)(2)) is amended by adding at the end the following:
       ``(E) National preferred lenders program.--
       ``(i) Establishment.--There is established the National 
     Preferred Lenders Program in the Preferred Lenders Program 
     operated by the Administration, in which a participant may 
     operate as a preferred lender in any State if such lender 
     meets appropriate eligibility criteria established by the 
     Administration.
       ``(ii) Terms and conditions.--An applicant shall be 
     approved under the following terms and conditions:

       ``(I) Term.--Each participant approved under this 
     subparagraph shall be eligible to make loans for not more 
     than 2 years under the program established under this 
     subparagraph.
       ``(II) Renewal.--At the expiration of the term described in 
     subclause (I), the authority of a participant to make loans 
     for the program established under this subparagraph may be 
     renewed based on a review of performance during the previous 
     term.
       ``(III) Effect of failure.--Failure to meet the criteria 
     under this subparagraph shall not affect the eligibility of a 
     participant to continue as a preferred lender in a State or 
     district in which the participant is in good standing.

       ``(iii) Implementation.--

       ``(I) Regulations.--As soon as is practicable, the 
     Administrator shall promulgate regulations to implement the 
     program established under this subparagraph.
       ``(II) Program implementation.--Not later than 120 days 
     after the date of enactment of this subparagraph, the 
     Administrator shall implement the program established under 
     this subparagraph.''.

     SEC. 3. MAXIMUM LOAN AMOUNT.

       Section 7(a)(3)(A) of the Small Business Act (15 U.S.C. 
     636(a)(3)(A)) is amended by striking ``$1,500,000 (or if the 
     gross loan amount would exceed $2,000,000)'' and inserting 
     ``$2,250,000 (or if the gross loan amount would exceed 
     $3,000,000)''.

     SEC. 4. SECTION 7(A) AUTHORIZATION FOR FISCAL YEAR 2006.

       Section 20(e)(1)(B)(i) of the Small Business Act (15 U.S.C. 
     631 note) is amended by striking ``$17,000,000,000'' and 
     inserting ``$18,000,000,000''.

     SEC. 5. ALTERNATIVE SIZE STANDARD.

       Section 3(a)(3) of the Small Business Act (15 U.S.C. 
     632(a)(3)) is amended--
       (1) by striking ``When establishing'' and inserting the 
     following: ``Establishment of Size Standards.--
       ``(A) In general.--When establishing''; and
       (2) by adding at the end the following:
       ``(B) Alternative size standard.--
       ``(i) In general.--Not later than 180 days after the date 
     of enactment of this subparagraph, the Administrator shall 
     establish an alternative size standard under paragraph (2), 
     that shall be applicable to loan applicants under section 
     7(a) or under title V of the Small Business Investment Act of 
     1958 (15 U.S.C. 695 et seq.).
       ``(ii) Criteria.--The alternative size standard established 
     under clause (i) shall utilize the maximum net worth and 
     maximum net income of the prospective borrower as an 
     alternative to the use of industry standards.
       ``(iii) Interim rule.--Until the Administrator establishes 
     an alternative size standard under clause (i), the 
     Administrator shall use the alternative size standard in 
     section 121.301(b) of title 13, Code of Federal Regulations, 
     for loan applicants under section 7(a) or under title V of 
     the Small Business Investment Act of 1958 (15 U.S.C. 695 et 
     seq.).''.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. Pryor, Mr. Cornyn, Mr. Graham, Mr. 
        Brownback, and Mr. Chambliss):
  S. 1605. A bill to amend title 18, United States Code, to protect 
public safety officers, judges, witnesses, victims, and their family 
members, and for other purposes; to the Committee on the Judiciary.
  Mr. KYL. Mr. President, I rise today to introduce the Law Enforcement 
Officers' Protection Act of 2005. This act will guarantee tough, 
mandatory punishment for criminals who murder or assault police 
officers, firefighters, judges, court employees, ambulance-crew 
members, and other public-safety officers in the course of their 
duties. Attacks on police officers and judges are serious crimes. They 
merit the toughest penalties. LEOPA imposes the following terms of 
imprisonment for attacks on public-safety officers: (1) second degree 
murder, 30 years to life; (2) voluntary manslaughter, 15 to 40 years; 
(3) assault resulting in serious bodily injury, 15 to 40 years; (4) 
assault with a dangerous weapon, 15 to 40 years; and (5) assault 
resulting in bodily injury, 5 to 20 years. The act also imposes 
commensurate penalties for retaliatory murders, kidnappings, and 
assaults committed against the family members of public-safety 
officers.
  LEOPA includes additional provisions that will deter attacks upon 
police officers. The act expedites Federal-court review of state 
convictions for murder of a public-safety officer; it limits the 
damages that can be recovered by criminals for any injuries experienced 
during their arrest; it removes arbitrary barriers to retired officers' 
right to carry concealed weapons under Federal law; it makes it a crime 
to publicize a public-safety officer's identity in order to threaten or 
intimidate him; and it increases existing penalties for obstruction of 
justice and interference with court proceedings.
  Aggravated assaults against police officers are a serious national 
problem. According to the most recent F.RI. report on the subject, 52 
law-enforcement officers were feloniously killed in the United States 
in 2003. In the 10 year period from 1994 through 2003, a total of 616 
lawenforcement officers were feloniously killed in the line of duty in 
the United States.

[[Page 19272]]

  These officers' assailants unquestionably are among the worst 
criminals. Of those individuals responsible for unlawful killings of 
police officers between 1994 and 2003, 521 had a prior criminal arrest, 
including 153 who had a prior arrest for assaulting a police officer or 
resisting arrest. The individuals who commit these types of offenses 
are among the most dangerous members of the criminal class. Tough 
sentences for these criminals not only protect those who risk their 
lives to protect us; they also directly protect the public at large by 
removing a dangerous class of criminals from society.
  Ordinary assaults against police officers have become a widespread 
problem. More than 57,000 law enforcement officers were assaulted in 
the course of their duties in 2003, and more than a quarter of these 
assaults resulted in injury to the officer. These numbers represent 
more than one of every 10 officers serving in the United States. Our 
society apparently has reached a point where criminals feel entitled to 
assault a police officer when they are being arrested. LEOPA is 
designed to change that understanding, to show criminals that assaults 
against police officers are unacceptable.
  It bears mention that because of improvements in technology, recent 
years' numbers of officers killed in the line of duty even understate 
the extent of the violence that officers face. As the Los Angeles Times 
noted in 1994, ``the number of officers killed--an average of 60 to 70 
a year since the late 1980s--would have broken records, too, if not for 
the advent of bulletproof vests, police experts say; about 400 officers 
have survived shootings over the last decade because they were wearing 
protective armor.'' (Faye Fiore & Miles Corwin, Toll of Violence Haunts 
Families of Police Officers, N.Y. Times, Feb. 21, 1994, at 1). As the 
executive director of the Fraternal Order of Police noted recently, 
``there's less respect for authority in general and police officers 
specifically. The predisposition of criminals to use firearms is 
probably at the highest point in our history.'' (Jerry Nachtigal, Crime 
Down, but Number of Police Officers Killed Holds Steady, Associated 
Press Newswires, Apr. 11, 1999).
  Violence against police officers also inhibits effective law 
enforcement. It breeds caution among officers and hinders robust 
investigation. LEOPA is designed to restore balance to the law. It is 
designed to ensure that police officers do not fear for their safety 
when enforcmg the law, but instead, that criminals fear the 
consequences of breaking the law.
  Finally, aside from their broader effects on law enforcement and 
society, aggravated assaults and murders of police officers simply are 
terrible crimes. The victims often are young and in the prime of life, 
leaving behind young children, spouses, and grieving parents. A few 
recent incidents in the news serve to illustrate the horrific toll that 
these homicides take on the surviving victims:
  Los Angeles County Deputy Sheriff Shayne York, 26 years old, was 
murdered during an invasion robbery while waiting for his fiancee at a 
hair salon on August 16, 1997. He was killed solely because of his 
status as a police officer. The Los Angeles Times gave the following 
account of the crime from the testimony at the killer's trial:

       The robbers yelled racial slurs and ordered customers and 
     employees to the floor, snatching valuables from everyone 
     inside. When one of the bandits found a law enforcement badge 
     in York's wallet, he kicked York as he lay on the ground, 
     according to testimony from [York's fiancee], also a Los 
     Angeles County sheriff's deputy. The gunman asked York if he 
     ever mistreated blacks and Crips gang members at Los Angeles 
     County's Pitchess Detention Center, where York worked. York 
     responded, ``No, sir.'' [The killer,] an alleged Crips gang 
     member, then pointed a pistol at the back of York's head and 
     squeezed the trigger, prosecutors said. [York's fiancee] 
     testified she saw York's body go limp as she felt his blood 
     flowing onto her legs. She said she heard the gunman say, ``I 
     always wanted to kill a pig.'' (Jack Leonard & Monte Morin, 
     Man Guilty of Killing Off-Duty Deputy, L.A. Times, Aug. 23, 
     2000, at B1.)

  Deputy York's killer never expressed any remorse over this senseless 
crime. When jurors read their verdict at his trial, he shouted at them, 
``May Allah kill you all, pagans, infidels.'' (Stuart Pfeifer & Richard 
Marosi, Jury Recommends Death for Robber Who Killed Deputy, L.A. Times, 
Sept. 8, 2000, at B7.)
  California Highway Patrol Officer Don Burt, 25 years old, was shot 
seven times by a member of a street gang during a traffic stop on July 
13, 1996. As Officer Burt lay wounded on the ground, the killer shot 
him in the head. The Los Angeles Times, covering the killer's trial, 
gave the following account of the testimony describing the devastating 
impact of Officer Burt's death on his family:

       [Don Burt's father] relived some of his happiest memories 
     with his son--the wedding of his son and [daughter-in-law] 
     Kristin, and the day he was told he was going to be a 
     grandfather. But the proudest moment for both father and son 
     was when the younger Burt joined the Highway Patrol. ``I 
     pinned on his badge and I hugged him,'' the father said, 
     tearfully. ``The proudest I'd ever seen him. The gleam he had 
     in his eye--he was so proud.''
       It was a quiet summer night the night his son died, [Burt's 
     father] told the 12-member jury. He and his wife had just 
     finished dinner. The telephone rang. It was their daughter-
     in-law's father, also a CHP officer, saying there had been a 
     shooting in the area that the younger Burt patrolled. The 
     elder Burt, a 30-year veteran trooper, called the CHP 
     dispatch center to learn more. A patrol car arrived to take 
     the parents to the hospital. ``We drove [to the hospital] in 
     dead silence,'' Burt said. ``I knew my son was dead and I 
     couldn't tell my wife. She was sitting there with hope and I 
     couldn't tell her.''
       Jeannie Burt said she didn't realize how serious her son's 
     injuries were until a few minutes after they arrived at the 
     hospital. ``I thought he wasn't hurt too bad, that everything 
     was going to be all right,'' Jeannie Burt told jurors. But 
     then, ``I saw Kristin's brother and he just shook his head. 
     And I knew my son was dead.'' Tears streamed down Jeannie 
     Burt's cheeks through most of her testimony. ``He wasn't 
     perfect, but pretty close to it,'' the mother said through 
     her tears. ``I'm grateful I had my son for the 25 years I had 
     him. I wouldn't trade that with anything. I'm just so sad 
     that my daughter-in-law has lost the love of her life. That 
     his son does not have a father.''
       Kristin Burt, widow of the slain officer, said she was 
     seven months pregnant with their first child when her husband 
     of nearly three years was killed. She took the stand Monday, 
     faltering and fighting back tears as she described how the 
     coroner told her that her husband was dead. The coroner 
     ``held my hand and slipped Don's wedding ring into my hand,'' 
     Kristin Burt said. (Louis Roug & Meg James, Rage in the 
     Courtroom, L.A. Times, Apr. 18, 2000, at B1.)

  Officer Burt's son, Cameron, was born two months after he was killed.
  Compton Police Officers Kevin Burrell and James MacDonald were shot 
and killed by a wanted criminal during a traffic stop on February 22, 
1993. Newspapers gave the following account of the crime: ``The 
officers were wearing bulletproof vests when they stopped a red pickup 
truck about 11 p.m., but were knocked to the ground by bullet wounds to 
their limbs. With the officers lying in the rain-soaked street, [the 
killer] pumped bullets into their heads, execution-style.'' (Jodi 
Wi1goren, Killer of 2 Compton Police Officers Sentenced to Death, L.A. 
Times, Aug. 16, 1995, at 1.)
  Officers Burrell and MacDonald were both young men, with all of their 
parents still living, at the time of their deaths. At the killer's 
trial, their families described the deep trauma that the crime created. 
The Los Angeles Times gave the following account:

       One after another, the mothers and fathers of Officers 
     James Wayne MacDonald and Kevin Michael Burrell took the 
     stand to cry out their losses. Three could not complete their 
     testimony without breaking down so badly that court recessed. 
     Burrell's mother told how she had heard the shots that killed 
     her son a few blocks from her home. MacDonald's father, 
     sobbing uncontrollably, blurted, ``Come home, Jimmy, let me 
     trade places with you,'' when he was asked what he would tell 
     his son if he could bring him back.
       James and Tonia MacDonald told how they visit their son's 
     grave twice each day in their hometown of Santa Rosa, just to 
     chat. Clark and Edna Burrell told how neither of them can 
     bear to visit the cemetery where their son now lies.
       ``I heard the shots,'' Edna Burrell said. Then she told how 
     she reasoned that her son had been hit. ``I was listening to 
     my police scanner,'' she said, ``and I knew it was Kevin 
     because I didn't hear them call his name'' on other dispatch 
     calls. ``So when she (a police officer) knocked on my door, 
     all I could do is scream, `Oh God, they shot my baby.'''. 
     With that, Edna Burrell broke down. Overwhelmed, she was led 
     from the courtroom,

[[Page 19273]]

     past where [the killer] sat staring straight ahead. Sobbing 
     softly, she repeated what she had said on the stand: ``How 
     could he do that? How could he do that?''
       Both sets of parents said the deaths of their sons left 
     them feeling empty, lost and angry. ``The whole time I was 
     praying, just to let Jimmy live until I could see him 
     again,'' Tonia MacDonald sobbed, remembering the hours after 
     she was told about the shooting. ``And then I was so mad at 
     God. All I wanted was to see him one more time.''
       All four parents said old friends have fallen away as grief 
     consumed their lives. Mother's Day, James MacDonald 
     testified, has become unbearable. ``This year, when I got up, 
     I didn't tell her (his wife) `Happy Mother's Day' because 
     it's a tough day,'' he said. ``I could see the tears in her 
     eyes.'' (Emily Adams, Slain Officers' Parents Tell of Pain, 
     L.A. Times, June 1, 1995, at 1.)

  It bears mention that all of the criminals responsible for the 
murders described here were convicted of capital offenses, and will be 
subject to the expedited federal review provisions in section 6 of 
LEOPA once they complete their State appeals.
  Section 6 of the bill is named for Dr. John B. Jamison, a Coconino 
County, AZ, Reserve Sheriffs Deputy who was murdered while responding 
to a fellow deputy's call for assistance on September 6, 1982. The 
killer fired 30 rounds from an assault rifle into Dr. Jamison's car, 
killing the deputy before he could reach his gun or even unbuckle his 
seatbelt. Dr. Jamison was survived by his 13-year-old son and 10-year-
old daughter. State courts completed their review of the killer's 
conviction and sentence in 1985. Federal courts then delayed the case 
for an additional 15 years. One judge on the U.S. Court of Appeals for 
the Ninth Circuit even tried to postpone the killer's final execution 
date on the alleged basis that the killer was wrongfully denied state 
funds to investigate a rare neurological condition that his lawyer had 
learned of while watching television. Dr. Jamison's killer ultimately 
was executed in 2000--18 years after the crime occurred, and 15 years 
after federal habeas-corpus proceedings began.
  Section 6 is designed to prevent these kinds of delays in Federal 
review of cases involving state convictions for the murder of a public-
safety officer. In the district court, parties will be required to move 
for an evidentiary hearing within 90 days of the completion of 
briefing, the court must act on the motion within 30 days, and the 
hearing must begin 60 days later and last no longer than 3 months. All 
district-court review must be completed within 15 months of the 
completion of briefing. In the court of appeals, the court must 
complete review within 120 days of the completion of briefing. In most 
cases, these limits will ensure that federal review of a defendant's 
appeal is completed within less than 2 years. This section also makes 
these deadlines practical and enforceable by limiting federal review to 
those claims presenting meaningful evidence that the defendant did not 
commit the crime--defendants would be barred from re-litigating claims 
unrelated to guilt or innocence. (Defendants still will be permitted to 
litigate all their legal claims in state court on direct review and 
state-habeas review, and in petitions for certiorari in the U.S. 
Supreme Court.)
  The need for this provision is particularly stark in the judicial 
circuit that includes my home state of Arizona. The U.S. Court of 
Appeals for the Ninth Circuit's pattern of blocking capital punishment 
for all murderers--including those who kill police officers--is well 
documented. A recent committee report of the U.S. Senate, for example, 
notes that: ``Data for the last ten years show that outside of the 
Ninth Circuit, usually 70 to 80 percent of death sentences are affirmed 
by a [federal] Court of Appeals on collateral review. In almost every 
year, however, the Ninth Circuit has reversed the majority of death 
sentences that it reviews. Moreover, this percentage has climbed 
sharply in recent years . . . In the last three years, the Ninth 
Circuit has reversed 88 percent, 80 percent, and 86 percent of the 
death sentences that it has reviewed.'' (S. Rep. No. 107-315 (2002), at 
72-73) The Senate report also notes that a core group of Ninth Circuit 
judges vote to reverse virtually every death sentence that they review. 
Judge Stephen Reinhardt, for example, had reviewed 31 death sentences 
by 2002, and voted to reverse every single one. Other Ninth Circuit 
judges have similar records.
  As Ninth Circuit Judge Alex Kozinski has noted, ``there are those of 
my colleagues who have never voted to uphold a death sentence and 
doubtless never wil1.'' He continued: ``Refusing to enforce a valid law 
is a violation of the judges' oath--something that most judges consider 
a shameful breach of duty. . . . [But] to slow down the pace of 
executions by finding fault with every death sentence is considered by 
some to be highly honorable.'' (Alex Kozinski, Tinkering with Death, 
The New Yorker, Feb. 10, 1997, at 48-53)
  This pattern of behavior extends to the Ninth Circuit's review of 
death sentences imposed for the murder of police officers. In the nine 
States under the Ninth Circuit's jurisdiction, 34 criminals have been 
sentenced to death for murdering police officers since the late 1970's. 
Only one--the man who killed Dr. Jamison--has ever been executed. The 
Ninth Circuit consistently has obstructed all other death sentences for 
criminals convicted of murdering police officers in the western States.
  As one Orange County newspaper columnist notes, these numbers reflect 
poorly on our society's commitment to ensuring justice for slain police 
officers and their families:

       When California voters reinstated the death penalty in 
     1978, they made killing an on-duty peace officer one of the 
     ``special circumstances'' that could subject the killer to 
     execution. The idea behind that was simple enough. If you 
     made killing a cop a death-penalty offense, maybe it would 
     make criminals think twice before doing it. . . . But it's 
     doubtful that the special circumstance concerning peace 
     officers strikes any fear into the heart of a would-be cop-
     killer. Because in the 24 years since the new death-penalty 
     law was passed, not one cop-killer has been executed in 
     California. During that time, more than 200 California peace 
     officers have been murdered in the line of duty, including 
     eight in Orange County, and dozens of cop-killers have been 
     sent to death row. But not one has died for his crime. True, 
     California hasn't been in any hurry to execute other 
     murderers, either. Since 1978, more than 700 killers have 
     been sent to death row, but only 10 have been executed. But 
     the justice system seems particularly reluctant to actually 
     enforce the death penalty against cop-killers. ``That sends a 
     terrible message,'' says Marianne Wrede of Anaheim Hills, 
     whose son, West Covina Police Officer Kenneth Wrede, was 
     murdered in 1983. ``It says the justice system doesn't 
     respect the sacrifices of police officers and their 
     families.'' (Gordon Dillow, State Balks at Executing Cop-
     Killers, The Orange County Reg., Dec. 5, 2002)

  These unconscionable delays have greatly increased the suffering 
experienced by the surviving families of murdered police officers. 
Again, a few examples from recent news stories illustrate the nature of 
the problems created by the current system of decades-long post-
conviction review:
  On August 31, 1983, West Covina Police Officer Kenneth Wrede, 26 
years old, responded to a call about a man behaving strangely in a 
residential neighborhood. Wrede confronted the man, who became abusive 
and tried to hit Wrede with an 8-foot tree spike. Wrede could have shot 
the man, but instead attempted to defuse the situation. The man then 
reached into Wrede's car and ripped the shotgun and rack from the 
dashboard. Wrede drew his gun and persuaded the man to lay down the 
shotgun, but the man picked it up again when Wrede lowered his revolver 
and shot Wrede in the head, killing him instantly.
  Years later, Wrede's parents described the terrible impact of this 
crime on their family. Marianne Wrede told of how ``a half hour before 
local television newscasts would broadcast the story, her doorbell 
rang. On the steps stood her son's commander and a police lieutenant. 
Between them stood Kenneth Wrede's distraught wife. `I knew it was bad 
news,' Marianne Wrede said. `I shut the door in their faces and I said, 
`It can't be my boy.''' (Laura-Lynne Powell, Grief Unites Kin of Fallen 
Officers, The Orange County Reg., June 20,1991, at EO1) Many years 
after the crime, she reflected that ``every day I miss my son and it 
never goes away.'' (Anne C. Mulkern & Tiffany Montgomery, Caring Counts 
in Line of Duty, The Orange County Reg., Sept. 25, 1996, at BO1) Ken 
Wrede's father also described the impact of the loss of

[[Page 19274]]

his son. ``My life will never be the same. I deal with it every day; 
when I hear a police siren and immediately think of my son, when I pull 
up next to a police car and think that that could have been him. I 
still stop as often as I can and tell the officers to have a good day 
and be careful.'' (David Haldane & Michael Wagner, For Some, a Reminder 
of Past Tragedy, L.A. Times, July 15, 1996, at A3)
  Officer Wrede's killer was sentenced to death in 1984, and that 
conviction was affirmed by the California Supreme Court in 1989. Then 
in 2000--17 years after Ken Wrede's murder--a divided panel of the 
Ninth Circuit reversed the killer's death sentence. The Ninth Circuit 
found that the killer's lawyer provided ineffective assistance of 
counsel at the penalty phase because he did not present additional 
evidence of the killer's abusive childhood and drug use.
  At the time, Marianne Wrede noted, ``We thought we finally were close 
to getting this behind us. And now this.'' (Gordon Dillow, Long Wait 
for Justice Gets Worse, The Orange County Reg., May 11, 2000, at BO1) A 
California Deputy Attorney General denounced the decision, stating that 
``it can always be suggested a jury should have heard something else in 
the penalty phase of a death penalty case.'' (Richard Winston, Reversal 
of Death Penalty in Officer's Killing Decried Courts, L.A. Times, May 
10, 2000, at B3) West Covina Corporal Robert Tibbets, the original 
investigator at the scene of Wrede's murder, described the Ninth 
Circuit's decision as a ``miscarriage of justice.'' (Id.) He had 
promised Wrede's parents that he would accompany them to every court 
hearing for their son's killer. He made good on his promise, even 19 
years later, when the killer was retried and again sentenced to death 
in 2002. But the Wredes now face another round of state and then 
federal appeals. At the retrial, Ken's father noted that ``my family 
and 1 had endured 19 years of trial, appeals, delays, causing us to 
relive the trauma of Kenny's death over and over again.'' The trial 
judge agreed. He stated, ``It is an obscenity to put anyone through 
this needlessly for 19 years. It is inexcusable for us in the system 
that we need to look at this case for 19 years to get it resolved. The 
system at some point in the line has become clogged and broken.'' 
(Larry Welborn, 19 Years and no Resolution for Parents, The Orange 
County Reg., Sept. 21, 2002)
  Riverside Police Officers Dennis Doty and Philip Trust were killed by 
a man whom they attempted to arrest at his home on May 13, 1982. The 
man was in bed when the officers arrived and they permitted him to 
dress. The man then pulled out a gun that he had been sitting on and 
shot and killed both officers. He apparently sought revenge for 
injuries that he sustained when he was shot while committing a bank 
robbery. Officer Doty had served a tour of duty in Vietnam, where he 
had received a Purple Heart and Bronze Star. The State supreme court 
affirmed the killer's conviction and death sentence in 1991.
  In 2002, 20 years after the murders, Federal district court reversed 
the killer's death sentence, finding that he had received ineffective 
assistance of counsel because he did not trust his lawyers. Local 
Superior Court judge Edward Webster denounced the decision, declaring 
that he was ``outraged by the entire federal process.'' He declared 
that ``this [ decision] is just a product of judges'' personal opinions 
and philosophies opposing the death penalty.'' (Marlowe Churchill, 
Riverside Judge Takes Federal Court to Task, The Press-Enterprise, July 
22, 1995, at BO1) The Riverside assistant police chief noted that the 
decision was particularly unfortunate for the officers' families: 
``They lived this 20 years ago, and not to have closure on the trial 
process is particularly difficult'' (Mike Kataoka, Court Annuls Death 
Decree, The Press Enterprise, May 31, 2002, at BO1)
  Los Angeles Police Detective Tom Williams was shot and killed by a 
man against whom he had testified several hours earlier in a robbery 
trial on October 31, 1985. Detective Williams was killed while picking 
up his son at a day-care center. A local newspaper gave the following 
account of the crime: ``With [his son] Ryan sitting beside him in the 
front seat of his truck, Williams, 42, saw the man in the ski mask, saw 
the automatic weapon pointing out of the driver's side window of the 
passing car. But he was helpless to do anything to protect himself. All 
he had time to do was scream for Ryan to get down, then cover the boy 
with his own body.'' (Dennis McCarthy, Youth Feels Need to Serve, L.A. 
Daily News, Aug. 24, 1993, at Nl) The Los Angeles Times gave the 
following account of testimony from the killer's trial:

       A seventh-grade pupil at a Canoga Park church school 
     testified Wednesday that he saw 6-year-old Ryan Williams 
     sitting on the ground crying moments after the boy's father, 
     a Los Angeles police detective, had been gunned down in the 
     street on Oct. 31, 1985. Thomas C. Williams, 42, was picking 
     up Ryan from school at 5:40 p.m. when he was struck by eight 
     bullets from an automatic weapon. The detective died, slumped 
     against the driver's side of his orange pickup truck. . . . 
     [The pupil] said he looked toward Williams' truck, parked in 
     front of the Faith Baptist Church school, and saw the 
     windshield shatter. ``It split into pieces,'' [he] said. 
     ``Then I ducked. I couldn't see anything. I got up because I 
     heard some little boy cry. I walked over. He was sitting on 
     the ground and he was crying and he had a bloody lip.'' (Lynn 
     Steinberg, Boy Tells of Fatal Attack on Detective, L.A. 
     Times, Feb. 11, 1998, at 12)

  Detective Williams's killer remains on death row today, 20 years 
after committing this crime.
  Garden Grove police officer Donald Reed was shot and killed while 
arresting a man at a bar on June 7, 1980. The killer appeared at first 
to cooperate with police, but then pulled a pistol from his jacket and 
began firing. One officer who comforted Reed as he lay on the ground 
describe the scene: ``I could see a sense of panic in Don's eyes. He 
said, `I am not gonna make it''' (Daniel Yi, Slain Officer's Family 
Testifies, L.A. Times, Feb. 9, 2000, at B1)
  When Reed died, he had two toddler sons, ages 3 and 1\1/2\. Reed's 
killer was sentenced to death, but the sentence was reversed on appeal, 
and he was retried and sentenced to death again in 2000. Reed's sons 
were 22 and 21 by the time of the retrial. Still coping with the loss 
of their father, they chose not to attend the second trial. ``I was a 
mother, a father, I had to teach them everything,'' Reed's widow 
stated. (Id.) Of her husband, she simply noted, ``He was taken 
unnecessarily.'' (John McDonald, Officer's Widow Details Trauma, The 
Orange County Reg., Feb. 9, 2000, at B01) She also described the impact 
on her family of holding a second trial 20 years after the crime. ``We 
had all moved on, and then this came back and smacked us in the face. 
It really just tears you apart.'' (Daniel Yi, Slain Officer's Family 
Testifies, L.A. Times, Feb. 9, 2000, at B1)
  Los Angeles Police Officer Paul Verna was gunned down during a 
traffic stop on June 2, 1983, by two men who earlier had committed a 
series of violent robberies. The first man shot Verna from inside the 
car, and the second then exited the vehicle and shot Verna five more 
times as he lay on the ground. Verna was survived by his wife and two 
young sons. Years later, the state supreme court reversed the death 
sentence of one of the killers. A new trial was held in 2000. At the 
first trial, Verna's widow described the devastating impact of the 
crime on her family. She spoke of how ``no one who has not done it can 
know how difficult it is to tell two young boys that the daddy they 
loved so much is gone.'' (Janet Rae-Dupree, 2 Sentenced to Die for 
Killing Policeman, L.A. Times, Sept. 21, 1985, at 6) A local newspaper 
gave the following accounts of the sentencing retrial:

       Vema's sons were young boys, 4 and 9, when he was murdered. 
     This past week, they testified as young men. They told the 
     jury that they did not have a lot of first-hand recollection 
     of their dad. They did have the memories of stories from 
     their mom and many others as to what their dad was like. Ryan 
     [the younger son] spoke of sometimes feeling uneasy at being 
     told how much he looked like and even acted like his dad, 
     whom he does not remember. Sandy, Verna's widow, spoke of the 
     challenge of properly raising two very young boys alone. (Jim

[[Page 19275]]

     Tatreau, Who Was Paul Verna? Murdered Officer Deeply Missed 
     Hero, L.A. Daily News, Oct. 22, 2000, at V3)
       ``At age 33, to be a widow--my roles in life completely 
     changed. The very hardest part was when they were very young 
     kids--when Ryan, who was 4 years old when his father died, 
     would get hurt and would cry to his mother at bedtime, 
     `Mommy, I just want my daddy.' I couldn't give that to him, 
     no matter how hard I tried. I could do everything else, but I 
     couldn't give him his daddy.'' (Jason Kandel, Retrial Brings 
     Victim's Family to Tears, L.A. Daily News, Sept. 27, 2000, at 
     N4)
       [Ryan] has only vague memories of his father's death, and 
     then he could know his father only through various police 
     memorials, plaques and family pictures. He has learned most 
     of the details of the death from three weeks of testimony 
     during the penalty retrial, and his killer's image won't 
     disappear. ``My father didn't deserve to die in that manner, 
     especially what was said to him and the gun being thrown on 
     him when he's lying on the ground,'' he said in tears. ``My 
     father wasn't around for a lot of things, a lot of special 
     things in my life.'' (Id.)

  Our society must do everything that it can to deter these types of 
crimes to ensure that punishment for those who commit them is swift and 
certain. For all of these reasons, I urge my colleagues to support the 
Law-Enforcement Officers' Protection Act.
  Mr. KYL. Mr. President, I rise today with my colleague, Senator 
Cornyn of Texas, to introduce the ``DNA Fingerprint Act of 2005.'' This 
act will allow State and Federal law enforcement to catch rapists, 
murderers, and other violent criminals whom it otherwise would be 
impossible to identify and arrest.
  The principal provisions of the DNA Fingerprint Act make it easier to 
include and keep the DNA profiles of criminal arrestees in the National 
DNA Index System, where that profile can be compared to crime-scene 
evidence. By removing current barriers to maintaining data from 
criminal arrestees, the act will allow the creation of a comprehensive, 
robust database that will make it possible to catch serial rapists and 
murderers before they commit more crimes.
  The impact this act will have on preventing rape and other violent 
crimes is not merely speculative. We know from real life examples that 
an all-arrestee database can prevent many future offenses. In March of 
this year, the city of Chicago produced a case study of eight serial 
killers in that city who would have been caught after their first 
offense--rather than after their fourth or tenth--if an all-arrestee 
database had been in place. This study is included in the record at the 
conclusion of my remarks.
  The first example that the Chicago study cites involves serial rapist 
and murderer Andre Crawford. In March 1993, Crawford was arrested for 
felony theft. Under the DNA Fingerprint Act, the state of Illinois 
would have been able to take a DNA sample from Crawford at that time 
and upload and keep that sample in NDIS, the national DNA database. But 
at that time--and still today--Federal law makes it difficult to upload 
an arrestee's profiles to NDIS, and bars States from keeping that 
profile in NDIS if the arrestee is not later convicted of a criminal 
offense. As a result, Crawford's DNA profile was not collected and it 
was not added to NDIS. And as a result, when Crawford murdered a 37-
year-old woman on September 21, 1993, although DNA evidence was 
recovered from the crime scene, Crawford could not be identified as the 
perpetrator. And as a result, Crawford went on to commit many more 
rapes and murders.
  On December 21, 1994, a 24-year-old woman was found murdered in an 
abandoned building on the 800 block of West 50th place in Chicago. DNA 
evidence was recovered. That DNA evidence identifies Crawford as the 
perpetrator. If the DNA Fingerprint Act had been law, and Crawford's 
profile had been collected after his March 1993 arrest, he would have 
been identified as the perpetrator of the September 1993 murder, and 
this December 1994 murder could have been prevented.
  On April 3, 1995, a 36-year-old woman was found murdered in an 
abandoned house on the 5000 block of South Carpenter Street in Chicago. 
DNA evidence was recovered. That DNA evidence identifies Crawford as 
the perpetrator. If the DNA Fingerprint Act had been law, and 
Crawford's profile had been collected after his March 1993 arrest, he 
would have been identified as the perpetrator of the two earlier 
murders that he had committed, and this April 1995 muurder could have 
been prevented.
  On July 23, 1997, a 27-year-old woman was found murdered in a closet 
of an abandoned house on the 900 block of West 51st Street in Chicago. 
DNA evidence was recovered. That DNA evidence identifies Crawford as 
the perpetrator. If the DNA Fingerprint Act had been law, and 
Crawford's profile had been collected after his March 1993 arrest, he 
would have been identified as the perpetrator of the three earlier 
murders that he had committed, and this July 1997 murder could have 
been prevented.
  On December 27, 1997, a 42-year-old woman was raped in Chicago. As 
she walked down the street, a man approached her from behind, put a 
knife to her head, dragged her into an abandoned building on the 5100 
block of South Peoria Street, and beat and raped her. DNA evidence was 
recovered. That DNA evidence identifies Crawford as the perpetrator. If 
the DNA Fingerprint Act had been law, and Crawford's profile had been 
collected after his March 1993 arrest, he would have been identified as 
the perpetrator of the four earlier murders that he had committed, and 
this December 1997 rape could have been prevented.
  In June 1998, a 31-year-old woman was found murdered in an abandoned 
building on the 5000 block of South May Street in Chicago. DNA evidence 
was recovered. That DNA evidence identifies Crawford as the 
perpetrator. If the DNA Fingerprint Act had been law, and Crawford's 
profile had been collected after his March 1993 arrest, he would have 
been identified as the perpetrator of the four earlier murders and one 
rape that he had committed, and this June 1998 murder could have been 
prevented.
  On August 13, 1998, a 44-year-old woman was found murdered in an 
abandoned house on the 900 block of West 52nd Street. Her clothes were 
found in the alley. DNA evidence was recovered. That DNA evidence 
identifies Crawford as the perpetrator. If the DNA Fingerprint Act had 
been law, and Crawford's profile had been collected after his March 
1993 arrest, he would have been identified as the perpetrator of the 
five earlier murders and one rape that he had committed, and this 
August 1998 murder could have been prevented.
  Also on August 13, 1998, a 32-year-old woman was found murdered in 
the attic of a house on the 5200 block of South Marshfield. Her body 
was decomposed, but DNA evidence was recovered. That DNA evidence 
identifies Crawford as the perpetrator. If the DNA Fingerprint Act had 
been law, and Crawford's profile had been collected after his March 
1993 arrest, he would have been identified as the perpetrator of the 
six earlier murders and one rape that he had committed, and this 
additional murder could have been prevented.
  On December 8, 1998, a 35-year-old woman was found murdered in a 
building on the 1200 block of West 52nd Street. She had rope marks 
around her neck and injuries to her face. DNA evidence was recovered. 
That DNA evidence identifies Crawford as the perpetrator. If the DNA 
Fingerprint Act had been law, and Crawford's profile had been collected 
after his March 1993 arrest, he would have been identified as the 
perpetrator of the seven earlier murders and one rape that he had 
committed, and this December 1998 murder could have been prevented.
  On February 2, 1999, a 35-year-old woman was found murdered on the 
1300 block of West 51st Street. DNA evidence was recovered. That DNA 
evidence identifies Crawford as the perpetrator. If the DNA Fingerprint 
Act had been law, and Crawford's profile had been collected after his 
March 1993 arrest, he would have been identified as the perpetrator of 
the eight earlier murders and one rape that he had committed, and this 
February 1999 murder could have been prevented.
  On April 21, 1999, a 44-year-old woman was found murdered in the 
upstairs of an abandoned house on the 5000 block of South Justine 
Street. DNA evidence

[[Page 19276]]

was recovered. That DNA evidence identifies Crawford as the 
perpetrator. If the DNA Fingerprint Act had been law, and Crawford's 
profile had been collected after his March 1993 arrest, he would have 
been identified as the perpetrator of the nine earlier murders and one 
rape that he had committed, and this April 1999 murder could have been 
prevented.
  And on June 20, 1999, a 41-year-old woman was found murdered in the 
attic of an abandoned building on the 1500 block of West 51st Street. 
DNA evidence was recovered from blood on a nearby wall, indicating a 
struggle. That DNA evidence identifies Crawford as the perpetrator. If 
the DNA Fingerprint Act had been law, and Crawford's profile had been 
collected after his March 1993 arrest, he would have been identified as 
the perpetrator of the ten earlier murders and one rape that he had 
committed, and this additional murder could have been prevented.
  As the city of Chicago case study concludes:

       In January 2000, Andre Crawford was charged with 11 murders 
     and 1 Aggravated Criminal Sexual Assault. If his DNA sample 
     had been taken on March 6, 1993, the subsequent 10 murders 
     and 1 rape would not have happened.

  The city of Chicago study goes on to discuss the cases of 7 other 
serial rapists and murders from that city. Collectively, together with 
Andre Crawford, these 8 serial rapists and killers represent 22 murders 
and 30 rapes that could have been prevented had an all-arrestee 
database been in place.
  The DNA Fingerprint Act eliminates current federal statutory 
restrictions that prevent states from adding and keeping arresttee 
profiles in NDIS. In effect, the Act would make it possible to build a 
comprehensive, robust national all-arrestee DNA database.
  Here is how the DNA Fingerprint Act works: First, under current 
Federal law, a DNA profile from an arrestee cannot be uploaded to NDIS 
until the arrestee is charged in an indictment or information. Thus 
today, even an arrestee charged in a pleading cannot have his DNA 
uploaded to the national index. The act eliminates this restriction, 
allowing arrestees to be included as soon as they are arrested. It also 
eliminates a statutory restriction that bars inclusion of profiles from 
suspects who provide so-called ``exoneration'' samples. The act 
recognizes that criminal suspects have no legitimate interest in 
evading identification for crimes that they have committed.
  Second, the act requires an arrestee to take the initiative to opt 
out of NDIS if charges against him have been dismissed or he has been 
acquitted, and he does not want his DNA profile compared to future 
crime scene evidence. Current law places the burden of determining who 
may be removed from the index on the administrator of the DNA database, 
thus requiring the administrator to track the progress of individual 
criminal cases. This bureaucratic burden discourages states from 
creating and maintaining comprehensive, all-arrestee DNA databases. It 
also effectively precludes the creation of a genuine national all-
arrestee database. In effect, only convicts' DNA profiles can be kept 
in the database over the long term. The act would allow arrestee 
profiles to be kept in the database as well.
  Third, the DNA Fingerprint Act would allow expanded use of CODIS 
grants. Congress currently appropriates funds for use by states to 
expand their DNA databases. Current law restricts the use of these 
grants, however, to only building databases of convicted felons. This 
bill expands this authorization to allow use of these funds to build a 
database of all DNA samples collected under lawful authority--including 
samples taken from arrestees.
  Fourth, the DNA Fingerprint Act allows the Federal Government to take 
and keep DNA samples from arrestees. The act gives the Attorney-General 
the authority to develop regulations allowing collection of DNA 
profiles from federal arrestees or detainees. The authority to issue 
such regulations would give the Attorney General the flexibility needed 
to respond to new legal developments and changes in technology.
  And finally, the act tolls the statute of limitations for Federal sex 
offenses. Current law generally tolls the statute of limitations for 
felony cases in which the perpetrator is implicated in the offense 
through DNA testing. The one exception to this tolling is the sexual-
abuse offenses in chapter 109A of title 18. When Congress adopted 
general tolling, it left out chapter 109A, apparently because those 
crimes already are subject to the use of ``John Doe'' indictments to 
charge unidentified perpetrators. The Justice Department has made 
clear, however, that John Doe indictments are ``not an adequate 
substitute for the applicability of [tolling].'' The Department has 
criticized the exception in current law as ``work[ing] against the 
effective prosecution of rapes and other serious sexual assaults under 
chapter 109A,'' noting that it makes ``the statute of limitation rules 
for such offenses more restrictive than those for all other Federal 
offenses in cases involving DNA identification.'' The DNA Fingerprint 
Act corrects this anomaly by allowing tolling for chapter 109A 
offenses.
  Further evidence of the potential effectiveness of a comprehensive, 
robust DNA database is available from the recent experience of Great 
Britain. The British have taken the lead in using DNA to solve crimes, 
creating a database that now includes 2,000,000 profiles. Their 
database has now reached the critical mass where it is big enough to 
serve as a highly effective tool for solving crimes. In the U.K., DNA 
from crime scenes produces a match to the DNA database in 40 percent of 
all cases. This amounted to 58,176 cold hits in the United Kingdom 
2001. (See generally ``The Application of DNA Technology in England and 
Wales,'' a study commissioned by the National Institute of Justice.) A 
broad DNA database works. The same tool should be made available in the 
United States.
  Some critics of DNA databasing argue that a comprehensive database 
would violate criminal suspects' privacy rights. This is simply untrue. 
The sample of DNA that is kept in NDIS is what is called ``junk DNA''--
it is impossible to determine anything medically sensitive from this 
DNA. For example, this DNA does not allow the tester to determine if 
the donor is susceptible to particular diseases. The Justice Department 
addressed this issue in its statement of views on S. 1700, a DNA bill 
that was introduced in the 108th Congress:

       [T]here [are no] legitimate privacy concerns that require 
     the retention or expansion of these [burdensome expungement 
     provisions]. The DNA identification system is already subject 
     to strict privacy rules, which generally limit the use of DNA 
     samples and DNA profiles in the system to law enforcement 
     identification purposes. See 42 U.S.C. 14132(b)-(c). 
     Moreover, the DNA profiles that are maintained in the 
     national index relate to 13 DNA sites that do not control any 
     traits or characteristics of individuals. Hence, the 
     databased information cannot be used to discern, for example, 
     anything about an individual's genetic illnesses, disorders, 
     or dispositions. Rather, by design, the information the 
     system retains in the databased DNA profiles is the 
     equivalent of a ``genetic fingerprint'' that uniquely 
     identifies an individual, but does not disclose other facts 
     about him.

  Elsewhere in its Views Letter, the Justice Department also explained 
why the restrictive expungement provisions in current law are 
unnecessary and contrary to sound public policy. The letter noted that 
the FBI maintains a database of fingerprints of arrestees--without 
regard to whether the arrestee later was acquitted or convicted. The 
letter states, ``With respect to the . . . exclusion of DNA profiles of 
unindicted arrestees, it should be noted by way of comparison that 
there is no Federal policy that bars States from including fingerprints 
of arrestees in State and Federal law enforcement databases prior to 
indictment.'' The Justice Department also pointed out that ``[t]here is 
no reason to have a . . . Federal policy mandating expunge-
ment for DNA information. If the person whose DNA it is does not commit 
other crimes, then the information simply remains in a secure database 
and there is no adverse effect on his life. But if he commits a murder, 
rape, or other serious crime, and DNA

[[Page 19277]]

matching can identify him as the perpetrator, then it is good that the 
information was retained.''
  From the Chicago study--which examines the experience of just one 
American city over recent years--we know that an all-arrestee database 
can and inevitably will make the critical difference in solving and 
preventing violent sex offenses. From the British experience, we know 
that a comprehensive database can be a highly effective tool in solving 
crimes. And we know that DNA databasing does not violate the right to 
privacy. I urge the Congress to enact the DNA Fingerprint Act--before 
another preventable sex crime occurs.
  I ask unanimous consent that the text of the Chicago study be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Case Study of 8 Serial Killers and Rapists: 60 Violent Crimes Could 
    Have Been Prevented, Including 22 Murders and 30 Rapes, City of 
                          Chicago, March 2005

       If Illinois collected DNA from 8 serial killers and rapists 
     during any of their felony arrests, over 60 serious violent 
     crimes would never have occurred. These include: 22 murders--
     all female victims ranging from 24 to 44 years old; 30 
     rapes--all victims ranging from 15 to 65 years old; attempted 
     rapes; and aggravated kidnapping.
     Offender Andre Crawford, 37 years old: 10 preventable murders 
         and 1 preventable rape
       Andre Crawford has been charged with eleven murders and one 
     attempted murder/aggravated criminal sexual assault.
       In March 1993, Andre Crawford was arrested for Felony 
     Theft. If Illinois required him to give a DNA sample during 
     that felony arrest, a DNA match could have been obtained with 
     the DNA evidence recovered from his first murder, thereby 
     identifying him as the offender and the subsequent 10 murders 
     and one attempted murder/criminal sexual assault would have 
     been prevented.
       Timeline of Events: On March 6, 1993, Andre Crawford was 
     arrested for Felony Theft.
       On September 21, 1993, a 37-year-old woman was found 
     murdered. Her body was discovered in a vacant factory lot on 
     the 700 block of West 50th Street. She had blunt trauma to 
     her head. DNA evidence was recovered.
       The following are 10 preventable murders & 1 preventable 
     attempted murder/rape which would not have occurred had 
     Crawford's DNA sample been taken on March 6, 1993:
       On December 21, 1994, a 24-year-old woman was found 
     murdered. Her body was found in an abandoned building on the 
     800 block of West 50th Place. DNA evidence was recovered.
       On April 3, 1995, a 36-year-old woman was found murdered. 
     Her body was discovered in an abandoned house on the 5000 
     block of South Carpenter. DNA evidence was recovered.
       On May 3, 1995, Andre Crawford was arrested for Attempted 
     Criminal Sexual Abuse (Felony). Another missed opportunity to 
     have his DNA sample entered into the system and to prevent 
     further violence.
       On July 23, 1997, a 27-year-old woman was found murdered. 
     Her body was discovered in a closet of an abandoned house on 
     the 900 block of West 51st Street. DNA evidence was 
     recovered.
       On December 27, 1997, a 42-year-old woman was raped. As she 
     walked, an offender approached her from behind, placed a 
     knife to her head, dragged her into an abandoned building on 
     the 5100 block of South Peoria, then beat and raped her. DNA 
     evidence was recovered.
       In January 1998, Andre Crawford was arrested for Possession 
     of a Controlled Substance (Felony). Another missed 
     opportunity to have his DNA sample entered into the system 
     and to prevent further violence.
       In June 1998, a 31-year-old woman was found murdered. Her 
     body was discovered in an abandoned building on the 5000 
     block of South May Street.
       On August 13, 1998, a 44-year-old woman was found murdered. 
     A rehabber discovered her body in the kitchen of an abandoned 
     house on the 900 block of West 52nd Street. Her clothes were 
     found in the alley. DNA evidence was recovered.
       On August 13, 1998, a 32-year-old woman was found murdered. 
     A real estate agent discovered her decomposed body lying on 
     the floor in the attic on the 5200 block of South Marshfield. 
     DNA evidence was recovered.
       On December 8, 1998, a 35-year-old woman was found 
     murdered. A rehabber discovered her body with her pants one 
     around her ankle and the other completely off in a building 
     on the 1200 block of West 52nd Street. She had rope marks 
     around her neck and injuries to her face. DNA evidence was 
     recovered.
       On February 2, 1999, a 35-year-old woman was found 
     murdered. Her body was discovered on the 1300 block of West 
     51st Street. DNA evidence was recovered.
       On April 21, 1999, a 44-year-old woman was found murdered. 
     Her body was discovered in the upstairs of an abandoned house 
     on the 5000 block of South Justine. DNA evidence was 
     recovered.
       On June 20, 1999, a 41-year-old woman was found murdered. 
     Her body was found in the attic of an abandoned building on 
     the 1500 block of West 51st Street. DNA evidence was 
     recovered from blood on the wall which indicated a struggle.
       In November 1999, Andre Crawford was arrested for 
     possession of a controlled substance (felony). Another missed 
     opportunity to have his DNA sample entered into the system 
     and to prevent further violence.
       In January 2000, Andre Crawford was charged with 11 murders 
     and 1 aggravated criminal sexual assault. If his DNA sample 
     had been taken on March 6, 1993, the subsequent 10 murders 
     and 1 rape would not have happened.
     Offender Brandon Harris, 18 years old: 4 preventable rapes 
         and 1 preventable kidnapping
       Brandon Harris was convicted of five aggravated criminal 
     sexual assaults and one aggravated kidnapping/attempted rape.
       In August 2000, Brandon Harris was arrested with a felony 
     charge. If Illinois required him to give a DNA sample after 
     that arrest, a DNA match could have been obtained with the 
     DNA evidence recovered from his first rape, thereby 
     identifying him as the offender and the subsequent four rapes 
     and one attempt rape/armed robbery/aggravated kidnapping 
     would have been prevented.
       Timeline of events: On December 2, 1999, a 17-year old girl 
     was raped. As she was waiting for a bus, an offender 
     displayed a knife, forced her to an abandoned garage on the 
     100 block of South 83rd Street and raped her.
       On August 25, 2000, Brandon Harris was arrested for 
     aggravated criminal sexual assault.
       On October 29, 2000, Brandon Harris was arrested for 
     aggravated criminal sexual assault.
       The following are 4 preventable rapes and 1 attempted rape/
     armed robbery/aggravated kidnapping which would not have 
     occurred had Harris's DNA sample been taken on August 25, 
     2000.
       On November 26, 2000, a 25-year-old woman was raped. As she 
     walked to work, an offender approached her, displayed a 
     handgun, forced her into an abandoned house on the 7900 block 
     of South Yale and raped her. DNA evidence was recovered.
       On November 29, 2000, a 19-year-old girl was robbed and 
     kidnapped. As she attempted to exit an L-Train, an offender 
     displayed a handgun and demanded her to stay on the train. 
     The offender ordered the victim to exit the train at a later 
     stop, took her to an abandoned basement on the 200 block of 
     West 80th Street where he made her take her clothes off and 
     took her money.
       On December 7, 2000, Brandon Harris was arrested for 
     robbery--armed with a firearm & UUW (felony). However, 
     Brandon was not convicted until February 5, 2001 and 
     sentenced to home confinement. Six days later, he rapes 
     again.
       On February 11, 2001, a 22-year-old woman was raped. As she 
     was waiting for a bus, an offender pulled up in a vehicle, 
     ordered her into the car at gunpoint and raped her on the 
     8200 block of South Harvard. DNA evidence was recovered.
       On February 28, 2001, a 15-year-old girl was raped. She 
     exited an L-station and began to walk home when an offender 
     walked up behind her, stuck a piece of glass to her neck, 
     forced her to a basement stairwell on the 8000 block of South 
     Princeton and raped her. DNA evidence was recovered.
       On May 19, 2001, a 17-year-old girl was raped. As she 
     waited for a bus, an offender approached her, led her at 
     gunpoint to a backyard on the 8100 South Harvard and raped 
     her.
       Brandon Harris was convicted of 5 aggravated criminal 
     sexual assaults and 1 attempt aggravated criminal sexual 
     assault. If his DNA sample had been taken on August 25, 2000, 
     the subsequent 4 rapes and 1 attempt rape would not have 
     happened.
     Offender Geoffrey T. Griffin, 31 years old: 8 preventable 
         murders and 1 preventable rape
       Geoffrey Griffin has been charged with eight murders and 
     one aggravated criminal sexual assault.
       In December 1993, Geoffrey Griffin was arrested for 
     possession of a controlled substance (felony). If Illinois 
     required him to give a DNA sample after that felony arrest, a 
     DNA match could have been obtained with the DNA evidence 
     recovered from his first rape, thereby identifying him as the 
     offender and the subsequent eight murders, one rape and one 
     attempted rape would have been prevented.
       Timeline of Events: On August 26, 1995, Geoffrey Griffin 
     was arrested for possession of a controlled substance.
       On July 10, 1998, a 37-year-old woman was raped. She was 
     forced into an abandoned building on the 6700 block of South 
     Halsted. After being raped, she was beat into unconsciousness 
     and left to die. DNA evidence was recovered from the sexual 
     assault kit.
       The following are 8 preventable murders, 1 rape and 1 
     attempted rape which would not have occurred had Griffin's 
     DNA sample been taken on August 26, 1995.
       On July 11, 1998, a 36-year-old woman was found murdered. 
     She was found in the rear yard on the 7400 block of South 
     Halsted,

[[Page 19278]]

     naked from the waist down. She suffered blunt trauma to the 
     face and head. DNA evidence was recovered from the sexual 
     assault kit.
       On February 7, 1999, a 22-year-old woman was raped. She was 
     attacked in an abandoned building on the 10900 block of South 
     Edbrooke. The offender raped her, then beat her in the head 
     with a brick and burned her eyes. DNA evidence was recovered 
     from the sexual assault kit.
       On May 2, 2000, a 33-year-old woman was found murdered. She 
     was raped, and then strangled to death on the 15800 block of 
     South Park. She was found naked. DNA evidence was recovered 
     from the victim's fingernail clippings.
       On May 12, 2000, a 32-year-old woman was found murdered. 
     She was found naked in an abandoned building on the 11800 
     block of South Yale. She was strangled to death. DNA evidence 
     of the assailant was recovered from the sexual assault kit.
       On May 17, 2000, a 32-year-old woman was found murdered. 
     Her body was discovered in an abandoned building on the 11900 
     block of South LaSalle. The murderer's jacket had the 
     victim's blood stains on it. DNA evidence was recovered.
       On June 13, 2000, a 21-year-old woman was attacked. As she 
     was in an abandoned building on the 11900 block of South 
     Wallace, an offender attempted to rape her. She was struck 
     with a knife, but escaped.
       On June 16, 2000, a 29-year-old woman was found murdered. 
     Her body was discovered in an abandoned building on the 10700 
     block of South Michigan. DNA of the assailant was recovered 
     from the victim's fingernails. Later matched.
       On June 19, 2000, a 47-year-old woman was found murdered. 
     Her body was found naked from her waist down and the cause of 
     death was strangulation on the 20 block of East 113th Place 
     (occurrence May 25, 2000). DNA of the assailant was recovered 
     from the victim's fingernails.
       On June 22, 2000, a 39-year-old woman was found murdered. 
     Her body was found in an abandoned house on the 200 block of 
     West 112th Place (occurrence June 13, 2000). She was naked 
     from the waist down and the cause of death was strangulation. 
     DNA evidence was recovered. The murderer's jacket had the 
     victim's blood on it.
       On June 27, 2000, a 44-year-old woman was found murdered. 
     She was strangled to death. Her body was found naked from the 
     waist down on the 11000 block of South Edbrooke (occurrence 
     June 13, 2000). The murderer's jacket had the victim's blood 
     on it.
       Geoffrey Griffin was arrested on June 17, 2000. He has 
     subsequently been charged with eight murders and 1 aggravated 
     criminal sexual assault. If his DNA sample had been taken on 
     August 26, 1995, the 8 murders, 1 rape and 1 attempted rape 
     would not have happened.
     Offender Mario Villa, 37 years old: 8 preventable rapes or 
         attempted rapes
       Mario Villa has been charged with four rapes, linked by DNA 
     to two other rapes, and a main suspect in an additional rape 
     and two attempted rapes.
       In February 1999, Mario Villa was arrested for felony 
     burglary. If Illinois required him to give a DNA sample after 
     that arrest, a DNA match could have been obtained with the 
     DNA evidence recovered from his first rape, thereby 
     identifying him as the offender and the subsequent six rapes 
     and two attempted rapes would have been prevented.
       Timeline of Events: On February 6, 1999, Mario Villa was 
     arrested for burglary (felony).
       On July 5, 1999, a 16-year-old girl was raped. As she slept 
     in her apartment on the 1300 block of North Dean Street, an 
     offender entered her apartment and raped her. He ordered her 
     to take a shower after raping her. DNA evidence was recovered 
     from the criminal sexual assault kit.
       The following are 8 preventable rapes or attempted rapes 
     which would not have occurred had Villa's DNA sample been 
     taken on February 6, 1999.
       On May 26, 2002, a 32-year-old woman was raped. As she 
     slept in her apartment on the 1300 block of South Greenview, 
     an offender entered her residence, raped her and then ordered 
     her to take a shower. DNA evidence of the assailant was 
     recovered from the criminal sexual assault kit.
       On March 17, 2003, a 47-year-old woman was raped. As she 
     sat in her car at a forest preserve in Lisle, Illinois, the 
     offender ordered her into the woods and raped her. DNA 
     evidence of the assailant was recovered from the criminal 
     sexual assault kit. Linked by DNA.
       On June 8, 2003, a 19-year-old woman was attacked in her 
     apartment. As she slept in her apartment on the 1800 block of 
     North Halsted, an offender entered her residence and 
     attempted to rape her. The victim yelled, ``Fire, fire'' and 
     the offender fled.
       On August 22, 2003, a woman was raped in Kenosha, 
     Wisconsin. DNA evidence of the assailant was recovered from 
     the criminal sexual assault kit. Linked by DNA.
       On October 4, 2003, a 29-year-old woman was attacked at 
     home on the 1200 block of West Byron at 3 a.m. in the 
     morning, an offender entered her apartment and attempted to 
     rape her.
       On October 15, 2003, a 24-year-old woman was raped. As she 
     slept in her apartment on the 3500 block of West Greenview, 
     the offender entered her residence, placed a pillow over her 
     face and raped her. Offender ordered her to take a shower 
     after raping her.
       On December 20, 2003, a 40-year-old woman was raped. As she 
     slept in her apartment at 1300 of West Ohio, an offender 
     entered her residence, told her not to say anything, placed a 
     pillow over her mouth and raped her. Offender ordered her to 
     take shower after raping her.
       On February 7, 2004, a 23-year-old woman was raped. As she 
     slept in her apartment, an offender entered her residence on 
     the 2000 block of North Cleveland and raped her. The offender 
     ordered her to take a shower after raping her.
       On March 19, 2004, police officers obtained a search 
     warrant and swabbed a DNA sample from Mario Villa as he 
     appeared in court on an unrelated criminal trespassing 
     charge. Subsequently, Mario Villa was charged with 4 
     aggravated criminal sexual assaults, linked by DNA or 
     similarities in the other crimes. If his DNA sample had been 
     taken on February 6, 1999, the subsequent 6 rapes and 2 
     attempted rapes would not have happened.
     Offender Bernard Middleton, 55 years old: 1 preventable 
         murder and 2 preventable rapes
       Bernard Middleton has been charged with one murder and 
     three aggravated criminal sexual assaults.
       Bernard Middleton was arrested for felonies in 1987 and 
     1993, if Illinois required him to give a DNA sample after 
     either arrest, a DNA match could have been obtained with the 
     DNA evidence recovered from his first rape, thereby 
     identifying him as the offender and the subsequent murder and 
     two rapes would have been prevented.
       Timeline of Events: On January 17, 1987, Bernard Middleton 
     was arrested for aggravated battery.
       On May 6, 1993, Bernard Middleton was arrested for felony 
     theft.
       On September 25, 1995, a 22-year-old woman was raped. As 
     she waited for a bus, an offender placed a knife to her head, 
     led her to an isolated area, beat and raped her on the 600 
     block of West Garfield. DNA evidence was recovered.
       The following is 1 preventable murder and 2 preventable 
     rapes which would not have occurred had Middleton's DNA 
     sample been taken on May 6, 1993.
       On October 16, 1995, a 32-year-old woman was found 
     murdered. She was lured into a stairwell at Hope Academy on 
     the 5500 block of South Lowe, raped, and then murdered. Her 
     body was found in the stairwell. DNA evidence was recovered 
     from the criminal sexual assault kit.
       On May 28, 1997, Bernard Middleton was arrested for felony 
     theft. Another missed opportunity to have his DNA sample 
     entered into the system and to prevent further violence.
       On July 25, 1997, a 34-year-old woman was raped. The 
     offender placed a knife against her head, told that she would 
     be killed and then raped her on the 5500 block of South 
     Calumet. DNA evidence was recovered.
       On September 14, 1998, Bernard Middleton was arrested for 
     felony theft. Convicted on October 9, 1998 and sentenced to 
     probation for 1 year. Another missed opportunity to have his 
     DNA sample entered into the system and to prevent further 
     violence.
       On October 31, 1998, a 48-year-old woman was raped. As she 
     walked down the street, an offender grabbed her from behind, 
     placed a knife against her, forced her to the alley and raped 
     her on the 1500 Block of North Claremont Avenue. DNA evidence 
     was recovered.
       On November 12, 2001, Bernard Middleton was arrested for 
     possession of a controlled substance. Another missed 
     opportunity to have his DNA sample entered into the system 
     and to prevent further violence.
       On August 8, 2002, Bernard Middleton was arrested for 
     felony retail theft. Convicted and sentence to 20 months. 
     Another missed opportunity to have his DNA sample entered 
     into the system and to prevent further violence.
       On May 1, 2003, Bernard Middleton was charged with the 
     aforementioned murder and three rapes. While Bernard 
     Middleton was in prison for a retail theft conviction in 
     2002, his DNA sample was entered into the DNA database and 
     his sample matched the evidence recovered from the previous 
     unresolved cases. If his DNA sample had been taken on May 6, 
     1993, the murder and 2 rapes would not have happened.
     Offender Ronald Macon, 35 years old: 2 preventable murders 
         and 1 preventable criminal sexual assault
       In 2003, Ronald Macon was convicted of three murders and 
     one criminal sexual assault.
       Ronald Macon was arrested for a felony charge on three 
     separate occasions in 1998. If Illinois required him to give 
     a DNA sample after his first felony arrest in 1998, a DNA 
     match could have been obtained with the DNA evidence 
     recovered from his first murder, thereby identifying him as 
     the offender and the subsequent two murders and one criminal 
     sexual assault would have been prevented.
       Timeline of Events: On January 13, 1998, Ronald Macon was 
     arrested for retail theft (felony).
       On July 20, 1998, Ronald Macon was arrested for defacing 
     property (felony).
       On September 8, 1998, Ronald Macon was arrested for retail 
     theft (felony).

[[Page 19279]]

       On February 18, 1999, a 43-year-old woman was found 
     murdered. Her body was discovered on the 100 block of East 
     45th Street. DNA evidence was recovered.
       The following are 2 preventable murders and 1 preventable 
     criminal sexual assault which would not have occurred had 
     Macon's DNA sample been taken on January 13, 1998.
       On April 4, 1999, a 35-year-old woman was found murdered. 
     She was choked and beaten to death with an electrical box on 
     the 5900 block of South Damen Ave. DNA was evidence 
     recovered.
       On June 21, 1999, a woman was found murdered. She was 
     choked, raped; her hands and feet were bound with shoelaces, 
     and then strangled to death with a strap from a bag. Her body 
     was discovered on the 400 block of East 69th Street. DNA 
     evidence was recovered.
       On August 9, 1999, Ronald Macon was arrested for criminal 
     sexual assault of a 65-year-old woman. Ronald Macon placed a 
     knife to the victim's neck and demanded her jewelry and 
     money. Ronald Macon then wrapped a cord around her hands, led 
     her into the bedroom and raped her.
       On September 11, 2003, Ronald Macon was sentenced for life 
     in prison for killing the three women and sentenced to 30 
     years for raping a 65-year-old woman. If his DNA sample had 
     been taken on January 13, 1998, 2 murders and 1 rape would 
     not have happened.
       [The remainder of the study describes 11 preventable rapes 
     committed by offenders Ronald Harris and Arto Jones, and 5 
     preventable rapes committed by offender Nolan Watson, all of 
     which could have been prevented if Chicago had collected DNA 
     from all felony arrestees.]
                                 ______
                                 
      By Mr. LAUTENBERG (for himself and Mr. Corzine):
  S. 1607. A bill to amend section 10501 of title 49, United States 
Code, to exclude solid waste disposal from the jurisdiction of the 
Surface Transportation Board; to the Committee on Commerce, Science, 
and Transportation.
  Mr LAUTENBERG. Mr. President, I rise to introduce legislation to 
address a serious problem in New Jersey and across the nation--the 
unregulated sorting and processing of garbage at rail facilities in our 
communities.
  A conflict in Federal laws and policy has resulted in certain solid 
waste-handling facilities located on railroad property being 
unregulated. Environmental laws such as the Solid Waste Disposal Act 
should apply to the operation of these facilities. However, a broad-
reaching Federal railroad law forbids environmental regulatory agencies 
from overseeing the safe handling of trash or solid waste at these 
sites.
  These unintended consequences require our attention, and are the 
reason for the Solid Waste Environmental Regulation Clarification 
Affecting Railroads Act of 2005.
  The Federal railroad law in question was enacted most recently in the 
Interstate Commerce Commission Termination Act of 1995 to protect the 
operation of interstate rail service. The law gives `exclusive' 
jurisdiction over rail transportation--and activities incident to such 
transportation--to the Federal Surface Transportation Board.
  I realize this law is necessary for the efficient operation of 
commerce in our modern economy. I serve on the Committee on Commerce, 
Science and Transportation, as well as the Subcommittee on Merchant 
Marine and Surface Transportation, which oversees the Surface 
Transportation Board and considers nominations of its members. The 
board's reputation and expertise in rail regulation is second to none.
  However, the Board is limited to only a passive role in ensuring that 
rail facilities are operated with minimal detriment to the public 
health and safety. These sites require active environmental regulation, 
just like other solid waste handling facilities.
  The recent proliferation of solid waste rail transfer facilities has 
affected the ability of State and local governments to engage in long-
term waste management planning. These agencies also are responsible for 
responding to accidents and incidents occurring at these facilities.
  Although transporting solid waste by rail can reduce the number of 
trucks hauling solid waste on public roads, handling this waste without 
careful planning and management presents a danger to human health and 
the environment.
  These transfer operations create thick dust, which is potentially 
hazardous and is breathed in by local residents and business owners.
  Some transfer facilities don't have proper drainage on site, leading 
to the potential contamination of surface and groundwater and nearby 
wetlands.
  In addition, these facilities raise serious concerns about the safety 
of their workers and the exemptions they claim from strong State worker 
protection laws.
  As a result of these chilling reports, I asked state agencies in New 
Jersey, railroads, and other interested groups to provide input into 
possible legislation to address this problem.
  Many experts in New Jersey, including the Department of Environmental 
Protection, the Meadowlands Commission, the Pinelands Commission, and 
the Rutgers Environmental Law Clinic, provided excellent suggestions. I 
look forward to working with them throughout the process to find a 
solution to this problem.
  I have also met with railroad interests, who are concerned about 
their ability to continue hauling solid waste. Some operators of these 
rail facilities have voluntarily complied with State environmental 
laws, even though they could claim that Federal railroad law preempts 
any enforcement action States could take. I would like to thank members 
of the solid waste handling industry for their concern and input as 
well.
  One reason this legislation is needed is that the Surface 
Transportation Board has never clarified whether it even has 
jurisdiction over the processing and sorting of solid waste at a rail 
facility.
  This bill would make it clear that Congress' intent was not to 
subvert the policies of the Solid Waste Disposal Act and other 
environmental laws covering the handling of garbage.
  The bill will clarify the intent of Congress in passing these two 
important laws, and ensure that they work together to provide for a 
robust, environmentally responsible rail system.
  Some have suggested that perhaps this clarification should not be 
limited to the processing and sorting of solid waste. But these are the 
activities that require the greatest environmental oversight, because 
they pose the greatest environmental risk.
  Many towns across the country are beginning to understand the problem 
of having an unregulated polluting neighbor, and having nowhere to turn 
for help. Many influential organizations support this effort, 
including: United States Conference of Mayors, National Governors 
Association, Solid Waste Association of North America, Mass Municipal 
Association, National Solid Wastes Management Association, Integrated 
Waste Services Association, and Construction Material Recyclers 
Association.
  These garbage transfer facilities should not be able to circumvent 
and ignore our environmental and. safety laws. I realize that the 
Surface Transportation Board must have broad jurisdiction over rail 
transportation, but that jurisdiction should not be interpreted in a 
way that puts our environment at risk.
  Railroading has a bright future in New Jersey and throughout our 
country, as freight loads have increased to levels we have not seen in 
some time. I have fought for many years to ensure that our freight 
transportation system, the backbone of our national economy, continues 
to flourish. But we need this legislation to ensure that these solid 
waste rail transfer facilities are run in the same environmentally 
responsible manner as other solid waste sites.
  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. 1607

       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 ``Solid Waste Environmental 
     Regulation Clarification Affecting Railroads Act of 2005''.

     SEC. 2. AMENDMENTS TO EXCLUDE SOLID WASTE DISPOSAL FROM THE 
                   JURISDICTION OF THE BOARD.

       Section 10501 of title 49, United States Code, is amended--
       (1) in subsection (b)(2), by inserting ``except solid waste 
     management facilities (as

[[Page 19280]]

     defined in section 1004 of the Solid Waste Disposal Act (42 
     U.S.C. 6903)),'' after ``facilities,''; and
       (2) in subsection (c)(2)--
       (A) by striking ``over mass'' and inserting the following: 
     ``over--
       ``(A) mass''; and
       (B) by striking the period at the end and inserting the 
     following: ``; or
       ``(B) the processing or sorting of solid waste.''.

  Mr. CORZINE. Mr. President, I rise in support of legislation being 
introduced today by my colleague from New Jersey, Senator Lautenberg. 
This legislation, the Solid Waste Environmental Regulation 
Clarification Affecting Railroads Act of 2005, would deal with a 
growing problem in my state: the problem of railroads avoiding strict 
environmental standards by constructing waste transfer facilities next 
to rail lines. I am proud to cosponsor this important legislation.
  I first became aware of this problem when constituents contacted me 
about a waste transfer facility proposed to be built by a railroad in 
Mullica Township, New Jersey. There could not be a worse place for such 
a facility. Mullica Township is located in the Pinelands National 
Reserve, which encompasses more than 1.1 million acres of ecologically 
sensitive land. The Pinelands was designated as our nation's first 
national reserve in order to protect its streams, bogs,and cedar and 
hardwood swamps, as well as the many species that live there. Yet many 
of these protections could be circumvented if this proposed facility is 
built. The railroad argues that federal statute provides a shield from 
all environmental standards for any trash facility built adjacent to a 
rail line. This same argument has been used by railroads in the case of 
5 similar facilities that are already in operation in North Bergen. 
These facilities lie near New Jersey's Meadowlands, another 
environmental treasure.
  The statute being used by the railroads establishes the Surface 
Transportation Board, STB, as the reulatory agency for the nation's 
railroads, title 49 of the United States Code. Under section 10501, the 
STB has exclusive jurisdiction over the ``construction, acquisition, or 
operation'' of ``facilities'' located adjacent to a rail line. The 
railroads argue that facility means any facility, including a trash 
transfer station. They argue that because of this statute, federal law 
preempts all other state and local protections.
  I cannot believe that Congress intended these types of facilities to 
be exempt from State and local environmental standards. The risk to the 
surrounding communities from the air pollution and groundwater 
contamination that could occur when open rail cars carrying solid waste 
are allowed to load and off-load is too great. However, I believe that 
we must take steps to clarify the law's intent. The ``Solid Waste 
Environmental Regulation Clarification Affecting Railroads Act of 2005 
will do this. The Act makes it clear that all state and local 
environmental laws and restrictions apply to these facilities.
  This is a commonsense measure that insures that the public remains 
fully involved in decisions relating to these facilities, regardless of 
where they are built. I urge its enactment.
                                 ______
                                 
      By Mr. SMITH (for himself, Mr. McCain, Mr. Inouye, and Mr. Nelson 
        of Florida):
  S. 1608. A bill to enhance Federal Trade Commission enforcement 
against illegal spam, spyware. and cross-border fraud and deception, 
and for other purposes; to the Committee on Commerce, Science, and 
Transportation.
  Mr. SMITH. Mr. President, I rise today with Senators McCain, Inouye, 
and Nelson of Florida to introduce the ``Undertaking Spam, Spyware, and 
Fraud Enforcement With Enforcers Beyond Borders Act of 2005'' or the 
``U.S. SAFE WEB Act of 2005''.
  The Federal Trade Commission has a constitutionally mandated 
responsibility to protect the American consumer from all types of fraud 
and deception. Today, the American consumer is increasingly falling 
prey to a new type of fraud unknown just a few years ago. The US SAFE 
WEB Act of 2005 will take the important steps necessary to help combat 
this disturbing and growing trend.
  The rise in the use of the internet has provided the American 
consumer with innumerable benefits. The global market place in which we 
live knows no borders, and the FTC must be provided with all the tools 
necessary to fulfill its duty in this type of environment.
  Using internet and long-distance telephone technology, unscrupulous 
businesses are increasingly able to victimize consumers in ways not 
previously imagined. Deceptive spammers can easily hide their 
identities, forge the electronic path of their email messages, and send 
messages from anywhere in the world to anyone in the world. These 
businesses can strike quickly on a global scale, victimize thousands of 
consumers, and disappear nearly without a trace--along with their ill-
gotten gains.
  There are dangers that come into U.S. homes through some of the 
harmful online networks, including some peer-to-peer networks, who 
purposefully locate outside the United States to avoid our Federal laws 
and put American families at risk.
  Cross-Border fraud, as it is known, is becoming an increasingly 
common problem facing the American consumer and the FTC. In 1995, fewer 
than 1 percent of all consumer fraud complaints received by the FTC 
were directed at foreign entities. In less than a decade, the 
percentage had grown to 16 percent. In 2004 alone, the FTC received 
more than 47,000 complaints by U.S. consumers against foreign companies 
complaining about transactions involving more that $92 million. In the 
past three years, over 100,000 consumers logged cross-border fraud 
complaints with the FTC.
  Remarkably, these high numbers likely understate the problem. 
Consumers who reported instances of cross-border fraud only did so when 
they knew that they were complaining about foreign entities. In many 
more instances, consumers do not know that their complaints are against 
foreign entities. Fully one-third of all complaints to the FTC do not 
reveal the location of the entity being complained about.
  The Federal Trade Commission also testified at a recent Aging 
Committee hearing on elder fraud that many sweepstakes and lottery 
scams originate in Canada, and consumer fraud has become increasingly 
cross-border in nature.
  The US SAFE WEB Act helps to address the challenges posed by globali-
zation of fraudulent, deceptive, and unfair practices.
  Our bill draws on established models for international cooperation 
pioneered by agencies such as the Securities and Exchange Commission 
and the Commodities Futures Trading Commission. The FTC faces 
significant challenges in battling sophisticated cross-border schemes. 
Just as improved authority to act in cross-border cases gave the SEC 
and CFTC important new tools to fulfill their missions, enactment of 
the US SAFE WEB Act would help the FTC fulfill its mission of 
protecting and assisting U.S. consumers. The Act will substantially 
improve the FTC's ability to meet the challenges posed by international 
investigations and litigation.
  The US SAFE WEB Act will provide the FTC with important new tools in 
many important areas. The provisions contained within the Act are 
needed to help the FTC to protect consumers from cross-border fraud and 
deception, and particularly to fight spam, spyware, and Internet fraud 
and deception.
  Among key provisions within the bill are those that broaden 
reciprocal information sharing, expand investigative cooperation 
between U.S. and foreign law enforcement agencies, increase information 
from foreign sources, and enhance the confidentiality of FTC 
investigations.
  These provisions are needed to allow the FTC to share important 
information with foreign agencies so that they can halt fraud, 
deception, spam, and spyware targeting U.S. citizens, and for the FTC 
to obtain, reciprocally, foreign information needed to halt these 
crimes.

[[Page 19281]]

  Furthermore, this legislation enhances the FTC's ability to obtain 
consumer redress in cross-border cases. The US SAFE WEB Act would allow 
the FTC to target more resources toward foreign litigation to 
facilitate recovery of offshore assets to redress U.S. consumers.
  In the 108th Congress, Senator McCain and I introduced this 
legislation and it quickly passed the Senate by unanimous consent. 
Unfortunately, the bill was not signed into law before Congress 
adjourned. I urge my colleagues to support quick passage of this very 
important legislation this year.
  The American consumer is far too vulnerable to this growing type of 
fraud and deception. Enactment of the US SAFE WEB Act would help the 
FTC fulfill its mission of protecting and assisting U.S. consumers.
  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. 1608

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

     SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.

       (a) Short Title.--This Act may be cited as the 
     ``Undertaking Spam, Spyware, And Fraud Enforcement With 
     Enforcers beyond Borders Act of 2005'' or the ``U.S. SAFE WEB 
     Act of 2005''.
       (b) Findings.--The Congress finds the following:
       (1) The Federal Trade Commission protects consumers from 
     fraud and deception. Cross-border fraud and deception are 
     growing international problems that affect American consumers 
     and businesses.
       (2) The development of the Internet and improvements in 
     telecommunications technologies have brought significant 
     benefits to consumers. At the same time, they have also 
     provided unprecedented opportunities for those engaged in 
     fraud and deception to establish operations in one country 
     and victimize a large number of consumers in other countries.
       (3) An increasing number of consumer complaints collected 
     in the Consumer Sentinel database maintained by the 
     Commission, and an increasing number of cases brought by the 
     Commission, involve foreign consumers, foreign businesses or 
     individuals, or assets or evidence located outside the United 
     States.
       (4) The Commission has legal authority to remedy law 
     violations involving domestic and foreign wrongdoers, 
     pursuant to the Federal Trade Commission Act. The 
     Commission's ability to obtain effective relief using this 
     authority, however, may face practical impediments when 
     wrongdoers, victims, other witnesses, documents, money and 
     third parties involved in the transaction are widely 
     dispersed in many different jurisdictions. Such circumstances 
     make it difficult for the Commission to gather all the 
     information necessary to detect injurious practices, to 
     recover offshore assets for consumer redress, and to reach 
     conduct occurring outside the United States that affects 
     United States consumers.
       (5) Improving the ability of the Commission and its foreign 
     counterparts to share information about cross-border fraud 
     and deception, to conduct joint and parallel investigations, 
     and to assist each other is critical to achieve more timely 
     and effective enforcement in cross-border cases.
       (c) Purpose.--The purpose of this Act is to enhance the 
     ability of the Federal Trade Commission to protect consumers 
     from illegal spam, spyware, and cross-border fraud and 
     deception and other consumer protection law violations.

     SEC. 2. FOREIGN LAW ENFORCEMENT AGENCY DEFINED.

       Section 4 of the Federal Trade Commission Act (15 U.S.C. 
     44) is amended by adding at the end the following:
       ```Foreign law enforcement agency' means--
       ``(1) any agency or judicial authority of a foreign 
     government, including a foreign state, a political 
     subdivision of a foreign state, or a multinational 
     organization constituted by and comprised of foreign states, 
     that is vested with law enforcement or investigative 
     authority in civil, criminal, or administrative matters; and
       ``(2) any multinational organization, to the extent that it 
     is acting on behalf of an entity described in paragraph 
     (1).''.

     SEC. 3. AVAILABILITY OF REMEDIES.

       Section 5(a) of the Federal Trade Commission Act (15 U.S.C. 
     45(a)) is amended by adding at the end the following:
       ``(4)(A) For purposes of subsection (a), the term `unfair 
     or deceptive acts or practices' includes such acts or 
     practices involving foreign commerce that--
       ``(i) cause or are likely to cause reasonably foreseeable 
     injury within the United States; or
       ``(ii) involve material conduct occurring within the United 
     States.
       ``(B) All remedies available to the Commission with respect 
     to unfair and deceptive acts or practices shall be available 
     for acts and practices described in this paragraph, including 
     restitution to domestic or foreign victims.''.

     SEC. 4. POWERS OF THE COMMISSION.

       (a) Publication of Information; Reports.--Section 6(f) of 
     the Federal Trade Commission Act (15 U.S.C. 46(f)) is 
     amended--
       (1) by inserting ``(1)'' after ``such information'' the 
     first place it appears; and
       (2) by striking ``purposes.'' and inserting ``purposes, and 
     (2) to any officer or employee of any foreign law enforcement 
     agency under the same circumstances that making material 
     available to foreign law enforcement agencies is permitted 
     under section 21(b).''.
       (b) Other Powers of the Commission.--Section 6 of the 
     Federal Trade Commission Act (15 U.S.C. 46) is further 
     amended by inserting after subsection (i) and before the 
     proviso the following:
       ``(j) Investigative Assistance for Foreign Law Enforcement 
     Agencies.--
       ``(1) In general.--Upon a written request from a foreign 
     law enforcement agency to provide assistance in accordance 
     with this subsection, if the requesting agency states that it 
     is investigating, or engaging in enforcement proceedings 
     against, possible violations of laws prohibiting fraudulent 
     or deceptive commercial practices, or other practices 
     substantially similar to practices prohibited by any 
     provision of the laws administered by the Commission, other 
     than Federal antitrust laws (as defined in section 12(5) of 
     the International Antitrust Enforcement Assistance Act of 
     1994 (15 U.S.C. 6211(5))), to provide the assistance 
     described in paragraph (2) without requiring that the conduct 
     identified in the request constitute a violation of the laws 
     of the United States.
       ``(2) Type of assistance.--In providing assistance to a 
     foreign law enforcement agency under this subsection, the 
     Commission may--
       ``(A) conduct such investigation as the Commission deems 
     necessary to collect information and evidence pertinent to 
     the request for assistance, using all investigative powers 
     authorized by this Act; and
       ``(B) when the request is from an agency acting to 
     investigate or pursue the enforcement of civil laws, or when 
     the Attorney General refers a request to the Commission from 
     an agency acting to investigate or pursue the enforcement of 
     criminal laws, seek and accept appointment by a United States 
     district court of Commission attorneys to provide assistance 
     to foreign and international tribunals and to litigants 
     before such tribunals on behalf of a foreign law enforcement 
     agency pursuant to section 1782 of title 28, United States 
     Code.
       ``(3) Criteria for determination.--In deciding whether to 
     provide such assistance, the Commission shall consider all 
     relevant factors, including--
       ``(A) whether the requesting agency has agreed to provide 
     or will provide reciprocal assistance to the Commission;
       ``(B) whether compliance with the request would prejudice 
     the public interest of the United States; and
       ``(C) whether the requesting agency's investigation or 
     enforcement proceeding concerns acts or practices that cause 
     or are likely to cause injury to a significant number of 
     persons.
       ``(4) International agreements.--If a foreign law 
     enforcement agency has set forth a legal basis for requiring 
     execution of an international agreement as a condition for 
     reciprocal assistance, or as a condition for provision of 
     materials or information to the Commission, the Commission, 
     with prior approval and ongoing oversight of the Secretary of 
     State, and with final approval of the agreement by the 
     Secretary of State, may negotiate and conclude an 
     international agreement, in the name of either the United 
     States or the Commission, for the purpose of obtaining such 
     assistance, materials, or information. The Commission may 
     undertake in such an international agreement to--
       ``(A) provide assistance using the powers set forth in this 
     subsection;
       ``(B) disclose materials and information in accordance with 
     subsection (f) and section 21(b); and
       ``(C) engage in further cooperation, and protect materials 
     and information received from disclosure, as authorized by 
     this Act.
       ``(5) Additional authority.--The authority provided by this 
     subsection is in addition to, and not in lieu of, any other 
     authority vested in the Commission or any other officer of 
     the United States.
       ``(6) Limitation.--The authority granted by this subsection 
     shall not authorize the Commission to take any action or 
     exercise any power with respect to a bank, a savings and loan 
     institution described in section 18(f)(3) (15 U.S.C. 
     57a(f)(3)), a Federal credit union described in section 
     18(f)(4) (15 U.S.C. 57a(f)(4)), or a common carrier subject 
     to the Act to regulate commerce, except in accordance with 
     the undesignated proviso following the last designated 
     subsection of section 6 (15 U.S.C. 46).
       ``(7) Assistance to certain countries.--The Commission may 
     not provide investigative assistance under this subsection to 
     a foreign law enforcement agency from a foreign state that 
     the Secretary of State has

[[Page 19282]]

     determined, in accordance with section 6(j) of the Export 
     Administration Act of 1979 (50 U.S.C. App. 2405(j)), has 
     repeatedly provided support for acts of international 
     terrorism, unless and until such determination is rescinded 
     pursuant to section 6(j)(4) of that Act (50 U.S.C. 
     App.2405(j)(4)).
       ``(k) Referral of Evidence for Criminal Proceedings.--
       ``(1) In general.--Whenever the Commission obtains evidence 
     that any person, partnership, or corporation, either domestic 
     or foreign, has engaged in conduct that may constitute a 
     violation of Federal criminal law, to transmit such evidence 
     to the Attorney General, who may institute criminal 
     proceedings under appropriate statutes. Nothing in this 
     paragraph affects any other authority of the Commission to 
     disclose information.
       ``(2) International information.--The Commission shall 
     endeavor to ensure, with respect to memoranda of 
     understanding and international agreements it may conclude, 
     that material it has obtained from foreign law enforcement 
     agencies acting to investigate or pursue the enforcement of 
     foreign criminal laws may be used for the purpose of 
     investigation, prosecution, or prevention of violations of 
     United States criminal laws.
       ``(l) Expenditures for Cooperative Arrangements.--To expend 
     appropriated funds for--
       ``(1) operating expenses and other costs of bilateral and 
     multilateral cooperative law enforcement groups conducting 
     activities of interest to the Commission and in which the 
     Commission participates; and
       ``(2) expenses for consultations and meetings hosted by the 
     Commission with foreign government agency officials, members 
     of their delegations, appropriate representatives and staff 
     to exchange views concerning developments relating to the 
     Commission's mission, development and implementation of 
     cooperation agreements, and provision of technical assistance 
     for the development of foreign consumer protection or 
     competition regimes, such expenses to include necessary 
     administrative and logistic expenses and the expenses of 
     Commission staff and foreign invitees in attendance at such 
     consultations and meetings including--
       ``(A) such incidental expenses as meals taken in the course 
     of such attendance;
       ``(B) any travel and transportation to or from such 
     meetings; and
       ``(C) any other related lodging or subsistence.''.
       (c) Authorization of Appropriations.--The Federal Trade 
     Commission is authorized to expend appropriated funds not to 
     exceed $100,000 per fiscal year for purposes of section 6(l) 
     of the Federal Trade Commission Act (15 U.S.C. 46(l)) (as 
     added by subsection (b) of this section), including operating 
     expenses and other costs of the following bilateral and 
     multilateral cooperative law enforcement agencies and 
     organizations:
       (1) The International Consumer Protection and Enforcement 
     Network.
       (2) The International Competition Network.
       (3) The Mexico-U.S.-Canada Health Fraud Task Force.
       (4) Project Emptor.
       (5) The Toronto Strategic Partnership and other regional 
     partnerships with a nexus in a Canadian province.
       (d) Conforming Amendment.--Section 6 of the Federal Trade 
     Commission Act (15 U.S.C. 46) is amended by striking 
     ``clauses (a) and (b)'' in the proviso following subsection 
     (l) (as added by subsection (b) of this section) and 
     inserting ``subsections (a), (b), and (j)''.

     SEC. 5. REPRESENTATION IN FOREIGN LITIGATION.

       Section 16 of the Federal Trade Commission Act (15 U.S.C. 
     56) is amended by adding at the end the following:
       ``(c) Foreign Litigation.--
       ``(1) Commission attorneys.--With the concurrence of the 
     Attorney General, the Commission may designate Commission 
     attorneys to assist the Attorney General in connection with 
     litigation in foreign courts on particular matters in which 
     the Commission has an interest.
       ``(2) Reimbursement for foreign counsel.--The Commission is 
     authorized to expend appropriated funds, upon agreement with 
     the Attorney General, to reimburse the Attorney General for 
     the retention of foreign counsel for litigation in foreign 
     courts and for expenses related to litigation in foreign 
     courts in which the Commission has an interest.
       ``(3) Limitation on use of funds.--Nothing in this 
     subsection authorizes the payment of claims or judgments from 
     any source other than the permanent and indefinite 
     appropriation authorized by section 1304 of title 31, United 
     States Code.
       ``(4) Other authority.--The authority provided by this 
     subsection is in addition to any other authority of the 
     Commission or the Attorney General.''.

     SEC. 6. SHARING INFORMATION WITH FOREIGN LAW ENFORCEMENT 
                   AGENCIES.

       (a) Material Obtained Pursuant to Compulsory Process.--
     Section 21(b)(6) of the Federal Trade Commission Act (15 
     U.S.C. 57b-2(b)(6)) is amended by adding at the end ``The 
     custodian may make such material available to any foreign law 
     enforcement agency upon the prior certification of an 
     appropriate official of any such foreign law enforcement 
     agency, either by a prior agreement or memorandum of 
     understanding with the Commission or by other written 
     certification, that such material will be maintained in 
     confidence and will be used only for official law enforcement 
     purposes, if--
       ``(A) the foreign law enforcement agency has set forth a 
     bona fide legal basis for its authority to maintain the 
     material in confidence;
       ``(B) the materials are to be used for purposes of 
     investigating, or engaging in enforcement proceedings related 
     to, possible violations of--
       ``(i) foreign laws prohibiting fraudulent or deceptive 
     commercial practices, or other practices substantially 
     similar to practices prohibited by any law administered by 
     the Commission;
       ``(ii) a law administered by the Commission, if disclosure 
     of the material would further a Commission investigation or 
     enforcement proceeding; or
       ``(iii) with the approval of the Attorney General, other 
     foreign criminal laws, if such foreign criminal laws are 
     offenses defined in or covered by a criminal mutual legal 
     assistance treaty in force between the government of the 
     United States and the foreign law enforcement agency's 
     government;
       ``(C) the appropriate Federal banking agency (as defined in 
     section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 
     1813(q)) or, in the case of a Federal credit union, the 
     National Credit Union Administration, has given its prior 
     approval if the materials to be provided under subparagraph 
     (B) are requested by the foreign law enforcement agency for 
     the purpose of investigating, or engaging in enforcement 
     proceedings based on, possible violations of law by a bank, a 
     savings and loan institution described in section 18(f)(3) of 
     the Federal Trade Commission Act (15 U.S.C. 57a(f)(3)), or a 
     Federal credit union described in section 18(f)(4) of the 
     Federal Trade Commission Act (15 U.S.C. 57a(f)(4)); and
       ``(D) the foreign law enforcement agency is not from a 
     foreign state that the Secretary of State has determined, in 
     accordance with section 6(j) of the Export Administration Act 
     of 1979 (50 U.S.C. App. 2405(j)), has repeatedly provided 
     support for acts of international terrorism, unless and until 
     such determination is rescinded pursuant to section 6(j)(4) 
     of that Act (50 U.S.C. App. 2405(j)(4)).
     Nothing in the preceding sentence authorizes the disclosure 
     of material obtained in connection with the administration of 
     the Federal antitrust laws or foreign antitrust laws (as 
     defined in paragraphs (5) and (7), respectively, of section 
     12 of the International Antitrust Enforcement Assistance Act 
     of 1994 (15 U.S.C. 6211)) to any officer or employee of a 
     foreign law enforcement agency.''.
       (b) Information Supplied by and About Foreign Sources.--
     Section 21(f) of the Federal Trade Commission Act (15 U.S.C. 
     57b-2(f)) is amended to read asfollows:
       ``(f) Exemption From Public Disclosure.--
       ``(1) In General.--Any material which is received by the 
     Commission in any investigation, a purpose of which is to 
     determine whether any person may have violated any provision 
     of the laws administered by the Commission, and which is 
     provided pursuant to any compulsory process under this Act or 
     which is provided voluntarily in place of such compulsory 
     process shall not be required to be disclosed under section 
     552 of title 5, United States Code, or any other provision of 
     law, except as provided in paragraph (2)(B) of this section.
       ``(2) Material obtained from a foreign source.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     of this paragraph, the Commission shall not be required to 
     disclose under section 552 of title 5, United States Code, or 
     any other provision of law--
       ``(i) any material obtained from a foreign law enforcement 
     agency or other foreign government agency, if the foreign law 
     enforcement agency or other foreign government agency has 
     requested confidential treatment, or has precluded such 
     disclosure under other use limitations, as a condition of 
     providing the material;
       ``(ii) any material reflecting a consumer complaint 
     obtained from any other foreign source, if that foreign 
     source supplying the material has requested confidential 
     treatment as a condition of providing the material; or
       ``(iii) any material reflecting a consumer complaint 
     submitted to a Commission reporting mechanism sponsored in 
     part by foreign law enforcement agencies or other foreign 
     government agencies.
       ``(B) Savings provision.--Nothing in this subsection shall 
     authorize the Commission to withhold information from the 
     Congress or prevent the Commission from complying with an 
     order of a court of the United States in an action commenced 
     by the United States or the Commission.''.

     SEC. 7. CONFIDENTIALITY; DELAYED NOTICE OF PROCESS.

       (a) In General.--The Federal Trade Commission Act (15 
     U.S.C. 41 et seq.) is amended by inserting after section 21 
     the following:

     ``SEC. 21A. CONFIDENTIALITY AND DELAYED NOTICE OF COMPULSORY 
                   PROCESS FOR CERTAIN THIRD PARTIES.

       ``(a) Application With Other Laws.--The Right to Financial 
     Privacy Act (12 U.S.C.

[[Page 19283]]

     3401 et seq.) and chapter 121 of title 18, United States 
     Code, shall apply with respect to the Commission, except as 
     otherwise provided in this section.
       ``(b) Procedures for Delay of Notification or Prohibition 
     of Disclosure.--The procedures for delay of notification or 
     prohibition of disclosure under the Right to Financial 
     Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title 
     18, United States Code, including procedures for extensions 
     of such delays or prohibitions, shall be available to the 
     Commission, provided that, notwithstanding any provision 
     therein--
       ``(1) a court may issue an order delaying notification or 
     prohibiting disclosure (including extending such an order) in 
     accordance with the procedures of section 1109 of the Right 
     to Financial Privacy Act (12 U.S.C. 3409) (if notification 
     would otherwise be required under that Act), or section 2705 
     of title 18, United States Code, (if notification would 
     otherwise be required under chapter 121 of that title), if 
     the presiding judge or magistrate judge finds that there is 
     reason to believe that such notification or disclosure may 
     cause an adverse result as defined in subsection (g) of this 
     section; and
       ``(2) if notification would otherwise be required under 
     chapter 121 of title 18, United States Code, the Commission 
     may delay notification (including extending such a delay) 
     upon the execution of a written certification in accordance 
     with the procedures of section 2705 of that title if the 
     Commission finds that there is reason to believe that 
     notification may cause an adverse result as defined in 
     subsection (g) of this section.
       ``(c) Ex Parte Application by Commission.--
       ``(1) In general.--If neither notification nor delayed 
     notification by the Commission is required under the Right to 
     Financial Privacy Act (12 U.S.C. 3401 et seq.) or chapter 121 
     of title 18, United States Code, the Commission may apply ex 
     parte to a presiding judge or magistrate judge for an order 
     prohibiting the recipient of compulsory process issued by the 
     Commission from disclosing to any other person the existence 
     of the process, notwithstanding any law or regulation of the 
     United States, or under the constitution, or any law or 
     regulation, of any State, political subdivision of a State, 
     territory of the United States, or the District of Columbia. 
     The presiding judge or magistrate judge may enter such an 
     order granting the requested prohibition of disclosure for a 
     period not to exceed 60 days if there is reason to believe 
     that disclosure may cause an adverse result as defined in 
     subsection (g). The presiding judge or magistrate judge may 
     grant extensions of this order of up to 30 days each in 
     accordance with this subsection, except that in no event 
     shall the prohibition continue in force for more than a total 
     of 9 months.
       ``(2) Application.--This subsection shall apply only in 
     connection with compulsory process issued by the Commission 
     where the recipient of such process is not a subject of the 
     investigation or proceeding at the time such process is 
     issued.
       ``(3) Limitation.--No order issued under this subsection 
     shall prohibit any recipient from disclosing to a Federal 
     agency that the recipient has received compulsory process 
     from the Commission.
       ``(d) No Liability for Failure To Notify.--If neither 
     notification nor delayed notification by the Commission is 
     required under the Right to Financial Privacy Act (12 U.S.C. 
     3401 et seq.) or chapter 121 of title 18, United States Code, 
     the recipient of compulsory process issued by the Commission 
     under this Act shall not be liable under any law or 
     regulation of the United States, or under the constitution, 
     or any law or regulation, of any State, political subdivision 
     of a State, territory of the United States, or the District 
     of Columbia, or under any contract or other legally 
     enforceable agreement, for failure to provide notice to any 
     person that such process has been issued or that the 
     recipient has provided information in response to such 
     process. The preceding sentence does not exempt any recipient 
     from liability for--
       ``(1) the underlying conduct reported;
       ``(2) a failure to comply with the record retention 
     requirements under section 1104(c) of the Right to Financial 
     Privacy Act (12 U.S.C. 3404), where applicable; or
       ``(3) any failure to comply with any obligation the 
     recipient may have to disclose to a Federal agency that the 
     recipient has received compulsory process from the Commission 
     or intends to provide or has provided information to the 
     Commission in response to such process.
       ``(e) Venue and Procedure.--
       ``(1) In general.--All judicial proceedings initiated by 
     the Commission under the Right to Financial Privacy Act (12 
     U.S.C. 3401 et seq.), chapter 121 of title 18, United States 
     Code, or this section may be brought in the United States 
     District Court for the District of Columbia or any other 
     appropriate United States District Court. All ex parte 
     applications by the Commission under this section related to 
     a single investigation may be brought in a single proceeding.
       ``(2) In camera proceedings.--Upon application by the 
     Commission, all judicial proceedings pursuant to this section 
     shall be held in camera and the records thereof sealed until 
     expiration of the period of delay or such other date as the 
     presiding judge or magistrate judge may permit.
       ``(f) Section Not to Apply to Antitrust Investigations or 
     Proceedings.--This section shall not apply to an 
     investigation or proceeding related to the administration of 
     Federal antitrust laws or foreign antitrust laws (as defined 
     in paragraphs (5) and (7), respectively, of section 12 of the 
     International Antitrust Enforcement Assistance Act of 1994 
     (15 U.S.C. 6211).
       ``(g) Adverse Result Defined.--For purposes of this section 
     the term `adverse result' means--
       ``(1) endangering the life or physical safety of an 
     individual;
       ``(2) flight from prosecution;
       ``(3) the destruction of, or tampering with, evidence;
       ``(4) the intimidation of potential witnesses; or
       ``(5) otherwise seriously jeopardizing an investigation or 
     proceeding related to fraudulent or deceptive commercial 
     practices or persons involved in such practices, or unduly 
     delaying a trial related to such practices or persons 
     involved in such practices, including, but not limited to, 
     by--
       ``(A) the transfer outside the territorial limits of the 
     United States of assets or records related to fraudulent or 
     deceptive commercial practices or related to persons involved 
     in such practices;
       ``(B) impeding the ability of the Commission to identify 
     persons involved in fraudulent or deceptive commercial 
     practices, or to trace the source or disposition of funds 
     related to such practices; or
       ``(C) the dissipation, fraudulent transfer, or concealment 
     of assets subject to recovery by the Commission.''.
       (b) Conforming Amendment.--Section 16(a)(2) of the Federal 
     Trade Commission Act (15 U.S.C. 56(a)(2)) is amended--
       (1) in subparagraph (C) by striking ``or'' after the 
     semicolon;
       (2) in subparagraph (D) by inserting ``or'' after the 
     semicolon; and
       (3) by inserting after subparagraph (D) the following:
       ``(E) under section 21A of this Act;''.

     SEC. 8. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION.

       The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is 
     further amended by adding after section 21A (as added by 
     section 7 of this Act) the following:

     ``SEC. 21B. PROTECTION FOR VOLUNTARY PROVISION OF 
                   INFORMATION.

       ``(a) In General.--
       ``(1) No liability for providing certain material.--An 
     entity described in paragraphs (2) or (3) of subsection (d) 
     that voluntarily provides material to the Commission that 
     such entity reasonably believes is relevant to--
       ``(A) a possible unfair or deceptive act or practice, as 
     defined in section 5(a) of this Act; or
       ``(B) assets subject to recovery by the Commission, 
     including assets located in foreign jurisdictions;
     shall not be liable to any person under any law or regulation 
     of the United States, or under the constitution, or any law 
     or regulation, of any State, political subdivision of a 
     State, territory of the United States, or the District of 
     Columbia, for such provision of material or for any failure 
     to provide notice of such provision of material or of 
     intention to so provide material.
       ``(2) Limitations.--Nothing in this subsection shall be 
     construed to exempt any such entity from liability--
       ``(A) for the underlying conduct reported; or
       ``(B) to any Federal agency for providing such material or 
     for any failure to comply with any obligation the entity may 
     have to notify a Federal agency prior to providing such 
     material to the Commission.
       ``(b) Certain Financial Institutions.--An entity described 
     in paragraph (1) of subsection (d) shall, in accordance with 
     section 5318(g)(3) of title 31, United States Code, be exempt 
     from liability for making a voluntary disclosure to the 
     Commission of any possible violation of law or regulation, 
     including--
       ``(1) a disclosure regarding assets, including assets 
     located in foreign jurisdictions--
       ``(A) related to possibly fraudulent or deceptive 
     commercial practices;
       ``(B) related to persons involved in such practices; or
       ``(C) otherwise subject to recovery by the Commission; or
       ``(2) a disclosure regarding suspicious chargeback rates 
     related to possibly fraudulent or deceptive commercial 
     practices.
       ``(c) Consumer Complaints.--Any entity described in 
     subsection (d) that voluntarily provides consumer complaints 
     sent to it, or information contained therein, to the 
     Commission shall not be liable to any person under any law or 
     regulation of the United States, or under the constitution, 
     or any law or regulation, of any State, political subdivision 
     of a State, territory of the United States, or the District 
     of Columbia, for such provision of material or for any 
     failure to provide notice of such provision of material or of 
     intention to so provide material. This subsection shall not 
     provide any exemption from liability for the underlying 
     conduct.

[[Page 19284]]

       ``(d) Application.--This section applies to the following 
     entities, whether foreign or domestic:
       ``(1) A financial institution as defined in section 5312 of 
     title 31, United States Code.
       ``(2) To the extent not included in paragraph (1), a bank 
     or thrift institution, a commercial bank or trust company, an 
     investment company, a credit card issuer, an operator of a 
     credit card system, and an issuer, redeemer, or cashier of 
     travelers' checks, money orders, or similar instruments.
       ``(3) A courier service, a commercial mail receiving 
     agency, an industry membership organization, a payment system 
     provider, a consumer reporting agency, a domain name 
     registrar or registry acting as such, and a provider of 
     alternative dispute resolution services.
       ``(4) An Internet service provider or provider of telephone 
     services.''.

     SEC. 9. STAFF EXCHANGES.

       The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is 
     amended by adding after section 25 the following new section:

     ``SEC. 25A. STAFF EXCHANGES.

       ``(a) In General.--The Commission may--
       ``(1) retain or employ officers or employees of foreign 
     government agencies on a temporary basis as employees of the 
     Commission pursuant to section 2 of this Act or section 3101 
     or section 3109 of title 5, United States Code; and
       ``(2) detail officers or employees of the Commission to 
     work on a temporary basis for appropriate foreign government 
     agencies.
       ``(b) Reciprocity and Reimbursement.--The staff 
     arrangements described in subsection (a) need not be 
     reciprocal. The Commission may accept payment or 
     reimbursement, in cash or in kind, from a foreign government 
     agency to which this section is applicable, or payment or 
     reimbursement made on behalf of such agency, for expenses 
     incurred by the Commission, its members, and employees in 
     carrying out such arrangements.
       ``(c) Standards of Conduct.--A person appointed under 
     subsection (a)(1) shall be subject to the provisions of law 
     relating to ethics, conflicts of interest, corruption, and 
     any other criminal or civil statute or regulation governing 
     the standards of conduct for Federal employees that are 
     applicable to the type of appointment.''.

     SEC. 10. INFORMATION SHARING WITH FINANCIAL REGULATORS.

       Section 1112(e) of the Right to Financial Privacy Act of 
     1978 (12 U.S.C. 3412(e)) is amended by inserting ``the 
     Federal Trade Commission,'' after ``the Securities and 
     Exchange Commission,''.

     SEC. 11. AUTHORITY TO ACCEPT REIMBURSEMENTS, GIFTS, AND 
                   VOLUNTARY AND UNCOMPENSA TED SERVICES.

       The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is 
     amended--
       (1) by redesignating section 26 as section 28; and
       (2) by inserting after section 25A, as added by section 9 
     of this Act, the following:

     ``SEC. 26. REIMBURSEMENT OF EXPENSES.

       ``The Commission may accept payment or reimbursement, in 
     cash or in kind, from a domestic or foreign law enforcement 
     agency, or payment or reimbursement made on behalf of such 
     agency, for expenses incurred by the Commission, its members, 
     or employees in carrying out any activity pursuant to a 
     statute administered by the Commission without regard to any 
     other provision of law. Any such payments or reimbursements 
     shall be considered a reimbursement to the appropriated funds 
     of the Commission.

     ``SEC. 27. GIFTS AND VOLUNTARY AND UNCOMPENSATED SERVICES.

       ``(a) In General.--In furtherance of its functions the 
     Commission may accept, hold, administer, and use 
     unconditional gifts, donations, and bequests of real, 
     personal, and other property and, notwithstanding section 
     1342 of 10 title 31, United States Code, accept voluntary and 
     uncompensated services.
       ``(b) Limitations.--
       ``(1) Conflicts of interest.--The Commission shall 
     establish written guidelines setting forth criteria to be 
     used in determining whether the acceptance, holding, 
     administration, or use of a gift, donation, or bequest 
     pursuant to subsection (a) would reflect unfavorably upon the 
     ability of the Commission or any employee to carry out its 
     responsibilities or official duties in a fair and objective 
     manner, or would compromise the integrity or the appearance 
     of the integrity of its programs or any official involved in 
     those programs.
       ``(2) Voluntary services.--A person who provides voluntary 
     and uncompensated service under subsection (a) shall be 
     considered a Federal employee for purposes of--
       ``(A) chapter 81 of title 5, United States Code, (relating 
     to compensation for injury); and
       ``(B) the provisions of law relating to ethics, conflicts 
     of interest, corruption, and any other criminal or civil 
     statute or regulation governing the standards of conduct for 
     Federal employees.
       ``(3) Tort liability of volunteers.--A person who provides 
     voluntary and uncompensated service under subsection (a), 
     while assigned to duty, shall be deemed a volunteer of a 
     nonprofit organization or governmental entity for purposes of 
     the Volunteer Protection Act of 1997 (42 U.S.C. 14501 et 
     seq.). Subsection (d) of section 4 of such Act (42 U.S.C. 
     14503(d)) shall not apply for purposes of any claim against 
     such volunteer.''.

     SEC. 12. PRESERVATION OF EXISTING AUTHORITY.

       The authority provided by this Act, and by the Federal 
     Trade Commission Act (15 U.S.C. 41 et seq.) and the Right to 
     Financial Privacy Act (12 U.S.C. 3401 et seq.), as such Acts 
     are amended by this Act, is in addition to, and not in lieu 
     of, any other authority vested in the Federal Trade 
     Commission or any other officer of the United States.

     SEC. 13. REPORT.

       Not later than 3 years after the date of enactment of this 
     Act, the Federal Trade Commission shall transmit to Congress 
     a report describing its use of and experience with the 
     authority granted by this Act, along with any recommendations 
     for additional legislation. The report shall include--
       (1) the number of cross-border complaints received by the 
     Commission;
       (2) identification of the foreign agencies to which the 
     Commission has provided nonpublic investigative information 
     under this Act;
       (3) the number of times the Commission has used compulsory 
     process on behalf of foreign law enforcement agencies 
     pursuant to section 6 of the Federal Trade Commission Act (15 
     U.S.C. 46), as amended by section 4 of this Act;
       (4) a list of international agreements and memoranda of 
     understanding executed by the Commission that relate to this 
     Act;
       (5) the number of times the Commission has sought delay of 
     notice pursuant to section 21A of the Federal Trade 
     Commission Act, as added by section 7 of this Act, and the 
     number of times a court has granted a delay;
       (6) a description of the types of information private 
     entities have provided voluntarily pursuant to section 21B of 
     the Federal Trade Commission Act, as added by section 8 of 
     this Act;
       (7) a description of the results of cooperation with 
     foreign law enforcement agencies under section 21 of the 
     Federal Trade Commission Act (15 U.S.C. 57-2) as amended by 
     section 6 of this Act;
       (8) an analysis of whether the lack of an exemption from 
     the disclosure requirements of section 552 of title 5, United 
     States Code, with regard to information or material 
     voluntarily provided relevant to possible unfair or deceptive 
     acts or practices, has hindered the Commission in 
     investigating or engaging in enforcement proceedings against 
     such practices; and
       (9) a description of Commission litigation brought in 
     foreign courts.

                          ____________________