[Congressional Record (Bound Edition), Volume 151 (2005), Part 4]
[Senate]
[Pages 5294-5365]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BUNNING (for himself, Mrs. Lincoln, Mr. Lott, Mr. Bond, 
        and Mr. Chambliss):
  S. 646. A bill to amend the Internal Revenue code of 1986 to allow 
distilled spirits wholesalers a credit against income tax for their 
cost of carrying Federal excise taxes prior to the sale of the product 
bearing the tax; to the Committee on Finance.
  Mr. BUNNING. Mr. President, I rise today to introduce legislation 
that will resolve a longstanding inequity in the tax treatment of U.S. 
distilled spirits that penalizes the wholesalers, and some suppliers, 
of these products.
  Under current law, wholesalers of distilled spirits are not required 
to pay the Federal excise tax on imported spirits until after the 
product is removed from a bonded warehouse for sale to a retailer.
  In contrast, the tax on domestically produced spirits is included as 
part of the purchase price and passed on from the supplier to 
wholesaler. After factoring in the Federal excise tax (FET)--which is 
$13.50 per proof gallon--domestically produced spirits can cost 
wholesalers 40 percent more to purchase than comparable imported 
spirits.
  In some instances, wholesalers and even suppliers can carry this tax-
paid inventory for an average of 60 days before selling it to a 
retailer. Interest charges--more commonly referred to as float--
resulting from financing the Federal excise tax can be quite 
considerable.
  For example, at a 5 percent interest rate on the sale of 100,000 
cases of domestic spirits, a wholesaler will incur finance charges of 
$21,106.85 for loans related to underwriting the cost of paying the 
Federal excise tax. It is important to note that it is not uncommon for 
wholesalers to sell a million or more cases per year of domestic 
spirits.
  The costs associated with financing Federal excise taxes amount to a 
tax

[[Page 5295]]

on a tax, making the effective rate of the Federal excise tax for 
domestic spirits much higher than $13.50 per proof gallon.
  The Domestic Spirits Tax Equity Act would give wholesalers and 
suppliers in bailment States a tax credit toward the cost of financing 
the FET for domestically produced products.
  I believe this legislation is fundamentally fair and will help 
protect and create jobs for the wholesale tier in Kentucky and many 
other States. This legislation, which has broad support in both 
chambers and on both sides or the aisle, has passed the Senate Finance 
Committee and the House Ways and Means Committee several times, and has 
reached the President's desk under a previous Administration. It's time 
to finally get this legislation over the goal line.
  I wish to emphasize, however, that I will reject any connection 
between a repeal of Section 5010 of the Internal Revenue Code or an 
increase in Federal taxes for distilled spirits. Tax equity for one 
tier should not be achieved by placing additional burden on other tiers 
within the same industry.
  My colleagues, Senators Lincoln, Lott and Bond join me in introducing 
this legislation, I which the Joint Tax Committee estimates would 
reduce Federal revenues by approximately $249 million over ten years. I 
understand that similar legislation will be introduced in the House of 
Representatives. I urge my colleagues to support this legislation when 
it comes before the Senate.
                                 ______
                                 
      By Mr. LUGAR (for himself, Mr. Harkin, Mr. Hagel, Mr. Nelson of 
        Nebraska, Mr. Grassley, Mr. Conrad, Mr. Frist, Mr. Johnson, Mr. 
        Talent, Mr. Dorgan, Mr. Coleman, Mr. Durbin, Mr. Thune, Mr. 
        Bayh, Mr. DeWine, Ms. Stabenow, Mr. Bunning, Mr. Dayton, Mr. 
        Obama, Mr. Salazar, and Mr. Bond):
  S. 650. A bill to amend the Clean Air Act to increase production and 
use of renewable fuel and to increase the energy independence of the 
United States, and for other purposes; to the Committee on Environment 
and Public Works.
  LUGAR. Mr. President, I am pleased to rise today to introduce bi-
partisan legislation to increase the security of our Nation, improve 
our environment, and add job opportunities in all 50 States in the 
union. This legislation has the strong support of 20 of my fellow 
colleagues and is the product of a great deal of bipartisan work.
  This legislation seeks to curb the negative consequences that stem 
from our Nation's insatiable appetite for oil. Oil has served America 
well and indeed has fueled a dramatic portion of this Nation's rise to 
prosperity. However, our dependence on oil carries a multitude of risks 
and costs in addition to the ever higher prices paid by Americans at 
the fuel pump.
  Oil is a magnet for conflict. The problem is simple--everyone needs 
energy, but the sources of the world's transportation fuel are 
concentrated in relatively few countries. Well over two-thirds of the 
world's remaining oil reserves lie in the Middle East.
  Energy is vital to a country's security and material well-being. A 
state unable to provide its people with adequate energy supplies or 
desiring added leverage over other people often resorts to force. 
Consider Saddam Hussein's 1990 invasion of Kuwait, driven by his desire 
to control more of the world's oil reserves, and the international 
response to that threat. The underlying goal of the U.N. force, which 
included 500,000 American troops, was to ensure continued and 
unfettered access to petroleum.
  This unwelcome dependence keeps U.S. military forces tied to the 
Persian Gulf, forces foreign policy compromises and sinks many 
developing nations into staggering debt as they struggle to pay for 
expensive dollar-denominated oil.
  The growth of economies in China and India, representing a third of 
the world's population that grows by 200,000 people per day, will bring 
greater stress on the finite supply of natural resources, refining 
capacity and distribution capability, and the consequential 
skyrocketing prices would be a destabilizing economic blow.
  In addition, oil causes environmental conflict. The possibility that 
greenhouse gases will lead to catastrophic climate change is 
substantially increased by the 40 million barrels of oil burned every 
day by vehicles. Subsequent environmental problems are often predicted 
as destabilizing factors in the form of drought, flooding or famine.
  Such political, economic and environmental trauma is preventable if 
we are on a course of developing more homegrown energy and developing 
new technology.
  That is why I have joined with my colleagues to introduce the Fuels 
Security Act of 2005. This act would more than double the current 
production of renewable fuels derived from sources available in every 
corner of the United States. More importantly, this increased 
production and use will spur investment in critical infrastructure that 
will allow for the economical use of renewable fuels by all Americans. 
Specifically, this bill would require the use of 4 billion gallons of 
renewable fuels per year in 2006 increasing to 8 billion gallons per 
year by 2012. Thereafter the requirements may be increased based on the 
nation's production and use of these fuels, as well as consideration of 
our economy and environment. While these figures may sound impressive, 
they still only represent a small portion of our nation's 
transportation fuel use of over 185 billion gallons last year.
  Some critics have argued that the production of renewable fuels 
benefits only corn and soybean farmers in the Midwest. And while I 
agree that agriculture communities will benefit, farmers will be less 
reliant upon direct government subsidy payments while encouraging land 
conservation and providing energy security for our country. 
Additionally, many farmers view their ability to produce domestic fuels 
as a matter of patriotism in defense of this nation. However, the 
current ability of U.S. grains to free us from the shackles of oil 
dependence does have its limits. This is why I have long supported 
efforts to increase the production of fuels from all parts of a plant, 
which could be grown throughout the United States.
  When I was chairman of the Agriculture, Nutrition and Forestry 
Committee, I initiated a biofuels research program to help decrease 
U.S. dependency on foreign oil. The Biomass Research and Development 
Act of 2000, which I authored and worked to pass, remains the nation's 
premier legislation guiding renewable fuels research. During a time of 
relatively low fuel prices I also co-authored ``The New Petroleum'' in 
Foreign Affairs with former CIA Director James Woolsey, extolling the 
need to accelerate the use of ethanol, especially that derived from 
cellulose, in order to stem future world conflict. It is clear from 
this research and the evolving instability in oil-rich regions of our 
world that it is time to act to enhance the use of renewable fuels.
  This legislation is an important and rational step forward in our 
nation's overall security and economic well-being. I look forward to 
working with my colleagues in the Senate in passing this bill for the 
good of the American people.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 650

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

                      TITLE I--GENERAL PROVISIONS

Sec. 101. Renewable content of motor vehicle fuel.
Sec. 102. Federal agency ethanol-blended gasoline and biodiesel 
              purchasing requirement.
Sec. 103. Data collection.

[[Page 5296]]

                  TITLE II--FEDERAL REFORMULATED FUELS

Sec. 201. Elimination of oxygen content requirement for reformulated 
              gasoline.
Sec. 202. Public health and environmental impacts of fuels and fuel 
              additives.
Sec. 203. Analyses of motor vehicle fuel changes.
Sec. 204. Additional opt-in areas under reformulated gasoline program.
Sec. 205. Federal enforcement of State fuels requirements.
Sec. 206. Fuel system requirements harmonization study.
Sec. 207. Review of Federal procurement initiatives relating to use of 
              recycled products and fleet and transportation 
              efficiency.

                      TITLE I--GENERAL PROVISIONS

     SEC. 101. RENEWABLE CONTENT OF MOTOR VEHICLE FUEL.

       (a) In General.--Section 211 of the Clean Air Act (42 
     U.S.C. 7545) is amended--
       (1) by redesignating subsection (o) as subsection (q); and
       (2) by inserting after subsection (n) the following:
       ``(o) Renewable Fuel Program.--
       ``(1) Definitions.--In this subsection:
       ``(A) Ethanol.--
       ``(i) Cellulosic biomass ethanol.--The term `cellulosic 
     biomass ethanol' means ethanol derived from any 
     lignocellulosic or hemicellulosic matter that is available on 
     a renewable or recurring basis, including--

       ``(I) dedicated energy crops and trees;
       ``(II) wood and wood residues;
       ``(III) plants;
       ``(IV) grasses;
       ``(V) agricultural residues; and
       ``(VI) fibers.

       ``(ii) Waste derived ethanol.--The term `waste derived 
     ethanol' means ethanol derived from--

       ``(I) animal wastes, including poultry fats and poultry 
     wastes, and other waste materials; or
       ``(II) municipal solid waste.

       ``(B) Renewable fuel.--
       ``(i) In general.--The term `renewable fuel' means motor 
     vehicle fuel that--

       ``(I)(aa) is produced from grain, starch, oilseeds, or 
     other biomass; or
       ``(bb) is natural gas produced from a biogas source, 
     including a landfill, sewage waste treatment plant, feedlot, 
     or other place where decaying organic material is found; and
       ``(II) is used to replace or reduce the quantity of fossil 
     fuel present in a fuel mixture used to operate a motor 
     vehicle.

       ``(ii) Inclusion.--The term `renewable fuel' includes--

       ``(I) cellulosic biomass ethanol;
       ``(II) waste derived ethanol;
       ``(III) biodiesel (as defined in section 312(f) of the 
     Energy Policy Act of 1992 (42 U.S.C. 13220(f)); and
       ``(IV) any blending components derived from renewable fuel, 
     except that only the renewable fuel portion of any such 
     blending component shall be considered part of the applicable 
     volume under the renewable fuel program established by this 
     subsection.

       ``(C) Small refinery.--The term `small refinery' means a 
     refinery for which average aggregate daily crude oil 
     throughput for the calendar year (as determined by dividing 
     the aggregate throughput for the calendar year by the number 
     of days in the calendar year) does not exceed 75,000 barrels.
       ``(2) Renewable fuel program.--
       ``(A) In general.--
       ``(i) Regulations.--Not later than 1 year after the date of 
     enactment of this subsection, the Administrator shall 
     promulgate regulations ensuring that motor vehicle fuel sold 
     or dispensed to consumers in the contiguous United States, on 
     an annual average basis, contains the applicable volume of 
     renewable fuel specified in subparagraph (B).
       ``(ii) Compliance.--Regardless of the date of promulgation, 
     the regulations shall contain compliance provisions for 
     refiners, blenders, and importers, as appropriate, to ensure 
     that the requirements of this subsection are met, but shall 
     not restrict where renewable fuel can be used, or impose any 
     per-gallon obligation for the use of renewable fuel.
       ``(iii) No regulations.--If the Administrator does not 
     promulgate the regulations, the applicable percentage 
     referred to in paragraph (3), on a volume percentage of 
     gasoline basis, shall be 3.2 in 2006.
       ``(B) Applicable volume.--
       ``(i) Calendar years 2006 through 2012.--For the purpose of 
     subparagraph (A), the applicable volume for any of calendar 
     years 2006 through 2012 shall be determined in accordance 
     with the following table:

                 ``Applicable volume of renewable fuel

  Calendar year:                               (In billions of gallons)
    2006...........................................................4.0 
    2007...........................................................4.7 
    2008...........................................................5.4 
    2009...........................................................6.1 
    2010...........................................................6.8 
    2011...........................................................7.4 
    2012...........................................................8.0 

       ``(ii) Calendar years 2013 and thereafter.--For the purpose 
     of subparagraph (A), the applicable volume for calendar year 
     2013 and each calendar year thereafter shall be determined by 
     the Administrator, in coordination with the Secretary of 
     Energy and the Secretary of Agriculture, based on a review of 
     the implementation of the program during calendar years 2006 
     through 2012, including a review of--

       ``(I) the impact of the use of renewable fuels on the 
     environment, air quality, energy security, job creation, and 
     rural economic development; and
       ``(II) the expected annual rate of future production of 
     renewable fuels, including cellulosic ethanol.

       ``(iii) Limitation.--An increase in the applicable volume 
     for a calendar year under clause (ii) shall be not less than 
     the product obtained by multiplying--

       ``(I) the number of gallons of gasoline that the 
     Administrator estimates will be sold or introduced into 
     commerce during the calendar year; and
       ``(I) the quotient obtained by dividing--

       ``(aa) 8,000,000,000; by
       ``(bb) the number of gallons of gasoline sold or introduced 
     into commerce during calendar year 2012.
       ``(3) Applicable percentages.--
       ``(A) Provision of estimate of volumes of gasoline sales.--
     Not later than October 31 of each of calendar years 2006 
     through 2011, the Administrator of the Energy Information 
     Administration shall provide to the Administrator of the 
     Environmental Protection Agency an estimate of the volumes of 
     gasoline that will be sold or introduced into commerce in the 
     United States during the following calendar year.
       ``(B) Determination of applicable percentages.--
       ``(i) In general.--Not later than November 30 of each of 
     calendar years 2006 through 2011, based on the estimate 
     provided under subparagraph (A), the Administrator shall 
     determine and publish in the Federal Register, with respect 
     to the following calendar year, the renewable fuel obligation 
     that ensures that the requirements under paragraph (2) are 
     met.
       ``(ii) Required elements.--The renewable fuel obligation 
     determined for a calendar year under clause (i) shall--

       ``(I) be applicable to refiners, blenders, and importers, 
     as appropriate;
       ``(II) be expressed in terms of a volume percentage of 
     gasoline sold or introduced into commerce; and
       ``(III) subject to subparagraph (C)(i), consist of a single 
     applicable percentage that applies to all categories of 
     persons specified in subclause (I).

       ``(C) Adjustments.--In determining the applicable 
     percentage for a calendar year, the Administrator shall make 
     adjustments--
       ``(i) to prevent the imposition of redundant obligations to 
     any person specified in subparagraph (B)(ii)(I); and
       ``(ii) to account for the use of renewable fuel during the 
     previous calendar year by small refineries that are exempt 
     under paragraph (11).
       ``(4) Equivalency.--For the purpose of paragraph (2), 1 
     gallon of either cellulosic biomass ethanol or waste derived 
     ethanol shall be considered to be the equivalent of 2.5 
     gallons of renewable fuel.
       ``(5) Credit program.--
       ``(A) Regulations.--The regulations promulgated to carry 
     out this subsection shall provide for--
       ``(i) the generation of an appropriate amount of credits by 
     any person that refines, blends, or imports gasoline that 
     contains a quantity of renewable fuel that is greater than 
     the quantity required under paragraph (2);
       ``(ii) the generation of an appropriate amount of credits 
     for biodiesel fuel; and
       ``(iii) if a small refinery notifies the Administrator that 
     the small refinery waives the exemption provided by this 
     subsection, the generation of credits by the small refinery 
     beginning in the year following the notification.
       ``(B) Use of credits.--A person that generates credits 
     under subparagraph (A) may use the credits, or transfer all 
     or a portion of the credits to another person, for the 
     purpose of complying with paragraph (2).
       ``(C) Life of credits.--A credit generated under this 
     paragraph shall be valid to demonstrate compliance for the 
     calendar year in which the credit was generated.
       ``(D) Inability to purchase sufficient credits.--The 
     regulations promulgated to carry out this subsection shall 
     include provisions permitting any person that is unable to 
     generate or purchase sufficient credits to meet the 
     requirement under paragraph (2) to carry forward a renewables 
     deficit if, for the calendar year following the year in which 
     the renewables deficit is created--
       ``(i) the person achieves compliance with the renewables 
     requirement under paragraph (2); and
       ``(ii) generates or purchases additional renewables credits 
     to offset the renewables deficit of the preceding year.
       ``(6) Seasonal variations in renewable fuel use.--
       ``(A) Study.--For each of calendar years 2006 through 2012, 
     the Administrator of the Energy Information Administration 
     shall conduct a study of renewable fuels blending to 
     determine whether there are excessive seasonal variations in 
     the use of renewable fuels.

[[Page 5297]]

       ``(B) Regulation of excessive seasonal variations.--If, for 
     any calendar year, the Administrator of the Energy 
     Information Administration, based on the study under 
     subparagraph (A), makes the determinations specified in 
     subparagraph (C), the Administrator shall promulgate 
     regulations to ensure that 35 percent or more of the quantity 
     of renewable fuels necessary to meet the requirements under 
     paragraph (2) is used during each of the periods specified in 
     subparagraph (D) of each subsequent calendar year.
       ``(C) Determinations.--The determinations referred to in 
     subparagraph (B) are that--
       ``(i) less than 35 percent of the quantity of renewable 
     fuels necessary to meet the requirements under paragraph (2) 
     has been used during 1 of the periods specified in 
     subparagraph (D) of the calendar year;
       ``(ii) a pattern of excessive seasonal variation described 
     in clause (i) will continue in subsequent calendar years; and
       ``(iii) promulgating regulations or other requirements to 
     impose a 35 percent or more seasonal use of renewable fuels 
     will not prevent or interfere with the attainment of national 
     ambient air quality standards or significantly increase the 
     price of motor fuels to the consumer.
       ``(D) Periods.--The 2 periods referred to in this paragraph 
     are--
       ``(i) April through September; and
       ``(ii) January through March and October through December.
       ``(E) Exclusions.--Renewable fuels blended or consumed in 
     2006 in a State that has received a waiver under section 
     209(b) shall not be included in the study under subparagraph 
     (A).
       ``(7) Waivers.--
       ``(A) In general.--The Administrator, in consultation with 
     the Secretary of Agriculture and the Secretary of Energy, may 
     waive the requirements under paragraph (2), in whole or in 
     part, on a petition by 1 or more States by reducing the 
     national quantity of renewable fuel required under this 
     subsection--
       ``(i) based on a determination by the Administrator, after 
     public notice and opportunity for comment, that 
     implementation of the requirement would severely harm the 
     economy or environment of a State, a region, or the United 
     States; or
       ``(ii) based on a determination by the Administrator, after 
     public notice and opportunity for comment, that there is an 
     inadequate domestic supply to meet the requirement.
       ``(B) Petitions for waivers.--Not later than 90 days after 
     the date on which a petition is received by the Administrator 
     under subparagraph (A), the Administrator, in consultation 
     with the Secretary of Agriculture and the Secretary of 
     Energy, shall approve or disapprove the petition.
       ``(C) Termination of waivers.--A waiver granted under 
     subparagraph (A) shall terminate on the date that is 1 year 
     after the date on which the waiver was granted, but may be 
     renewed by the Administrator, after consultation with the 
     Secretary of Agriculture and the Secretary of Energy.
       ``(8) Small refineries.--
       ``(A) In general.--Paragraph (2) shall not apply to small 
     refineries until the first calendar year beginning more than 
     5 years after the first year set forth in the table in 
     paragraph (2)(B)(i).
       ``(B) Study.--Not later than December 31, 2008, the 
     Secretary of Energy shall complete for the Administrator a 
     study to determine whether the requirements under paragraph 
     (2) would impose a disproportionate economic hardship on 
     small refineries.
       ``(C) Small refineries and economic hardship.--For any 
     small refinery that the Secretary of Energy determines would 
     experience a disproportionate economic hardship, the 
     Administrator shall extend the small refinery exemption for 
     the small refinery for not less than 2 additional years.
       ``(D) Economic hardship.--
       ``(i) Extension of exemption.--A small refinery may at any 
     time petition the Administrator for an extension of the 
     exemption from the requirements under paragraph (2) for the 
     reason of disproportionate economic hardship.
       ``(ii) Evaluation.--In evaluating a hardship petition, the 
     Administrator, in consultation with the Secretary of Energy, 
     shall consider the findings of the study in addition to other 
     economic factors.
       ``(iii) Deadline for action on petitions.--The 
     Administrator shall act on any petition submitted by a small 
     refinery for a hardship exemption not later than 90 days 
     after the receipt of the petition.
       ``(E) Credit program.--Paragraph (6)(A)(iii) shall apply to 
     each small refinery that waives an exemption under this 
     paragraph.
       ``(F) Opt-in for small refiners.--A small refinery shall be 
     subject to paragraph (2) if the small refinery notifies the 
     Administrator that the small refinery waives the exemption 
     under subparagraph (C).''.
       (b) Penalties and enforcement.--Section 211(d) of the Clean 
     Air Act (42 U.S.C. 7545(d)) is amended--
       (1) in paragraph (1)--
       (A) in the first sentence, by striking ``or (n)'' and 
     inserting ``(n), or (o)'' each place it appears; and
       (B) in the second sentence, by striking ``or (m)'' and 
     inserting ``(m), or (o)''; and
       (2) in the first sentence of paragraph (2), by striking 
     ``and (n)'' and inserting ``(n), and (o)'' each place it 
     appears.

     SEC. 102. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND 
                   BIODIESEL PURCHASING REQUIREMENT.

       Title III of the Energy Policy Act of 1992 is amended by 
     striking section 306 (42 U.S.C. 13215) and inserting the 
     following:

     ``SEC. 306. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND 
                   BIODIESEL PURCHASING REQUIREMENT.

       ``(a) Ethanol-Blended Gasoline.--The head of each Federal 
     agency shall ensure that, in areas in which ethanol-blended 
     gasoline is reasonably available at a generally competitive 
     price, the Federal agency purchases ethanol-blended gasoline 
     containing at least 10 percent ethanol rather than 
     nonethanol-blended gasoline, for use in vehicles used by the 
     agency that use gasoline.
       ``(b) Biodiesel.--
       ``(1) Definition of biodiesel.--In this subsection, the 
     term `biodiesel' has the meaning given the term in section 
     312(f).
       ``(2) Requirement.--The head of each Federal agency shall 
     ensure that the Federal agency purchases, for use in fueling 
     fleet vehicles that use diesel fuel used by the Federal 
     agency at the location at which fleet vehicles of the Federal 
     agency are centrally fueled, in areas in which the biodiesel-
     blended diesel fuel described in subparagraphs (A) and (B) is 
     available at a generally competitive price--
       ``(A) as of the date that is 5 years after the date of 
     enactment of this paragraph, biodiesel-blended diesel fuel 
     that contains at least 2 percent biodiesel, rather than 
     nonbiodiesel-blended diesel fuel; and
       ``(B) as of the date that is 10 years after the date of 
     enactment of this paragraph, biodiesel-blended diesel fuel 
     that contains at least 20 percent biodiesel, rather than 
     nonbiodiesel-blended diesel fuel.
       ``(3) Requirement of Federal Law.--The provisions of this 
     subsection shall not be considered a requirement of Federal 
     law for the purposes of section 312.
       ``(c) Exemption.--This section does not apply to fuel used 
     in vehicles excluded from the definition of `fleet' by 
     subparagraphs (A) through (H) of section 301(9).''.

     SEC. 103. DATA COLLECTION.

       Section 205 of the Department of Energy Organization Act 
     (42 U.S.C. 7135) is amended by adding at the end the 
     following:
       ``(m)(1) In order to improve the ability to evaluate the 
     effectiveness of the renewable fuels mandate of the United 
     States, the Administrator shall conduct and publish the 
     results of a survey of renewable fuels demand in the motor 
     vehicle fuels market in the United States monthly, and in a 
     manner designed to protect the confidentiality of individual 
     responses.
       ``(2) In conducting the survey, the Administrator shall 
     collect information both on a national and regional basis, 
     including--
       ``(A) information on--
       ``(i) the quantity of renewable fuels produced;
       ``(ii) the quantity of renewable fuels blended;
       ``(iii) the quantity of renewable fuels imported; and
       ``(iv) the quantity of renewable fuels demanded; and
       ``(B) market price data.''.

                  TITLE II--FEDERAL REFORMULATED FUELS

     SEC. 201. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR 
                   REFORMULATED GASOLINE.

       (a) Elimination.--
       (1) In general.--Section 211(k) of the Clean Air Act (42 
     U.S.C. 7545(k)) is amended--
       (A) in paragraph (2)--
       (i) in the second sentence of subparagraph (A), by striking 
     ``(including the oxygen content requirement contained in 
     subparagraph (B))'';
       (ii) by striking subparagraph (B); and
       (iii) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (B) and (C), respectively;
       (B) in paragraph (3)(A), by striking clause (v); and
       (C) in paragraph (7)--
       (i) in subparagraph (A)--

       (I) by striking clause (i); and
       (II) by redesignating clauses (ii) and (iii) as clauses (i) 
     and (ii), respectively; and

       (ii) in subparagraph (C)--

       (I) by striking clause (ii); and
       (II) by redesignating clause (iii) as clause (ii).

       (2) Effective date.--The amendments made by paragraph (1) 
     take effect on the date that is 1 year after the date of 
     enactment of this Act, except that the amendments shall take 
     effect upon that date of enactment in any State that has 
     received a waiver under section 209(b) of the Clean Air Act 
     (42 U.S.C. 7543(b)).
       (b) Maintenance of Toxic Air Pollutant Emission 
     Reductions.--Section 211(k)(1) of the Clean Air Act (42 
     U.S.C. 7545(k)(1)) is amended--
       (1) by striking ``Within 1 year after the enactment of the 
     Clean Air Act Amendments of 1990,'' and inserting the 
     following:
       ``(A) In general.--Not later than November 15, 1991,''; and

[[Page 5298]]

       (2) by adding at the end the following:
       ``(B) Maintenance of toxic air pollutant emissions 
     reductions from reformulated gasoline.--
       ``(i) Definition of padd.--In this subparagraph, the term 
     `PADD' means a Petroleum Administration for Defense District.
       ``(ii) Regulations regarding emissions of toxic air 
     pollutants.--Not later than 270 days after the date of 
     enactment of this subparagraph, the Administrator shall 
     establish, for each refinery or importer, standards for toxic 
     air pollutants from use of the reformulated gasoline produced 
     or distributed by the refinery or importer that maintain the 
     reduction of the average annual aggregate emissions of toxic 
     air pollutants for reformulated gasoline produced or 
     distributed by the refinery or importer during calendar years 
     2001 and 2002, determined on the basis of data collected by 
     the Administrator with respect to the refinery or importer.
       ``(iii) Standards applicable to specific refineries or 
     importers.--

       ``(I) Applicability of standards.--For any calendar year, 
     the standards applicable to a refinery or importer under 
     clause (ii) shall apply to the quantity of gasoline produced 
     or distributed by the refinery or importer in the calendar 
     year only to the extent that the quantity is less than or 
     equal to the average annual quantity of reformulated gasoline 
     produced or distributed by the refinery or importer during 
     calendar years 2001 and 2002.
       ``(II) Applicability of other standards.--For any calendar 
     year, the quantity of gasoline produced or distributed by a 
     refinery or importer that is in excess of the quantity 
     subject to subclause (I) shall be subject to standards for 
     toxic air pollutants promulgated under subparagraph (A) and 
     paragraph (3)(B).

       ``(iv) Credit program.--The Administrator shall provide for 
     the granting and use of credits for emissions of toxic air 
     pollutants in the same manner as provided in paragraph (7).
       ``(v) Regional protection of toxics reduction baselines.--

       ``(I) In general.--Not later than 60 days after the date of 
     enactment of this subparagraph, and not later than April 1 of 
     each calendar year that begins after that date of enactment, 
     the Administrator shall publish in the Federal Register a 
     report that specifies, with respect to the previous calendar 
     year--

       ``(aa) the quantity of reformulated gasoline produced that 
     is in excess of the average annual quantity of reformulated 
     gasoline produced in 2001 and 2002; and
       ``(bb) the reduction of the average annual aggregate 
     emissions of toxic air pollutants in each PADD, based on 
     retail survey data or data from other appropriate sources.

       ``(II) Effect of failure to maintain aggregate toxics 
     reductions.--If, in any calendar year, the reduction of the 
     average annual aggregate emissions of toxic air pollutants in 
     a PADD fails to meet or exceed the reduction of the average 
     annual aggregate emissions of toxic air pollutants in the 
     PADD in calendar years 2001 and 2002, the Administrator, not 
     later than 90 days after the date of publication of the 
     report for the calendar year under subclause (I), shall--

       ``(aa) identify, to the maximum extent practicable, the 
     reasons for the failure, including the sources, volumes, and 
     characteristics of reformulated gasoline that contributed to 
     the failure; and
       ``(bb) promulgate revisions to the regulations promulgated 
     under clause (ii), to take effect not earlier than 180 days 
     but not later than 270 days after the date of promulgation, 
     to provide that, notwithstanding clause (iii)(II), all 
     reformulated gasoline produced or distributed at each 
     refinery or importer shall meet the standards applicable 
     under clause (ii) not later than April 1 of the year 
     following the report under this subclause and for subsequent 
     years.
       ``(vi) Regulations to control hazardous air pollutants from 
     motor vehicles and motor vehicle fuels.--Not later than July 
     1, 2006, the Administrator shall promulgate final regulations 
     to control hazardous air pollutants from motor vehicles and 
     motor vehicle fuels, as provided for in section 80.1045 of 
     title 40, Code of Federal Regulations (as in effect on the 
     date of enactment of this subparagraph).''.
       (c) Consolidation in Reformulated Gasoline Regulations.--
     Not later than 180 days after the date of enactment of this 
     Act, the Administrator of the Environmental Protection Agency 
     shall revise the reformulated gasoline regulations under 
     subpart D of part 80 of title 40, Code of Federal Regulations 
     (or any successor regulations), to consolidate the 
     regulations applicable to VOC-Control Regions 1 and 2 under 
     section 80.41 of that title by eliminating the less stringent 
     requirements applicable to gasoline designated for VOC-
     Control Region 2 and instead applying the more stringent 
     requirements applicable to gasoline designated for VOC-
     Control Region 1.
       (d) Authority of Administrator.--Nothing in this section 
     affects or prejudices any legal claim or action with respect 
     to regulations promulgated by the Administrator of the 
     Environmental Protection Agency before the date of enactment 
     of this Act regarding--
       (1) emissions of toxic air pollutants from motor vehicles; 
     or
       (2) the adjustment of standards applicable to a specific 
     refinery or importer made under the prior regulations.
       (e) Determination Regarding a State Petition.--Section 
     211(k) of the Clean Air Act (42 U.S.C. 7545(k)) is amended by 
     inserting after paragraph (10) the following:
       ``(11) Determination regarding a state petition.--
       ``(A) In general.--Notwithstanding any other provision of 
     this section, not later than 30 days after the date of 
     enactment of this paragraph, the Administrator shall 
     determine the adequacy of any petition received from a 
     Governor of a State to exempt gasoline sold in that State 
     from the requirements under paragraph (2)(B).
       ``(B) Approval.--If a determination under subparagraph (A) 
     is not made by the date that is 30 days after the date of 
     enactment of this paragraph, the petition shall be considered 
     to be approved.''.

     SEC. 202. PUBLIC HEALTH AND ENVIRONMENTAL IMPACTS OF FUELS 
                   AND FUEL ADDITIVES.

       Section 211(b) of the Clean Air Act (42 U.S.C. 7545(b)) is 
     amended--
       (1) in paragraph (2)--
       (A) by striking ``may also'' and inserting ``shall, on a 
     regular basis,''; and
       (B) by striking subparagraph (A) and inserting the 
     following:
       ``(A) to conduct tests to determine potential public health 
     and environmental effects of the fuel or additive (including 
     carcinogenic, teratogenic, or mutagenic effects); and''; and
       (2) by adding at the end the following:
       ``(4) Study on certain fuel additives and blendstocks.--
       ``(A) In general.--Not later than 2 years after the date of 
     enactment of this paragraph, the Administrator shall--
       ``(i) conduct a study on the effects on public health, air 
     quality, and water resources of increased use of, and the 
     feasibility of using as substitutes for methyl tertiary butyl 
     ether in gasoline--

       ``(I) ethyl tertiary butyl ether;
       ``(II) tertiary amyl methyl ether;
       ``(III) di-isopropyl ether;
       ``(IV) tertiary butyl alcohol;
       ``(V) other ethers and heavy alcohols, as determined by the 
     Administrator;
       ``(VI) ethanol;
       ``(VII) iso-octane; and
       ``(VIII) alkylates;

       ``(ii) conduct a study on the effects on public health, air 
     quality, and water resources of the adjustment for ethanol-
     blended reformulated gasoline to the VOC performance 
     requirements otherwise applicable under sections 211(k)(1) 
     and 211(k)(3); and
       ``(iii) submit to the Committee on Environment and Public 
     Works of the Senate and the Committee on Energy and Commerce 
     of the House of Representatives a report describing the 
     results of these studies.
       ``(B) Contracts for study.--In carrying out this paragraph, 
     the Administrator may enter into one or more contracts with 
     nongovernmental entities including but not limited to 
     National Energy Laboratories and institutions of higher 
     education (as defined in section 101 of the Higher Education 
     Act of 1965 (20 U.S.C. 1001)).''.

     SEC. 203. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

       Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
     amended by inserting after subsection (o) (as added by 
     section 101(a)(2)) the following:
       ``(p) Analyses of Motor Vehicle Fuel Changes and Emissions 
     Model.--
       ``(1) Anti-backsliding analysis.--
       ``(A) Draft analysis.--Not later than 4 years after the 
     date of enactment of this subsection, the Administrator shall 
     publish for public comment a draft analysis of the changes in 
     emissions of air pollutants and air quality due to the use of 
     motor vehicle fuel and fuel additives resulting from 
     implementation of the amendments made by the Fuels Security 
     Act of 2005.
       ``(B) Final analysis.--After providing a reasonable 
     opportunity for comment, but not later than 5 years after the 
     date of enactment of this paragraph, the Administrator shall 
     publish the analysis in final form.
       ``(2) Emissions model.--For the purposes of this 
     subsection, as soon as the necessary data are available, the 
     Administrator shall develop and finalize an emissions model 
     that reasonably reflects the effects of gasoline 
     characteristics or components on emissions from vehicles in 
     the motor vehicle fleet during calendar year 2005.''.

     SEC. 204. ADDITIONAL OPT-IN AREAS UNDER REFORMULATED GASOLINE 
                   PROGRAM.

       Section 211(k)(6) of the Clean Air Act (42 U.S.C. 
     7545(k)(6)) is amended--
       (1) by striking ``(6) Opt-in areas.--(A) Upon'' and 
     inserting the following:
       ``(6) Opt-in areas.--
       ``(A) Classified areas.--
       ``(i) In general.--Upon'';
       (2) in subparagraph (B), by striking ``(B) If'' and 
     inserting the following:
       ``(ii) Effect of insufficient domestic capacity to produce 
     reformulated gasoline.--If'';
       (3) in subparagraph (A)(ii) (as redesignated by paragraph 
     (2))--

[[Page 5299]]

       (A) in the first sentence, by striking ``subparagraph (A)'' 
     and inserting ``clause (i)''; and
       (B) in the second sentence, by striking ``this paragraph'' 
     and inserting ``this subparagraph''; and
       (4) by adding at the end the following:
       ``(B) Ozone transport region.--
       ``(i) Application of prohibition.--

       ``(I) In general.--In addition to the provisions of 
     subparagraph (A), upon the application of the Governor of a 
     State in the ozone transport region established by section 
     184(a), the Administrator, not later than 180 days after the 
     date of receipt of the application, shall apply the 
     prohibition specified in paragraph (5) to any area in the 
     State (other than an area classified as a marginal, moderate, 
     serious, or severe ozone nonattainment area under subpart 2 
     of part D of title I) unless the Administrator determines 
     under clause (iii) that there is insufficient capacity to 
     supply reformulated gasoline.
       ``(II) Publication of application.--As soon as practicable 
     after the date of receipt of an application under subclause 
     (I), the Administrator shall publish the application in the 
     Federal Register.

       ``(ii) Period of applicability.--Under clause (i), the 
     prohibition specified in paragraph (5) shall apply in a 
     State--

       ``(I) commencing as soon as practicable but not later than 
     2 years after the date of approval by the Administrator of 
     the application of the Governor of the State; and
       ``(II) ending not earlier than 4 years after the 
     commencement date determined under subclause (I).

       ``(iii) Extension of commencement date based on 
     insufficient capacity.--

       ``(I) In general.--If, after receipt of an application from 
     a Governor of a State under clause (i), the Administrator 
     determines, on the Administrator's own motion or on petition 
     of any person, after consultation with the Secretary of 
     Energy, that there is insufficient capacity to supply 
     reformulated gasoline, the Administrator, by regulation--

       ``(aa) shall extend the commencement date with respect to 
     the State under clause (ii)(I) for not more than 1 year; and
       ``(bb) may renew the extension under item (aa) for 2 
     additional periods, each of which shall not exceed 1 year.

       ``(II) Deadline for action on petitions.--The Administrator 
     shall act on any petition submitted under subclause (I) not 
     later than 180 days after the date of receipt of the 
     petition.''.

     SEC. 205. FEDERAL ENFORCEMENT OF STATE FUELS REQUIREMENTS.

       Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 
     7545(c)(4)(C)) is amended--
       (1) by striking ``(C) A State'' and inserting the 
     following:
       ``(C) Authority of state to control fuels and fuel 
     additives for reasons of necessity.--
       ``(i) In general.--A State''; and
       (2) by adding at the end the following:
       ``(ii) Enforcement by the administrator.--In any case in 
     which a State prescribes and enforces a control or 
     prohibition under clause (i), the Administrator, at the 
     request of the State, shall enforce the control or 
     prohibition as if the control or prohibition had been adopted 
     under the other provisions of this section.''.

     SEC. 206. FUEL SYSTEM REQUIREMENTS HARMONIZATION STUDY.

       (a) Study.--
       (1) In general.--The Administrator of the Environmental 
     Protection Agency and the Secretary of Energy shall jointly 
     conduct a study of Federal, State, and local requirements 
     concerning motor vehicle fuels, including--
       (A) requirements relating to reformulated gasoline, 
     volatility (measured in Reid vapor pressure), oxygenated 
     fuel, and diesel fuel; and
       (B) other requirements that vary from State to State, 
     region to region, or locality to locality.
       (2) Required elements.--The study shall assess--
       (A) the effect of the variety of requirements described in 
     paragraph (1) on the supply, quality, and price of motor 
     vehicle fuels available to the consumer;
       (B) the effect of the requirements described in paragraph 
     (1) on achievement of--
       (i) national, regional, and local air quality standards and 
     goals; and
       (ii) related environmental and public health protection 
     standards and goals;
       (C) the effect of Federal, State, and local motor vehicle 
     fuel regulations, including multiple motor vehicle fuel 
     requirements, on--
       (i) domestic refineries;
       (ii) the fuel distribution system; and
       (iii) industry investment in new capacity;
       (D) the effect of the requirements described in paragraph 
     (1) on emissions from vehicles, refineries, and fuel handling 
     facilities;
       (E) the feasibility of developing national or regional 
     motor vehicle fuel slates for the 48 contiguous States that, 
     while protecting and improving air quality at the national, 
     regional, and local levels, could--
       (i) enhance flexibility in the fuel distribution 
     infrastructure and improve fuel fungibility;
       (ii) reduce price volatility and costs to consumers and 
     producers;
       (iii) provide increased liquidity to the gasoline market; 
     and
       (iv) enhance fuel quality, consistency, and supply; and
       (F) the feasibility of providing incentives, and the need 
     for the development of national standards necessary, to 
     promote cleaner burning motor vehicle fuel.
       (b) Report.--
       (1) In general.--Not later than June 1, 2006, the 
     Administrator of the Environmental Protection Agency and the 
     Secretary of Energy shall submit to Congress a report on the 
     results of the study conducted under subsection (a).
       (2) Recommendations.--
       (A) In general.--The report shall contain recommendations 
     for legislative and administrative actions that may be 
     taken--
       (i) to improve air quality;
       (ii) to reduce costs to consumers and producers; and
       (iii) to increase supply liquidity.
       (B) Required considerations.--The recommendations under 
     subparagraph (A) shall take into account the need to provide 
     advance notice of required modifications to refinery and fuel 
     distribution systems in order to ensure an adequate supply of 
     motor vehicle fuel in all States.
       (3) Consultation.--In developing the report, the 
     Administrator of the Environmental Protection Agency and the 
     Secretary of Energy shall consult with--
       (A) the Governors of the States;
       (B) automobile manufacturers;
       (C) motor vehicle fuel producers and distributors; and
       (D) the public.

     SEC. 207. REVIEW OF FEDERAL PROCUREMENT INITIATIVES RELATING 
                   TO USE OF RECYCLED PRODUCTS AND FLEET AND 
                   TRANSPORTATION EFFICIENCY.

       Not later than 180 days after the date of enactment of this 
     Act, the Administrator of General Services shall submit to 
     Congress a report that details efforts by each Federal agency 
     to implement the procurement policies specified in Executive 
     Order No. 13101 (63 Fed. Reg. 49643; relating to governmental 
     use of recycled products) and Executive Order No. 13149 (65 
     Fed. Reg. 24607; relating to Federal fleet and transportation 
     efficiency).

     SEC. 208. REPORT ON RENEWABLE MOTOR FUEL.

       Not later than January 1, 2007, the Secretary of Energy and 
     the Secretary of Agriculture shall jointly prepare and submit 
     to Congress a report containing recommendations for 
     achieving, by January 1, 2025, at least 25 percent renewable 
     fuel content (calculated on an average annual basis) for all 
     gasoline sold or introduced into commerce in the United 
     States.


                       FUELS SECURITY ACT OF 2005

  Mr. HARKIN. Mr. President, today, along with my colleague, Senator 
Lugar, and a bipartisan coalition of 19 other Senators, am introducing 
important legislation to set an ambitious Renewable Fuels Standard for 
this country. This legislation will more than double the amount of 
ethanol and biodiesel in the Nation's fuel supply to at least 8 billion 
gallons a year by 2012. It firmly commits our Nation to clean sources 
of domestic energy, and is a bold step toward energy security, a strong 
rural economy, and a healthier environment.
  We have a growing problem of energy supplies and prices in this 
country. Today, 97 percent of our transportation fuel comes from oil, 
nearly two-thirds of which is from foreign sources.
  This heavy dependence on petroleum undermines our energy security. It 
wreaks havoc on consumers, with record high prices now for gasoline. It 
costs jobs--27,000 lost U.S. jobs for every $1 billion in imported 
oil--and threatens our environment. A full one-third of greenhouse 
gases now come from vehicle emissions.
  We have a choice. We can stand by and fuel our addiction to foreign 
oil, or we can make an aggressive shift toward clean, domestic 
renewable fuels like ethanol and biodiesel.
  In the 108th Congress, we approved an RFS of 5 billion gallons a year 
by 2012. At the time, this represented a strong push for renewable 
fuels. But since that time, renewable fuels production in this country 
has grown dramatically. Domestic ethanol production grew 21 percent in 
2004 to 3.4 billion gallons, helping to buffer rising crude oil prices.
  The Environment and Public Works Committee, recognizing this success, 
reported yesterday a modestly increased RFS of 6 billion gallons a year 
by 2012. I applaud this step forward, but we can do more. The Energy 
Future Coalition has said that ``increased production of domestic 
renewable fuels is the single most important step the

[[Page 5300]]

United States could take to reduce its dependence on foreign oil,'' and 
I agree.
  Our Nation already has the capacity to produce nearly 4 billion 
gallons of ethanol a year, almost a third of it in Iowa. The biofuels 
industry's output is on track to surpass even our ambitious target of 8 
billion gallons a year by 2012. Several studies further indicate that 
renewable fuels could provide more than 25 percent of our 
transportation fuel by 2025. Our bill will ensure that market demand 
for these fuels grows accordingly.
  Many of the biofuels plants that will be built will be farmer-owned, 
bringing tremendous added value to our rural economies. For example, 
according to a recent study, each typical ethanol plant built in the 
United States creates 700 jobs, expands the local economic base by over 
$140 million, and increases the local corn price by 5 to 10 cents a 
bushel. Iowa's ethanol plants are expected to contribute $4 billion 
annually to our state's economy once all are in production. This RFS is 
expected to create over 200,000 new jobs nationwide, add nearly $200 
billion to our GDP, and do more to reduce foreign oil dependence than 
all of the oil in the Alaska National Wildlife Refuge could possibly 
do.
  This legislation has built-in flexibility through a system of 
tradable credits for refiners who exceed their minimum requirement. It 
takes strong measures to protect air and water quality, and it rewards 
production of second-generation biofuels such as cellulosic ethanol 
that promise tremendous value to farmers, consumers and the 
environment.
  For these reasons, our bill has generated strong support from a broad 
range of interests. I have here a letter endorsing our bill signed by 
more than a dozen groups, including the Iowa Renewable Fuels 
Association, the National Renewable Fuels Association, the Energy 
Future Coalition, the National Farmers Union, the National Corn Growers 
Association, the American Farm Bureau Federation, the American Soybean 
Association, the American Coalition for Ethanol, and many others.
  Farmers and biofuel producers are ready to lead our Nation toward a 
future based on renewable energy. I sincerely hope that Congress and 
the administration will get behind commonsense energy policy and 
support this ambitious RFS. I ask unanimous consent that the text of 
the bill, along with the letter, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                   March 17, 2005.
     Re the Fuels Agreement and the Renewable Fuels Standard.
     The Hon. Bill Frist,
     U.S. Senate Majority Leader,
     Washington, DC.
     The Hon. Harry Reid,
     U.S. Senate Minority Leader,
     Washington, DC.
       Dear Majority Leader Frist and Minority Leader Reid: The 
     undersigned organizations are writing to express our strong 
     support for S. 650, legislation establishing a Renewable 
     Fuels Standard (RFS) growing to 8 billion gallons by 2012. 
     This landmark legislation would increase the nation's energy 
     independence, protect air and water quality, provide 
     increased flexibility for refiners, and stimulate rural 
     economies through the increased production of domestic, 
     renewable fuels.
       The ethanol and biodiesel industries have undergone 
     unprecedented growth over the past several years. In fact, 
     the U.S. currently has the capacity to produce more than 3.7 
     billion gallons of ethanol and biodiesel, and plants under 
     construction will add an additional 700 million gallons of 
     capacity by the end of the year. Most of this growth has been 
     in farmer-owned plants, which taken as a whole, now represent 
     the single largest producer in the country. Clearly, the 
     renewable fuels industry is poised to make a significant 
     contribution to this nation's energy supply.
       With rising crude oil and gasoline prices hurting 
     consumers, and record petroleum imports exacerbating our 
     trade imbalance and slowing economic growth, we need to be 
     maximizing the production and use of domestic renewable fuels 
     such as ethanol and biodiesel. Enacting an RFS that would 
     provide a market of 8 billion gallons by 2012 demonstrates a 
     firm commitment to reducing this nation's foreign oil 
     dependence while providing a significant impact to the 
     American economy. Specifically (in 2005 dollars):
       The production and use of 8 billion gallons of ethanol, 
     biodiesel and other renewable fuels by 2012 will displace 
     over 2 billion barrels of crude oil and reduce the outflow of 
     dollars largely to foreign oil producers by $64.1 billion 
     between 2005 and 2012. As a result of the RFS, America's 
     dependence on imported oil will be reduced from an estimated 
     68 percent to 62 percent.
       The renewable fuels sector will spend an estimated $6 
     billion to build 4.3 billion gallons of new ethanol and 
     biodiesel capacity between 2005 and 2012.
       The renewable fuels sector will spend nearly $70 billion on 
     goods and services required to produce 8 billion gallons of 
     ethanol and biodiesel by 2012. Purchases of corn, grain 
     sorghum, soybeans, corn stover and wheat straw, alone will 
     total $43 billion between 2005 and 2012.
       The combination of this direct spending and the indirect 
     impacts of those dollars `` circulating throughout the 
     economy will:
       Add nearly $200 billion to GDP between 2005 and 2012.
       Generate an additional $43 billion of household income for 
     all Americans between 2005 and 2012, and
       Create as many as 234,840 new jobs in all sectors of the 
     economy by 2012.
       We urge your support of this important bill as the Congress 
     considers comprehensive energy policy legislation. The RFS is 
     a vital and necessary component of any energy policy designed 
     to reduce our nation's dependence on foreign sources of 
     petroleum.
           Sincerely,
       Renewable Fuels Association, American Farm Bureau 
     Federation, National Corn Growers Association, American 
     Soybean Association, National Grain Sorghum Producers, 
     American Coalition for Ethanol, National Biodiesel Board, 
     Energy Future Coalition, Biotechnology Industry Organization, 
     New Uses Council, National Sunflower Association, United 
     States Canola Association, Ethanol Producers & Consumers, 
     Environmental & Energy Study Institute, National Farmers 
     Union.

  Mr. JOHNSON. Mr. President, I rise today to join twenty of my Senate 
colleagues in introducing landmark legislation that will double the 
amount of ethanol used in motor fuel by 2012.
  The Fuels Security Act of 2005 establishes a renewable fuels standard 
program beginning with 4 billion gallons in 2006 and culminating in 8 
billion gallons in 2012--nearly a 40 percent increase from legislation 
that I first sponsored in 2003. The legislation creates a functioning 
and flexible market for ethanol produced from South Dakota's farmer-
owned plants. South Dakota has more farmer-owned ethanol plants than 
any other State, and South Dakota producers deliver a greater 
percentage of corn for ethanol production than any neighboring State. 
Revising and strengthening the proposed RFS is important to South 
Dakota producers and our value-added economy.
  In 2004, the domestic ethanol industry produced a record 3.4 billion 
gallons of ethanol and an additional 700 million gallons of capacity 
will be added in 2005. Because of the strong increase in ethanol 
production over the last few years it is necessary to revisit and 
revise the proposed RFS to more accurately reflect the growing market. 
Increasing the RFS schedule to 8 billion gallons in 2012 ensures market 
stability and encourages investment in ethanol plants and 
transportation infrastructure.
  Ethanol stands out as an agriculture sector that is resisting the 
move toward greater consolidation and concentration. The Fuels Security 
Act of 2005 goes a long way toward ensuring that farmers retain market 
power and will continue to play a leading role in renewable energy 
production.
  While adjusting the schedule to match growth is crucial, equally 
important is ensuring that the schedule and standard are not eroded by 
a permissive credit program or inconsistent and suspect waiver 
authority provisions. To that end, the Fuels Security Act of 2005 
creates a one-year credit program to provide flexibility to blenders 
without diluting the RFS requirement. An ill-defined or open-ended 
credit program will cause investors to hedge against investing in new 
ethanol facilities as the guarantee of an increased baseline is 
weakened through multi-year credit trading language.
  Additionally, the bill includes an effective tool to ensure that 
after 2012, America's renewable fuel market does not diminish and 
capacity and production match demand. The bill directs

[[Page 5301]]

the Secretaries of Agriculture and Energy, as well as the Environmental 
Protection Agency to ensure the RFS schedule grows with the overall 
motor vehicle fuel pool after 2013.
  I am proud to stand with over a dozen agriculture, clean energy and 
renewable fuels organizations that support this legislation. 
Accordingly, I ask unanimous consent that a letter written by over a 
dozen agriculture and energy groups be printed in the Record at the 
conclusion of my remarks.
  The PRESIDING OFFICER. Without objection it is so ordered.
  (See exhibit 1)
  Mr. JOHNSON. Mr. President, I am encouraged that as a consequence of 
the strong bipartisan support for increasing the RFS to 8 billion 
gallons, my colleagues and I can add this bill to a comprehensive 
energy proposal working through the Senate.
  Furthermore, as a member of the Senate Energy and Natural Resources 
Committee, I remain committed to working with my Senate colleagues, 
Chairman Domenici and Majority Leader Frist and Minority Leader Reid 
toward ensuring that the Fuels Security Act of 2005 becomes law.

                               Exhibit 1

                                                   March 17, 2005.
     Re the Fuels Agreement and the Renewable Fuels Standard.

     Hon. Bill Frist,
     U.S. Senate Majority Leader,
     Capitol Building, Washington, DC.
     Hon. Harry Reid,
     U.S. Senate Minority Leader,
     Capitol Building, Washington, DC.
       Dear Majority Leader Frist and Minority Leader Reid: The 
     undersigned organizations are writing to express our strong 
     support for S. 650, legislation establishing a Renewable 
     Fuels Standard (RFS) growing to 8 billion gallons by 2012. 
     This landmark legislation would increase the nation's energy 
     independence, protect air and water quality, provide 
     increased flexibility for refiners, and stimulate rural 
     economies through the increased production of domestic, 
     renewable fuels.
       The ethanol and biodiesel industries have undergone 
     unprecedented growth over the past several years. In fact, 
     the U.S. currently has the capacity to produce more than 3.7 
     billion gallons of ethanol and biodiesel, and plants under 
     construction will add an additional 700 million gallons of 
     capacity by the end of the year. Most of this growth has been 
     in farmer-owned plants, which taken as a whole, now represent 
     the single largest producer in the country. Clearly, the 
     renewable fuels industry is poised to make a significant 
     contribution to this nation's energy supply.
       With rising crude oil and gasoline prices hurting 
     consumers, and record petroleum imports exacerbating our 
     trade imbalance and slowing economic growth, we need to be 
     maximizing the production and use of domestic renewable fuels 
     such as ethanol and biodiesel. Enacting an RFS that would 
     provide a market of 8 billion gallons by 2012 demonstrates a 
     firm commitment to reducing this nation's foreign oil 
     dependence while providing a significant impact to the 
     American economy. Specifically (in 2005 dollars):
       The production and use of 8 billion gallons of ethanol, 
     biodiesel and other renewable fuels by 2012 will displace 
     over 2 billion barrels of crude oil and reduce the outflow of 
     dollars largely to foreign oil producers by $64.1 billion 
     between 2005 and 2012. As a result of the RFS, America's 
     dependence on imported oil will be reduced from an estimated 
     68 percent to 62 percent.
       The renewable fuels sector will spend an estimated $6 
     billion to build 4.3 billion gallons of new ethanol and 
     biodiesel capacity between 2005 and 2012.
       The renewable fuels sector will spend nearly $70 billion on 
     goods and services required to produce 8 billion gallons of 
     ethanol and biodiesel by 2012. Purchases of corn, grain 
     sorghum, soybeans, corn stover and wheat straw, alone will 
     total $43 billion between 2005 and 2012.
       The combination of this direct spending and the indirect 
     impacts of those dollars circulating throughout the economy 
     will:
       Add nearly $200 billion to GDP between 2005 and 2012.
       Generate an additional $43 billion of household income for 
     all Americans between 2005 and 2012, and
       Create as many as 234,840 new jobs in all sectors of the 
     economy by 2012.
       We urge your support of this important bill as the Congress 
     considers comprehensive energy policy legislation. The RFS is 
     a vital and necessary component of any energy policy designed 
     to reduce our nation's dependence on foreign sources of 
     petroleum.
           Sincerely,
         Renewable Fuels Association; American Farm Bureau 
           Federation; National Corn Growers Association; American 
           Soybean Association; National Grain Sorghum Producers; 
           American Coalition for Ethanol; National Biodiesel 
           Board; Energy Future Coalition; Biotechnology Industry 
           Organization; New Uses Council; National Sunflower 
           Association; United States Canola Association; Ethanol 
           Producers & Consumers; Environmental & Energy Study 
           Institute.

  Mr. OBAMA. Mr. President, I am pleased to join as a cosponsor of the 
Fuels Security Act of 2005, which sets a renewable fuels standard for 
the years 2006 to 2012.
  To lessen our dependence on foreign oil and strengthen our economy 
here at home, renewable fuels like ethanol ought to be a larger part of 
our domestic fuel supply. This bill will contribute to that objective, 
and I commend Senators Lugar and Harkin for their leadership in 
crafting this legislation.
  Yesterday, during the markup of a similar bill in the Senate 
Environment and Public Works Committee, I expressed strong support for 
establishing a meaningful renewable fuels standard as an important part 
of a comprehensive national energy policy. The bill before the 
Committee set targets at 3.8 billion gallons in 2006 and 6 billion 
gallons in 2012, improving upon last year's RFS provision in the energy 
bill conference report that set targets at 3.1 billion gallons and 5 
billion gallons, respectively.
  I voted for the chairman's mark yesterday because it gets the RFS 
debate rolling in the new Congress. However, I also noted that it has 
been widely reported in the trade press that the 30-state Governors 
Ethanol Coalition has recommended to the President that refiners be 
required to purchase a minimum volume of ethanol of at least 4 billion 
gallons in 2006, rising to 8 billion gallons in 2012. This 
recommendation adds weight to the view expressed by me and others that 
the committee's targets are too conservative.
  Why are these specific targets so important? They are important if we 
are to maximize the ethanol industry's ability to boost farm income by 
providing a new market for corn; to promote economic growth in rural 
communities by increasing production in existing plants and attracting 
investment in new community-sized ethanol facilities; and to reduce our 
alarming dependence on imported oil by expanding the volume of ethanol 
in our transportation fuel mix.
  These are important objectives. They matter. And that is why it is 
important to get the specific targets right.
  In committee yesterday, I suggested that since ethanol production is 
expected to reach 4 billion gallons this year, we ought to adjust the 
committee bill's RFS targets on the Senate floor to reflect current 
market reality. I am pleased that Chairman Inhofe seemed open to that 
debate.
  I think the Governors Ethanol Coalition recommendation of at least 4 
billion gallons in 2006 and 8 billion gallons in 2012 is a good place 
to start this debate. I think any RFS legislation enacted by Congress 
should contain these levels.
  That is why I am pleased to cosponsor the Fuels Security Act 
introduced by Senators Lugar and Harkin today. The ethanol volume 
targets in this bill--4 billion gallons in 2006 and 8 billion gallons 
in 2012--are in much greater alignment with expected ethanol production 
in future years than those in the Committee bill.
  Earlier this week, I had the opportunity to tour the Aventine ethanol 
plant in Pekin, IL. My visit reminded me of the work of a Pekin native 
more than 50 years ago. That person--Senator Everett Dirksen--
encouraged federal lawmakers to consider ``processing our surplus farm 
crops into an alcohol . . . to create a market in our own land for our 
own people.''
  Today, farmers across Illinois, including farmers near Pekin, are 
growing corn for fuel, both strengthening our energy security and 
providing an economic boost to rural communities. By enacting a 
meaningful RFS, we are displacing more foreign oil with homegrown 
energy. We are expanding the market for Illinois corn. And we are 
promoting the use of renewable fuel. Remember, unlike other energy 
sources, when you run out of ethanol, you can simply grow more.
  For too many years, America has been overly dependent on foreign oil 
to meet its domestic energy needs. And,

[[Page 5302]]

despite rising crude oil prices and unsettling volatility in the 
Persian Gulf, that trend is increasing, not declining. Renewable fuels 
such as ethanol can help address this dangerous dependence on foreign 
oil. And a strong renewable fuels standard will maximize this 
contribution.
                                 ______
                                 
      By Mr. REID:
  S. 651. A bill to amend title 5, United States Code, to make 
creditable for civil service retirement purposes certain periods of 
service performed with Air America, Incorporated, Air Asia Company 
Limited, or the Pacific Division of Southern Air Transport, 
Incorporated, while those entities were owned or controlled by the 
Government of the United States and operate or managed by the Central 
Intelligence Agency; to the Committee on Homeland Security and 
Governmental Affairs.
  Mr. REID. 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. 651

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

     SECTION 1. AMENDMENTS.

       (a) In General.--Section 8332(b) of title 5, United States 
     Code, is amended--
       (1) by striking ``and'' at the end of paragraph (16);
       (2) by striking the period at the end of paragraph (17) and 
     inserting ``; and'';
       (3) by adding after paragraph (17) the following:
       ``(18) any period of service performed before 1977, while a 
     citizen of the United States, in the employ of Air America, 
     Incorporated, Air Asia Company Limited (a subsidiary of Air 
     America, Incorporated), or the Pacific Division of Southern 
     Air Transport, Incorporated, at a time when that corporation 
     (or subsidiary) was owned or controlled by the Government of 
     the United States and operated or managed by the Central 
     Intelligence Agency.''; and
       (4) by adding at the end the following: ``For purposes of 
     this subchapter, service of the type described in paragraph 
     (18) of this subsection shall be considered to have been 
     service as an employee, and the Office of Personnel 
     Management shall accept the certification of the Director of 
     the Central Intelligence Agency or his designee concerning 
     any such service.''.
       (b) Exemption From Deposit Requirement.--Section 8334(g) of 
     title 5, United States Code, is amended--
       (1) by striking ``or'' at the end of paragraph (5);
       (2) by striking the period at the end of paragraph (6) and 
     inserting ``; or''; and
       (3) by adding after paragraph (6) the following:
       ``(7) any service for which credit is allowed under section 
     8332(b)(18) of this title.''.

     SEC. 2. APPLICABILITY.

       (a) In General.--Except as otherwise provided in this 
     section, the amendments made by this Act shall apply with 
     respect to annuities commencing on or after the effective 
     date of this Act.
       (b) Provisions Relating to Current Annuitants.--Any 
     individual who is entitled to an annuity for the month in 
     which this Act becomes effective may, upon application 
     submitted to the Office of Personnel Management within 2 
     years after the effective date of this Act, have the amount 
     of such annuity recomputed as if the amendments made by this 
     Act had been in effect throughout all periods of service on 
     the basis of which such annuity is or may be based. Any such 
     recomputation shall be effective as of the commencement date 
     of the annuity, and any additional amounts becoming payable 
     for periods before the first month for which the 
     recomputation is reflected in the individual's regular 
     monthly annuity payments shall be payable to such individual 
     in the form of a lump-sum payment.
       (c) Provisions Relating to Individuals Eligible for (But 
     Not Currently Receiving) an Annuity.--
       (1) In general.--Any individual (not described in 
     subsection (b)) who becomes eligible for an annuity or for an 
     increased annuity as a result of the enactment of this Act 
     may elect to have such individual's rights under subchapter 
     III of chapter 83 of title 5, United States Code, determined 
     as if the amendments made by this Act had been in effect, 
     throughout all periods of service on the basis of which such 
     annuity is or would be based, by submitting an appropriate 
     application to the Office of Personnel Management within 2 
     years after--
       (A) the effective date of this Act; or
       (B) if later, the date on which such individual separates 
     from service.
       (2) Commencement date, etc.--
       (A) In general.--Any entitlement to an annuity or to an 
     increased annuity resulting from an application under 
     paragraph (1) shall be effective as of the commencement date 
     of such annuity (subject to subparagraph (B), if applicable), 
     and any amounts becoming payable for periods before the first 
     month for which regular monthly annuity payments begin to be 
     made in accordance with the amendments made by this Act shall 
     be payable to such individual in the form of a lump-sum 
     payment.
       (B) Retroactivity.--Any determination of the amount, or of 
     the commencement date, of any annuity, all the requirements 
     for entitlement to which (including separation, but 
     disregarding any application requirement) would have been 
     satisfied before the effective date of this Act if this Act 
     had then been in effect (but would not then otherwise have 
     been satisfied absent this Act) shall be made as if 
     application for such annuity had been submitted as of the 
     earliest date that would have been allowable, after such 
     individual's separation from service, if such amendments had 
     been in effect throughout the periods of service referred to 
     in the first sentence of paragraph (1).
       (d) Right To File on Behalf of a Decedent.--The regulations 
     under section 4(a) shall include provisions, consistent with 
     the order of precedence set forth in section 8342(c) of title 
     5, United States Code, under which a survivor of an 
     individual who performed service described in section 
     8332(b)(18) of such title (as amended by section 1) shall be 
     allowed to submit an application on behalf of and to receive 
     any lump-sum payment that would otherwise have been payable 
     to the decedent under subsection (b) or (c). Such an 
     application shall not be valid unless it is filed within 2 
     years after the effective date of this Act or 1 year after 
     the date of the decedent's death, whichever is later.

     SEC. 3. FUNDING.

       (a) Lump-Sum Payments.--Any lump-sum payments under section 
     2 shall be payable out of the Civil Service Retirement and 
     Disability Fund.
       (b) Unfunded Liability.--Any increase in the unfunded 
     liability of the Civil Service Retirement System attributable 
     to the enactment of this Act shall be financed in accordance 
     with section 8348(f) of title 5, United States Code.

     SEC. 4. REGULATIONS AND SPECIAL RULE.

       (a) In General.--Except as provided in subsection (b), the 
     Director of the Office of Personnel Management, in 
     consultation with the Director of the Central Intelligence 
     Agency, shall prescribe any regulations necessary to carry 
     out this Act. Such regulations shall include provisions under 
     which rules similar to those established pursuant to section 
     201 of the Federal Employees' Retirement System Act of 1986 
     (Public Law 99-335; 100 Stat. 514) shall be applied with 
     respect to any service described in section 8332(b)(18) of 
     title 5, United States Code (as amended by section 1) that 
     was subject to title II of the Social Security Act.
       (b) Other Regulations.--The Director of the Central 
     Intelligence Agency, in consultation with the Director of the 
     Office of Personnel Management, shall prescribe any 
     regulations which may become necessary, with respect to any 
     retirement system administered by the Director of the Central 
     Intelligence Agency, as a result of the enactment of this 
     Act.
       (c) Special Rule.--For purposes of any application for any 
     benefit which is computed or recomputed taking into account 
     any service described in section 8332(b)(18) of title 5, 
     United States Code (as amended by section 1), section 
     8345(i)(2) of such title shall be applied by deeming the 
     reference to the date of the ``other event which gives rise 
     to title to the benefit'' to refer to the effective date of 
     this Act, if later than the date of the event that would 
     otherwise apply.

     SEC. 5. DEFINITIONS.

       For purposes of this Act--
       (1) the terms ``unfunded liability'', ``survivor'', and 
     ``survivor annuitant'' have the meanings given under section 
     8331 of title 5, United States Code; and
       (2) the term ``annuity'', as used in subsections (b) and 
     (c) of section 2, includes a survivor annuity.

     SEC. 6. EFFECTIVE DATE.

       This Act shall take effect on the first day of the first 
     fiscal year beginning after the date of the enactment of this 
     Act.
                                 ______
                                 
      By Mr. SPECTER (for himself and Mr. Santorum):
  S. 652. A bill to provide financial assistance for the rehabilitation 
of the Benjamin Franklin National Memorial in Philadelphia, 
Pennsylvania, and the development of an exhibit to commemorate the 
300th anniversary of the birth of Benjamin Franklin; to the Committee 
on Energy and Natural Resources.
  Mr. SPECTER. Mr. President, I have sought recognition today to 
introduce a bill to authorize Federal funding for the rehabilitation of 
the Benjamin Franklin National Memorial. This memorial, an attraction 
for some 1 million visitors annually, is truly a national treasure, yet 
it has come under significant deterioration. The Franklin

[[Page 5303]]

statue has not been thoroughly cleaned since 1998; there are structural 
impacts to the statue from changes in temperature and humidity; the 
lighting and sound systems are obsolete; and the marble walls and 
stained glass dome are discolored from days when smoking was permitted. 
The bill that Senator Santorum and I are introducing today will help 
ensure that Federal funding is made available to preserve and protect 
our Nation's memorial to Benjamin Franklin, America's distinguished 
scientist, statesman, inventor, and diplomat.
  In the 108th Congress, Senator Santorum and I introduced similar 
legislation to authorize this much needed funding and we were pleased 
that Senator Domenici, Senator Thomas, and their colleagues on the 
Senate Committee on Energy and Natural Resources favorably reported an 
amended version of our legislation to the Senate on September 28, 2004. 
Subsequently, this legislature passed the Senate on October 10, 2004; 
however, the limited time available prior to adjournment of the 108th 
Congress precluded passage of this measure by the House of 
Representatives.
  Unlike other national memorials, the Benjamin Franklin National 
Memorial does not receive an annual allocation of Federal funds to 
provide for preventative maintenance or other important activities.
  The significant burden of maintaining this national memorial has 
become a challenge to the Franklin Institute Science Museum of 
Philadelphia, Pennsylvania, custodian of the Benjamin Franklin National 
Memorial. In 1972, The Institute--a non-profit organization--absorbed 
the sole responsibility for providing the funds necessary to preserve 
and maintain the memorial when Public Law 92-511 designated the 
Memorial Hall at The Franklin Institute Science Museum as the Benjamin 
Franklin National Memorial. In 1973, a Memorandum of Agreement was 
executed by the U.S. Department of the Interior and the Franklin 
Institute that directed the Department to cooperate with the Institute 
in ``all appropriate and mutually agreeable ways in the preservation 
and presentation of the Benjamin Franklin National Memorial Hall as a 
national memorial,'' however, the Department has not provided any 
Federal funding to the Franklin Institute for those purposes other than 
$300,000 that Senator Santorum and I secured from the ``Save America's 
Treasures'' program in the Fiscal Year 2000 Interior Appropriations Act 
to help improve handicap accessibility to the memorial.
  The Benjamin Franklin National Memorial at the Franklin Institute 
serves as the Nation's primary location honoring Franklin's life, 
legacy, and ideals. As we expect visitors to converge on Philadelphia, 
Pennsylvania from throughout the world for the Benjamin Franklin 
Tercentenary Celebration beginning in January 2006, it is important 
that the Franklin Institute, as custodian of the Memorial, begin a 
meticulous restoration and enhancement promptly. I urge my colleagues 
to support this legislation to preserve this national tribute to 
Benjamin Franklin for years to come.
                                 ______
                                 
      By Mr. LEAHY (for himself, Mr. Durbin, Mr. Kennedy, and Mr. 
        Dodd):
  S. 654. A bill to prohibit the expulsion, return, or extradition of 
persons by the United States to countries engaging in torture, and for 
other purposes; to the Committee on Foreign Relations.
  Mr. LEAHY. Mr. President, our Nation has a proud history as the 
leading advocate of human rights around the world. Throughout this 
history, we have committed ourselves to numerous international human 
rights treaties, including the Convention Against Torture and Other 
Cruel, Inhuman or Degrading Treatment or Punishment. The bill that I 
introduce today will reaffirm our obligations under this Convention and 
reassure the world that we are a nation committed to the rule of law. I 
want to thank my cosponsors, Senators Durbin, Kennedy, and Dodd, for 
working with me on this legislation, and for their leadership on these 
issues.
  It has been nearly a year since the first horrific images from Abu 
Ghraib prison appeared in the media, shocking the world and shattering 
the image of the United States. As the Administration circled the 
wagons and claimed the abuses were committed by a ``few bad apples,'' 
new details about the widespread abuse of detainees continued to 
emerge. I have spoken many times about the need for a comprehensive, 
independent investigation into the abuse of detainees. I have no doubt 
that such an investigation would be painful, but it is also a necessary 
step to moving forward.
  Prisoner abuse by U.S. personnel is deeply troubling, but it is only 
one aspect of a broader and serious problem. While we must ensure that 
prisoners are treated humanely by our own personnel, we must also 
prohibit the use of so-called ``extraordinary renditions'' to send 
people to other countries where they will be subject to torture. 
Article 3 of the Convention Against Torture states that ``no State 
Party shall expel, return or extradite a person to another State where 
there are substantial grounds for believing that he would be in danger 
of being subjected to torture.'' The bill I introduce today, the 
``Convention Against Torture Implementation Act,'' will ensure that we 
honor this commitment.
  We have addressed this issue before. Congress implemented Article 3 
of the Convention Against Torture in the Foreign Affairs Reform and 
Restructuring Act of 1998, but this Administration has exploited 
loopholes in that law to transfer detainees to countries where they are 
subjected to torture. Attorney General Gonzales recently said that U.S. 
policy is not to send detainees ``to countries where we believe or we 
know that they're going to be tortured,'' but he acknowledged that we 
``can't fully control'' what other nations do, and added that he does 
not know whether countries have always complied with their promises. In 
fact, they have not.
  My proposed legislation does not broaden the obligations that we 
agreed to by ratifying the Convention Against Torture; it simply closes 
the loopholes in the 1998 law and ensures that we honor our commitment 
not to out-
source torture to other countries.
  The case of Maher Arar provides a chilling example of extraordinary 
rendition, and illustrates why this bill is necessary. Mr. Arar, a 
Canadian and Syrian citizen, was stopped by immigration officers at 
John F. Kennedy International Airport in September 2002 as he attempted 
to change planes on his way home to Canada from Tunisia. He claims that 
he was interrogated by an FBI agent and a New York City police officer, 
and that he was denied access to a lawyer. He further claims that he 
repeatedly told U.S. officials that he feared he would be tortured if 
deported to Syria. After being detained for nearly two weeks in a 
Federal detention center in New York, Mr. Arar was transferred by U.S. 
authorities to Syria and held at the Bush administration's request. Mr. 
Arar claims that he was physically tortured during the first two weeks 
of his detention in Syria, and that he was subjected to severe 
psychological abuse over the following 10 months, including being held 
in a grave-like cell and being forced to undergo interrogation while 
hearing the screams of other prisoners.
  According to Administration officials, the CIA received diplomatic 
assurances from Syria that it would not torture Mr. Arar. But those 
assurances amounted to little more than a wink and a nod. Unnamed 
intelligence officials were later quoted in the press, saying that Arar 
confessed under torture in Syria that he had gone to Afghanistan for 
terrorist training. Syria has a well-documented history of state-
sponsored torture. In fact, President Bush stated on November 7, 2003, 
that Syria has left ``a legacy of torture, oppression, misery, and 
ruin'' to its people.
  Rather than rely on assurances that a country will not torture an 
individual, we must make our own unbiased determination. We already 
have the necessary information to do so. Each year, as required by law, 
the State Department publishes country reports on human rights 
practices. The

[[Page 5304]]

most recent report on Syria states that its torture methods include 
``administering electrical shocks; pulling out fingernails; forcing 
objects into the rectum; beating, sometimes while the victim was 
suspended from the ceiling; hyperextending the spine; bending the 
detainees into the frame of a wheel and whipping exposed body parts; 
and using a backward-bending chair to asphyxiate the victim or fracture 
the victim's spine.''
  Some will argue that the post-9/11 world is different; that we must 
use any and all means available to extract information from suspected 
terrorists. Their argument might be more credible if every person who 
turned up on a terrorist watch list were, in fact, a terrorist. I 
cannot say whether Mr. Arar had ties to terrorist groups or not, but we 
do know that he was never charged with a crime. After enduring months 
of torture at the hands of the Syrians, he was released and sent back 
to Canada.
  Nor was Mr. Arar's experience an isolated incident. A recent article 
in The New Yorker titled ``Outsourcing Torture'' provides disturbing 
details about how the administration embraced the use of rendition 
after the 9/11 attacks. Several press reports detail the CIA's use of 
its own Gulfstream V and Boeing 737 jets to secretly transfer detainees 
to countries around the world, where it is likely that they will be 
tortured.
  The Convention Against Torture Implementation Act addresses the 
extraordinary rendition problem in a straightforward manner. It 
requires the State Department to produce annually a list of countries 
where torture is known to occur. The list would be based on information 
contained in the State Department's country reports on human rights 
practices. The bill prohibits the transfer of individuals to any 
country on this list or to any other country if there are substantial 
grounds for believing that the person would be tortured. It also 
provides reasonable exceptions to this prohibition to allow for legal 
extraditions and removals.
  Most importantly, the bill closes the diplomatic assurances loophole. 
We would no longer accept assurances from governments that we know 
engage in torture. Our past reliance on diplomatic assurances is 
blatantly hypocritical. How can our State Department denounce countries 
for engaging in torture while the CIA secretly transfers detainees to 
the very same countries for interrogation? The President says he does 
not condone torture, but transferring detainees to other countries 
where they will be tortured does not absolve our government of 
responsibility. By outsourcing torture to these countries, we diminish 
our own values as a nation and lose our credibility as an advocate of 
human rights around the world.
  Last June, in the aftermath of the Abu Ghraib scandal, the President 
was asked if he had authorized abusive interrogation techniques. He 
replied, ``The authorization I issued was that anything we did would 
conform to U.S. law and would be consistent with international treaty 
obligations.'' The legislation I introduce today will help us fulfill 
the President's promise.
  The Senate gave its advice and consent to the ratification of the 
Convention Against Torture more than a decade ago. It is time to honor 
our commitment and show the world that we will hold ourselves to the 
same standards that we demand of others.
  Mr. President, I ask unanimous consent that the text of the bill and 
a section-by-section analysis be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 654

       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 ``Convention Against Torture 
     Implementation Act of 2005''.

     SEC. 2. PROHIBITION ON CERTAIN TRANSFERS OF PERSONS.

       (a) Prohibition.--No person in the custody or control of a 
     department, agency, or official of the United States 
     Government, or of any contractor of any such department or 
     agency, shall be expelled, returned, or extradited to another 
     country, whether directly or indirectly, if--
       (1) the country is included on the most recent list 
     submitted to Congress by the Secretary of State under section 
     3; or
       (2) there are otherwise substantial grounds for believing 
     that the person would be in danger of being subjected to 
     torture.
       (b) Exceptions.--
       (1) Waivers.--
       (A) Authority.--The Secretary of State may waive the 
     prohibition in subsection (a)(1) with respect to a country if 
     the Secretary certifies to the appropriate congressional 
     committees that--
       (i) the acts of torture that were the basis for including 
     that country on the list have ended; and
       (ii) there is in place a mechanism that assures the 
     Secretary in a verifiable manner that a person expelled, 
     returned, or extradited to that country will not be tortured 
     in that country, including, at a minimum, immediate, 
     unfettered, and continuing access, from the point of return, 
     to such person by an independent humanitarian organization.
       (B) Reports on waivers.--
       (i) Reports required.--For each person expelled, returned, 
     or extradited under a waiver provided under subparagraph (A), 
     the head of the appropriate government agency making such 
     transfer shall submit to the appropriate congressional 
     committees a report that includes the name and nationality of 
     the person transferred, the date of transfer, the reason for 
     such transfer, and the name of the receiving country.
       (ii) Form.--Each report under this subparagraph shall be 
     submitted, to the extent practicable, in unclassified form, 
     but may include a classified annex as necessary to protect 
     the national security of the United States.
       (2) Extradition or removal.--The prohibition in subsection 
     (a)(1) may not be construed to apply to the legal extradition 
     of a person under a bilateral or multilateral extradition 
     treaty or to the legal removal of a person under the 
     immigration laws of the United States if, before such 
     extradition or removal, the person has recourse to a United 
     States court of competent jurisdiction to challenge such 
     extradition or removal on the basis that there are 
     substantial grounds for believing that the person would be in 
     danger of being subjected to torture in the receiving 
     country.
       (c) Assurances Insufficient.--Written or verbal assurances 
     made to the United States by the government of a country that 
     persons in its custody or control will not be tortured are 
     not sufficient for believing that a person is not in danger 
     of being subjected to torture for purposes of subsections 
     (a)(2) and (b)(2), or for meeting the requirement of 
     subsection (b)(1)(A)(ii).

     SEC. 3. REPORTS ON COUNTRIES USING TORTURE.

       Not later than 30 days after the effective date of this 
     Act, and annually thereafter, the Secretary of State shall 
     submit to the appropriate congressional committees a report 
     listing each country where torture is known to be used. The 
     list shall be compiled on the basis of the information 
     contained in the most recent annual report of the Secretary 
     of State submitted to the Speaker of the House of 
     Representatives and the Committee on Foreign Relations of the 
     Senate under section 116(d) of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2151n(d)).

     SEC. 4. REGULATIONS.

       (a) Interim Regulations.--Not later than 60 days after the 
     effective date of this Act, the heads of the appropriate 
     government agencies shall prescribe interim regulations for 
     the purpose of carrying out this Act and implementing the 
     obligations of the United States under Article 3 of the 
     Convention Against Torture, subject to any reservations, 
     understandings, declarations, and provisos contained in the 
     Senate resolution advising and consenting to the ratification 
     of the Convention Against Torture, and consistent with the 
     provisions of this Act.
       (b) Final Regulations.--Not later than 180 days after 
     interim regulations are prescribed under subsection (a), and 
     following a period of notice and opportunity for public 
     comment, the heads of the appropriate government agencies 
     shall prescribe final regulations for the purposes described 
     in subsection (a).

     SEC. 5. SAVINGS CLAUSE.

       Nothing in this Act shall be construed to eliminate, limit, 
     or constrain in any way the obligations of the United States 
     or the rights of any individual under the Convention Against 
     Torture or any other applicable law.

     SEC. 6. REPEAL OF SUPERSEDED AUTHORITY.

       Section 2242 of the Foreign Affairs Reform and 
     Restructuring Act of 1998 (Public Law 105-277; 8 U.S.C. 1231 
     note) is repealed. Regulations promulgated under such section 
     that are in effect on the date this Act becomes effective 
     shall remain in effect until the heads of the appropriate 
     government agencies issue interim regulations under section 
     4(a).

     SEC. 7. DEFINITIONS.

       (a) Defined Terms.--In this Act:
       (1) Appropriate government agencies.--The term 
     ``appropriate government agencies'' means--
       (A) the intelligence community (as defined in section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4))); 
     and
       (B) elements of the Department of State, the Department of 
     Defense, the Department

[[Page 5305]]

     of Homeland Security, the Department of Justice, the United 
     States Secret Service, the United States Marshals Service, 
     and any other Federal law enforcement, national security, 
     intelligence, or homeland security agency that takes or 
     assumes custody or control of persons or transports persons 
     in its custody or control outside the United States, other 
     than those elements listed or designated as elements of the 
     intelligence community under section 3(4) of the National 
     Security Act of 1947 (50 U.S.C. 401a(4))).
       (2) Appropriate congressional committees.--The term 
     ``appropriate congressional committees'' means--
       (A) the Committees on Armed Services, Homeland Security and 
     Government Affairs, Judiciary, Foreign Relations, and the 
     Select Committee on Intelligence of the Senate; and
       (B) the Committees on Armed Services, Homeland Security, 
     Judiciary, International Relations, and the Permanent Select 
     Committee on Intelligence of the House of Representatives.
       (3) Convention against torture.--The term ``Convention 
     Against Torture'' means the United Nations Convention Against 
     Torture and Other Cruel, Inhuman or Degrading Treatment or 
     Punishment, done at New York on December 10, 1984, entered 
     into force on June 26, 1987, signed by the United States on 
     April 18, 1988, and ratified by the United States on October 
     21, 1994 (T. Doc. 100-20).
       (4) Expelled person.--A person who is expelled is a person 
     who is involuntarily transferred from the territory of any 
     country, or a port of entry thereto, to the territory of 
     another country, or a port of entry thereto.
       (5) Extradited person.--A person who is extradited is an 
     accused person who, in accordance with chapter 209 of title 
     18, United States Code, is surrendered or delivered to 
     another country with jurisdiction to try and punish the 
     person.
       (6) Returned person.--A person who is returned is a person 
     who is transferred from the territory of any country, or a 
     port of entry thereto, to the territory of another country of 
     which the person is a national or where the person has 
     previously resided, or a port of entry thereto.
       (b) Same Terms as in the Convention Against Torture.--
     Except as otherwise provided, the terms used in this Act have 
     the meanings given those terms in the Convention Against 
     Torture, subject to any reservations, understandings, 
     declarations, and provisos contained in the Senate resolution 
     advising and consenting to the ratification of the Convention 
     Against Torture.

     SEC. 8. EFFECTIVE DATE.

       This Act shall take effect on the date that is 30 days 
     after the date of the enactment of this Act.

     SEC. 9. CLASSIFICATION IN UNITED STATES CODE.

       This Act shall be classified to the United States Code as a 
     new chapter of title 50, United States Code.

   Convention Against Torture Implementation Act of 2005 Section-by-
                            Section Analysis

       Sec. 1. Short Title. The Convention Against Torture 
     Implementation Act of 2005.
       Sec. 2. Prohibition on Certain Transfers of Persons. This 
     section implements Article 3 of the Convention Against 
     Torture, which prohibits expelling, returning, or extraditing 
     persons to countries where they are in danger of being 
     subjected to torture. Subsection (a) prohibits the transfer 
     of a person in the custody or control of the United States 
     government to a country included on a list generated by the 
     State Department, as required by Section 3 of this Act, or to 
     countries where there are substantial grounds for believing 
     that the person would be in danger of being subjected to 
     torture. Subsection (b) allows exceptions to the prohibition 
     if the Secretary of State waives the prohibition or if the 
     transfer is done under an extradition treaty or as a legal 
     removal under United States immigration laws. Agencies that 
     transfer a detainee under the waiver exception must submit a 
     report of the transfer to appropriate congressional 
     committees. Subsection (c) states that assurances made to the 
     United States by another government that persons in its 
     custody will not be tortured are not sufficient for the 
     United States to conclude that a person will not be subjected 
     to torture.
       Sec. 3. Reports on Countries Using Torture. This section 
     requires the Secretary of State, on an annual basis, to 
     compile a list of countries where torture is known to be 
     used. The United States is prohibited from transferring 
     persons to the countries on this list, except in accordance 
     with the exceptions contained in section 2. The list shall be 
     compiled based on information contained in the most recent 
     State Department country reports on human rights practices, 
     which the Department submits annually in accordance with 
     section 116(d) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2151n(d)).
       Sec. 4. Regulations. This section requires appropriate 
     government agencies (as defined in section 7) to prescribe 
     regulations in accordance with this Act. Interim regulations 
     must be prescribed within 60 days of the effective date of 
     the Act. Final regulations must be prescribed, through notice 
     and comment rulemaking, not more than 180 days thereafter.
       Sec. 5. Savings Clause. This section ensures that the Act 
     does not eliminate, limit, or constrain the obligations of 
     the United States or the rights of any individual under the 
     Convention Against Torture or any other applicable law.
       Sec. 6. Repeal of Superseded Authority. This section 
     repeals section 2242 of the Foreign Affairs Reform and 
     Restructuring Act of 1998 (Public Law 105-277; 8 U.S.C. 1231 
     note). This law also implemented Article 3 of the Convention 
     Against Torture, but lacked specific guidance for agencies 
     and allowed the United States to rely on diplomatic 
     assurances that a government would not torture a person 
     transferred to its custody. This section also requires agency 
     regulations promulgated under section 2242 to remain in 
     effect until the appropriate government agencies issue new 
     regulations in accordance with section 4 of this Act.
       Sec. 7. Definitions. This section defines ``Appropriate 
     Government Agencies,'' ``Appropriate Congressional 
     Committees,'' ``Expelled Person,'' ``Extradited Person,'' 
     ``Returned Person,'' and ``Convention Against Torture.'' It 
     also states that terms used in the Act, unless otherwise 
     provided, have the meanings given to those terms in the 
     Convention Against Torture.
       Sec. 8. Effective Date. Makes the Act effective 30 days 
     after its enactment.
       Sec. 9. Classification in United States Code. This section 
     requires the Act to be classified as a new chapter of title 
     50 in the United States Code. The superseded authority was 
     classified as a note in title 8 in the United States Code. 
     Given the scope and applicability of the Act, it is more 
     accurate to classify it in the War and National Defense title 
     than in the Aliens and Nationality title.

  Mr. KENNEDY. Mr. President, the entire world continues to wait for 
signs that the administration takes seriously its moral and legal 
responsibilities to eliminate torture and abuse. It is long past time 
for the administration to give the American people and the world an 
ironclad assurance that these shameful tactics are no longer being used 
in any prison or detention facility under American control and that we 
are not outsourcing our torture to regimes well known for using them.
  I strongly support the legislation that Senator Leahy has introduced 
to deal with this urgent problem and to see that our Nation is not 
farming out abusive interrogations to other countries. The bill makes 
crystal clear that we can't torture by proxy.
  Abhorrence to torture is a fundamental value. Our attitude toward 
torture speaks volumes about our national conscience, our dedication to 
the rule of law, and our essential ideals. 
9/11 is no excuse for abandoning our ideals.
  The line separating right from wrong must clearly exclude the 
reprehensible practice called extraordinary rendition, the ridiculous 
code word for torture by proxy. Article 3 of the Treaty Against 
Torture, which the United States has ratified, provides: ``No State 
Party shall expel, return, or extradite a person to another State where 
there are substantial grounds for believing he would be in danger of 
being subjected to torture.'' The secretive U.S. practice of rendition 
is a violation of international law because it involves detaining 
prisoners without a shred of due process and delivering them for 
interrogation into the hands of countries known to commit torture. As 
one commentator noted: ``In terms of bad behavior, it stands side by 
side with contract killings.''
  Ask Maher Arar. In the fall of 2002, Arar, a Canadian citizen, was 
returning to Montreal from a family visit in Tunisia and he made a 
stopover at Kennedy Airport in New York City. Acting in part on flawed 
intelligence from Canadian officials, U.S. Immigration officials seized 
Mr. Arar at the airport. He was not charged with a crime, or given a 
chance to talk with a lawyer. Instead, he was held in Brooklyn and 
interrogated for days by U.S. law enforcement authorities.
  When the interrogation failed to produce incriminating information, 
Mr. Arar was flown to Jordan and handed over to Jordanian authorities. 
He was chained, blindfolded, and beaten in a van that transported him 
to the Syrian border. In Syria, he was placed in a small, dark cell--
three feet by six feet, like a grave--and was held there for almost a 
year. He was slapped, beaten, and whipped on his palms, wrists, and 
back with an electric cable. He begged them to stop. He heard other

[[Page 5306]]

prisoners screaming as they were tortured. He signed any confessions he 
was told to sign.
  Mr. Arar was released in October 2003. Syrian officials told 
reporters that their investigators found no link between Mr. Arar and 
al-Qaida. His confession turned out to be worthless and his suffering 
was pointless. Mr. Arar is now home in Canada.
  How can any of us stand idly by knowing that this country condoned 
and facilitated such brutality?
  Tragically, Mr. Arar is not the only victim. On March 6, 60 Minutes 
aired a report on rendition. On the program, Michael Scheuer, a 
recently retired CIA official who created its rendition program, 
admitted that he would ``have to assume'' that suspects the U.S. sends 
to Egypt are tortured. ``It's very convenient,'' he said. ``It's 
finding someone else to do your dirty work.''
  The Defense Department has attempted to justify this tactic. On June 
25, 2003, Defense Department General Counsel William Haynes wrote to 
Senator Leahy, stating that whenever the U.S. transfers an individual 
to another country, ``United States policy is to obtain specific 
assurances from the receiving country that it will not torture the 
individual being transferred to that country. We can assure you that 
the United States would take steps to investigate credible allegations 
of torture and take appropriate action if there were reason to believe 
that those assurances were not being honored.''
  Mr. Haynes' ``assurances,'' are difficult to accept. The State 
Department's annual human rights report, released last month, 
criticized numerous countries for a range of interrogation practices it 
labeled as torture. The State Department identified Syria, Egypt, and 
Saudi Arabia, among others, as countries practicing torture. Press 
reports make clear that since 
9/11, the U.S. has flown 100-150 suspects to countries such as these. 
The State Department condemns Syria for torturing its prisoners, but 
Mr. Haynes blindly relies on Syria's promise that the prisoners we send 
there will be treated humanely.
  Recent press reports also suggest that the assurances of humane 
treatment sought by the CIA are worth very little. According to today's 
Washington Post, ``one government official who visited several foreign 
prisons where suspects were rendered by the CIA said 
. . . `It's widely understood that the interrogation practices that 
would be illegal in the U.S. are being used.''' The official also said, 
``they say they are not abusing them . . . but we all know they do.''
  According to the Post, an Arab diplomat, whose country is actively 
engaged in counterterrorism alongside the CIA said it was unrealistic 
to believe the CIA really wants to follow up on assurances. He said: 
``It would be stupid to keep track of them because then you would know 
what's going on.'' He said, ``it's like don't ask don't tell.''
  So, it seems that we are not fooling anybody but the American public.
  We are a Nation of laws, not hypocrites. Our country is strong and 
our constitutional system has endured because it permits us to do great 
things and still ensure that we treat people fairly and humanely. We 
are not supposed to ``disappear'' people here.
  Yet, that is exactly what rendition and the related tactic of ``ghost 
detainees'' amounts to, making people vanish into a shadowy world of 
secret abuse. In his report on the abuses at Abu Ghraib prison, MG. 
Antonio Taguba wrote that prisoners had not been registered as required 
by Army regulations and they were being moved around to avoid detection 
by the Red Cross. General Taguba called the practice ``deceptive, 
contrary to Army doctrine, and in violation of international law.'' 
Last September, Army investigators told the Senate Armed Services 
Committee that as many as 100 detainees at Abu Ghraib had been hidden 
from the Red Cross at the CIA's direction.
  Last month, the Associated Press reported that one of the ``ghost 
detainees'' held at Abu Ghraib, Manadel al-Jamadi, died in November 
2003 under CIA interrogation. He had been suspended by his wrists, with 
his hands cuffed behind his back. According to an Army guard who was 
asked by the interrogator to adjust al-Jamadi's position, blood gushed 
from his mouth ``as if a faucet had been turned on'' after he was 
released from his shackles.
  Behavior like that forces us all to ask, ``what has America become?''
  The issue shows no signs of abating. Article 49 of the Fourth Geneva 
Convention states that transfers of detainees from occupied territory 
to any other country ``are prohibited, regardless of their motive.'' 
Violations of the Article constitute ``grave breaches'' of the Treaty 
and qualify as ``war crimes'' under Federal law. Nevertheless, a 
Justice Department memorandum in March, 2004 re-interpreted the Treaty 
to allow the CIA to remove prisoners from Iraq for the purpose of 
``facilitating interrogation.'' According to press reports, the CIA 
used this ``Goldsmith Memorandum'' as justification to transport ``as 
many as a dozen detainees'' out of Iraq. The legal analysis in the 
memorandum is an embarrassment. Yet it appears to have provided the 
legal justification for the CIA to commit war crimes.
  The New York Times recently reported that the U.S. plans to transfer 
as many as half the 550 detainees held at Guantanamo Bay to prisons in 
other countries. This week, a Federal judge blocked the government from 
transferring 13 citizens of Yemen until a hearing can be held on the 
propriety of the move. Lawyers for the detainees expressed concern that 
the prisoners would be delivered into the hands of torture.
  Even worse, last week Attorney General Gonzales defended the practice 
of rendition, despite admitting that he ``can't fully control'' what 
other nations do and that he doesn't know whether countries have always 
complied with their promises.
  Congress can't allow these shameful tactics to continue. Senator 
Leahy's bill is designed to prevent them. It states that no person in 
the custody or control of the United States can be sent to another 
country on the State Department list of countries that commit torture. 
Nor, may any person be sent to a country, even if it is not on the 
State Department list, where there are grounds to believe the person 
would be in danger of being tortured. The bill states that mere 
diplomatic assurances that detainees will be treated humanely are not 
sufficient to permit a detainee's transfer. Instead, in certain 
circumstances, the act permits delivery of the detainee where there is 
an actual mechanism to verify that the person will not be tortured, 
such as by allowing unfettered access to the detainee by humanitarian 
organizations.
  The Bush administration's has clearly condoned the use of torture and 
abuse by our own government, as well as handing prisoners over to other 
countries for the same purpose. Officials have approved and used 
interrogation techniques that include feigning suffocation, feigning 
drowning, ``stress positions,'' sleep deprivation, and the use of 
unmuzzled dogs. According to one report, ``The methods employed by the 
CIA are so severe that senior officials of the Federal Bureau of 
Investigation have directed its agents to stay out of many of the 
interviews of the high-level detainees . . . ``because the FBI fears 
that the techniques could subject their agents to criminal lawsuits.
  The anti-rendition bill offered today is a way to start addressing 
the problem. It deserves to pass as soon as possible. Torture and other 
abuses of prisoners in Iraq, Afghanistan, and Guantanamo have done 
immense damage to America's standing in the world and has clearly made 
the war on terrorism harder to win. We need to repair that damage and 
re-claim our national commitment to fairness and decency.
  As Edmund Burke said, ``The only thing necessary for the triumph of 
evil is for good men to do nothing.'' We in Congress have it in our 
power to prevent the triumph of an evil practice. Knowing what we now 
know, the Senate cannot simply look away and do nothing. I urge my 
colleagues to support us in ending these despicable abuses.
                                 ______
                                 
      By Mr. ENSIGN (for himself and Ms. Landrieu):

[[Page 5307]]

  S. 657. A bill to amend title XVIII of the Social Security Act to 
make a technical correction in the definition of outpatient speech-
language pathology services; to the Committee on Finance.

  Mr. ENSIGN. Mr. President, today I introduced a bill that would 
expand access to speech-language pathology care.
  Speech-language pathology, or speech therapy, includes services for 
patients with speech, hearing and language disorders, which result in 
communication disabilities. Speech therapy also includes the diagnosis 
and treatment of swallowing disorders, regardless of the presence of 
communications disability. Communications disabilities most frequently 
affect patients who suffer from a stroke, tumor, head injury, or have 
been diagnosed with Parkinson's disease, amyotrophic lateral sclerosis 
(ALS) , or other neuromuscular diseases.
  As a result of a legislative anomaly, patients cannot receive 
Medicare coverage for speech-language pathology care in a private 
practice setting. Under the Medicare program, the same patient is able 
to receive such care in a hospital, skilled nursing facility, or 
rehabilitation facility. This bill would not create a new benefit. 
Rather, it would provide a technical correction to a section of 
Medicare statute that originated more than 30 years ago. Under current 
law, physical therapy and occupational therapy care can be received by 
patients in the private practice setting.
  In 1972, speech-language pathology services were added to the 
Medicare statute under the physical therapy definition section. 14 
years later, occupational therapy was defined under a separate section. 
Unlike speech-language pathology services, occupational therapy 
services were not incorporated within the physical therapy definition. 
As a result, a patient can receive both physical and occupational 
therapy care in an independent practice setting. The legislation I am 
introducing today would enable patients to likewise receive speech-
language therapy services in private practice settings.
  Without this legislative fix, beneficiaries may confront situations 
in which they either do not have access to a Medicare-covered setting 
or do not meet the requirements to receive care from other settings. 
This can be especially problematic in rural communities with fewer 
hospitals, skilled nursing facilities, and rehabilitation facilities.
  For example, consider an elderly patient who is discharged from a 
hospital, but requires follow-up physical therapy and speech-language 
pathology care. The patient would be able to obtain necessary physical 
therapy care in an independent practice setting, but would not be able 
to receive necessary speech-language pathology care in the same 
setting. The patient would have to see the necessary speech-language 
pathology care in another Medicare setting, possibly having to travel 
farther distances to receive such care or not receive it all.
  Essentially, the legislation I am introducing today would ensure that 
patients have access to speech-language pathology services, 
particularly in rural areas. I urge my colleagues to join me in 
supporting this commonsense legislation.
  This legislation compliments the measure I introduced last month, 
called the Medicare Access to Rehabilitation Services Act (S. 438). 
Both bills ensure access to needed therapy care within the Medicare 
program. I am committed to working toward their enactment and believe 
that they will help Medicare beneficiaries obtain the quality health 
care that they deserve.
                                 ______
                                 
      By Mr. BROWNBACK (for himself, Ms. Landrieu, Mr. Allard, Mr. 
        Bunning, Mr. Burr, Mr. Chambliss, Mr. Cornyn, Mr. Craig, Mr. 
        Crapo, Mr. Demint, Mr. DeWine, Mrs. Dole, Mr. Domenici, Mr. 
        Ensign, Mr. Graham, Mr. Grassley, Mr. Hagel, Mr. Inhofe, Mr. 
        Kyl, Mr. Martinez, Ms. Murkowski, Mr. Santorum, Mr. Sessions, 
        Mr. Shelby, Mr. Thomas, Mr. Thune, Mr. Vitter, Mr. Voinovich, 
        and Mr. Talent):
  S. 658. A bill to amend the Public Health Service Act to prohibit 
human cloning; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. BROWNBACK. Mr. President, I rise to speak on the Brownback-
Landrieu Human Cloning Prohibition Act, which we introduce today.
  The Brownback-Landrieu Human Cloning Prohibition Act remains the only 
effective ban on human cloning.
  This legislation has passed the U.S. House of Representatives twice 
by large margins. This bill would also bring the U.S. into conformity 
with the recent vote at the United Nations, where the General Assembly 
called on all member states ``to prohibit all forms of human cloning'' 
by a strong 84 to 34 margin.
  President Bush has also spoken eloquently on the Brownback-Landrieu 
Human Cloning Prohibition Act, when he ``wholeheartedly'' endorsed the 
legislation.
  The President said: ``Human cloning is deeply troubling to me, and to 
most Americans. Life is a creation, not a commodity.
  ``Our children are gifts to be loved and protected, not products to 
be designed and manufactured. Allowing cloning would be taking a 
significant step toward a society in which human beings are grown for 
spare body parts, and children are engineered to custom specifications; 
and that's not acceptable. . . .
  ``I strongly support a comprehensive law against all human cloning. 
And I endorse the bill wholeheartedly endorse the bill--sponsored by 
Senator Brownback and Senator Mary Landrieu.''
  The President could hardly have been clearer.
  We should take a stand against those that would turn young human 
beings into commodities and spare parts. We should not use human life 
for research purposes.
  The legislation introduced by Sen. Landrieu and myself, along with 
over one quarter of the Senate, answers that human life should not be 
used for research purposes.
  Let there be no doubt. Science affirms that the young human, at his 
or her earliest moments of life, is a human. It is wrong to treat 
another person as a piece of property that can be bought and sold, 
created and destroyed, all at the will of those in power.
  The issue of human cloning--and specifically how we treat the young 
human--will determine the kind of future we will give to our children 
and grandchildren.
  The essential question is whether or not we will allow human beings 
to be produced, to preordained specifications, for their eventual 
implantation or destruction, depending upon the intentions of the 
technicians who created them.
  Will we create life simply to destroy it?
  I firmly believe that human life should be cherished and that human 
dignity should be protected.
  I also firmly believe that ethically-sound research should proceed in 
the search for cures. The legislation that we introduce today takes a 
very thoughtful approach and is careful not to ban or interfere with 
gene therapy, IVF practices, or DNA, cell or tissue cloning--other than 
with cloned embryos.
  Now, some of our colleagues will tell you that they oppose 
`reproductive cloning,' but then turn around and call for `therapeutic 
cloning' or `SCNT.' Whether intentional or not, to argue that there are 
different types of human cloning creates a distinction that simply does 
not exist.
  All human cloning is `reproductive.' The question is simply: What do 
you do with the young, cloned human? Do you implant it and bring it to 
birth--like the sheep Dolly--or do you research on and kill the young 
human being, as advocates of so-called `therapeutic' cloning would have 
us do?
  Any other so-called human cloning bans, outside of the Brownback-
Landrieu Human Cloning Prohibition Act, are not enforceable. Once the

[[Page 5308]]

young human has been cloned, you cannot distinguish it from any other 
human embryo produced by IVF or embodied sexual intercourse.
  If so-called `therapeutic' human cloning proceeds--and there are no 
laws in the U.S. against it--one of these human clones will be 
implanted, and there is nothing we can do to stop human cloning once we 
reach this point.
  Even if we detected a clonal human pregnancy, nothing could be done 
about it. Any remedies or punishments would be highly unpopular and 
unenforceable.
  As I have already stated, over a quarter of all U.S. Senators have 
agreed to be original cosponsors of this bill, and it is our intention 
to press for a clean vote in the Senate during the 109th Congress.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Baucus, Mr. Grassley, and Mrs. 
        Lincoln):
  S. 661. A bill to amend the Internal Revenue Code of 1986 to provide 
for the modernization of the United States Tax Court, and for other 
purposes, to the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce the Tax Court 
Modernization Act. I am joined in this legislation by the Chairman and 
Ranking Democrat of the Finance Committee, Senator Grassley and Senator 
Baucus, and my colleague Senator Lincoln.
  The United States Tax Court plays an important role in our tax 
system. However, it has been years since Congress has taken a good hard 
look at the Tax Court. This bipartisan piece of legislation will 
improve this Court in a number of ways, and I would like to take a 
moment to summarize some of its provisions.
  First, the TCMA would make minor changes in the Tax Court's 
jurisdiction. These are small changes that will have a big impact on 
the Court's efficiency. For example, the bill would allow the Tax Court 
to hire employees on its own, just as other courts do. Currently, the 
Tax Court is forced to hire through the Executive Branch's Office of 
Personnel Management, entangling the executive power with the judicial 
power. Restoring the constitutional separation of powers in the hiring 
process will increase the independence of the Tax Court.
  Second, the TCMA would improve the way that Tax Court judges receive 
retirement benefits and other non-salary benefits. I believe that Tax 
Court judges should be treated the same way that bankruptcy, Court of 
Federal Claims, and Article III judges are treated when it comes to 
fringe benefits.
  Tax Court judges are often not provided with the same benefits as 
similarly appointed Article I and Article III judges. For example, 
Congress allows Article III, bankruptcy, and Court of Federal Claims 
judges to participate in the Thrift Savings Plan in addition to the 
Civil Service Retirement System, while Tax Court judges are ineligible 
to participate in this program. These disparities in the treatment of 
our Tax Court judges affect the Court's ability to attract and retain 
seasoned judges, as well as talented employees.
  This legislation is non-controversial and is the result of many years 
of work. The Finance Committee passed the bill three separate times 
during the 108th Congress, but it unfortunately was not included in a 
vehicle that made it to enactment. Hopefully, we will be able to get 
these provisions to the President's desk this year.
  I have spent many years observing the Federal judiciary. I have spent 
many years trying to improve the Judicial Branch of our government and 
to make it the very finest court system the world has ever known. I 
look forward to working with my colleagues on the Senate Finance 
Committee on this important piece of legislation. I urge my colleagues, 
both on the Finance Committee and in the Senate as a whole, to support 
this legislation.
  I ask unanimous consent to print in the Record a summary of the 
provisions of the U.S. Tax Court Modernization Act.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         U.S. Tax Court Modernization Act Summary of Provisions

       Jurisdiction of Tax Court over collection due process 
     cases. Currently, if a taxpayer's underlying tax liability 
     does not relate to income taxes or a type of tax over which 
     the Tax Court normally has deficiency jurisdiction, there is 
     no opportunity for Tax Court review and the taxpayer must 
     file in a District Court to obtain review. This provision 
     consolidates judicial review of collection due process 
     activity in the Tax Court.
       Authority for special trial judges to hear and decide 
     certain employment status cases. This provision clarifies 
     that the Tax Court may authorize its special trial judges to 
     enter decisions in employment status cases that are subject 
     to small case proceedings under section 7436(c).
       Confirmation of authority of Tax Court to apply doctrine of 
     equitable recoupment. The common-law principle of equitable 
     recoupment permits a party to assert an otherwise time-barred 
     claim to reduce or defeat an opponent's claim if both claims 
     arise from the same transaction. This provision confirms 
     statutorily that the Tax Court may apply equitable recoupment 
     principles to the same extent as District Courts and the 
     Court of Federal Claims.
       Tax Court filing fee in all cases commenced by filing 
     petition. This provision clarifies, in keeping with current 
     Tax Court procedure, that the Tax Court is authorized to 
     impose a $60 filing fee for all cases commenced by petition. 
     The proposal would eliminate the need to amend section 7451 
     each time the Tax Court is granted new jurisdiction.
       Amendments to appoint employees. Currently, the Tax Court 
     has to go to the executive branch, the Office of Personnel 
     Management, to change a position. It is inappropriate to 
     require the Tax Court to seek permission from the executive 
     since that branch is a party (Commissioner of Internal 
     Revenue) before the Tax Court. This change would allow the 
     Tax Court to be independent in fact and perception from the 
     Executive Branch while ensuring that basic employee rights, 
     protections, and remedies are retained or required in an 
     appropriate way (e.g., whistleblower protection, civil 
     rights, merit system principles, etc.).
       Expanded use of Tax Court practice fee for pro se 
     taxpayers. The Tax Court is authorized to charge 
     practitioners a fee of up to $30 per year and to use these 
     fees to pursue disciplinary matters. The provision expands 
     use of these fees to provide services to pro se taxpayers. 
     Fees could be used for education programs for pro se 
     taxpayers.
       Annuities for survivors of Tax Court judges who are 
     assassinated. The reality is that many people do not like to 
     pay taxes. There is as much risk of a Tax Court judge being 
     assassinated as any other Federal judge. The proposal would 
     conform the treatment of Tax Court judges to District Court 
     judges.
       Cost-of-living adjustments for Tax Court judicial survivor 
     annuities. All Federal employees have this provision except 
     the Tax Court. Survivors of Tax Court judges are subject to 
     an obsolete method of indexing.
       Life insurance coverage for Tax Court judges. This simply 
     codifies current Office of Personnel Management 
     interpretation, as was previously done for District Court 
     judges.
       Cost of life insurance coverage for Tax Court judges age 65 
     or over. Congress established the Tax Court in 1969 and 
     required that Tax Court judges receive the same compensation 
     as District Court judges. The District Court judges were 
     given this benefit to ensure that there was no diminution of 
     their compensation (as required by the Constitution). This 
     provision is in keeping with the original intent of Congress.
       Modification of timing of lump-sum payment of judge's 
     accrued annual leave. District Court judges are allowed to 
     receive a lump-sum payment due to the life-time tenure of 
     Article III judges. Tax Court judges, while they have a 15 
     year term, effectively have a life-time term because they are 
     always subject to recall.
       Participation of Tax Court judges in the Thrift Savings 
     Plan. The proposal would allow Tax Court judges to 
     participate in Thrift Savings Plan. Currently, only 19 
     federal government employees are left out of the Thrift 
     Savings Plan (i.e., Tax Court judges).
       Exemption of teaching compensation of retired judges for 
     limitation on outside earned income. After retirement, Tax 
     Court judges should have the same ability to teach as 
     District Court judges.
       General provisions relating to magistrate judges of the Tax 
     Court. ``Magistrate'' is more recognizable to the American 
     public because it is the term used by Article III courts. The 
     provision changes the term ``Special Trial Judge'' to 
     ``Magistrate Judge of the United States Tax Court'' and 
     provides for alignment of term of office and removal 
     applicable to District Court magistrate judges.
       Annuities to surviving spouses and dependent children of 
     magistrate judges of the Tax Court. This section gives 
     Magistrates/Special Trial Judges the same advantages as Tax 
     Court judges, thus ensuring a greater pool of participants in 
     the fund.

[[Page 5309]]

       Retirement and annuity program for magistrate judges. A 
     retirement and annuity program more aligned with District 
     Court Magistrates and the Tax Court judges is key for 
     attracting and retaining qualified judges.
       Incumbent magistrate judges of the Tax Court. The provision 
     provides transition rules similar to those given to the 
     District Court magistrate judges.
       Provisions for recall. Article III judges are ``self-
     recalling'' (i.e., they decide for themselves whether they 
     are recalled). In contrast, Tax Court judges are subject 
     mandatory recall by the Chief Judge. These provisions 
     authorize the recall in a manner similar to those now 
     applicable to the regular judges of the Court.

  Mr. BAUCUS. Mr. President, I rise today to support the United States 
Tax Court Modernization Act. I am pleased to be an original cosponsor 
of this important legislation along with Senators Hatch, Grassley and 
Lincoln.
  In 1969, Congress elevated the U.S. Tax Court as a Federal court of 
record under Article I of the Constitution of the United States. 
Congress created the Tax Court to provide a judicial forum in which 
affected persons could dispute tax deficiencies determined by the 
Commissioner of the Internal Revenue Service prior to payment of the 
disputed amounts. That means that the Tax Court's jurisdictional 
requirements are, in part, a recognition that lower and middle income 
taxpayers cannot necessarily pay the tax deficiency before taking their 
dispute to court.
  Congress also closely linked the legislation governing the Tax Court 
with the laws governing the Article III District Courts. Unfortunately, 
the Congress did not include the Tax Court in the changes made for 
Article III courts.
  This legislation is designed to restore parity between the Tax Court 
and Article III courts, and to modernize their personnel and pension 
systems.
  I thank Senator Hatch for sponsoring the legislation. I also want to 
thank former Senator Breaux, who sponsored the legislation in the last 
Congress and who was a strong advocate for the Tax Court as well as 
this package of modernization provisions.
  This modernization package is non-controversial and long overdue. In 
the 108th Congress, the Finance Committee passed the Tax Court 
legislation three times: as a stand alone bill, as part of the National 
Employee Savings and Trust Equity Guarantee Act, and as part of the Tax 
Administration Good Government Act.
  The Finance Committee intends to mark-up the United States Tax Court 
Modernization Act next month. I fully expect the Committee to once 
again unanimously pass the legislation. I also hope that, soon after 
Committee action, Majority Leader Frist and Minority Leader Reid will 
bring the United States Tax Court Modernization Act to the floor for 
swift passage.
  The Finance Committee and the House Ways & Means Committee fought to 
retain jurisdiction over the Tax Court as an Article I, rather than an 
Article III court. The Committees recognized the benefit to the 
American taxpayer of having a court composed of technical tax law 
experts. History has proven the wisdom of this decision. The Tax Court 
is composed of dedicated, talented, nonpartisan tax experts. Their 
commitment to public service is noble. We should recognize the 
commitment of our Tax Court judges by acting upon the responsibility 
that the Members before us, our predecessors on the Finance Committee 
and the House Ways and Means Committee, fought to retain by ensuring 
that the Tax Court modernization provisions become law during the 109th 
Congress.
                                 ______
                                 
      By Ms. COLLINS (for herself, Mr. Carper, and Mr. Voinovich):
  S. 662. A bill to reform the postal laws of the United States; to the 
Committee on Homeland Security and Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today with my friend and 
colleague, Senator Carper, to introduce the Postal Accountability and 
Enhancement Act of 2005, a bill designed to help the 225-year-old 
Postal Service meet the challenges of the 21st Century. This 
legislation represents the culmination of a process that began in the 
summer of 2002 when I introduced a bill to establish a Presidential 
Commission charged with examining the problems the Postal Service 
faces, and developing specific recommendations and legislative 
proposals that Congress and the Postal Service could implement.
  I originally introduced the Postal Accountability and Enhancement Act 
last May. In June of 2004, the bill was unanimously reported out of the 
the Homeland Security and Governmental Affairs Committee. That bill, S. 
2468, had the strong endorsements of the National Rural Letter Carriers 
Association, the National Association of Letter Carriers, the National 
Association of Postmasters of the United States, and the Coalition for 
a 21st Century Postal Service--which represents thousands of the major 
mailers, employee groups, small businesses, and other users of the 
mail. It also had the strong bi-partisan support of twenty-two members 
of the United States Senate. Unfortunately, due to a variety of 
factors, my efforts to have the bill considered before the full Senate 
were stalled.
  Since last Fall, Administration representatives have become actively 
engaged in postal reform efforts, and have given me their commitment to 
working with Congress to ensure passage of a reform bill this year. I 
have every expectation that this will be the year comprehensive postal 
reform legislation is signed into law.
  It has long been acknowledged that the financial and operational 
problems confronting the Postal Service are serious. At present, the 
Postal Service has more than $90 billion in unfunded liabilities and 
obligations, which include $1.8 billion in debt to the U.S. Treasury, 
$7.6 billion for Workers' Compensation claims, $3.5 billion for 
retirement costs, and as much as $47 billion to cover retiree health 
care costs. The Government Accountability Office's Comptroller General, 
David Walker, has pointed to the urgent need for ``fundamental reforms 
to minimize the risk of a significant taxpayer bailout or dramatic 
postal rate increases.'' The Postal Service has been on GAO's ``High-
Risk'' List since April of 2001. The Postal Service is at risk of a 
``death spiral'' of decreasing volume and increasing rates that lead to 
further decreases in volume.
  In December of 2003, President Bush announced the creation of a 
bipartisan commission charged with identifying the operational, 
structural, and financial challenges facing the U.S. Postal Service. 
The President charged this commission with examining all significant 
aspects of the Postal Service with the goal of recommending legislative 
and administrative reforms to ensure its long-term viability.
  The President's Commission conducted seven public hearings across the 
country at which they heard from numerous witnesses. On July 31, 2003, 
the Commission released its final report, making 35 legislative and 
administrative recommendations for the reform of the Postal Service.
  As I read through the Commission's report, I was struck by what I 
considered the Commission's wake up call to Congress: its statement 
that ``an incremental approach to Postal Service reform will yield too 
little, too late given the enterprise's bleak fiscal outlook, the depth 
of current debt and unfunded obligations, the downward trend in First-
Class mail volumes and the limited potential of its legacy postal 
network that was built for a bygone era.'' That is a very strong 
statement, and one that challenged both the Postal Service and Congress 
to embrace far-reaching reforms.
  To the relief of many, including myself, the Commission did not 
recommend privatization of the Postal Service. Instead, the Commission 
sought to find a way for the Postal Service to do, as Co-Chair Jim 
Johnson described to me, ``an overwhelmingly better job under the same 
general structure.''
  The Postal Service plays a vital role in our economy. The Service 
itself employs more than 750,000 career employees. Less well known is 
the fact that it is also the linchpin of a $900-billion mailing 
industry that employs 9 million Americans in fields as diverse as 
direct mailing, printing, catalog production, paper manufacturing, and 
financial services. The health of the

[[Page 5310]]

Postal Service is essential to the vitality of thousands of companies 
and the millions that they employ.
  One of the greatest challenges for the Postal Service is the decrease 
in mail volume as business communications, bills and payments move more 
and more to the Internet. The Postal Service has experienced declining 
volumes of First-Class mail for three straight years. This is highly 
significant, given that First-Class mail accounts for 48 percent of 
total mail volume, and the revenue it generates pays for more than two-
thirds of the Postal Service's institutional costs.
  The Postal Service also faces the difficult task of trying to cut 
costs from its nationwide infrastructure and transportation network. 
These costs are difficult to cut. Even though volumes may be 
decreasing, carriers must still deliver six days a week to more than 
139 million addresses.
  As Chairman of the Committee on Homeland Security and Governmental 
Affairs, I held a series of eight hearings, including a joint hearing 
with the House, during which we reviewed the recommendations of the 
President's Commission. The bill Senator Carper and I introduce today 
reflects what the Committee learned from dozens of witnesses.
  First and foremost, the Collins-Carper bill preserves the basic 
features of universal service--affordable rates, frequent delivery, and 
convenient community access to retail postal services. As a Senator 
representing a large, rural State, I want to ensure that my 
constituents living in the northern woods, or on the islands, or in our 
many rural small towns have the same access to postal services as the 
people of our cities. If the Postal Service were no longer to provide 
universal service and deliver mail to every customer, the affordable 
communication link upon which many Americans rely would be jeopardized. 
Most commercial enterprises would find it uneconomical, if not 
impossible, to deliver mail and packages to rural Americans at rates 
charged by the Postal Service.
  The Collins-Carper bill allows the Postal Service to maintain its 
current mail monopoly, and retain its sole access to customer 
mailboxes. It grants the Postal Service Board of Governors the 
authority to set rates for competitive products like Express Mail and 
Parcel Post, as long as these prices do not result in cross subsidy 
from market-dominant products. As a safeguard, our bill establishes a 
30 day prior review period during which the proposed rate changes shall 
be reviewed by the Postal Regulatory Commission.
  It replaces the current lengthy and litigious rate-setting process 
with a rate cap-based structure for market-dominant products such as 
First-Class Mail, periodicals and library mail. This would allow the 
Postal Service to react more quickly to changes in the mailing 
industry. The rate caps would be linked to the Consumer Price Index. 
The goal would be to make rate increases more predictable and less 
frequent and to provide incentives for the Postal Service to operate 
efficiently. Price changes for market-dominant products would be 
subject to a 45 day prior review period by the Postal Regulatory 
Commission.
  Our bill would introduce new safeguards against unfair competition by 
the Postal Service in competitive markets. Subsidization of competitive 
products by market-dominant products would be expressly forbidden, and 
an equitable allocation of institutional costs to competitive products 
would be required.
  The President's Commission recommended that the regulator be granted 
the authority to make changes to the Postal Service's universal service 
obligation and monopoly. The vast majority of the postal community, 
however, shared my belief that these are important policy 
determinations that should be retained by Congress. The Collins-Carper 
bill keeps those public policy decisions in congressional hands.
  The existing Postal Rate Commission would be transformed into the 
Postal Regulatory Commission with greatly enhanced authority. Under 
current law, the Rate Commission has very narrow authority. We wanted 
to ensure that the Postal Service management has both greater latitude 
and stronger oversight. Among other things, the Postal Regulatory 
Commission will have the authority to regulate rates for non-
competitive products and services; ensure financial transparency; 
establish limits on the accumulation of retained earnings by the Postal 
Service; obtain information from the Postal Service, if need be, 
through the use of new subpoena power; and review and act on complaints 
filed by those who believe the Postal Service has exceeded its 
authority. Members of the Postal Regulatory Board will be selected 
solely on the basis of their demonstrated experience and professional 
standing. Senate confirmation of all Board Members will be required.
  To meet the Presidential Commission's call for increased financial 
transparency, the Collins-Carper bill will require the Postal Service 
to file with the Postal Regulatory Commission certain Securities and 
Exchange Commission financial disclosure forms, along with detailed 
annual reports on the status of the Postal Service's pension and 
postretirement health obligations.
  The Governmental Affairs Committee dedicated two hearings to the 
examination of the Commission's workforce-related recommendations. The 
Postal Service is a highly labor intensive organization, using $3 out 
of every $4 to pay the wages and benefits of its employees. Their 
workforce is comprised of more than 700,000 dedicated letter carriers, 
clerks, mail handlers, postmasters, and others, many of whom place 
great value on their right to collectively bargain. Our bill reaffirms 
that right. This bill only makes changes to the bargaining process that 
have been agreed to by both the Postal Service and the four major 
unions. We replace the rarely used fact-finding process with mediation, 
and shorten statutory deadlines for certain phases of the bargaining 
process.
  Additionally, the Collins-Carper bill corrects what I believe to be 
an anomaly in the federal workers' compensation law that results in 
high costs for the Postal Service. Under the Federal Employees 
Compensation Act (FECA), federal employees with dependents are eligible 
for 75 percent of their take-home pay, tax free, plus cost of living 
allowances. In addition, there is no maximum dollar cap on FECA 
payments. As a result, employees often opt not to retire, staying on 
the more generous workers' compensation program permanently.
  According to a March 2003 audit issued by the Postal Service's Office 
of Inspector General, the Postal Service's workers' compensation rolls 
include 81 cases that originated 40 to 50 years ago, with the oldest 
recipient being 102 years old. The IG's office found 778 cases that 
originated 30 to 40 years ago; and 1,189 cases that originated 20 to 29 
years ago.
  The Collins-Carper bill works to protect the financial resources of 
the Postal Service by converting workers' compensation benefits for 
total or partial disability to a retirement annuity when the affected 
employee reaches 65 years of age. This change would reflect the fact 
that disabled postal employees would likely retire at some point were 
they not receiving workers' compensation. I would like to note that the 
average postal employee retires far earlier than age 65, so this is 
still a generous program. It is important to point out that the Postal 
Service has reduced their workplace injury rate by twenty-eight percent 
over the past three years.
  The Collins-Carper bill also puts into place a three-day waiting 
period before an employee is eligible to receive 45 days of 
continuation of pay. This is consistent with every state's workers' 
compensation program that requires a three- to seven-day waiting period 
before benefits are paid.
  To address the President's Commission's recommendation for improved 
executive compensation, this bill will allow the Postal Service to 
raise their overall executive compensation level from Executive Level 1 
to that of the Vice President. This would bring the Postal Service in 
line with authority granted to federal agencies. This new authority 
will be contingent upon the

[[Page 5311]]

development of a meaningful performance appraisal system.
  Our bill has reached an important compromise on the issue of 
workshare discounts. The workshare program was developed by the Postal 
Service and the Postal Rate Commission to enable customers to pay lower 
rates when they perform mail preparation or transportation activities. 
The language in our bill supports the principle that workshare 
discounts should generally not exceed the costs that the Postal Service 
avoids as a result of the worksharing activity. However, the bill 
spells out certain circumstances under which workshare discounts in 
excess of avoided costs are warranted.
  Finally, our bill would repeal a provision of Public Law 108-18 which 
requires that money owed to the Postal Service due to an overpayment 
into the Civil Service Retirement System Fund be held in an escrow 
account. Repealing this provision would essentially ``free up'' $78 
billion over a period of 60 years. These savings would be used to not 
only pay off debt to the U.S. Treasury and to fund health care 
liabilities, but also to mitigate rate increases as well. In fact, 
failure to release these escrow funds could mean, for mailers, a 
double-digit rate increase in 2006--an expense most American businesses 
and many consumers are ill-equipped to afford.
  The bill would also return to the Department of Treasury the 
responsibility for funding CSRS pension benefits relating to the 
military service of postal retirees. No other agency is required to 
make this payment. Ratepayers should not be held responsible for this 
$27 billion obligation.
  The Postal Service has reached a critical juncture. If we are to save 
and strengthen this vital service upon which so many Americans rely for 
communication and their livelihoods, the time to act is now.
  I look forward to working with all of my colleagues in the Senate, 
and House Government Reform and Oversight Committee Chairman Tom Davis, 
who, together with Congressman John McHugh, also recently introduced a 
postal reform bill, H.R. 22.
  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. 662

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Postal 
     Accountability and Enhancement Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal services.

                    TITLE II--MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.

                  TITLE III--MODERN SERVICE STANDARDS

Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.

           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
Sec. 405. International postal arrangements.

                      TITLE V--GENERAL PROVISIONS

Sec. 501. Qualification and term requirements for Governors.
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
Sec. 506. Bonus authority.

                TITLE VI--ENHANCED REGULATORY COMMISSION

Sec. 601. Reorganization and modification of certain provisions 
              relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue 
              subpoenas.
Sec. 603. Appropriations for the Postal Regulatory Commission.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.

                         TITLE VII--EVALUATIONS

Sec. 701. Assessments of ratemaking, classification, and other 
              provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related 
              injuries.
Sec. 705. Study on recycled paper.

   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.

                TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.

                         TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Expanded contracting authority.
Sec. 1003. Report on the United States Postal Inspection Service and 
              the Office of the Inspector General of the United States 
              Postal Service.
Sec. 1004. Sense of Congress regarding Postal Service purchasing 
              reform.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

     SEC. 101. DEFINITIONS.

       Section 102 of title 39, United States Code, is amended by 
     striking ``and'' at the end of paragraph (3), by striking the 
     period at the end of paragraph (4) and inserting a semicolon, 
     and by adding at the end the following:
       ``(5) `postal service' refers to the physical delivery of 
     letters, printed matter, or packages weighing up to 70 
     pounds, including physical acceptance, collection, sorting, 
     transportation, or other functions ancillary thereto;
       ``(6) `product' means a postal service with a distinct cost 
     or market characteristic for which a rate or rates are 
     applied;
       ``(7) `rates', as used with respect to products, includes 
     fees for postal services;
       ``(8) `market-dominant product' or `product in the market-
     dominant category of mail' means a product subject to 
     subchapter I of chapter 36; and
       ``(9) `competitive product' or `product in the competitive 
     category of mail' means a product subject to subchapter II of 
     chapter 36; and
       ``(10) `year', as used in chapter 36 (other than 
     subchapters I and VI thereof), means a fiscal year.''.

     SEC. 102. POSTAL SERVICES.

       (a) In General.--Section 404 of title 39, United States 
     Code, is amended--
       (1) in subsection (a), by striking paragraph (6) and by 
     redesignating paragraphs (7) through (9) as paragraphs (6) 
     through (8), respectively; and
       (2) by adding at the end the following:
       ``(c) Except as provided in section 411, nothing in this 
     title shall be considered to permit or require that the 
     Postal Service provide any special nonpostal or similar 
     services.''.
       (b) Conforming Amendments.--(1) Section 1402(b)(1)(B)(ii) 
     of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 
     10601(b)(1)(B)(ii)) is amended by striking ``404(a)(8)'' and 
     inserting ``404(a)(7)''.
       (2) Section 2003(b)(1) of title 39, United States Code, is 
     amended by striking ``and nonpostal''.

                    TITLE II--MODERN RATE REGULATION

     SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.

       (a) In General.--Chapter 36 of title 39, United States 
     Code, is amended by striking sections 3621 and 3622 and 
     inserting the following:

     ``Sec. 3621. Applicability; definitions

       ``(a) Applicability.--This subchapter shall apply with 
     respect to--
       ``(1) first-class mail letters and sealed parcels;
       ``(2) first-class mail cards;
       ``(3) periodicals;
       ``(4) standard mail;
       ``(5) single-piece parcel post;
       ``(6) media mail;
       ``(7) bound printed matter;
       ``(8) library mail;
       ``(9) special services; and
       ``(10) single-piece international mail,
     subject to any changes the Postal Regulatory Commission may 
     make under section 3642.

[[Page 5312]]

       ``(b) Rule of Construction.--Mail matter referred to in 
     subsection (a) shall, for purposes of this subchapter, be 
     considered to have the meaning given to such mail matter 
     under the mail classification schedule.

     ``Sec. 3622. Modern rate regulation

       ``(a) Authority Generally.--The Postal Regulatory 
     Commission shall, within 12 months after the date of 
     enactment of this section, by regulation establish (and may 
     from time to time thereafter by regulation revise) a modern 
     system for regulating rates and classes for market-dominant 
     products.
       ``(b) Objectives.--Such system shall be designed to achieve 
     the following objectives:
       ``(1) To reduce the administrative burden and increase the 
     transparency of the ratemaking process while affording 
     reasonable opportunities for interested parties to 
     participate in that process.
       ``(2) To create predictability and stability in rates.
       ``(3) To maximize incentives to reduce costs and increase 
     efficiency.
       ``(4) To enhance mail security and deter terrorism by 
     promoting secure, sender-identified mail.
       ``(5) To allow the Postal Service pricing flexibility, 
     including the ability to use pricing to promote intelligent 
     mail and encourage increased mail volume during nonpeak 
     periods.
       ``(6) To assure adequate revenues, including retained 
     earnings, to maintain financial stability and meet the 
     service standards established under section 3691.
       ``(7) To allocate the total institutional costs of the 
     Postal Service equitably between market-dominant and 
     competitive products.
       ``(c) Factors.--In establishing or revising such system, 
     the Postal Regulatory Commission shall take into account--
       ``(1) the establishment and maintenance of a fair and 
     equitable schedule for rates and classification system;
       ``(2) the value of the mail service actually provided each 
     class or type of mail service to both the sender and the 
     recipient, including but not limited to the collection, mode 
     of transportation, and priority of delivery;
       ``(3) the requirement that each class of mail or type of 
     mail service bear the direct and indirect postal costs 
     attributable to each class or type of mail service plus that 
     portion of all other costs of the Postal Service reasonably 
     assignable to such class or type;
       ``(4) the effect of rate increases upon the general public, 
     business mail users, and enterprises in the private sector of 
     the economy engaged in the delivery of mail matter other than 
     letters;
       ``(5) the available alternative means of sending and 
     receiving letters and other mail matter at reasonable costs;
       ``(6) the degree of preparation of mail for delivery into 
     the postal system performed by the mailer and its effect upon 
     reducing costs to the Postal Service;
       ``(7) simplicity of structure for the entire schedule and 
     simple, identifiable relationships between the rates or fees 
     charged the various classes of mail for postal services;
       ``(8) the relative value to the people of the kinds of mail 
     matter entered into the postal system and the desirability 
     and justification for special classifications and services of 
     mail;
       ``(9) the importance of providing classifications with 
     extremely high degrees of reliability and speed of delivery 
     and of providing those that do not require high degrees of 
     reliability and speed of delivery;
       ``(10) the desirability of special classifications from the 
     point of view of both the user and of the Postal Service;
       ``(11) the educational, cultural, scientific, and 
     informational value to the recipient of mail matter;
       ``(12) the need for the Postal Service to increase its 
     efficiency and reduce its costs, including infrastructure 
     costs, to help maintain high quality, affordable, universal 
     postal service; and
       ``(13) the policies of this title as well as such other 
     factors as the Commission determines appropriate.
       ``(d) Requirements.--
       ``(1) In general.--The system for regulating rates and 
     classes for market-dominant products shall--
       ``(A) require the Postal Regulatory Commission to set 
     annual limitations on the percentage changes in rates based 
     on inflation using indices, such as the Consumer Price Index 
     for All Urban Consumers unadjusted for seasonal variation 
     over the 12-month period preceding the date the Postal 
     Service proposes to increase rates;
       ``(B) establish a schedule whereby rates, when necessary 
     and appropriate, would change at regular intervals by 
     predictable amounts;
       ``(C) not later than 45 days before the implementation of 
     any adjustment in rates under this section--
       ``(i) require the Postal Service to provide public notice 
     of the adjustment;
       ``(ii) provide an opportunity for review by the Postal 
     Regulatory Commission;
       ``(iii) provide for the Postal Regulatory Commission to 
     notify the Postal Service of any noncompliance of the 
     adjustment with the limitation under subparagraph (A); and
       ``(iv) require the Postal Service to respond to the notice 
     provided under clause (iii) and describe the actions to be 
     taken to comply with the limitation under subparagraph (A); 
     and
       ``(D) notwithstanding any limitation set under 
     subparagraphs (A) and (C), establish procedures whereby rates 
     may be adjusted on an expedited basis due to unexpected and 
     extraordinary circumstances.
       ``(2) Limitations.--
       ``(A) Classes of mail.--The annual limitations under 
     paragraph (1)(A) shall apply to a class of mail, as defined 
     in the Domestic Mail Classification Schedule as in effect on 
     the date of enactment of the Postal Accountability and 
     Enhancement Act.
       ``(B) Rounding of rates and fees.--Nothing in this 
     subsection shall preclude the Postal Service from rounding 
     rates and fees to the nearest whole integer, if the effect of 
     such rounding does not cause the overall rate increase for 
     any class to exceed the Consumer Price Index for All Urban 
     Consumers.
       ``(e) Workshare Discounts.--
       ``(1) Definition.--In this subsection, the term `workshare 
     discount' refers to rate discounts provided to mailers for 
     the presorting, prebarcoding, handling, or transportation of 
     mail, as further defined by the Postal Regulatory Commission 
     under subsection (a).
       ``(2) Regulations.--As part of the regulations established 
     under subsection (a), the Postal Regulatory Commission shall 
     establish rules for workshare discounts that ensure that such 
     discounts do not exceed the cost that the Postal Service 
     avoids as a result of workshare activity, unless--
       ``(A) the discount is--
       ``(i) associated with a new postal service, a change to an 
     existing postal service, or with a new workshare initiative 
     related to an existing postal service; and
       ``(ii) necessary to induce mailer behavior that furthers 
     the economically efficient operation of the Postal Service 
     and the portion of the discount in excess of the cost that 
     the Postal Service avoids as a result of the workshare 
     activity will be phased out over a limited period of time;
       ``(B) a reduction in the discount would--
       ``(i) lead to a loss of volume in the affected category or 
     subclass of mail and reduce the aggregate contribution to the 
     institutional costs of the Postal Service from the category 
     or subclass subject to the discount below what it otherwise 
     would have been if the discount had not been reduced to costs 
     avoided;
       ``(ii) result in a further increase in the rates paid by 
     mailers not able to take advantage of the discount; or
       ``(iii) impede the efficient operation of the Postal 
     Service;
       ``(C) the amount of the discount above costs avoided--
       ``(i) is necessary to mitigate rate shock; and
       ``(ii) will be phased out over time; or
       ``(D) the discount is provided in connection with 
     subclasses of mail consisting exclusively of mail matter of 
     educational, cultural, scientific, or informational value.
       ``(3) Report.--Whenever the Postal Service establishes or 
     maintains a workshare discount, the Postal Service shall, at 
     the time it publishes the workshare discount rate, submit to 
     the Postal Regulatory Commission a detailed report that--
       ``(A) explains the Postal Service's reasons for 
     establishing or maintaining the rate;
       ``(B) sets forth the data, economic analyses, and other 
     information relied on by the Postal Service to justify the 
     rate; and
       ``(C) certifies that the discount will not adversely affect 
     rates or services provided to users of postal services who do 
     not take advantage of the discount rate.
       ``(f) Transition Rule.--Until regulations under this 
     section first take effect, rates and classes for market-
     dominant products shall remain subject to modification in 
     accordance with the provisions of this chapter and section 
     407, as such provisions were last in effect before the date 
     of enactment of this section.''.
       (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 
     of title 39, United States Code, are repealed.
       (c) Redesignation.--Chapter 36 of title 39, United States 
     Code (as in effect after the amendment made by section 601, 
     but before the amendment made by section 202) is amended by 
     striking the heading for subchapter II and inserting the 
     following:

   ``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS''.

     SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

       Chapter 36 of title 39, United States Code, is amended by 
     inserting after section 3629 the following:

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

     ``Sec. 3631. Applicability; definitions and updates

       ``(a) Applicability.--This subchapter shall apply with 
     respect to--
       ``(1) priority mail;
       ``(2) expedited mail;
       ``(3) bulk parcel post;
       ``(4) bulk international mail; and
       ``(5) mailgrams;
     subject to subsection (d) and any changes the Postal 
     Regulatory Commission may make under section 3642.
       ``(b) Definition.--For purposes of this subchapter, the 
     term `costs attributable', as

[[Page 5313]]

     used with respect to a product, means the direct and indirect 
     postal costs attributable to such product.
       ``(c) Rule of Construction.--Mail matter referred to in 
     subsection (a) shall, for purposes of this subchapter, be 
     considered to have the meaning given to such mail matter 
     under the mail classification schedule.
       ``(d) Limitation.--Notwithstanding any other provision of 
     this section, nothing in this subchapter shall be considered 
     to apply with respect to any product then currently in the 
     market-dominant category of mail.

     ``Sec. 3632. Action of the Governors

       ``(a) Authority To Establish Rates and Classes.--The 
     Governors, with the written concurrence of a majority of all 
     of the Governors then holding office, shall establish rates 
     and classes for products in the competitive category of mail 
     in accordance with the requirements of this subchapter and 
     regulations promulgated under section 3633.
       ``(b) Procedures.--
       ``(1) In general.--Rates and classes shall be established 
     in writing, complete with a statement of explanation and 
     justification, and the date as of which each such rate or 
     class takes effect.
       ``(2) Public notice; review; and compliance.--Not later 
     than 30 days before the date of implementation of any 
     adjustment in rates under this section--
       ``(A) the Governors shall provide public notice of the 
     adjustment and an opportunity for review by the Postal 
     Regulatory Commission;
       ``(B) the Postal Regulatory Commission shall notify the 
     Governors of any noncompliance of the adjustment with section 
     3633; and
       ``(C) the Governors shall respond to the notice provided 
     under subparagraph (B) and describe the actions to be taken 
     to comply with section 3633.
       ``(c) Transition Rule.--Until regulations under section 
     3633 first take effect, rates and classes for competitive 
     products shall remain subject to modification in accordance 
     with the provisions of this chapter and section 407, as such 
     provisions were as last in effect before the date of 
     enactment of this section.

     ``Sec. 3633. Provisions applicable to rates for competitive 
       products

       ``(a) In General.--The Postal Regulatory Commission shall, 
     within 180 days after the date of enactment of this section, 
     promulgate (and may from time to time thereafter revise) 
     regulations to--
       ``(1) prohibit the subsidization of competitive products by 
     market-dominant products;
       ``(2) ensure that each competitive product covers its costs 
     attributable; and
       ``(3) ensure that all competitive products collectively 
     cover their share of the institutional costs of the Postal 
     Service.
       ``(b) Review of Minimum Contribution.--Five years after the 
     date of enactment of this section, and every 5 years 
     thereafter, the Postal Regulatory Commission shall conduct a 
     review to determine whether the institutional costs 
     contribution requirement under subsection (a)(3) should be 
     retained in its current form, modified, or eliminated. In 
     making its determination, the Commission shall consider all 
     relevant circumstances, including the prevailing competitive 
     conditions in the market, and the degree to which any costs 
     are uniquely or disproportionately associated with any 
     competitive products.''.

     SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW 
                   PRODUCTS.

       Subchapter III of chapter 36 of title 39, United States 
     Code, is amended to read as follows:

 ``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

     ``Sec. 3641. Market tests of experimental products

       ``(a) Authority.--
       ``(1) In general.--The Postal Service may conduct market 
     tests of experimental products in accordance with this 
     section.
       ``(2) Provisions waived.--A product shall not, while it is 
     being tested under this section, be subject to the 
     requirements of sections 3622, 3633, or 3642, or regulations 
     promulgated under those sections.
       ``(b) Conditions.--A product may not be tested under this 
     section unless it satisfies each of the following:
       ``(1) Significantly different product.--The product is, 
     from the viewpoint of the mail users, significantly different 
     from all products offered by the Postal Service within the 2-
     year period preceding the start of the test.
       ``(2) Market disruption.--The introduction or continued 
     offering of the product will not create an unfair or 
     otherwise inappropriate competitive advantage for the Postal 
     Service or any mailer, particularly in regard to small 
     business concerns (as defined under subsection (h)).
       ``(3) Correct categorization.--The Postal Service 
     identifies the product, for the purpose of a test under this 
     section, as either market-dominant or competitive, consistent 
     with the criteria under section 3642(b)(1). Costs and 
     revenues attributable to a product identified as competitive 
     shall be included in any determination under section 
     3633(3)(relating to provisions applicable to competitive 
     products collectively). Any test that solely affects products 
     currently classified as competitive, or which provides 
     services ancillary to only competitive products, shall be 
     presumed to be in the competitive product category without 
     regard to whether a similar ancillary product exists for 
     market-dominant products.
       ``(c) Notice.--
       ``(1) In general.--At least 30 days before initiating a 
     market test under this section, the Postal Service shall file 
     with the Postal Regulatory Commission and publish in the 
     Federal Register a notice--
       ``(A) setting out the basis for the Postal Service's 
     determination that the market test is covered by this 
     section; and
       ``(B) describing the nature and scope of the market test.
       ``(2) Safeguards.--For a competitive experimental product, 
     the provisions of section 504(g) shall be available with 
     respect to any information required to be filed under 
     paragraph (1) to the same extent and in the same manner as in 
     the case of any matter described in section 504(g)(1). 
     Nothing in paragraph (1) shall be considered to permit or 
     require the publication of any information as to which 
     confidential treatment is accorded under the preceding 
     sentence (subject to the same exception as set forth in 
     section 504(g)(3)).
       ``(d) Duration.--
       ``(1) In general.--A market test of a product under this 
     section may be conducted over a period of not to exceed 24 
     months.
       ``(2) Extension authority.--If necessary in order to 
     determine the feasibility or desirability of a product being 
     tested under this section, the Postal Regulatory Commission 
     may, upon written application of the Postal Service (filed 
     not later than 60 days before the date as of which the 
     testing of such product would otherwise be scheduled to 
     terminate under paragraph (1)), extend the testing of such 
     product for not to exceed an additional 12 months.
       ``(e) Dollar-Amount Limitation.--
       ``(1) In general.--A product may only be tested under this 
     section if the total revenues that are anticipated, or in 
     fact received, by the Postal Service from such product do not 
     exceed $10,000,000 in any year, subject to paragraph (2) and 
     subsection (g).
       ``(2) Exemption authority.--The Postal Regulatory 
     Commission may, upon written application of the Postal 
     Service, exempt the market test from the limit in paragraph 
     (1) if the total revenues that are anticipated, or in fact 
     received, by the Postal Service from such product do not 
     exceed $50,000,000 in any year, subject to subsection (g). In 
     reviewing an application under this paragraph, the Postal 
     Regulatory Commission shall approve such application if it 
     determines that--
       ``(A) the product is likely to benefit the public and meet 
     an expected demand;
       ``(B) the product is likely to contribute to the financial 
     stability of the Postal Service; and
       ``(C) the product is not likely to result in unfair or 
     otherwise inappropriate competition.
       ``(f) Cancellation.--If the Postal Regulatory Commission at 
     any time determines that a market test under this section 
     fails to meet 1 or more of the requirements of this section, 
     it may order the cancellation of the test involved or take 
     such other action as it considers appropriate. A 
     determination under this subsection shall be made in 
     accordance with such procedures as the Commission shall by 
     regulation prescribe.
       ``(g) Adjustment for Inflation.--For purposes of each year 
     following the year in which occurs the deadline for the 
     Postal Service's first report to the Postal Regulatory 
     Commission under section 3652(a), each dollar amount 
     contained in this section shall be adjusted by the change in 
     the Consumer Price Index for such year (as determined under 
     regulations of the Commission).
       ``(h) Definition of a Small Business Concern.--The criteria 
     used in defining small business concerns or otherwise 
     categorizing business concerns as small business concerns 
     shall, for purposes of this section, be established by the 
     Postal Regulatory Commission in conformance with the 
     requirements of section 3 of the Small Business Act.
       ``(i) Effective Date.--Market tests under this subchapter 
     may be conducted in any year beginning with the first year in 
     which occurs the deadline for the Postal Service's first 
     report to the Postal Regulatory Commission under section 
     3652(a).

     ``Sec. 3642. New products and transfers of products between 
       the market-dominant and competitive categories of mail

       ``(a) In General.--Upon request of the Postal Service or 
     users of the mails, or upon its own initiative, the Postal 
     Regulatory Commission may change the list of market-dominant 
     products under section 3621 and the list of competitive 
     products under section 3631 by adding new products to the 
     lists, removing products from the lists, or transferring 
     products between the lists.
       ``(b) Criteria.--All determinations by the Postal 
     Regulatory Commission under subsection (a) shall be made in 
     accordance with the following criteria:
       ``(1) The market-dominant category of products shall 
     consist of each product in the sale of which the Postal 
     Service exercises sufficient market power that it can 
     effectively set the price of such product substantially above 
     costs, raise prices significantly, decrease quality, or 
     decrease output, without

[[Page 5314]]

     risk of losing substantial business to other firms offering 
     similar products. The competitive category of products shall 
     consist of all other products.
       ``(2) Exclusion of products covered by postal monopoly.--A 
     product covered by the postal monopoly shall not be subject 
     to transfer under this section from the market-dominant 
     category of mail. For purposes of the preceding sentence, the 
     term `product covered by the postal monopoly' means any 
     product the conveyance or transmission of which is reserved 
     to the United States under section 1696 of title 18, subject 
     to the same exception as set forth in the last sentence of 
     section 409(e)(1).
       ``(3) Additional considerations.--In making any decision 
     under this section, due regard shall be given to--
       ``(A) the availability and nature of enterprises in the 
     private sector engaged in the delivery of the product 
     involved;
       ``(B) the views of those who use the product involved on 
     the appropriateness of the proposed action; and
       ``(C) the likely impact of the proposed action on small 
     business concerns (within the meaning of section 3641(h)).
       ``(c) Transfers of Subclasses and Other Subordinate Units 
     Allowable.--Nothing in this title shall be considered to 
     prevent transfers under this section from being made by 
     reason of the fact that they would involve only some (but not 
     all) of the subclasses or other subordinate units of the 
     class of mail or type of postal service involved (without 
     regard to satisfaction of minimum quantity requirements 
     standing alone).
       ``(d) Notification and Publication Requirements.--
       ``(1) Notification requirement.--The Postal Service shall, 
     whenever it requests to add a product or transfer a product 
     to a different category, file with the Postal Regulatory 
     Commission and publish in the Federal Register a notice 
     setting out the basis for its determination that the product 
     satisfies the criteria under subsection (b) and, in the case 
     of a request to add a product or transfer a product to the 
     competitive category of mail, that the product meets the 
     regulations promulgated by the Postal Regulatory Commission 
     under section 3633. The provisions of section 504(g) shall be 
     available with respect to any information required to be 
     filed.
       ``(2) Publication requirement.--The Postal Regulatory 
     Commission shall, whenever it changes the list of products in 
     the market-dominant or competitive category of mail, 
     prescribe new lists of products. The revised lists shall 
     indicate how and when any previous lists (including the lists 
     under sections 3621 and 3631) are superseded, and shall be 
     published in the Federal Register.
       ``(e) Prohibition.--Except as provided in section 3641, no 
     product that involves the physical delivery of letters, 
     printed matter, or packages may be offered by the Postal 
     Service unless it has been assigned to the market-dominant or 
     competitive category of mail (as appropriate) either--
       ``(1) under this subchapter; or
       ``(2) by or under any other provision of law.''.

     SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

       (a) Redesignation.--Chapter 36 of title 39, United States 
     Code (as in effect before the amendment made by subsection 
     (b)) is amended--
       (1) by striking the heading for subchapter IV and inserting 
     the following:

``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW''; and

       (2) by striking the heading for subchapter V and inserting 
     the following:

                      ``SUBCHAPTER VI--GENERAL''.

       (b) Reports and Compliance.--Chapter 36 of title 39, United 
     States Code, is amended by inserting after subchapter III the 
     following:

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

     ``Sec. 3651. Annual reports by the Commission

       ``(a) In General.--The Postal Regulatory Commission shall 
     submit an annual report to the President and the Congress 
     concerning the operations of the Commission under this title, 
     including the extent to which regulations are achieving the 
     objectives under sections 3622, 3633, and 3691.
       ``(b) Information From Postal Service.--The Postal Service 
     shall provide the Postal Regulatory Commission with such 
     information as may, in the judgment of the Commission, be 
     necessary in order for the Commission to prepare its reports 
     under this section.

     ``Sec. 3652. Annual reports to the Commission

       ``(a) Costs, Revenues, Rates, and Service.--Except as 
     provided in subsection (c), the Postal Service shall, no 
     later than 90 days after the end of each year, prepare and 
     submit to the Postal Regulatory Commission a report (together 
     with such nonpublic annex to the report as the Commission may 
     require under subsection (e))--
       ``(1) which shall analyze costs, revenues, rates, and 
     quality of service in sufficient detail to demonstrate that 
     all products during such year complied with all applicable 
     requirements of this title; and
       ``(2) which shall, for each market-dominant product 
     provided in such year, provide--
       ``(A) product information, including mail volumes; and
       ``(B) measures of the service afforded by the Postal 
     Service in connection with such product, including--
       ``(i) the level of service (described in terms of speed of 
     delivery and reliability) provided; and
       ``(ii) the degree of customer satisfaction with the service 
     provided.
     Before submitting a report under this subsection (including 
     any annex to the report and the information required under 
     subsection (b)), the Postal Service shall have the 
     information contained in such report (and annex) audited by 
     the Inspector General. The results of any such audit shall be 
     submitted along with the report to which it pertains.
       ``(b) Information Relating to Workshare Discounts.--The 
     Postal Service shall include, in each report under subsection 
     (a), the following information with respect to each market-
     dominant product for which a workshare discount was in effect 
     during the period covered by such report:
       ``(1) The per-item cost avoided by the Postal Service by 
     virtue of such discount.
       ``(2) The percentage of such per-item cost avoided that the 
     per-item workshare discount represents.
       ``(3) The per-item contribution made to institutional 
     costs.
       ``(c) Service Agreements and Market Tests.--In carrying out 
     subsections (a) and (b) with respect to service agreements 
     and experimental products offered through market tests under 
     section 3641 in a year, the Postal Service--
       ``(1) may report summary data on the costs, revenues, and 
     quality of service by service agreement and market test; and
       ``(2) shall report such data as the Postal Regulatory 
     Commission requires.
       ``(d) Supporting Matter.--The Postal Regulatory Commission 
     shall have access, in accordance with such regulations as the 
     Commission shall prescribe, to the working papers and any 
     other supporting matter of the Postal Service and the 
     Inspector General in connection with any information 
     submitted under this section.
       ``(e) Content and Form of Reports.--
       ``(1) In general.--The Postal Regulatory Commission shall, 
     by regulation, prescribe the content and form of the public 
     reports (and any nonpublic annex and supporting matter 
     relating to the report) to be provided by the Postal Service 
     under this section. In carrying out this subsection, the 
     Commission shall give due consideration to--
       ``(A) providing the public with timely, adequate 
     information to assess the lawfulness of rates charged;
       ``(B) avoiding unnecessary or unwarranted administrative 
     effort and expense on the part of the Postal Service; and
       ``(C) protecting the confidentiality of commercially 
     sensitive information.
       ``(2) Revised requirements.--The Commission may, on its own 
     motion or on request of an interested party, initiate 
     proceedings (to be conducted in accordance with regulations 
     that the Commission shall prescribe) to improve the quality, 
     accuracy, or completeness of Postal Service data required by 
     the Commission under this subsection whenever it shall appear 
     that--
       ``(A) the attribution of costs or revenues to products has 
     become significantly inaccurate or can be significantly 
     improved;
       ``(B) the quality of service data has become significantly 
     inaccurate or can be significantly improved; or
       ``(C) such revisions are, in the judgment of the 
     Commission, otherwise necessitated by the public interest.
       ``(f) Confidential Information.--
       ``(1) In general.--If the Postal Service determines that 
     any document or portion of a document, or other matter, which 
     it provides to the Postal Regulatory Commission in a 
     nonpublic annex under this section or under subsection (d) 
     contains information which is described in section 410(c) of 
     this title, or exempt from public disclosure under section 
     552(b) of title 5, the Postal Service shall, at the time of 
     providing such matter to the Commission, notify the 
     Commission of its determination, in writing, and describe 
     with particularity the documents (or portions of documents) 
     or other matter for which confidentiality is sought and the 
     reasons therefor.
       ``(2) Treatment.--Any information or other matter described 
     in paragraph (1) to which the Commission gains access under 
     this section shall be subject to paragraphs (2) and (3) of 
     section 504(g) in the same way as if the Commission had 
     received notification with respect to such matter under 
     section 504(g)(1).
       ``(g) Other Reports.--The Postal Service shall submit to 
     the Postal Regulatory Commission, together with any other 
     submission that the Postal Service is required to make under 
     this section in a year, copies of its then most recent--
       ``(1) comprehensive statement under section 2401(e);
       ``(2) strategic plan under section 2802;
       ``(3) performance plan under section 2803; and
       ``(4) program performance reports under section 2804.

[[Page 5315]]



     ``Sec. 3653. Annual determination of compliance

       ``(a) Opportunity for Public Comment.--After receiving the 
     reports required under section 3652 for any year, the Postal 
     Regulatory Commission shall promptly provide an opportunity 
     for comment on such reports by users of the mails, affected 
     parties, and an officer of the Commission who shall be 
     required to represent the interests of the general public.
       ``(b) Determination of Compliance or Noncompliance.--Not 
     later than 90 days after receiving the submissions required 
     under section 3652 with respect to a year, the Postal 
     Regulatory Commission shall make a written determination as 
     to--
       ``(1) whether any rates or fees in effect during such year 
     (for products individually or collectively) were not in 
     compliance with applicable provisions of this chapter (or 
     regulations promulgated thereunder); or
       ``(2) whether any service standards in effect during such 
     year were not met.
     If, with respect to a year, no instance of noncompliance is 
     found under this subsection to have occurred in such year, 
     the written determination shall be to that effect.
       ``(c) If Any Noncompliance Is Found.--If, for a year, a 
     timely written determination of noncompliance is made under 
     subsection (b), the Postal Regulatory Commission shall take 
     any appropriate remedial action authorized by section 
     3662(c).
       ``(d) Rebuttable Presumption.--A timely written 
     determination described in the last sentence of subsection 
     (b) shall, for purposes of any proceeding under section 3662, 
     create a rebuttable presumption of compliance by the Postal 
     Service (with regard to the matters described under 
     paragraphs (1) and (2) of subsection (b)) during the year to 
     which such determination relates.''.

     SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

       Chapter 36 of title 39, United States Code, is amended by 
     striking sections 3662 and 3663 and inserting the following:

     ``Sec. 3662. Rate and service complaints

       ``(a) In General.--Any person (including an officer of the 
     Postal Regulatory Commission representing the interests of 
     the general public) who believes the Postal Service is not 
     operating in conformance with the requirements of chapter 1, 
     4, or 6, or this chapter (or regulations promulgated under 
     any of those chapters) may lodge a complaint with the Postal 
     Regulatory Commission in such form and manner as the 
     Commission may prescribe.
       ``(b) Prompt Response Required.--
       ``(1) In general.--The Postal Regulatory Commission shall, 
     within 90 days after receiving a complaint under subsection 
     (a), either--
       ``(A) begin proceedings on such complaint; or
       ``(B) issue an order dismissing the complaint (together 
     with a statement of the reasons therefor).
       ``(2) Treatment of complaints not timely acted on.--For 
     purposes of section 3663, any complaint under subsection (a) 
     on which the Commission fails to act in the time and manner 
     required by paragraph (1) shall be treated in the same way as 
     if it had been dismissed under an order issued by the 
     Commission on the last day allowable for the issuance of such 
     order under paragraph (1).
       ``(c) Action Required If Complaint Found To Be Justified.--
     If the Postal Regulatory Commission finds the complaint to be 
     justified, it shall order that the Postal Service take such 
     action as the Commission considers appropriate in order to 
     achieve compliance with the applicable requirements and to 
     remedy the effects of any noncompliance including ordering 
     unlawful rates to be adjusted to lawful levels, ordering the 
     cancellation of market tests, ordering the Postal Service to 
     discontinue providing loss-making products, and requiring the 
     Postal Service to make up for revenue shortfalls in 
     competitive products.
       ``(d) Authority To Order Fines in Cases of Deliberate 
     Noncompliance.--In addition, in cases of deliberate 
     noncompliance by the Postal Service with the requirements of 
     this title, the Postal Regulatory Commission may order, based 
     on the nature, circumstances, extent, and seriousness of the 
     noncompliance, a fine (in the amount specified by the 
     Commission in its order) for each incidence of noncompliance. 
     Fines resulting from the provision of competitive products 
     shall be paid out of the Competitive Products Fund 
     established in section 2011. All receipts from fines imposed 
     under this subsection shall be deposited in the general fund 
     of the Treasury of the United States.

     ``Sec. 3663. Appellate review

       ``A person, including the Postal Service, adversely 
     affected or aggrieved by a final order or decision of the 
     Postal Regulatory Commission may, within 30 days after such 
     order or decision becomes final, institute proceedings for 
     review thereof by filing a petition in the United States 
     Court of Appeals for the District of Columbia. The court 
     shall review the order or decision in accordance with section 
     706 of title 5, and chapter 158 and section 2112 of title 28, 
     on the basis of the record before the Commission.

     ``Sec. 3664. Enforcement of orders

       ``The several district courts have jurisdiction 
     specifically to enforce, and to enjoin and restrain the 
     Postal Service from violating, any order issued by the Postal 
     Regulatory Commission.''.

     SEC. 206. CLERICAL AMENDMENT.

       Chapter 36 of title 39, United States Code, is amended by 
     striking the heading and analysis for such chapter and 
     inserting the following:

           ``CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

    ``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``[3623. Repealed.]
``[3624. Repealed.]
``[3625. Repealed.]
``3626. Reduced Rates.
``3627. Adjusting free rates.
``[3628. Repealed.]
``3629. Reduced rates for voter registration purposes.

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
``3634. Assumed Federal income tax on competitive products.

 ``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
              dominant and competitive categories of mail.

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.

    ``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

``3661. Postal Services.
``3662. Rate and service complaints.
``3663. Appellate review.
``3664. Enforcement of orders.

                        ``SUBCHAPTER VI--GENERAL

``3681. Reimbursement.
``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``3691. Establishment of modern service standards.''.

                  TITLE III--MODERN SERVICE STANDARDS

     SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

       Chapter 36 of title 39, United States Code, as amended by 
     this Act, is further amended by adding at the end the 
     following:

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

     ``Sec. 3691. Establishment of modern service standards

       ``(a) Authority Generally.--Not later than 12 months after 
     the date of enactment of this section, the Postal Service 
     shall, in consultation with the Postal Regulatory Commission, 
     by regulation establish (and may from time to time thereafter 
     by regulation revise) a set of service standards for market-
     dominant products consistent with the Postal Service's 
     universal service obligation as defined in sections 101 (a) 
     and (b) and 403.
       ``(b) Objectives.--Such standards shall be designed to 
     achieve the following objectives:
       ``(1) To enhance the value of postal services to both 
     senders and recipients.
       ``(2) To preserve regular and effective access to postal 
     services in all communities, including those in rural areas 
     or where post offices are not self-sustaining.
       ``(3) To reasonably assure Postal Service customers 
     delivery reliability, speed and frequency consistent with 
     reasonable rates and best business practices.
       ``(4) To provide a system of objective external performance 
     measurements for each market-dominant product as a basis for 
     measurement of Postal Service performance.
       ``(c) Factors.--In establishing or revising such standards, 
     the Postal Service shall take into account--
       ``(1) the actual level of service that Postal Service 
     customers receive under any service guidelines previously 
     established by the Postal Service or service standards 
     established under this section;
       ``(2) the degree of customer satisfaction with Postal 
     Service performance in the acceptance, processing and 
     delivery of mail;
       ``(3) the needs of Postal Service customers, including 
     those with physical impairments;
       ``(4) mail volume and revenues projected for future years;
       ``(5) the projected growth in the number of addresses the 
     Postal Service will be required to serve in future years;
       ``(6) the current and projected future cost of serving 
     Postal Service customers;

[[Page 5316]]

       ``(7) the effect of changes in technology, demographics, 
     and population distribution on the efficient and reliable 
     operation of the postal delivery system; and
       ``(8) the policies of this title and such other factors as 
     the Commission determines appropriate.
       ``(d) Review.--The regulations promulgated pursuant to this 
     section (and any revisions thereto) shall be subject to 
     review upon complaint under sections 3662 and 3663.

     SEC. 302. POSTAL SERVICE PLAN.

       (a) In General.--Within 6 months after the establishment of 
     the service standards under section 3691 of title 39, United 
     States Code, as added by this Act, the Postal Service shall, 
     in consultation with the Postal Regulatory Commission, 
     develop and submit to Congress a plan for meeting those 
     standards.
       (b) Contents.--The plan under this section shall--
       (1) establish performance goals;
       (2) describe any changes to the Postal Service's 
     processing, transportation, delivery, and retail networks 
     necessary to allow the Postal Service to meet the performance 
     goals;
       (3) describe any changes to planning and performance 
     management documents previously submitted to Congress to 
     reflect new performance goals; and
       (4) contain the matters relating to postal facilities 
     provided under subsection (c).
       (c) Postal Facilities.--
       (1) Findings.--Congress finds that--
       (A) the Postal Service has more than 400 logistics 
     facilities, separate from its post office network;
       (B) as noted by the President's Commission on the United 
     States Postal Service, the Postal Service has more facilities 
     than it needs and the streamlining of this distribution 
     network can pave the way for the potential consolidation of 
     sorting facilities and the elimination of excess costs;
       (C) the Postal Service has always revised its distribution 
     network to meet changing conditions and is best suited to 
     address its operational needs; and
       (D) Congress strongly encourages the Postal Service to--
       (i) expeditiously move forward in its streamlining efforts; 
     and
       (ii) keep unions, management associations, and local 
     elected officials informed as an essential part of this 
     effort and abide by any procedural requirements contained in 
     the national bargaining agreements.
       (2) In general.--The Postal Service plan shall include a 
     description of--
       (A) the long-term vision of the Postal Service for 
     rationalizing its infrastructure and workforce; and
       (B) how the Postal Service intends to implement that 
     vision.
       (3) Content of facilities plan.--The plan under this 
     subsection shall include--
       (A) a strategy for how the Postal Service intends to 
     rationalize the postal facilities network and remove excess 
     processing capacity and space from the network, including 
     estimated timeframes, criteria, and processes to be used for 
     making changes to the facilities network, and the process for 
     engaging policy makers and the public in related decisions;
       (B) a discussion of what impact any facility changes may 
     have on the postal workforce and whether the Postal Service 
     has sufficient flexibility to make needed workforce changes; 
     and
       (C) an identification of anticipated costs, cost savings, 
     and other benefits associated with the infrastructure 
     rationalization alternatives discussed in the plan.
       (4) Annual reports.--
       (A) In general.--Not later than 90 days after the end of 
     each fiscal year, the Postal Service shall prepare and submit 
     a report to Congress on how postal decisions have impacted or 
     will impact rationalization plans.
       (B) Contents.--Each report under this paragraph shall 
     include--
       (i) an account of actions taken during the preceding fiscal 
     year to improve the efficiency and effectiveness of its 
     processing, transportation, and distribution networks while 
     preserving the timely delivery of postal services, including 
     overall estimated costs and cost savings;
       (ii) an account of actions taken to identify any excess 
     capacity within its processing, transportation, and 
     distribution networks and implement savings through 
     realignment or consolidation of facilities including overall 
     estimated costs and cost savings;
       (iii) an estimate of how postal decisions related to mail 
     changes, security, automation initiatives, worksharing, 
     information technology systems, excess capacity, 
     consolidating and closing facilities, and other areas will 
     impact rationalization plans;
       (iv) identification of any statutory or regulatory 
     obstacles that prevented or will prevent or hinder the Postal 
     Service from taking action to realign or consolidate 
     facilities; and
       (v) such additional topics and recommendations as the 
     Postal Service considers appropriate.
       (d) Alternate Retail Options.--The Postal Service plan 
     shall include plans to expand and market retail access to 
     postal services, in addition to post offices, including--
       (1) vending machines;
       (2) the Internet;
       (3) Postal Service employees on delivery routes;
       (4) retail facilities in which overhead costs are shared 
     with private businesses and other government agencies; or
       (5) any other nonpost office access channel providing 
     market retail access to postal services.
       (e) Reemployment Assistance and Retirement Benefits.--The 
     Postal Service plan shall include--
       (1) a plan under which reemployment assistance shall be 
     afforded to employees displaced as a result of the automation 
     of any of its functions or the closing and consolidation of 
     any of its facilities; and
       (2) a plan, developed in consultation with the Office of 
     Personnel Management, to offer early retirement benefits.
       (f) Inspector General Report.--
       (1) In general.--Before submitting the plan under 
     subsection (a) and each annual report under subsection (c) to 
     Congress, the Postal Service shall submit the plan and each 
     annual report to the Inspector General of the United States 
     Postal Service in a timely manner to carry out this 
     subsection.
       (2) Report.--The Inspector General shall prepare a report 
     describing the extent to which the Postal Service plan and 
     each annual report under subsection (c)--
       (A) are consistent with the continuing obligations of the 
     Postal Service under title 39, United States Code;
       (B) provide for the Postal Service to meet the service 
     standards established under section 3691 of title 39, United 
     States Code; and
       (C) allow progress toward improving overall efficiency and 
     effectiveness consistent with the need to maintain universal 
     postal service at affordable rates.
       (g) Continued Authority.--Nothing in this section shall be 
     construed to prohibit the Postal Service from implementing 
     any change to its processing, transportation, delivery, and 
     retail networks under any authority granted to the Postal 
     Service for those purposes.

           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

     SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

       (a) Provisions Relating to Postal Service Competitive 
     Products Fund and Related Matters.--
       (1) In general.--Chapter 20 of title 39, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 2011. Provisions relating to competitive products

       ``(a)(1) In this subsection, the term `costs attributable' 
     has the meaning given such term by section 3631.
       ``(2) There is established in the Treasury of the United 
     States a revolving fund, to be called the Postal Service 
     Competitive Products Fund, which shall be available to the 
     Postal Service without fiscal year limitation for the payment 
     of--
       ``(A) costs attributable to competitive products; and
       ``(B) all other costs incurred by the Postal Service, to 
     the extent allocable to competitive products.
       ``(b) There shall be deposited in the Competitive Products 
     Fund, subject to withdrawal by the Postal Service--
       ``(1) revenues from competitive products;
       ``(2) amounts received from obligations issued by Postal 
     Service under subsection (e);
       ``(3) interest and dividends earned on investments of the 
     Competitive Products Fund; and
       ``(4) any other receipts of the Postal Service (including 
     from the sale of assets), to the extent allocable to 
     competitive products.
       ``(c) If the Postal Service determines that the moneys of 
     the Competitive Products Fund are in excess of current needs, 
     the Postal Service may request the investment of such amounts 
     as the Postal Service determines advisable by the Secretary 
     of the Treasury in obligations of, or obligations guaranteed 
     by, the Government of the United States, and, with the 
     approval of the Secretary, in such other obligations or 
     securities as the Postal Service determines appropriate.
       ``(d) With the approval of the Secretary of the Treasury, 
     the Postal Service may deposit moneys of the Competitive 
     Products Fund in any Federal Reserve bank, any depository for 
     public funds, or in such other places and in such manner as 
     the Postal Service and the Secretary may mutually agree.
       ``(e)(1)(A) Subject to the limitations specified in section 
     2005(a), the Postal Service is authorized to borrow money and 
     to issue and sell such obligations as the Postal Service 
     determines necessary to provide for competitive products and 
     deposit such amounts in the Competitive Products Fund.
       ``(B) Subject to paragraph (5), any borrowings by the 
     Postal Service under subparagraph (A) shall be supported and 
     serviced by--
       ``(i) the revenues and receipts from competitive products 
     and the assets related to the provision of competitive 
     products (as determined under subsection (h)); or
       ``(ii) for purposes of any period before accounting 
     practices and principles under subsection (h) have been 
     established and applied, the best information available from 
     the Postal Service, including the audited statements required 
     by section 2008(e).

[[Page 5317]]

       ``(2) The Postal Service may enter into binding covenants 
     with the holders of such obligations, and with any trustee 
     under any agreement entered into in connection with the 
     issuance of such obligations with respect to--
       ``(A) the establishment of reserve, sinking, and other 
     funds;
       ``(B) application and use of revenues and receipts of the 
     Competitive Products Fund;
       ``(C) stipulations concerning the subsequent issuance of 
     obligations or the execution of leases or lease purchases 
     relating to properties of the Postal Service; and
       ``(D) such other matters as the Postal Service, considers 
     necessary or desirable to enhance the marketability of such 
     obligations.
       ``(3) Obligations issued by the Postal Service under this 
     subsection--
       ``(A) shall be in such forms and denominations;
       ``(B) shall be sold at such times and in such amounts;
       ``(C) shall mature at such time or times;
       ``(D) shall be sold at such prices;
       ``(E) shall bear such rates of interest;
       ``(F) may be redeemable before maturity in such manner, at 
     such times, and at such redemption premiums;
       ``(G) may be entitled to such relative priorities of claim 
     on the assets of the Postal Service with respect to principal 
     and interest payments; and
       ``(H) shall be subject to such other terms and conditions,
     as the Postal Service determines.
       ``(4) Obligations issued by the Postal Service under this 
     subsection--
       ``(A) shall be negotiable or nonnegotiable and bearer or 
     registered instruments, as specified therein and in any 
     indenture or covenant relating thereto;
       ``(B) shall contain a recital that such obligations are 
     issued under this subsection, and such recital shall be 
     conclusive evidence of the regularity of the issuance and 
     sale of such obligations and of their validity;
       ``(C) shall be lawful investments and may be accepted as 
     security for all fiduciary, trust, and public funds, the 
     investment or deposit of which shall be under the authority 
     or control of any officer or agency of the Government of the 
     United States, and the Secretary of the Treasury or any other 
     officer or agency having authority over or control of any 
     such fiduciary, trust, or public funds, may at any time sell 
     any of the obligations of the Postal Service acquired under 
     this section;
       ``(D) shall not be exempt either as to principal or 
     interest from any taxation now or hereafter imposed by any 
     State or local taxing authority; and
       ``(E) except as provided in section 2006(c), shall not be 
     obligations of, nor shall payment of the principal thereof or 
     interest thereon be guaranteed by, the Government of the 
     United States, and the obligations shall so plainly state.
       ``(5)(A) Subject to subparagraph (B), the Postal Service 
     shall make payments of principal, or interest, or both on 
     obligations issued under this subsection from--
       ``(i) revenues and receipts from competitive products and 
     assets related to the provision of competitive products (as 
     determined under subsection (h)); or
       ``(ii) for purposes of any period before accounting 
     practices and principles under subsection (h) have been 
     established and applied, the best information available, 
     including the audited statements required by section 2008(e).
       ``(B) Based on the audited financial statements for the 
     most recently completed fiscal year, the total assets of the 
     Competitive Products Fund may not be less than the amount 
     determined by multiplying--
       ``(i) the quotient resulting from the total revenue of the 
     Competitive Products Fund divided by the total revenue of the 
     Postal Service; and
       ``(ii) the total assets of the Postal Service.
       ``(f) The receipts and disbursements of the Competitive 
     Products Fund shall be accorded the same budgetary treatment 
     as is accorded to receipts and disbursements of the Postal 
     Service Fund under section 2009a.
       ``(g) A judgment (or settlement of a claim) against the 
     Postal Service or the Government of the United States shall 
     be paid out of the Competitive Products Fund to the extent 
     that the judgment or claim arises out of activities of the 
     Postal Service in the provision of competitive products.
       ``(h)(1)(A) The Secretary of the Treasury, in consultation 
     with the Postal Service and an independent, certified public 
     accounting firm and other advisors as the Secretary considers 
     appropriate, shall develop recommendations regarding--
       ``(i) the accounting practices and principles that should 
     be followed by the Postal Service with the objectives of--
       ``(I) identifying and valuing the assets and liabilities of 
     the Postal Service associated with providing competitive 
     products, including the capital and operating costs incurred 
     by the Postal Service in providing such competitive products; 
     and
       ``(II) subject to subsection (e)(5), preventing the 
     subsidization of such products by market-dominant products; 
     and
       ``(ii) the substantive and procedural rules that should be 
     followed in determining the assumed Federal income tax on 
     competitive products income of the Postal Service for any 
     year (within the meaning of section 3634).
       ``(B) Not earlier than 6 months after the date of enactment 
     of this section, and not later than 12 months after such 
     date, the Secretary of the Treasury shall submit the 
     recommendations under subparagraph (A) to the Postal 
     Regulatory Commission.
       ``(2)(A) Upon receiving the recommendations of the 
     Secretary of the Treasury under paragraph (1), the Commission 
     shall give interested parties, including the Postal Service, 
     users of the mails, and an officer of the Commission who 
     shall be required to represent the interests of the general 
     public, an opportunity to present their views on those 
     recommendations through submission of written data, views, or 
     arguments with or without opportunity for oral presentation, 
     or in such other manner as the Commission considers 
     appropriate.
       ``(B)(i) After due consideration of the views and other 
     information received under subparagraph (A), the Commission 
     shall by rule--
       ``(I) provide for the establishment and application of the 
     accounting practices and principles which shall be followed 
     by the Postal Service;
       ``(II) provide for the establishment and application of the 
     substantive and procedural rules described under paragraph 
     (1)(A)(ii); and
       ``(III) provide for the submission by the Postal Service to 
     the Postal Regulatory Commission of annual and other periodic 
     reports setting forth such information as the Commission may 
     require.
       ``(ii) Final rules under this subparagraph shall be issued 
     not later than 12 months after the date on which 
     recommendations are submitted under paragraph (1) (or by such 
     later date on which the Commission and the Postal Service may 
     agree). The Commission may revise such rules.
       ``(C)(i) Reports described under subparagraph (B)(i)(III) 
     shall be submitted at such time and in such form, and shall 
     include such information, as the Commission by rule requires.
       ``(ii) The Commission may, on its own motion or on request 
     of an interested party, initiate proceedings (to be conducted 
     in accordance with such rules as the Commission shall 
     prescribe) to improve the quality, accuracy, or completeness 
     of Postal Service information under subparagraph (B)(i)(III) 
     whenever it shall appear that--
       ``(I) the quality of the information furnished in those 
     reports has become significantly inaccurate or can be 
     significantly improved; or
       ``(II) such revisions are, in the judgment of the 
     Commission, otherwise necessitated by the public interest.
       ``(D) A copy of each report described under subparagraph 
     (B)(i)(III) shall be submitted by the Postal Service to the 
     Secretary of the Treasury and the Inspector General of the 
     United States Postal Service.
       ``(i)(1) The Postal Service shall submit an annual report 
     to the Secretary of the Treasury concerning the operation of 
     the Competitive Products Fund. The report shall address such 
     matters as risk limitations, reserve balances, allocation or 
     distribution of moneys, liquidity requirements, and measures 
     to safeguard against losses.
       ``(2) A copy of the most recent report submitted under 
     paragraph (1) shall be included in the annual report 
     submitted by the Postal Regulatory Commission under section 
     3652(g).''.
       (2) Clerical amendment.--The table of sections for chapter 
     20 of title 39, United States Code, is amended by adding 
     after the item relating to section 2010 the following:

``2011. Provisions relating to competitive products.''.

       (b) Technical and Conforming Amendments.--
       (1) Definition.--Section 2001 of title 39, United States 
     Code, is amended by striking ``and'' at the end of paragraph 
     (1), by redesignating paragraph (2) as paragraph (3), and by 
     inserting after paragraph (1) the following:
       ``(2) Competitive products fund.--The term `Competitive 
     Products Fund' means the Postal Service Competitive Products 
     Fund established by section 2011; and''.
       (2) Capital of the postal service.--Section 2002(b) of 
     title 39, United States Code, is amended by striking 
     ``Fund,'' and inserting ``Fund and the balance in the 
     Competitive Products Fund,''.
       (3) Postal service fund.--
       (A) Purposes for which available.--Section 2003(a) of title 
     39, United States Code, is amended by striking ``title.'' and 
     inserting ``title (other than any of the purposes, functions, 
     or powers for which the Competitive Products Fund is 
     available).''.
       (B) Deposits.--Section 2003(b) of title 39, United States 
     Code, is amended by striking ``There'' and inserting ``Except 
     as otherwise provided in section 2011, there''.
       (4) Relationship between the treasury and the postal 
     service.--Section 2006 of title 39, United States Code, is 
     amended--
       (A) in subsection (a), in the first sentence, by inserting 
     ``or 2011'' after ``section 2005'';
       (B) in subsection (b)--
       (i) in the first sentence, by inserting ``under section 
     2005'' before ``in such amounts''; and

[[Page 5318]]

       (ii) in the second sentence, by inserting ``under section 
     2005'' before ``in excess of such amount.''; and
       (C) in subsection (c), by inserting ``or 2011(e)(4)(E)'' 
     after ``section 2005(d)(5)''.

     SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS 
                   INCOME.

       Subchapter II of chapter 36 of title 39, United States 
     Code, as amended by section 202, is amended by adding at the 
     end the following:

     ``Sec. 3634. Assumed Federal income tax on competitive 
       products income

       ``(a) Definitions.--For purposes of this section--
       ``(1) the term `assumed Federal income tax on competitive 
     products income' means the net income tax that would be 
     imposed by chapter 1 of the Internal Revenue Code of 1986 on 
     the Postal Service's assumed taxable income from competitive 
     products for the year; and
       ``(2) the term `assumed taxable income from competitive 
     products', with respect to a year, refers to the amount 
     representing what would be the taxable income of a 
     corporation under the Internal Revenue Code of 1986 for the 
     year, if--
       ``(A) the only activities of such corporation were the 
     activities of the Postal Service allocable under section 
     2011(h) to competitive products; and
       ``(B) the only assets held by such corporation were the 
     assets of the Postal Service allocable under section 2011(h) 
     to such activities.
       ``(b) Computation and Transfer Requirements.--The Postal 
     Service shall, for each year beginning with the year in which 
     occurs the deadline for the Postal Service's first report to 
     the Postal Regulatory Commission under section 3652(a)--
       ``(1) compute its assumed Federal income tax on competitive 
     products income for such year; and
       ``(2) transfer from the Competitive Products Fund to the 
     Postal Service Fund the amount of that assumed tax.
       ``(c) Deadline for Transfers.--Any transfer required to be 
     made under this section for a year shall be due on or before 
     the January 15th next occurring after the close of such 
     year.''.

     SEC. 403. UNFAIR COMPETITION PROHIBITED.

       (a) Specific Limitations.--Chapter 4 of title 39, United 
     States Code, is amended by adding after section 404 the 
     following:

     ``Sec. 404a. Specific limitations

       ``(a) Except as specifically authorized by law, the Postal 
     Service may not--
       ``(1) establish any rule or regulation (including any 
     standard) the effect of which is to preclude competition or 
     establish the terms of competition unless the Postal Service 
     demonstrates that the regulation does not create an unfair 
     competitive advantage for itself or any entity funded (in 
     whole or in part) by the Postal Service;
       ``(2) compel the disclosure, transfer, or licensing of 
     intellectual property to any third party (such as patents, 
     copyrights, trademarks, trade secrets, and proprietary 
     information); or
       ``(3) obtain information from a person that provides (or 
     seeks to provide) any product, and then offer any postal 
     service that uses or is based in whole or in part on such 
     information, without the consent of the person providing that 
     information, unless substantially the same information is 
     obtained (or obtainable) from an independent source or is 
     otherwise obtained (or obtainable).
       ``(b) The Postal Regulatory Commission shall prescribe 
     regulations to carry out this section.
       ``(c) Any party (including an officer of the Commission 
     representing the interests of the general public) who 
     believes that the Postal Service has violated this section 
     may bring a complaint in accordance with section 3662.''.
       (b) Conforming Amendments.--
       (1) General powers.--Section 401 of title 39, United States 
     Code, is amended by striking ``The'' and inserting ``Subject 
     to the provisions of section 404a, the''.
       (2) Specific powers.--Section 404(a) of title 39, United 
     States Code, is amended by striking ``Without'' and inserting 
     ``Subject to the provisions of section 404a, but otherwise 
     without''.
       (c) Clerical Amendment.--The analysis for chapter 4 of 
     title 39, United States Code, is amended by inserting after 
     the item relating to section 404 the following:

``404a. Specific limitations.''.

     SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.

       (a) In General.--Section 409 of title 39, United States 
     Code, is amended by striking subsections (d) and (e) and 
     inserting the following:
       ``(d)(1) For purposes of the provisions of law cited in 
     paragraphs (2)(A) and (2)(B), respectively, the Postal 
     Service--
       ``(A) shall be considered to be a `person', as used in the 
     provisions of law involved; and
       ``(B) shall not be immune under any other doctrine of 
     sovereign immunity from suit in Federal court by any person 
     for any violation of any of those provisions of law by any 
     officer or employee of the Postal Service.
       ``(2) This subsection applies with respect to--
       ``(A) the Act of July 5, 1946 (commonly referred to as the 
     `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
       ``(B) the provisions of section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 applies to 
     unfair or deceptive acts or practices.
       ``(e)(1) To the extent that the Postal Service, or other 
     Federal agency acting on behalf of or in concert with the 
     Postal Service, engages in conduct with respect to any 
     product which is not reserved to the United States under 
     section 1696 of title 18, the Postal Service or other Federal 
     agency (as the case may be)--
       ``(A) shall not be immune under any doctrine of sovereign 
     immunity from suit in Federal court by any person for any 
     violation of Federal law by such agency or any officer or 
     employee thereof; and
       ``(B) shall be considered to be a person (as defined in 
     subsection (a) of the first section of the Clayton Act) for 
     purposes of--
       ``(i) the antitrust laws (as defined in such subsection); 
     and
       ``(ii) section 5 of the Federal Trade Commission Act to the 
     extent that such section 5 applies to unfair methods of 
     competition.
     For purposes of the preceding sentence, any private carriage 
     of mail allowable by virtue of section 601 shall not be 
     considered a service reserved to the United States under 
     section 1696 of title 18.
       ``(2) No damages, interest on damages, costs or attorney's 
     fees may be recovered, and no criminal liability may be 
     imposed, under the antitrust laws (as so defined) from any 
     officer or employee of the Postal Service, or other Federal 
     agency acting on behalf of or in concert with the Postal 
     Service, acting in an official capacity.
       ``(3) This subsection shall not apply with respect to 
     conduct occurring before the date of enactment of this 
     subsection.
       ``(f) To the extent that the Postal Service engages in 
     conduct with respect to the provision of competitive 
     products, it shall be considered a person for the purposes of 
     the Federal bankruptcy laws.
       ``(g)(1) Each building constructed or altered by the Postal 
     Service shall be constructed or altered, to the maximum 
     extent feasible as determined by the Postal Service, in 
     compliance with 1 of the nationally recognized model building 
     codes and with other applicable nationally recognized codes. 
     To the extent practicable, model building codes should meet 
     the voluntary consensus criteria established for codes and 
     standards as required in the National Technology Transfer and 
     Advancement Act of 1995 as defined in Office of Management 
     and Budget Circular A1190. For purposes of life safety, the 
     Postal Service shall continue to comply with the most current 
     edition of the Life Safety Code of the National Fire 
     Protection Association (NFPA 101).
       ``(2) Each building constructed or altered by the Postal 
     Service shall be constructed or altered only after 
     consideration of all requirements (other than procedural 
     requirements) of zoning laws, land use laws, and applicable 
     environmental laws of a State or subdivision of a State which 
     would apply to the building if it were not a building 
     constructed or altered by an establishment of the Government 
     of the United States.
       ``(3) For purposes of meeting the requirements of 
     paragraphs (1) and (2) with respect to a building, the Postal 
     Service shall--
       ``(A) in preparing plans for the building, consult with 
     appropriate officials of the State or political subdivision, 
     or both, in which the building will be located;
       ``(B) upon request, submit such plans in a timely manner to 
     such officials for review by such officials for a reasonable 
     period of time not exceeding 30 days; and
       ``(C) permit inspection by such officials during 
     construction or alteration of the building, in accordance 
     with the customary schedule of inspections for construction 
     or alteration of buildings in the locality, if such officials 
     provide to the Postal Service--
       ``(i) a copy of such schedule before construction of the 
     building is begun; and
       ``(ii) reasonable notice of their intention to conduct any 
     inspection before conducting such inspection.
     Nothing in this subsection shall impose an obligation on any 
     State or political subdivision to take any action under the 
     preceding sentence, nor shall anything in this subsection 
     require the Postal Service or any of its contractors to pay 
     for any action taken by a State or political subdivision to 
     carry out this subsection (including reviewing plans, 
     carrying out on-site inspections, issuing building permits, 
     and making recommendations).
       ``(4) Appropriate officials of a State or a political 
     subdivision of a State may make recommendations to the Postal 
     Service concerning measures necessary to meet the 
     requirements of paragraphs (1) and (2). Such officials may 
     also make recommendations to the Postal Service concerning 
     measures which should be taken in the construction or 
     alteration of the building to take into account local 
     conditions. The Postal Service shall give due consideration 
     to any such recommendations.
       ``(5) In addition to consulting with local and State 
     officials under paragraph (3), the Postal Service shall 
     establish procedures for soliciting, assessing, and 
     incorporating local community input on real property and land 
     use decisions.

[[Page 5319]]

       ``(6) For purposes of this subsection, the term `State' 
     includes the District of Columbia, the Commonwealth of Puerto 
     Rico, and a territory or possession of the United States.
       ``(h)(1) Notwithstanding any other provision of law, legal 
     representation may not be furnished by the Department of 
     Justice to the Postal Service in any action, suit, or 
     proceeding arising, in whole or in part, under any of the 
     following:
       ``(A) Subsection (d) or (e) of this section.
       ``(B) Subsection (f) or (g) of section 504 (relating to 
     administrative subpoenas by the Postal Regulatory 
     Commission).
       ``(C) Section 3663 (relating to appellate review).
     The Postal Service may, by contract or otherwise, employ 
     attorneys to obtain any legal representation that it is 
     precluded from obtaining from the Department of Justice under 
     this paragraph.
       ``(2) In any circumstance not covered by paragraph (1), the 
     Department of Justice shall, under section 411, furnish the 
     Postal Service such legal representation as it may require, 
     except that, with the prior consent of the Attorney General, 
     the Postal Service may, in any such circumstance, employ 
     attorneys by contract or otherwise to conduct litigation 
     brought by or against the Postal Service or its officers or 
     employees in matters affecting the Postal Service.
       ``(3)(A) In any action, suit, or proceeding in a court of 
     the United States arising in whole or in part under any of 
     the provisions of law referred to in subparagraph (B) or (C) 
     of paragraph (1), and to which the Commission is not 
     otherwise a party, the Commission shall be permitted to 
     appear as a party on its own motion and as of right.
       ``(B) The Department of Justice shall, under such terms and 
     conditions as the Commission and the Attorney General shall 
     consider appropriate, furnish the Commission such legal 
     representation as it may require in connection with any such 
     action, suit, or proceeding, except that, with the prior 
     consent of the Attorney General, the Commission may employ 
     attorneys by contract or otherwise for that purpose.
       ``(i) A judgment against the Government of the United 
     States arising out of activities of the Postal Service shall 
     be paid by the Postal Service out of any funds available to 
     the Postal Service, subject to the restriction specified in 
     section 2011(g).''.
       (b) Technical Amendment.--Section 409(a) of title 39, 
     United States Code, is amended by striking ``Except as 
     provided in section 3628 of this title,'' and inserting 
     ``Except as otherwise provided in this title,''.

     SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

       (a) In General.--Section 407 of title 39, United States 
     Code, is amended to read as follows:

     ``Sec. 407. International postal arrangements

       ``(a) It is the policy of the United States--
       ``(1) to promote and encourage communications between 
     peoples by efficient operation of international postal 
     services and other international delivery services for 
     cultural, social, and economic purposes;
       ``(2) to promote and encourage unrestricted and undistorted 
     competition in the provision of international postal services 
     and other international delivery services, except where 
     provision of such services by private companies may be 
     prohibited by law of the United States;
       ``(3) to promote and encourage a clear distinction between 
     governmental and operational responsibilities with respect to 
     the provision of international postal services; and
       ``(4) to participate in multilateral and bilateral 
     agreements with other countries to accomplish these 
     objectives.
       ``(b)(1) The Secretary of State shall be responsible for 
     formulation, coordination, and oversight of foreign policy 
     related to international postal services and shall have the 
     power to conclude postal treaties and conventions, except 
     that the Secretary may not conclude any postal treaty or 
     convention if such treaty or convention would, with respect 
     to any competitive product, grant an undue or unreasonable 
     preference to the Postal Service, a private provider of 
     international postal services, or any other person.
       ``(2) In carrying out the responsibilities specified in 
     paragraph (1), the Secretary of State shall exercise primary 
     authority for the conduct of foreign policy with respect to 
     international postal services, including the determination of 
     United States positions and the conduct of United States 
     participation in negotiations with foreign governments and 
     international bodies. In exercising this authority, the 
     Secretary--
       ``(A) shall coordinate with other agencies as appropriate, 
     and in particular, should consider the authority vested by 
     law or Executive order in the Postal Regulatory Commission, 
     the Department of Commerce, the Department of Transportation, 
     and the Office of the United States Trade Representative in 
     this area;
       ``(B) shall maintain continuing liaison with other 
     executive branch agencies concerned with postal and delivery 
     services;
       ``(C) shall maintain continuing liaison with the Committee 
     on Homeland Security and Governmental Affairs of the Senate 
     and the Committee on Government Reform of the House of 
     Representatives;
       ``(D) shall maintain appropriate liaison with both 
     representatives of the Postal Service and representatives of 
     users and private providers of international postal services 
     and other international delivery services to keep informed of 
     their interests and problems, and to provide such assistance 
     as may be needed to ensure that matters of concern are 
     promptly considered by the Department of State or (if 
     applicable, and to the extent practicable) other executive 
     branch agencies; and
       ``(E) shall assist in arranging meetings of such public 
     sector advisory groups as may be established to advise the 
     Department of State and other executive branch agencies in 
     connection with international postal services and 
     international delivery services.
       ``(3) The Secretary of State shall establish an advisory 
     committee (within the meaning of the Federal Advisory 
     Committee Act) to perform such functions as the Secretary 
     considers appropriate in connection with carrying out 
     subparagraphs (A) through (D) of paragraph (2).
       ``(c) Before concluding any postal treaty or convention 
     that establishes a rate or classification for a product 
     subject to subchapter I of chapter 36, the Secretary of State 
     shall request the Postal Regulatory Commission to submit its 
     views on whether such rate or classification is consistent 
     with the standards and criteria established by the Commission 
     under section 3622.
       ``(d) Nothing in this section shall be considered to 
     prevent the Postal Service from entering into such commercial 
     or operational contracts related to providing international 
     postal services as it deems appropriate, except that--
       ``(1) any such contract made with an agency of a foreign 
     government (whether under authority of this subsection or 
     otherwise) shall be solely contractual in nature and may not 
     purport to be binding under international law; and
       ``(2) a copy of each such contract between the Postal 
     Service and an agency of a foreign government shall be 
     transmitted to the Secretary of State and the Postal 
     Regulatory Commission not later than the effective date of 
     such contract.
       ``(e)(1) With respect to shipments of international mail 
     that are competitive products within the meaning of section 
     3631 that are exported or imported by the Postal Service, the 
     Customs Service and other appropriate Federal agencies shall 
     apply the customs laws of the United States and all other 
     laws relating to the importation or exportation of such 
     shipments in the same manner to both shipments by the Postal 
     Service and similar shipments by private companies.
       ``(2) In exercising the authority under subsection (b) to 
     conclude new postal treaties and conventions related to 
     international postal services and to renegotiate such 
     treaties and conventions, the Secretary of State shall, to 
     the maximum extent practicable, take such measures as are 
     within the Secretary's control to encourage the governments 
     of other countries to make available to the Postal Service 
     and private companies a range of nondiscriminatory customs 
     procedures that will fully meet the needs of all types of 
     American shippers. The Secretary of State shall consult with 
     the United States Trade Representative and the Commissioner 
     of Customs in carrying out this paragraph.
       ``(3) The provisions of this subsection shall take effect 6 
     months after the date of enactment of this subsection or such 
     earlier date as the Customs Service may determine in 
     writing.''.
       (b) Effective Date.--Notwithstanding any provision of the 
     amendment made by subsection (a), the authority of the United 
     States Postal Service to establish the rates of postage or 
     other charges on mail matter conveyed between the United 
     States and other countries shall remain available to the 
     Postal Service until--
       (1) with respect to market-dominant products, the date as 
     of which the regulations promulgated under section 3622 of 
     title 39, United States Code (as amended by section 201(a)) 
     take effect; and
       (2) with respect to competitive products, the date as of 
     which the regulations promulgated under section 3633 of title 
     39, United States Code (as amended by section 202) take 
     effect.

                      TITLE V--GENERAL PROVISIONS

     SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

       (a) Qualifications.--
       (1) In general.--Section 202(a) of title 39, United States 
     Code, is amended by striking ``(a)'' and inserting ``(a)(1)'' 
     and by striking the fourth sentence and inserting the 
     following: ``The Governors shall represent the public 
     interest generally, and shall be chosen solely on the basis 
     of their demonstrated ability in managing organizations or 
     corporations (in either the public or private sector) of 
     substantial size. Experience in the fields of law and 
     accounting shall be considered in making appointments of 
     Governors. The Governors shall not be representatives of 
     specific interests using the Postal Service, and may be 
     removed only for cause.''.
       (2) Applicability.--The amendment made by paragraph (1) 
     shall not affect the appointment or tenure of any person 
     serving as a Governor of the United States Postal Service 
     under an appointment made before the date

[[Page 5320]]

     of enactment of this Act however, when any such office 
     becomes vacant, the appointment of any person to fill that 
     office shall be made in accordance with such amendment. The 
     requirement set forth in the fourth sentence of section 
     202(a)(1) of title 39, United States Code (as amended by 
     subsection (a)) shall be met beginning not later than 9 years 
     after the date of enactment of this Act.
       (b) Consultation Requirement.--Section 202(a) of title 39, 
     United States Code, is amended by adding at the end the 
     following:
       ``(2) In selecting the individuals described in paragraph 
     (1) for nomination for appointment to the position of 
     Governor, the President should consult with the Speaker of 
     the House of Representatives, the minority leader of the 
     House of Representatives, the majority leader of the Senate, 
     and the minority leader of the Senate.''.
       (c) 5-Year Terms.--
       (1) In general.--Section 202(b) of title 39, United States 
     code, is amended in the first sentence by striking ``9 
     years'' and inserting ``5 years''.
       (2) Applicability.--
       (A) Continuation by incumbents.--The amendment made by 
     paragraph (1) shall not affect the tenure of any person 
     serving as a Governor of the United States Postal Service on 
     the date of enactment of this Act and such person may 
     continue to serve the remainder of the applicable term.
       (B) Vacancy by incumbent before 5 years of service.--If a 
     person who is serving as a Governor of the United States 
     Postal Service on the date of enactment of this Act resigns, 
     is removed, or dies before the expiration of the 9-year term 
     of that Governor, and that Governor has served less than 5 
     years of that term, the resulting vacancy in office shall be 
     treated as a vacancy in a 5-year term.
       (C) Vacancy by incumbent after 5 years of service.--If a 
     person who is serving as a Governor of the United States 
     Postal Service on the date of enactment of this Act resigns, 
     is removed, or dies before the expiration of the 9-year term 
     of that Governor, and that Governor has served 5 years or 
     more of that term, that term shall be deemed to have been a 
     5-year term beginning on its commencement date for purposes 
     of determining vacancies in office. Any appointment to the 
     vacant office shall be for a 5-year term beginning at the end 
     of the original 9-year term determined without regard to the 
     deeming under the preceding sentence. Nothing in this 
     subparagraph shall be construed to affect any action or 
     authority of any Governor or the Board of Governors during 
     any portion of a 9-year term deemed to be 5-year term under 
     this subparagraph.
       (d) Term Limitation.--
       (1) In general.--Section 202(b) of title 39, United States 
     Code, is amended--
       (A) by inserting ``(1)'' after ``(b)''; and
       (B) by adding at the end the following:
       ``(2) No person may serve more than 3 terms as a 
     Governor.''.
       (2) Applicability.--The amendments made by paragraph (1) 
     shall not affect the tenure of any person serving as a 
     Governor of the United States Postal Service on the date of 
     enactment of this Act with respect to the term which that 
     person is serving on that date. Such person may continue to 
     serve the remainder of the applicable term, after which the 
     amendments made by paragraph (1) shall apply.

     SEC. 502. OBLIGATIONS.

       (a) Purposes for Which Obligations May Be Issued.--The 
     first sentence of section 2005(a)(1) of title 39, United 
     States Code, is amended by striking ``title.'' and inserting 
     ``title, other than any of the purposes for which the 
     corresponding authority is available to the Postal Service 
     under section 2011.''.
       (b) Increase Relating to Obligations Issued for Capital 
     Improvements.--Section 2005(a)(1) of title 39, United States 
     Code, is amended by striking the third sentence.
       (c) Amounts Which May Be Pledged.--
       (1) Obligations to which provisions apply.--The first 
     sentence of section 2005(b) of title 39, United States Code, 
     is amended by striking ``such obligations,'' and inserting 
     ``obligations issued by the Postal Service under this 
     section,''.
       (2) Assets, revenues, and receipts to which provisions 
     apply.--Subsection (b) of section 2005 of title 39, United 
     States Code, is amended by striking ``(b)'' and inserting 
     ``(b)(1)'', and by adding at the end the following:
       ``(2) Notwithstanding any other provision of this section--
       ``(A) the authority to pledge assets of the Postal Service 
     under this subsection shall be available only to the extent 
     that such assets are not related to the provision of 
     competitive products (as determined under section 2011(h) or, 
     for purposes of any period before accounting practices and 
     principles under section 2011(h) have been established and 
     applied, the best information available from the Postal 
     Service, including the audited statements required by section 
     2008(e)); and
       ``(B) any authority under this subsection relating to the 
     pledging or other use of revenues or receipts of the Postal 
     Service shall be available only to the extent that they are 
     not revenues or receipts of the Competitive Products Fund.''.

     SEC. 503. PRIVATE CARRIAGE OF LETTERS.

       (a) In General.--Section 601 of title 39, United States 
     Code, is amended by striking subsection (b) and inserting the 
     following:
       ``(b) A letter may also be carried out of the mails when--
       ``(1) the amount paid for the private carriage of the 
     letter is at least the amount equal to 6 times the rate then 
     currently charged for the 1st ounce of a single-piece first 
     class letter;
       ``(2) the letter weighs at least 12\1/2\ ounces; or
       ``(3) such carriage is within the scope of services 
     described by regulations of the United States Postal Service 
     (as in effect on July 1, 2001) that permit private carriage 
     by suspension of the operation of this section (as then in 
     effect).
       ``(c) Any regulations necessary to carry out this section 
     shall be promulgated by the Postal Regulatory Commission.''.
       (b) Effective Date.--This section shall take effect on the 
     date as of which the regulations promulgated under section 
     3633 of title 39, United States Code (as amended by section 
     202) take effect.

     SEC. 504. RULEMAKING AUTHORITY.

       Paragraph (2) of section 401 of title 39, United States 
     Code, is amended to read as follows:
       ``(2) to adopt, amend, and repeal such rules and 
     regulations, not inconsistent with this title, as may be 
     necessary in the execution of its functions under this title 
     and such other functions as may be assigned to the Postal 
     Service under any provisions of law outside of this title;''.

     SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING 
                   AGREEMENTS.

       (a) Labor Disputes.--Section 1207 of title 39, United 
     States Code, is amended to read as follows:

     ``Sec. 1207. Labor disputes

       ``(a) If there is a collective-bargaining agreement in 
     effect, no party to such agreement shall terminate or modify 
     such agreement unless the party desiring such termination or 
     modification serves written notice upon the other party to 
     the agreement of the proposed termination or modification not 
     less than 90 days prior to the expiration date thereof, or 
     not less than 90 days prior to the time it is proposed to 
     make such termination or modification. The party serving such 
     notice shall notify the Federal Mediation and Conciliation 
     Service of the existence of a dispute within 45 days after 
     such notice, if no agreement has been reached by that time.
       ``(b) If the parties fail to reach agreement or to adopt a 
     procedure providing for a binding resolution of a dispute by 
     the expiration date of the agreement in effect, or the date 
     of the proposed termination or modification, the Director of 
     the Federal Mediation and Conciliation Service shall within 
     10 days appoint a mediator of nationwide reputation and 
     professional stature, and who is also a member of the 
     National Academy of Arbitrators. The parties shall cooperate 
     with the mediator in an effort to reach an agreement and 
     shall meet and negotiate in good faith at such times and 
     places that the mediator, in consultation with the parties, 
     shall direct.
       ``(c)(1) If no agreement is reached within 60 days after 
     the expiration or termination of the agreement or the date on 
     which the agreement became subject to modification under 
     subsection (a) of this section, or if the parties decide upon 
     arbitration but do not agree upon the procedures therefore, 
     an arbitration board shall be established consisting of 3 
     members, 1 of whom shall be selected by the Postal Service, 1 
     by the bargaining representative of the employees, and the 
     third by the 2 thus selected. If either of the parties fails 
     to select a member, or if the members chosen by the parties 
     fail to agree on the third person within 5 days after their 
     first meeting, the selection shall be made from a list of 
     names provided by the Director. This list shall consist of 
     not less then 9 names of arbitrators of nationwide reputation 
     and professional nature, who are also members of the National 
     Academy of Arbitrators, and whom the Director has determined 
     are available and willing to serve.
       ``(2) The arbitration board shall give the parties a full 
     and fair hearing, including an opportunity to present 
     evidence in support of their claims, and an opportunity to 
     present their case in person, by counsel or by other 
     representative as they may elect. Decisions of the 
     arbitration board shall be conclusive and binding upon the 
     parties. The arbitration board shall render its decision 
     within 45 days after its appointment.
       ``(3) Costs of the arbitration board and mediation shall be 
     shared equally by the Postal Service and the bargaining 
     representative.
       ``(d) In the case of a bargaining unit whose recognized 
     collective-bargaining representative does not have an 
     agreement with the Postal Service, if the parties fail to 
     reach the agreement within 90 days after the commencement of 
     collective bargaining, a mediator shall be appointed in 
     accordance with the terms in subsection (b) of this section, 
     unless the parties have previously agreed to another 
     procedure for a binding resolution of their differences. If 
     the parties fail to reach agreement within 180 days after the 
     commencement of collective bargaining, and if they have not 
     agreed to another procedure for binding resolution, an 
     arbitration board shall be established to provide conclusive

[[Page 5321]]

     and binding arbitration in accordance with the terms of 
     subsection (c) of this section.''.
       (b) Noninterference With Collective Bargaining 
     Agreements.--Except as otherwise provided by the amendment 
     made by subsection (a), nothing in this Act shall restrict, 
     expand, or otherwise affect any of the rights, privileges, or 
     benefits of either employees of or labor organizations 
     representing employees of the United States Postal Service 
     under chapter 12 of title 39, United States Code, the 
     National Labor Relations Act, any handbook or manual 
     affecting employee labor relations within the United States 
     Postal Service, or any collective bargaining agreement.
       (c) Free Mailing Privileges Continue Unchanged.--Nothing in 
     this Act or any amendment made by this Act shall affect any 
     free mailing privileges accorded under section 3217 or 
     sections 3403 through 3406 of title 39, United States Code.

     SEC. 506. BONUS AUTHORITY.

       Chapter 36 of title 39, United States Code, is amended by 
     inserting after section 3685 the following:

     ``Sec. 3686. Bonus authority

       ``(a) In General.--The Postal Service may establish 1 or 
     more programs to provide bonuses or other rewards to officers 
     and employees of the Postal Service in senior executive or 
     equivalent positions to achieve the objectives of this 
     chapter.
       ``(b) Limitation on Total Compensation.--
       ``(1) In general.--Under any such program, the Postal 
     Service may award a bonus or other reward in excess of the 
     limitation set forth in the last sentence of section 1003(a), 
     if such program has been approved under paragraph (2). Any 
     such award or bonus may not cause the total compensation of 
     such officer or employee to exceed the total annual 
     compensation payable to the Vice President under section 104 
     of title 3 as of the end of the calendar year in which the 
     bonus or award is paid.
       ``(2) Approval process.--If the Postal Service wishes to 
     have the authority, under any program described in subsection 
     (a), to award bonuses or other rewards in excess of the 
     limitation set forth in the last sentence of section 
     1003(a)--
       ``(A) the Postal Service shall make an appropriate request 
     to the Board of Governors of the Postal Service in such form 
     and manner as the Board requires; and
       ``(B) the Board of Governors shall approve any such request 
     if the Board certifies, for the annual appraisal period 
     involved, that the performance appraisal system for affected 
     officers and employees of the Postal Service (as designed and 
     applied) makes meaningful distinctions based on relative 
     performance.
       ``(3) Revocation authority.--If the Board of Governors of 
     the Postal Service finds that a performance appraisal system 
     previously approved under paragraph (2)(B) does not (as 
     designed and applied) make meaningful distinctions based on 
     relative performance, the Board may revoke or suspend the 
     authority of the Postal Service to continue a program 
     approved under paragraph (2) until such time as appropriate 
     corrective measures have, in the judgment of the Board, been 
     taken.
       ``(c) Reporting Requirement Relating to Bonuses or Other 
     Rewards.--Included in its comprehensive statement under 
     section 2401(e) for any period shall be--
       ``(1) the name of each person receiving a bonus or other 
     reward during such period which would not have been allowable 
     but for the provisions of subsection (b);
       ``(2) the amount of the bonus or other reward; and
       ``(3) the amount by which the limitation referred to in 
     subsection (b)(1) was exceeded as a result of such bonus or 
     other reward.''.

                TITLE VI--ENHANCED REGULATORY COMMISSION

     SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN 
                   PROVISIONS RELATING TO THE POSTAL REGULATORY 
                   COMMISSION.

       (a) Transfer and Redesignation.--Title 39, United States 
     Code, is amended--
       (1) by inserting after chapter 4 the following:

               ``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``505. Officer of the Postal Regulatory Commission representing the 
              general public.

     ``Sec. 501. Establishment

       ``The Postal Regulatory Commission is an independent 
     establishment of the executive branch of the Government of 
     the United States.

     ``Sec. 502. Commissioners

       ``(a) The Postal Regulatory Commission is composed of 5 
     Commissioners, appointed by the President, by and with the 
     advice and consent of the Senate. The Commissioners shall be 
     chosen solely on the basis of their technical qualifications, 
     professional standing, and demonstrated expertise in 
     economics, accounting, law, or public administration, and may 
     be removed by the President only for cause. Each individual 
     appointed to the Commission shall have the qualifications and 
     expertise necessary to carry out the enhanced 
     responsibilities accorded Commissioners under the Postal 
     Accountability and Enhancement Act. Not more than 3 of the 
     Commissioners may be adherents of the same political party.
       ``(b) No Commissioner shall be financially interested in 
     any enterprise in the private sector of the economy engaged 
     in the delivery of mail matter.
       ``(c) A Commissioner may continue to serve after the 
     expiration of his term until his successor has qualified, 
     except that a Commissioner may not so continue to serve for 
     more than 1 year after the date upon which his term otherwise 
     would expire under subsection (f).
       ``(d) One of the Commissioners shall be designated as 
     Chairman by, and shall serve in the position of Chairman at 
     the pleasure of, the President.
       ``(e) The Commissioners shall by majority vote designate a 
     Vice Chairman of the Commission. The Vice Chairman shall act 
     as Chairman of the Commission in the absence of the Chairman.
       ``(f) The Commissioners shall serve for terms of 6 
     years.'';
       (2) by striking, in subchapter I of chapter 36 (as in 
     effect before the amendment made by section 201(c)), the 
     heading for such subchapter I and all that follows through 
     section 3602;
       (3) by redesignating sections 3603 and 3604 as sections 503 
     and 504, respectively, and transferring such sections to the 
     end of chapter 5 (as inserted by paragraph (1)); and
       (4) by adding after such section 504 the following:

     ``Sec. 505. Officer of the Postal Regulatory Commission 
       representing the general public

       ``The Postal Regulatory Commission shall designate an 
     officer of the Postal Regulatory Commission in all public 
     proceedings who shall represent the interests of the general 
     public.''.
       (b) Applicability.--The amendment made by subsection (a)(1) 
     shall not affect the appointment or tenure of any person 
     serving as a Commissioner on the Postal Regulatory Commission 
     (as so redesignated by section 604) under an appointment made 
     before the date of enactment of this Act or any nomination 
     made before that date, but, when any such office becomes 
     vacant, the appointment of any person to fill that office 
     shall be made in accordance with such amendment.
       (c) Clerical Amendment.--The analysis for part I of title 
     39, United States Code, is amended by inserting after the 
     item relating to chapter 4 the following:

  ``5. Postal Regulatory Commission...........................501''....

     SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE 
                   SUBPOENAS.

       Section 504 of title 39, United States Code (as so 
     redesignated by section 601) is amended by adding at the end 
     the following:
       ``(f)(1) Any Commissioner of the Postal Regulatory 
     Commission, any administrative law judge appointed by the 
     Commission under section 3105 of title 5, and any employee of 
     the Commission designated by the Commission may administer 
     oaths, examine witnesses, take depositions, and receive 
     evidence.
       ``(2) The Chairman of the Commission, any Commissioner 
     designated by the Chairman, and any administrative law judge 
     appointed by the Commission under section 3105 of title 5 
     may, with respect to any proceeding conducted by the 
     Commission under this title or to obtain information to be 
     used to prepare a report under this title--
       ``(A) issue subpoenas requiring the attendance and 
     presentation of testimony by, or the production of 
     documentary or other evidence in the possession of, any 
     covered person; and
       ``(B) order the taking of depositions and responses to 
     written interrogatories by a covered person.
     The written concurrence of a majority of the Commissioners 
     then holding office shall, with respect to each subpoena 
     under subparagraph (A), be required in advance of its 
     issuance.
       ``(3) In the case of contumacy or failure to obey a 
     subpoena issued under this subsection, upon application by 
     the Commission, the district court of the United States for 
     the district in which the person to whom the subpoena is 
     addressed resides or is served may issue an order requiring 
     such person to appear at any designated place to testify or 
     produce documentary or other evidence. Any failure to obey 
     the order of the court may be punished by the court as a 
     contempt thereof.
       ``(4) For purposes of this subsection, the term `covered 
     person' means an officer, employee, agent, or contractor of 
     the Postal Service.
       ``(g)(1) If the Postal Service determines that any document 
     or other matter it provides to the Postal Regulatory 
     Commission under a subpoena issued under subsection (f), or 
     otherwise at the request of the Commission in connection with 
     any proceeding or other purpose under this title, contains 
     information which is described in section 410(c) of this 
     title, or exempt from public disclosure under section 552(b) 
     of title 5, the Postal Service shall, at the time of 
     providing such matter to the Commission, notify the 
     Commission, in writing, of its determination (and the reasons 
     therefor).
       ``(2) Except as provided in paragraph (3), no officer or 
     employee of the Commission may,

[[Page 5322]]

     with respect to any information as to which the Commission 
     has been notified under paragraph (1)--
       ``(A) use such information for purposes other than the 
     purposes for which it is supplied; or
       ``(B) permit anyone who is not an officer or employee of 
     the Commission to have access to any such information.
       ``(3)(A) Paragraph (2) shall not prohibit the Commission 
     from publicly disclosing relevant information in furtherance 
     of its duties under this title, provided that the Commission 
     has adopted regulations under section 553 of title 5, that 
     establish a procedure for according appropriate 
     confidentiality to information identified by the Postal 
     Service under paragraph (1). In determining the appropriate 
     degree of confidentiality to be accorded information 
     identified by the Postal Service under paragraph (1), the 
     Commission shall balance the nature and extent of the likely 
     commercial injury to the Postal Service against the public 
     interest in maintaining the financial transparency of a 
     government establishment competing in commercial markets.
       ``(B) Paragraph (2) shall not prevent the Commission from 
     requiring production of information in the course of any 
     discovery procedure established in connection with a 
     proceeding under this title. The Commission shall, by 
     regulations based on rule 26(c) of the Federal Rules of Civil 
     Procedure, establish procedures for ensuring appropriate 
     confidentiality for information furnished to any party.''.

     SEC. 603. APPROPRIATIONS FOR THE POSTAL REGULATORY 
                   COMMISSION.

       (a) Authorization of Appropriations.--Subsection (d) of 
     section 504 of title 39, United States Code (as so 
     redesignated by section 601) is amended to read as follows:
       ``(d) There are authorized to be appropriated, out of the 
     Postal Service Fund, such sums as may be necessary for the 
     Postal Regulatory Commission. In requesting an appropriation 
     under this subsection for a fiscal year, the Commission shall 
     prepare and submit to the Congress under section 2009 a 
     budget of the Commission's expenses, including expenses for 
     facilities, supplies, compensation, and employee benefits.''.
       (b) Budget Program.--
       (1) In general.--The next to last sentence of section 2009 
     of title 39, United States Code, is amended to read as 
     follows: ``The budget program shall also include separate 
     statements of the amounts which (1) the Postal Service 
     requests to be appropriated under subsections (b) and (c) of 
     section 2401, (2) the Office of Inspector General of the 
     United States Postal Service requests to be appropriated, out 
     of the Postal Service Fund, under section 8G(f) of the 
     Inspector General Act of 1978, and (3) the Postal Regulatory 
     Commission requests to be appropriated, out of the Postal 
     Service Fund, under section 504(d) of this title.''.
       (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
     United States Code, is amended by striking the first sentence 
     and inserting the following: ``The Fund shall be available 
     for the payment of (A) all expenses incurred by the Postal 
     Service in carrying out its functions as provided by law, 
     subject to the same limitation as set forth in the 
     parenthetical matter under subsection (a); (B) all expenses 
     of the Postal Regulatory Commission, subject to the 
     availability of amounts appropriated under section 504(d); 
     and (C) all expenses of the Office of Inspector General, 
     subject to the availability of amounts appropriated under 
     section 8G(f) of the Inspector General Act of 1978.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to fiscal years beginning on or after 
     October 1, 2002.
       (2) Savings provision.--The provisions of title 39, United 
     States Code, that are amended by this section shall, for 
     purposes of any fiscal year before the first fiscal year to 
     which the amendments made by this section apply, continue to 
     apply in the same way as if this section had never been 
     enacted.

     SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

       (a) Amendments to Title 39, United States Code.--Title 39, 
     United States Code, is amended in sections 404, 503 and 504 
     (as so redesignated by section 601), 1001 and 1002, by 
     striking ``Postal Rate Commission'' each place it appears and 
     inserting ``Postal Regulatory Commission'';
       (b) Amendments to Title 5, United States Code.--Title 5, 
     United States Code, is amended in sections 104(1), 306(f), 
     2104(b), 3371(3), 5314 (in the item relating to Chairman, 
     Postal Rate Commission), 5315 (in the item relating to 
     Members, Postal Rate Commission), 5514(a)(5)(B), 
     7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B), 
     and 8474(c)(4) by striking ``Postal Rate Commission'' and 
     inserting ``Postal Regulatory Commission''.
       (c) Amendment to the Ethics in Government Act of 1978.--
     Section 101(f)(6) of the Ethics in Government Act of 1978 (5 
     U.S.C. App.) is amended by striking ``Postal Rate 
     Commission'' and inserting ``Postal Regulatory Commission''.
       (d) Amendment to the Rehabilitation Act of 1973.--Section 
     501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) 
     is amended by striking ``Postal Rate Office'' and inserting 
     ``Postal Regulatory Commission''.
       (e) Amendment to Title 44, United States Code.--Section 
     3502(5) of title 44, United States Code, is amended by 
     striking ``Postal Rate Commission'' and inserting ``Postal 
     Regulatory Commission''.
       (f) Other References.--Whenever a reference is made in any 
     provision of law (other than this Act or a provision of law 
     amended by this Act), regulation, rule, document, or other 
     record of the United States to the Postal Rate Commission, 
     such reference shall be considered a reference to the Postal 
     Regulatory Commission.

     SEC. 605. FINANCIAL TRANSPARENCY.

       (a) In General.--Section 101 of title 39, United States 
     Code, is amended--
       (1) by redesignating subsections (d) through (g) as 
     subsections (e) through (h), respectively; and
       (2) by inserting after subsection (c) the following:
       ``(d) As an independent establishment of the executive 
     branch of the Government of the United States, the Postal 
     Service shall be subject to a high degree of transparency to 
     ensure fair treatment of customers of the Postal Service's 
     market-dominant products and companies competing with the 
     Postal Service's competitive products.''.
       (b) Financial Reporting Requirements and Enforcement Powers 
     Applicable to Postal Service.--Section 503 of title 39, 
     United States Code (as so redesignated by section 601 and 
     604) is amended by--
       (1) inserting ``(a)'' before ``The Postal Regulatory 
     Commission shall promulgate''; and
       (2) adding at the end the following:
       ``(b)(1) Beginning with the first full fiscal year 
     following the date of enactment of the Postal Accountability 
     and Enhancement Act, the Postal Service shall file with the 
     Postal Regulatory Commission --
       ``(A) within 35 days after the end of each fiscal quarter, 
     a quarterly report containing the information prescribed in 
     Form 10-Q of the Securities and Exchange Commission under 
     section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m), or any revised or successor form;
       ``(B) within 60 days after the end of each fiscal year, an 
     annual report containing the information prescribed in Form 
     10-K of the Securities and Exchange Commission under section 
     13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), or 
     any revised or successor form; and
       ``(C) periodic reports within the time frame and containing 
     the information prescribed in Form 8-K of the Securities and 
     Exchange Commission under section 13 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78m), or any revised or 
     successor form.
       ``(2) For purposes of preparing the reports required under 
     paragraph (1), the Postal Service shall be deemed to be the 
     registrant described in the Securities and Exchange 
     Commission forms, and references contained in such forms to 
     Securities and Exchange Commission regulations are 
     applicable.
       ``(3) For purposes of preparing the reports required under 
     paragraph (1), the Postal Service shall comply with the rules 
     prescribed by the Securities and Exchange Commission 
     implementing section 404 of the Sarbanes-Oxley Act of 2002 
     (15 U.S.C. 7262; Public Law 107-204) beginning with fiscal 
     year 2007 and in each fiscal year thereafter.
       ``(c)(1) The reports required under subsection (b)(1)(B) 
     shall include, with respect to the financial obligations of 
     the Postal Service under chapters 83, 84, and 89 of title 5 
     for retirees of the Postal Service--
       ``(A) the funded status of such obligations of the Postal 
     Service;
       ``(B) components of the net change in the fund balances and 
     obligations and the nature and cause of any significant 
     changes;
       ``(C) components of net periodic costs;
       ``(D) cost methods and assumptions underlying the relevant 
     actuarial valuations;
       ``(E) the effect of a one-percentage point increase in the 
     assumed health care cost trend rate for each future year on 
     the service and interest costs components of net periodic 
     cost and the accumulated obligation of the Postal Service 
     under chapter 89 of title 5 for retirees of the Postal 
     Service;
       ``(F) actual contributions to and payments from the funds 
     for the years presented and the estimated future 
     contributions and payments for each of the following 5 years;
       ``(G) the composition of plan assets reflected in the fund 
     balances; and
       ``(H) the assumed rate of return on fund balances and the 
     actual rates of return for the years presented.
       ``(2)(A) Beginning with the fiscal year 2007 and in each 
     fiscal year thereafter, for purposes of the reports required 
     under subsection (b)(1) (A) and (B), the Postal Service shall 
     include segment reporting.
       ``(B) The Postal Service shall determine the appropriate 
     segment reporting under subparagraph (A), after consultation 
     with the Postal Regulatory Commission.
       ``(d) For purposes of the annual reports required under 
     subsection (b)(1)(B), the Postal Service shall obtain an 
     opinion from an independent auditor on whether the 
     information listed under subsection (c) is fairly stated in 
     all material respects, either in relation to the basic 
     financial statements as a whole or on a stand-alone basis.
       ``(e) The Postal Regulatory Commission shall have access to 
     the audit documentation and any other supporting matter of 
     the Postal Service and its independent auditor in

[[Page 5323]]

     connection with any information submitted under subsection 
     (b)(1)(B).
       ``(f) The Postal Regulatory Commission may, on its own 
     motion or on request of an interested party, initiate 
     proceedings (to be conducted in accordance with regulations 
     that the Commission shall prescribe) to improve the quality, 
     accuracy, or completeness of Postal Service data required by 
     the Commission under this section whenever it shall appear 
     that the data--
       ``(1) have become significantly inaccurate;
       ``(2) can be significantly improved; or
       ``(3) are not cost beneficial.''.

                         TITLE VII--EVALUATIONS

     SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND 
                   OTHER PROVISIONS.

       (a) In General.--The Postal Regulatory Commission shall, at 
     least every 3 years, submit a report to the President and 
     Congress concerning--
       (1) the operation of the amendments made by this Act; and
       (2) recommendations for any legislation or other measures 
     necessary to improve the effectiveness or efficiency of the 
     postal laws of the United States.
       (b) Postal Service Views.--A report under this section 
     shall be submitted only after reasonable opportunity has been 
     afforded to the Postal Service to review the report and to 
     submit written comments on the report. Any comments timely 
     received from the Postal Service under the preceding sentence 
     shall be attached to the report submitted under subsection 
     (a).

     SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL 
                   MONOPOLY.

       (a) Report by the Postal Regulatory Commission.--
       (1) In general.--Not later than 12 months after the date of 
     enactment of this Act, the Postal Regulatory Commission shall 
     submit a report to the President and Congress on universal 
     postal service and the postal monopoly in the United States 
     (in this section referred to as ``universal service and the 
     postal monopoly''), including the monopoly on the delivery of 
     mail and on access to mailboxes.
       (2) Contents.--The report under this subsection shall 
     include--
       (A) a comprehensive review of the history and development 
     of universal service and the postal monopoly, including how 
     the scope and standards of universal service and the postal 
     monopoly have evolved over time for the Nation and its urban 
     and rural areas;
       (B) the scope and standards of universal service and the 
     postal monopoly provided under current law (including 
     sections 101 and 403 of title 39, United States Code), and 
     current rules, regulations, policy statements, and practices 
     of the Postal Service;
       (C) a description of any geographic areas, populations, 
     communities (including both urban and rural communities), 
     organizations, or other groups or entities not currently 
     covered by universal service or that are covered but that are 
     receiving services deficient in scope or quality or both; and
       (D) the scope and standards of universal service and the 
     postal monopoly likely to be required in the future in order 
     to meet the needs and expectations of the United States 
     public, including all types of mail users, based on 
     discussion of such assumptions, alternative sets of 
     assumptions, and analyses as the Postal Service considers 
     plausible.
       (b) Recommended Changes to Universal Service and the 
     Monopoly.--The Postal Regulatory Commission shall include in 
     the report under subsection (a), and in all reports submitted 
     under section 701 of this Act--
       (1) any recommended changes to universal service and the 
     postal monopoly as the Commission considers appropriate, 
     including changes that the Commission may implement under 
     current law and changes that would require changes to current 
     law, with estimated effects of the recommendations on the 
     service, financial condition, rates, and security of mail 
     provided by the Postal Service;
       (2) with respect to each recommended change described under 
     paragraph (1)--
       (A) an estimate of the costs of the Postal Service 
     attributable to the obligation to provide universal service 
     under current law; and
       (B) an analysis of the likely benefit of the current postal 
     monopoly to the ability of the Postal Service to sustain the 
     current scope and standards of universal service, including 
     estimates of the financial benefit of the postal monopoly to 
     the extent practicable, under current law; and
       (3) such additional topics and recommendations as the 
     Commission considers appropriate, with estimated effects of 
     the recommendations on the service, financial condition, 
     rates, and the security of mail provided by the Postal 
     Service.

     SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE 
                   PRODUCTS.

       (a) In General.--The Federal Trade Commission shall prepare 
     and submit to the President and Congress, and to the Postal 
     Regulatory Commission, within 1 year after the date of 
     enactment of this Act, a comprehensive report identifying 
     Federal and State laws that apply differently to the United 
     States Postal Service with respect to the competitive 
     category of mail (within the meaning of section 102 of title 
     39, United States Code, as amended by section 101) and 
     similar products provided by private companies.
       (b) Recommendations.--The Federal Trade Commission shall 
     include such recommendations as it considers appropriate for 
     bringing such legal discrimination to an end, and in the 
     interim, to account under section 3633 of title 39, United 
     States Code (as added by this Act), for the net economic 
     advantages provided by those laws.
       (c) Consultation.--In preparing its report, the Federal 
     Trade Commission shall consult with the United States Postal 
     Service, the Postal Regulatory Commission, other Federal 
     agencies, mailers, private companies that provide delivery 
     services, and the general public, and shall append to such 
     report any written comments received under this subsection.
       (d) Competitive Product Regulation.--The Postal Regulatory 
     Commission shall take into account the recommendations of the 
     Federal Trade Commission in promulgating or revising the 
     regulations required under section 3633 of title 39, United 
     States Code.

     SEC. 704. REPORT ON POSTAL WORKPLACE SAFETY AND WORKPLACE-
                   RELATED INJURIES.

       (a) Report by the Inspector General.--
       (1) In general.--Not later than 6 months after the 
     enactment of this Act, the Inspector General of the United 
     States Postal Service shall submit a report to Congress and 
     the Postal Service that--
       (A) details and assesses any progress the Postal Service 
     has made in improving workplace safety and reducing 
     workplace-related injuries nationwide; and
       (B) identifies opportunities for improvement that remain 
     with respect to such improvements and reductions.
       (2) Contents.--The report under this subsection shall 
     also--
       (A) discuss any injury reduction goals established by the 
     Postal Service;
       (B) describe the actions that the Postal Service has taken 
     to improve workplace safety and reduce workplace-related 
     injuries, and assess how successful the Postal Service has 
     been in meeting its injury reduction goal; and
       (C) identify areas where the Postal Service has failed to 
     meet its injury reduction goals, explain the reasons why 
     these goals were not met, and identify opportunities for 
     making further progress in meeting these goals.
       (b) Report by the Postal Service.--
       (1) Report to congress.--Not later than 6 months after 
     receiving the report under subsection (a), the Postal Service 
     shall submit a report to Congress detailing how it plans to 
     improve workplace safety and reduce workplace-related 
     injuries nationwide, including goals and metrics.
       (2) Problem areas.--The report under this subsection shall 
     also include plans, developed in consultation with the 
     Inspector General and employee representatives, including 
     representatives of each postal labor union and management 
     association, for addressing the problem areas identified by 
     the Inspector General in the report under subsection 
     (a)(2)(C).

     SEC. 705. STUDY ON RECYCLED PAPER.

       (a) In General.--Within 12 months after the date of 
     enactment of this Act, the Government Accountability Office 
     shall study and submit to the Congress, the Board of 
     Governors of the Postal Service, and to the Postal Regulatory 
     Commission a report concerning--
       (1) the economic and environmental efficacy of establishing 
     rate incentives for mailers linked to the use of recycled 
     paper;
       (2) a description of the accomplishments of the Postal 
     Service in each of the preceding 5 years involving recycling 
     activities, including the amount of annual revenue generated 
     and savings achieved by the Postal Service as a result of its 
     use of recycled paper and other recycled products and its 
     efforts to recycle undeliverable and discarded mail and other 
     materials; and
       (3) additional opportunities that may be available for the 
     United States Postal Service to engage in recycling 
     initiatives and the projected costs and revenues of 
     undertaking such opportunities.
       (b) Recommendations.--The report shall include 
     recommendations for any administrative or legislative actions 
     that may be appropriate.

   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

     SEC. 801. SHORT TITLE.

       This title may be cited as the ``Postal Civil Service 
     Retirement and Health Benefits Funding Amendments of 2004''.

     SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

       (a) In General.--Chapter 83 of title 5, United States Code, 
     is amended--
       (1) in section 8334(a)(1)(B), by striking clause (ii) and 
     inserting the following:
       ``(ii) In the case of an employee of the United States 
     Postal Service, no amount shall be contributed under this 
     subparagraph.''; and
       (2) by amending section 8348(h) to read as follows:
       ``(h)(1) In this subsection, the term `Postal surplus or 
     supplemental liability' means the estimated difference, as 
     determined by the Office, between--
       ``(A) the actuarial present value of all future benefits 
     payable from the Fund under

[[Page 5324]]

     this subchapter to current or former employees of the United 
     States Postal Service and attributable to civilian employment 
     with the United States Postal Service; and
       ``(B) the sum of--
       ``(i) the actuarial present value of deductions to be 
     withheld from the future basic pay of employees of the United 
     States Postal Service currently subject to this subchapter 
     under section 8334;
       ``(ii) that portion of the Fund balance, as of the date the 
     Postal surplus or supplemental liability is determined, 
     attributable to payments to the Fund by the United States 
     Postal Service and its employees, minus benefit payments 
     attributable to civilian employment with the United States 
     Postal Service, plus the earnings on such amounts while in 
     the Fund; and
       ``(iii) any other appropriate amount, as determined by the 
     Office in accordance with generally accepted actuarial 
     practices and principles.
       ``(2)(A) Not later than June 15, 2006, the Office shall 
     determine the Postal surplus or supplemental liability, as of 
     September 30, 2005. If that result is a surplus, the amount 
     of the surplus shall be transferred to the Postal Service 
     Retiree Health Benefits Fund established under section 8909a 
     by June 30, 2006. If the result is a supplemental liability, 
     the Office shall establish an amortization schedule, 
     including a series of annual installments commencing 
     September 30, 2006, which provides for the liquidation of 
     such liability by September 30, 2043.
       ``(B) The Office shall redetermine the Postal surplus or 
     supplemental liability as of the close of the fiscal year, 
     for each fiscal year beginning after September 30, 2006, 
     through the fiscal year ending September 30, 2038. If the 
     result is a surplus, that amount shall remain in the Fund 
     until distribution is authorized under subparagraph (C), and 
     any prior amortization schedule for payments shall be 
     terminated. If the result is a supplemental liability, the 
     Office shall establish a new amortization schedule, including 
     a series of annual installments commencing on September 30 of 
     the subsequent fiscal year, which provides for the 
     liquidation of such liability by September 30, 2043.
       ``(C) As of the close of the fiscal years ending September 
     30, 2015, 2025, 2035, and 2039, if the result is a surplus, 
     that amount shall be transferred to the Postal Service 
     Retiree Health Benefits Fund, and any prior amortization 
     schedule for payments shall be terminated.
       ``(D) Amortization schedules established under this 
     paragraph shall be set in accordance with generally accepted 
     actuarial practices and principles, with interest computed at 
     the rate used in the most recent valuation of the Civil 
     Service Retirement System.
       ``(E) The United States Postal Service shall pay the 
     amounts so determined to the Office, with payments due not 
     later than the date scheduled by the Office.
       ``(3) Notwithstanding any other provision of law, in 
     computing the amount of any payment under any other 
     subsection of this section that is based upon the amount of 
     the unfunded liability, such payment shall be computed 
     disregarding that portion of the unfunded liability that the 
     Office determines will be liquidated by payments under this 
     subsection.''.
       (b) Credit Allowed for Military Service.--In the 
     application of section 8348(g)(2) of title 5, United States 
     Code, for the fiscal year 2006, the Office of Personnel 
     Management shall include, in addition to the amount otherwise 
     computed under that paragraph, the amounts that would have 
     been included for the fiscal years 2003 through 2005 with 
     respect to credit for military service of former employees of 
     the United States Postal Service as though the Postal Civil 
     Service Retirement System Funding Reform Act of 2003 (Public 
     Law 108-18) had not been enacted, and the Secretary of the 
     Treasury shall make the required transfer to the Civil 
     Service Retirement and Disability Fund based on that amount.

     SEC. 803. HEALTH INSURANCE.

       (a) In General.--
       (1) Funding.--Chapter 89 of title 5, United States Code, is 
     amended--
       (A) in section 8906(g)(2)(A), by striking ``shall be paid 
     by the United States Postal Service.'' and inserting ``shall 
     be paid first from the Postal Service Retiree Health Benefits 
     Fund up to the amount contained in the Fund, with any 
     remaining amount paid by the United States Postal Service.''; 
     and
       (B) by inserting after section 8909 the following:

     ``Sec. 8909a. Postal Service Retiree Health Benefit Fund

       ``(a) There is in the Treasury of the United States a 
     Postal Service Retiree Health Benefits Fund which is 
     administered by the Office of Personnel Management.
       ``(b) The Fund is available without fiscal year limitation 
     for payments required under section 8906(g)(2)(A).
       ``(c) The Secretary of the Treasury shall immediately 
     invest, in interest-bearing securities of the United States 
     such currently available portions of the Fund as are not 
     immediately required for payments from the Fund. Such 
     investments shall be made in the same manner as investments 
     for the Civil Service Retirement and Disability Fund under 
     section 8348.
       ``(d)(1) Not later than June 30, 2006, and by June 30 of 
     each succeeding year, the Office shall compute the net 
     present value of the future payments required under section 
     8906(g)(2)(A) and attributable to the service of Postal 
     Service employees during the most recently ended fiscal year.
       ``(2)(A) Not later than June 30, 2006, the Office shall 
     compute, and by June 30 of each succeeding year, the Office 
     shall recompute the difference between--
       ``(i) the net present value of the excess of future 
     payments required under section 8906(g)(2)(A) for current and 
     future United States Postal Service annuitants as of the end 
     of the fiscal year ending on September 30 of that year; and
       ``(ii)(I) the value of the assets of the Postal Retiree 
     Health Benefits Fund as of the end of the fiscal year ending 
     on September 30 of that year; and
       ``(II) the net present value computed under paragraph (1).
       ``(B) Not later than June 30, 2006, the Office shall 
     compute, and by June 30 of each succeeding year shall 
     recompute, an amortization schedule including a series of 
     annual installments which provide for the liquidation by 
     September 30, 2045, or within 15 years, whichever is later, 
     of the net present value determined under subparagraph (A), 
     including interest at the rate used in that computation.
       ``(3) Not later than September 30, 2006, and by September 
     30 of each succeeding year, the United States Postal Service 
     shall pay into such Fund--
       ``(A) the net present value computed under paragraph (1); 
     and
       ``(B) the annual installment computed under paragraph 
     (2)(B).
       ``(4) Computations under this subsection shall be made 
     consistent with the assumptions and methodology used by the 
     Office for financial reporting under subchapter II of chapter 
     35 of title 31.
       ``(5) After consultation with the United States Postal 
     Service, the Office shall promulgate any regulations the 
     Office determines necessary under this subsection.''.
       (2) Technical and conforming amendment.--The table of 
     sections for chapter 89 of title 5, United States Code, is 
     amended by inserting after the item relating to section 8909 
     the following:

``8909a. Postal Service Retiree Health Benefits Fund.''.

       (b) Transitional Adjustment for Fiscal Year 2006.--For 
     fiscal year 2006, the amounts paid by the Postal Service in 
     Government contributions under section 8906(g)(2)(A) of title 
     5, United States Code, for fiscal year 2006 contributions 
     shall be deducted from the initial payment otherwise due from 
     the Postal Service to the Postal Service Retiree Health 
     Benefits Fund under section 8909a(d)(3) of such title as 
     added by this section.

     SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

       Section 3 of the Postal Civil Service Retirement System 
     Funding Reform Act of 2003 (Public Law 108-18) is repealed.

     SEC. 805. EFFECTIVE DATES.

       (a) In General.--Except as provided under subsection (b), 
     this title shall take effect on October 1, 2005.
       (b) Termination of Employer Contribution.--The amendment 
     made by paragraph (1) of section 802(a) shall take effect on 
     the first day of the first pay period beginning on or after 
     October 1, 2005.

                TITLE IX--COMPENSATION FOR WORK INJURIES

     SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

       (a) Time of Accrual of Right.--Section 8117 of title 5, 
     United States Code, is amended--
       (1) by striking ``An employee'' and inserting ``(a) An 
     employee other than a Postal Service employee''; and
       (2) by adding at the end the following:
       ``(b) A Postal Service employee is not entitled to 
     compensation or continuation of pay for the first 3 days of 
     temporary disability, except as provided under paragraph (3) 
     of subsection (a). A Postal Service employee may use annual 
     leave, sick leave, or leave without pay during that 3-day 
     period, except that if the disability exceeds 14 days or is 
     followed by permanent disability, the employee may have their 
     sick leave or annual leave reinstated or receive pay for the 
     time spent on leave without pay under this section.''.
       (b) Technical and Conforming Amendment.--Section 8118(b)(1) 
     of title 5, United States Code, is amended to read as 
     follows:
       ``(1) without a break in time, except as provided under 
     section 8117(b), unless controverted under regulations of the 
     Secretary''.

     SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.

       (a) Total Disability.--Section 8105 of title 5, United 
     States Code, is amended--
       (1) in subsection (a), by adding at the end the following: 
     ``This section applies to a Postal Service employee, except 
     as provided under subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In this subsection, the term `retirement age' has 
     the meaning given under section 216(l)(1) of the Social 
     Security Act (42 U.S.C. 416(l)(1)).

[[Page 5325]]

       ``(2) Notwithstanding any other provision of law, for any 
     injury occurring on or after the date of enactment of the 
     Postal Accountability and Enhancement Act, and for any new 
     claim for a period of disability commencing on or after that 
     date, the compensation entitlement for total disability is 
     converted to 50 percent of the monthly pay of the employee on 
     the later of--
       ``(A) the date on which the injured employee reaches 
     retirement age; or
       ``(B) 1 year after the employee begins receiving 
     compensation.''.
       (b) Partial Disability.--Section 8106 of title 5, United 
     States Code, is amended--
       (1) in subsection (a), by adding at the end the following: 
     ``This section applies to a Postal Service employee, except 
     as provided under subsection (d).''; and
       (2) by adding at the end the following:
       ``(d)(1) In this subsection, the term `retirement age' has 
     the meaning given under section 216(l)(1) of the Social 
     Security Act (42 U.S.C. 416(l)(1)).
       ``(2) Notwithstanding any other provision of law, for any 
     injury occurring on or after the date of enactment of this 
     subsection, and for any new claim for a period of disability 
     commencing on or after that date, the compensation 
     entitlement for partial disability is converted to 50 percent 
     of the difference between the monthly pay of an employee and 
     the monthly wage earning capacity of the employee after the 
     beginning of partial disability on the later of--
       ``(A) the date on which the injured employee reaches 
     retirement age; or
       ``(B) 1 year after the employee begins receiving 
     compensation.''.

                         TITLE X--MISCELLANEOUS

     SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

       Section 404 of title 39, United States Code (as amended by 
     this Act), is further amended by adding at the end the 
     following:
       ``(d) The Postal Service may employ guards for all 
     buildings and areas owned or occupied by the Postal Service 
     or under the charge and control of the Postal Service, and 
     may give such guards, with respect to such property, any of 
     the powers of special policemen provided under section 1315 
     of title 40. The Postmaster General, or the designee of the 
     Postmaster General, may take any action that the Secretary of 
     Homeland Security may take under section 1315 of title 40, 
     with respect to that property.

     SEC. 1002. EXPANDED CONTRACTING AUTHORITY.

       (a) Amendment to Title 39, United States Code.--
       (1) Contracts with air carriers.--Subsection (e) of section 
     5402 of title 39, United States Code, is amended--
       (A) by striking the matter preceding paragraph (2) and 
     inserting the following:
       ``(e)(1) The Postal Service may contract with any air 
     carrier for the transportation of mail by aircraft in 
     interstate air transportation, including the rates for that 
     transportation, either through negotiations or competitive 
     bidding.'';
       (B) by redesignating paragraph (2) as paragraph (4); and
       (C) by inserting after paragraph (1) the following:
       ``(2) Notwithstanding subsections (b) through (d), the 
     Postal Service may contract with any air carrier or foreign 
     air carrier for the transportation of mail by aircraft in 
     foreign air transportation, including the rates for that 
     transportation, either through negotiations or competitive 
     bidding, except that--
       ``(A) any such contract may be awarded only to--
       ``(i) an air carrier holding a certificate required by 
     section 41101 of title 49 or an exemption therefrom issued by 
     the Secretary of Transportation;
       ``(ii) a foreign air carrier holding a permit required by 
     section 41301 of title 49 or an exemption therefrom issued by 
     the Secretary of Transportation; or
       ``(iii) a combination of such air carriers or foreign air 
     carriers (or both);
       ``(B) mail transported under any such contract shall not be 
     subject to any duty-to-carry requirement imposed by any 
     provision of subtitle VII of title 49 or by any certificate, 
     permit, or corresponding exemption authority issued by the 
     Secretary of Transportation under that subtitle;
       ``(C) during the 5-year period beginning 1 year after the 
     date of enactment of the Postal Accountability and 
     Enhancement Act, the Postal Service may not under this 
     paragraph--
       ``(i) contract for service between a pair or combination of 
     pairs of points in foreign air transportation with--
       ``(I) a foreign air carrier; or
       ``(II) an air carrier to the extent that service provided 
     would be offered through a code sharing arrangement in which 
     the air carrier's designator code is used to identify a 
     flight operated by a foreign air carrier; or
       ``(ii) tender mail in foreign air transportation under 
     contracts providing for the carriage of mail in foreign air 
     transportation over all (or substantially all, as determined 
     by the Postal Service) of a carrier's routes or all or 
     substantially all of a carrier's routes within a geographic 
     area determined by the Postal Service on the basis of a 
     common unit price per mile and a separate terminal price to--
       ``(I) a foreign air carrier; or
       ``(II) an air carrier to the extent that service provided 
     would be offered through a code sharing arrangement in which 
     the air carrier's designator code is used to identify a 
     flight operated by a foreign air carrier, unless--

       ``(aa) with respect to clause (i) and this clause, fewer 
     than 2 air carriers capable of providing service to the 
     Postal Service adequate for its purposes between the pair or 
     combination of pairs of points in foreign air transportation 
     offer scheduled service between the pair or combination of 
     pairs of points in foreign air transportation which are the 
     subject of the contract or tender;
       ``(bb) with respect to clause (i), after competitive 
     solicitation, the Postal Service has not received at least 2 
     offers from eligible air carriers capable of providing 
     service to the Postal Service adequate for its purposes 
     between the pair of combination of pairs of points in foreign 
     air transportation; or
       ``(cc) with respect to this clause, after competitive 
     solicitation, fewer than 2 air carriers under contract with 
     the Postal Service offer service adequate for the Postal 
     Service's purposes between the pair or combination of pairs 
     of points in foreign air transportation for which tender is 
     being made;

       ``(D) beginning 6 years after the date of enactment of the 
     Postal Accountability and Enhancement Act, every contract 
     that the Postal Service awards to a foreign air carrier under 
     this paragraph shall be subject to the continuing requirement 
     that air carriers shall be afforded the same opportunity to 
     carry the mail of the country to and from which the mail is 
     transported and the flag country of the foreign air carrier, 
     if different, as the Postal Service has afforded the foreign 
     air carrier; and
       ``(E) the Postmaster General shall consult with the 
     Secretary of Defense concerning actions that affect the 
     carriage of military mail transported in foreign air 
     transportation.
       ``(3) Paragraph (2) shall not be interpreted as suspending 
     or otherwise diminishing the authority of the Secretary of 
     Transportation under section 41310 of title 49.''.
       (2) Definitions.--Section 5402(a) of title 39, United 
     States Code, is amended by striking paragraph (2) and 
     inserting the following:
       ``(2) The terms `air carrier', `air transportation', 
     `foreign air carrier', `foreign air transportation', 
     `interstate air transportation', and `mail' have the meanings 
     given such terms in section 40102(a) of title 49.''.
       (b) Amendments to Title 49, United States Code.--
       (1) Authority of postal service to provide for interstate 
     air transportation of mail.--Section 41901(a) of title 49, 
     United States Code, is amended to read as follows:
       ``(a) Title 39.--The United States Postal Service may 
     provide for the transportation of mail by aircraft in air 
     transportation under this chapter and under chapter 54 of 
     title 39.''.
       (2) Schedules for certain transportation of mail.--Section 
     41902 of title 49, United States Code, is amended--
       (A) by striking subsection (b) and inserting the following:
       ``(b) Statements on Places and Schedules.--Every air 
     carrier shall file with the Secretary of Transportation and 
     the United States Postal Service a statement showing--
       ``(1) the places between which the carrier is authorized to 
     transport mail in Alaska;
       ``(2) every schedule of aircraft regularly operated by the 
     carrier between places described under paragraph (1) and 
     every change in each schedule; and
       ``(3) for each schedule, the places served by the carrier 
     and the time of arrival at, and departure from, each 
     place.'';
       (B) in subsection (c), by striking ``(b)(3)'' and inserting 
     ``(b)''; and
       (C) in subsection (d), in the first sentence, by striking 
     ``(b)(3)'' and inserting ``(b)''.
       (3) Prices for foreign transportation of mail.--Section 
     41907 of title 49, United States Code, is amended--
       (A) by striking ``(a) Limitations.--''; and
       (B) by striking subsection (b).
       (4) Technical and conforming amendments.--Sections 41107, 
     41901(b)(1), 41902(a), and 41903 (a) and (b) of title 49, 
     United States Code, are amended by striking ``in foreign air 
     transportation or''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 1 year after the date of enactment of this 
     Act.

     SEC. 1003. REPORT ON THE UNITED STATES POSTAL INSPECTION 
                   SERVICE AND THE OFFICE OF THE INSPECTOR GENERAL 
                   OF THE UNITED STATES POSTAL SERVICE.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Government Accountability Office 
     shall review the functions, responsibilities, and areas of 
     possible duplication of the United States Postal Inspection 
     Service and the Office of the Inspector General of the United 
     States Postal Service and submit a report on the review to 
     the Committee on Homeland Security and Governmental Affairs 
     of the Senate.
       (b) Contents.--The report under this section shall include 
     recommendations for legislative actions necessary to clarify 
     the roles of the United States Postal Inspection Service and 
     the Office of the Inspector General of the United States 
     Postal Service to strengthen oversight of postal operations.

[[Page 5326]]



     SEC. 1004. SENSE OF CONGRESS REGARDING POSTAL SERVICE 
                   PURCHASING REFORM.

       It is the sense of Congress that the Postal Service 
     should--
       (1) ensure the fair and consistent treatment of suppliers 
     and contractors in its current purchasing policies and any 
     revision or replacement of such policies, such as through the 
     use of competitive contract award procedures, effective 
     dispute resolution mechanisms, and socioeconomic programs; 
     and
       (2) implement commercial best practices in Postal Service 
     purchasing policies to achieve greater efficiency and cost 
     savings as recommended in July 2003 by the President's 
     Commission on the United States Postal Service, in a manner 
     that is compatible with the fair and consistent treatment of 
     suppliers and contractors, as befitting an establishment in 
     the United States Government.

           postal accountability and enhancement act of 2005

  Mr. CARPER. Mr. President, I rise today to join my friend from Maine, 
Senator Collins, in introducing the Postal Accountability and 
Enhancement Act of 2005, legislation that makes the reforms necessary 
for the Postal Service to thrive in the 21st Century and to better 
serve the American people. This bill is almost identical to S. 2468, 
the version of the Postal Accountability and Enhancement Act that was 
unanimously reported out of the Governmental Affairs Committee last 
June on a 17-0 vote.
  When I rose with Senator Collins to introduce S. 2468 last year, I 
noted that some of our colleagues may wonder why we need postal reform. 
Most of us probably receive few complaints from our constituents about 
the Postal Service. Most Americans like the Postal Service just the way 
it is and don't want to see it changed. We must keep in mind, however, 
that, despite the fact that the mailing industry, and the economy as a 
whole, have changed radically over the years, the Postal Service has, 
for the most part, remained unchanged for more than three decades now.
  Senator Collins and I are re-introducing this bill today, then, 
because the Postal Service continues to operate under a business model 
created a generation ago.
  In the early 1970s, Senator Stevens led the effort in the Senate to 
create the Postal Service out of the failing Post Office Department. At 
the time, the Post Office Department received about 20 percent of its 
revenue from taxpayer subsidies. Labor-management relations were at 
their worst, service was suffering and there was little hope the 
department would be able to muster the resources necessary to service a 
growing delivery network.
  By all accounts, the product of Senator Stevens' labors, the Postal 
Reorganization Act signed into law by President Nixon in 1971, has been 
a phenomenal success. The Postal Service today receives virtually no 
taxpayer support. The service its hundreds of thousands of employees 
provide to every American, nearly every day is second to none. The 
Postal Service now delivers to 141 million addresses each day and is 
the anchor of a $900 billion mailing industry.
  As we celebrate the success of the Postal Reorganization Act, 
however, we need to be thinking about what needs to be done to help the 
Postal Service continue to thrive in the years to come.
  The Postal Service is clearly in need of modernization once again. 
Back in the early 1970s, none of the Postal Service's customers had 
access to fax machines, cell phones or pagers. Nobody imagined that we 
would ever enjoy conveniences like e-mail and electronic bill pay that 
could replace a First Class letter. That, of course, is no longer the 
case. Most of the mall I receive from my constituents these days 
arrives via fax and e-mail instead of hard copy mail, a marked change 
from my days in the House and even from my more recent days as Governor 
of Delaware.
  This continuing electronic diversion of mail, coupled with a slow 
economy and the threat of terrorism, has made for some rough going at 
the Postal Service of late. In 2001, as Postmaster General Potter came 
onboard, the Postal Service was projecting its third consecutive year 
of deficits. They lost $199 million in 2000 and $1.68 billion in 2001. 
They were projecting losses of up to $4 billion in fiscal year 2002. 
Mail volume was falling, revenues were below projections and the Postal 
Service was estimating that it needed to spend $4 billion on security 
enhancements in order to prevent a repeat of the tragic anthrax attacks 
that took several lives. The Postal Service was also perilously close 
to its $15 billion debt ceiling and had been forced to raise rates 
three times in less than two years in order to pay for its operations.
  A number of positive steps have been taken since 2001. General Potter 
has led a commendable effort to improve productivity and make the 
Postal Service more efficient. Billions of dollars in costs have been 
taken out of the system--some $4.3 billion since 2002--according to the 
Postal Service's most recent annual report. Thousands of positions have 
been eliminated through attrition and successful automation programs 
have yielded great benefits, resulting in the smallest workforce seen 
at the Postal Service since the early 1980s.
  Perhaps most dramatically, the Postal Service learned in 2002 that an 
unfunded pension liability they once believed was as high as $32 
billion was actually significantly lower. Senator Collins and I 
responded with legislation, the Postal Civil Service Retirement System 
Funding Reform Act, which cut the amount the Postal Service must pay 
into the Civil Service Retirement System each year by nearly $3 
billion. This has freed up money for debt reduction and prevented the 
need for further rate increases until at least next year. The Postal 
Service's debt to the Treasury now stands at about $1.8 billion--the 
lowest it's been in more than 20 years--and rates have remained stable 
since the passage of the pension bill.
  Aggressive cost cutting and a lower pension payment, then, have put 
off the postal emergency we thought was right around the corner just a 
few years ago. But cost cutting can only go so far and will not solve 
the Postal Service's long-term challenges. These long-term challenges 
were laid out in stark detail last year when Postmaster General Potter 
and then-Postal Board of Governors Chairman David Fineman testified 
before the House Government Reform Committee's Special Panel on Postal 
Reform. Mr. Fineman pointed out in his testimony that the total volume 
of mail delivered by the Postal Service has declined by more than 5 
billion pieces since 2000. Over the same period, the number of homes 
and businesses the Postal Service delivers to have increased by more 
than 5 million. First Class mail, the largest contributor to the Postal 
Service's bottom line, is leading the decline in volume. Some of those 
disappearing First Class letters are being replaced by advertising 
mail, which earns significantly less. Many First Class letters have 
likely been lost for good to fax machines, e-mail and electronic bill 
pay.
  Despite electronic diversion, the Postal Service continues to add 
between 1.6 million and 1.9 million new delivery points each year, 
creating the need for thousands of new routes and thousands of new 
letter carriers to work them. In addition, faster-growing parts of the 
country will need new or expanded postal facilities in the coming 
years. As more and more customers turn to electronic forms of 
communication, however, letter carriers are bringing fewer pieces of 
mail to each address they serve. The rate increases that will be needed 
to maintain the Postal Service's current infrastructure, finance 
retirement obligations to its current employees, pay for new letter 
carriers and build facilities in growing parts of the country will only 
erode mail volume further.
  The Postal Service has been trying to modernize on its own. General 
Potter and his management team are making progress, but there is only 
so much they can do without legislative change. Even if the Postal 
Service begins to see volume and revenues pick up, we will still need 
to make fundamental changes in the way the Postal Service operates in 
order to make them as successful in the 21st Century as they were in 
the 20th Century.
  This is where the Postal Accountability and Enhancement Act comes in.

[[Page 5327]]

First, our bill begins the process of developing a modern rate system 
for pricing Postal Service products. The new system, to be developed by 
a strengthened Postal Rate Commission, re-named the Postal Regulatory 
Commission, would allow retained earnings, provide the Postal Service 
significantly more flexibility in setting prices and streamline today's 
burdensome rate making process. To provide stability, predictability 
and fairness for the Postal Service's customers, rates would remain 
within a cap to be set each year by the Regulatory Commission.
  The second major provision in the Postal Accountability and 
Enhancement Act requires the Postal Service to set strong service 
standards for its Market Dominant products, a category made up mostly 
of those products, like First Class mail, that are part of the postal 
monopoly. The new standards will improve service and will be used by 
the Postal Service to establish performance goals, rationalize its 
physical infrastructure and streamline its workforce.
  Third, the Postal Accountability and Enhancement Act ensures that the 
Postal Service competes fairly. The bill prohibits the Postal Service 
from issuing anti-competitive regulations. It also subjects the Postal 
Service to state zoning, planning and land use laws, requires them to 
pay an assumed Federal income tax on products like packages and Express 
Mail that private firms also offer and requires that these products as 
a whole pay their share of the Postal Service's institutional costs. 
The Federal Trade Commission will further study any additional legal 
benefits the Postal Service enjoys that its private sector competitors 
do not. The Regulatory Commission will then find a way to use the rate 
system to level the playing field.
  Fourth, the Postal Accountability and Enhancement Act improves Postal 
Service accountability, mostly by strengthening oversight. 
Qualifications for membership on the Regulatory Commission would be 
stronger than those for the Rate Commission so that Commissioners would 
have a background in finance or economics. Commissioners would also 
have the power to demand information from the Postal Service, including 
by subpoena, and have the power to punish the Postal Service for 
violating rate and service regulations. In addition, the Regulatory 
Commission will make an annual determination as to whether the Postal 
Service is in compliance with existing rate regulations and service 
standards and will have the power to punish them for any 
transgressions.
  Fifth, the Postal Accountability and Enhancement Act revises two 
provisions from the ``Postal Civil Service Retirement System Funding 
Reform Act in an effort to shore up the Postal Service's finances in 
the years to come. As our colleagues may be aware, that bill required 
the Postal Service, beginning in 2006, to deposit any savings it enjoys 
by virtue of lower pension payments into an escrow account. In this 
bill, we eliminate that requirement in order to allow the Postal 
Service to spend the money that would have gone into escrow to begin 
pre-funding on a current basis its $50 billion retiree health 
obligation. Leftover savings would be used to continue paying down debt 
to the Treasury and to maintain rate stability.
  The bill Senator Collins and I are introducing today also reverses 
the provision in the Postal Civil Service Retirement System Funding 
Reform Act that made the Postal Service the only Federal agency 
shouldered with the burden of paying the additional pension benefits 
owed to their employees by virtue of past military service.
  Finally, and most importantly, the Postal Accountability and 
Enhancement Act preserves universal service and the postal monopoly and 
forces the Postal Service to concentrate solely on what it does best--
processing and delivering the mail to all Americans. Our bill limits 
the Postal 'Service, for the first time, to providing ``postal 
services,'' meaning they would be prohibited from engaging in other 
lines of business, such as e-commerce, that draw time and resources 
away from letter and package delivery. It also explicitly preserves the 
requirement that the Postal Service ``bind the Nation together through 
the mail'' and serve all parts of the country, urban, suburban and 
rural, in a non-discriminatory fashion. Any service standards 
established by the Postal Service will continue to ensure delivery to 
every address, every day. In addition, the bill maintains the 
prohibition on closing post offices solely because they operate at a 
deficit, ensuring that rural and urban customers continue to enjoy full 
access to retail postal services.
  As I mentioned at the beginning of my remarks, this bill that Senator 
Collins and I are introducing today is almost identical to the version 
of the Postal Accountability and Enhancement Act that was unanimously 
reported out of the Governmental Affairs Committee last June on a 17-0 
vote. A similar bill was unanimously reported out of the House 
Government Reform Committee last year as well. Neither bill was 
considered on the floor of the Senate or the House, however, due--I'm 
told--to objections raised by the administration.
  I was deeply disappointed that we were unable to complete action on 
postal reform last year. However, Senator Collins and I, our staffs and 
our colleagues in the House have had a series of discussions with 
administration officials since the 108th Congress adjourned last year 
and have narrowed our differences with them on these issues 
significantly. I'm pleased to report that this bill contains a handful 
of new provisions drafted to address specific concerns raised by the 
Administration.
  First, we demand even greater financial transparency from the Postal 
Service. The Postal Accountability and Enhancement Act gives the Postal 
Service more room to operate like a private business. For quite some 
time, however, it's been clear that the financial reporting required of 
the Postal Service has been lacking. It's difficult to look at the 
Postal Service's financial reports and learn as much as we'd like to 
learn about its current condition and its future liabilities. For this 
reason, our bill requires the Postal Service to begin filing the very 
same quarterly and annual Securities and Exchange Commission disclosure 
forms that private sector firms must file.
  Second, we add language drafted at the request of the Treasury 
Department that would ensure that the Postal Service does its banking 
and investing with the Federal Financing Bank. Our original bill would 
have given the Postal Service almost total freedom to invest any 
revenue earned by its competitive products in the market as if they 
were a private business. Treasury feared this could have a negative 
impact on the markets and the issuance of federal debt.
  Third, we give the Postal Board of Governors the ability to better 
reward top Postal Service executives for their performance and recruit 
top talent. We accomplish this by raising the cap on executive pay at 
the Postal Service to the level of compensation given to the Vice 
President. This will allow the Board to reward high-performing 
managers. It should also make it easier to recruit and retain qualified 
managers.
  Fourth, we ensure that the rate cap to be developed by the Postal 
Regulatory Commission is truly workable by requiring that the cap be 
based on the Consumer Price Index. A CPI-based cap should guarantee 
that the Postal Service has the room to operate each year without 
breaking the cap or turning to the Treasury for assistance while still 
giving mailers the predictability they need.
  This is significant progress but we still have our work cut out for 
us. I look forward to working in the coming weeks with Chairman 
Collins, my colleagues on the Homeland Security and Governmental 
Affairs Committee, our House counterparts and the administration to 
work out any remaining differences we have. It's vitally important that 
we succeed.
  The Postal Board of Governors voted last month to go forward with a 
rate increase. If approved by the Postal Rate Commission, this increase 
will go into effect sometime next year. Thanks to increased 
productivity, this is expected to be a lower increase than

[[Page 5328]]

many observers feared. Without postal reform, however, especially the 
language freeing the Postal Service from the escrow requirement and the 
military pension obligation, future rate increases will be higher. 
Probably much higher. This will only speed the flight from hard copy 
mail to electronic forms of communication. The impact of this flight 
will be significant, not just at the Postal Service but throughout the 
entire economy.
  A recent study conducted by the Envelope Manufacturers Association 
Foundation's Institute for Postal Studies found that, if mail volume 
were to decline by 10 percent more than 780,000 mail-related jobs will 
be at risk across the country. More than 2,000 of those jobs are in 
Delaware. If mail volume were to decline by 20 percent more than 
1,500,000 mailing industry jobs will be at risk across the country. 
More than 4,000 of those jobs are in Delaware. We need to act soon to 
prevent this from happening.
  In closing, I'd like to point out how amazing it is to me to think 
that the Postal Service, something Senator Stevens was literally able 
to put together at his kitchen table at the very beginning of his 
career, could have lasted so long and had such an enduring impact on 
every American. I'm hopeful that the model Senator Collins and I have 
set out in this bill today can last at least that long and have just as 
positive an impact on our nation and our economy as the Postal Service 
has had over the past 35 years.


              collins and gregg colloquy on postal reform

  Ms. COLLINS. Mr. President, today I introduce the Postal 
Accountability and Enhancement Act of 2005, a bill designed to help the 
225-year-old Postal Service meet the challenges of the 21st century. I 
originally introduced this bill last May. In June of 2004, the bill was 
unanimously reported out of the Homeland Security and Governmental 
Affairs Committee. That bill, S. 2468, had the strong endorsements of 
the National Rural Letter Carriers Association, the National 
Association of Letter Carriers, the National Association of Postmasters 
of the United States, and the Coalition for a 21st Century Postal 
Service--which represents thousands of the major mailers, employee 
groups, small business, and other users of the mail. It also had the 
strong bi-partisan support of twenty-two members of the United States 
Senate. Unfortunately, the 108th Congress expired before my bill passed 
the Senate.
  It has long been acknowledged that the financial and operational 
problems confronting the Postal Service are serious. At present, the 
Postal Service has roughly $70 billion to $80 billion in unfunded 
liabilities and obligations, which include $1.8 billion in debt to the 
U.S. Treasury, $7.6 billion for workers' compensation claims, $3.5 
billion for retirement costs, and as much as $47 billion to cover 
retiree health care costs. The Government Accountability Office's 
Comptroller General, David Walker, has pointed to the urgent need for 
``fundamental reforms to minimize the risk of a significant taxpayer 
bailout or dramatic postal rate increases.'' The Postal Service has 
been on GAO's ``High-Risk'' List since April of 2001. The Postal 
Service is at risk of a ``death spiral'' of decreasing volume and 
increasing rates that lead to further decreases in volume.
  The Postal Service is the linchpin of a $900-billion mailing industry 
that employs 9 million Americans in fields as diverse as direct 
mailing, printing, catalog production, and paper manufacturing. The 
health of the Postal Service is essential to the vitality of thousands 
of companies and the millions that they employ.
  First and foremost, my bill preserves the basic features of universal 
service--affordable rates, frequent delivery, and convenient community 
access to retail postal services. If the Postal Service were no longer 
to provide universal service and deliver mail to every customer, the 
affordable communication link upon which many Americans rely would be 
jeopardized.
  This postal reform legislation grants the Postal Service Board of 
Governors the authority to set rates for competitive products like 
Express Mail and Parcel Post, as long as these prices do not result in 
cross subsidy from market-dominant products. It replaces the current 
lengthy and litigious rate-setting process with a rate cap-based 
structure for market-dominant products such as first-class mail, 
periodicals, and library mail. The bill also introduces new safeguards 
against unfair competition by the Postal Service in competitive 
markets.
  The Postal Accountability and Enhancement Act will greatly improve 
the financial transparency of the Postal Service. The USPS would be 
required to file with the Postal Regulatory Commission certain 
Securities and Exchange Commission financial disclosure forms, along 
with detailed annual reports on the status of the Postal Service's 
pension and postretirement health obligations in order to ensure 
increased financial transparency.
  The legislation repeals a provision of Public Law 108-18 which 
requires that money owed to the Postal Service due to an overpayment 
into the Civil Service Retirement System Fund be held in an escrow 
account, which would essentially ``free up'' $78 billion over a period 
of 60 years. These savings would be used to not only pay off debt to 
the U.S. Treasury and to fund health care liabilities, but also to 
mitigate rate increases. It also returns to the Department of the 
Treasury the responsibility for funding CSRS pension benefits relating 
to the military service of postal retirees--a responsibility that the 
Treasury Department bears for all executive branch departments and 
agencies.
  The bill also converts workers' compensation benefits for total or 
partial disability to a retirement annuity when the affected employee 
reaches 65 years of age, and puts into place a 3-day waiting period 
before an employee is eligible to receive 45 days of continuation of 
pay. These changes will save the Postal Service approximately $50 
million in workers' compensation costs over a 10-year period.
  The Postal Service has reached a critical juncture. If we are to save 
and strengthen this vital service upon which so many Americans rely for 
communication and their livelihoods, the time to act is now.
  I therefore ask the Senior Senator from New Hampshire and chairman of 
the Senate Budget Committee whether I can count on his assistance and 
support to help pass this legislation this Congress.
  Mr. GREGG. I thank the chairman of the Homeland Security and 
Governmental Affairs Committee for her question. I do recognize the 
economic importance of a healthy postal service, and as a Senator from 
the rural State of New Hampshire, I appreciate the role of a healthy 
Postal Service in meeting the universal service needs of rural 
residents. I look forward to reading the bill, reading the CBO cost 
estimate of the bill, and working with the Senator from Maine to ensure 
that a true, fiscally responsible postal reform bill is enacted.
  Ms. COLLINS. I thank my friend from New Hampshire and look forward to 
working with him on this important piece of legislation.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Thomas, Mr. Isakson, and Mr. 
        Burns):
  S. 663. A bill to amend the Internal Revenue Code of 1986 to allow 
self-employed individuals to deduct health insurance costs in computing 
self-employment taxes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, today my colleague, Senator Thomas, and 
I along with Senator Isakson are re-introducing the ``Equity for Our 
Nation's Self-Employed Act of 2005.'' This important legislation 
corrects an inequity that currently exists in our tax code that forces 
self-employed workers to pay payroll taxes on the funds used to pay for 
their health insurance while larger businesses do not. Because of this 
inequity, health insurance is more expensive for the self-employed. At 
a time when the uninsured are growing at an alarming rate, we need to 
find ways to reduce the cost of health insurance. This legislation is a 
first logical step.

[[Page 5329]]

  Under current law, the self-employed are allowed an income tax 
deduction for the amount they pay for health insurance, but must still 
calculate their payroll taxes as if they were not allowed this income 
tax deduction. The result is that the self-employed are paying payroll 
taxes on the amount they pay for health insurance. As previously 
stated, larger businesses do not include pay payroll taxes on the 
amount they pay for health insurance. The legislation we are 
introducing today would stop this inequitable tax treatment and allow 
the self-employed to deduct the amount they pay for health insurance 
from their calculation of payroll taxes.
  This problem affects all self-employed who provide health insurance 
to their families. According to the Census Bureau, there are almost 
74,000 self-employed workers in New Mexico. While we have no idea how 
many of these people in New Mexico have health insurance, we do know 
that roughly 3.6 million working families in the United States paid 
self-employment tax on their health insurance premiums. Estimates 
indicate that roughly 60 percent of our Nation's uninsured are either 
self-employed or work for a small business. According to the Kaiser 
Family Foundation, self-employed workers spend more than $9,000 per 
year to provide health insurance for their family. Because they cannot 
deduct this as an ordinary business expense, those that spend this 
amount will pay a 15.3 percent tax on their premiums resulting in 
almost $1,400 of taxes annually.
  This problem was identified by the National Taxpayer Advocate in 
several of her annual reports to Congress and our legislation to 
correct it is supported by a variety of groups including the National 
Association for the Self-Employed, the National Small Business 
Association, the National Federation of Independent Businesses, the 
U.S. Chamber of Commerce, the U.S. Hispanic Chamber of Commerce, and 
the Small Business Legislative Council.
  I look forward to working with my colleagues to get this important 
legislation passed.
  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. 663

       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 ``Equity for Our Nation's Self 
     Employed Act of 2005''.

     SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS IN COMPUTING 
                   SELF-EMPLOYMENT TAXES.

       (a) In General.--Section 162(l) of the Internal Revenue 
     Code of 1986 (relating to special rules for health insurance 
     costs of self-employed individuals) is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Graham, and Mr. Akaka):
  S. 665. A bil. to reauthorize and improve the Spark M. Matsunaga 
Hydrogen Research, Development, and Demonstration Act of 1990 to 
establish a program to commercialize hydrogen and fuel cell technology, 
and for other purposes; to the Committee on Energy and Natural 
Resources.

  Mr. DORGAN. Mr. President, I rise today to introduce a piece of 
legislation, along with Mr. Graham, that I believe is needed to solve 
our long-term energy need. It is imperative that our Nation implements 
a roadmap to achieving our goal of creating a hydrogen fuel-cell 
economy. I believe this measure is the best way to diversify our energy 
portfolio and protect our national security interests.
  This legislation would invest $7.9 billion over 10 years in hydrogen 
fuel cell research and deployment. Additionally, the measure would 
change the current direction of the hydrogen program, allowing each 
program related to developing hydrogen to build off of each other. 
Similar to what has been recommended by the National Academies, it 
realizes a more conscious systems approach to program design.
  You see, currently the hydrogen program is like a series of small 
block grants. We send money to the Department of Energy, DOE, and 
simply tell them to come up with a program. Under this scenario, with 
little accountability or direction, the program has not moved as 
swiftly as we would like.
  Changing the structure of the hydrogen program will ensure that the 
long-term goal is reached and the benefits are reaped. What this 
legislation does is compartmentalize each program at DoE related to 
hydrogen development. Instead of sending a chunk of money, the funds 
will now be targeted to programs that will be the foundation for 
building and commercializing a hydrogen fuel-cell economy.
  Additionally, this measure uses the successful ``learning 
demonstration'' technique of building institutional relationships among 
key industries and with the Government that has strong support from 
both the fuels industry and the auto sector, and applies this as a 
program design to all large scale systems demonstrations. These 
demonstrations are then linked to refining the R&D tasks again after 
the demonstrations complete their early phases, so that concrete 
learning is integrated directly into a final round of more focused R&D.
  This bill enables a more strategic approach to program planning in 
the formation of a hydrogen economy. It also includes more interaction 
between R&D and demonstrations--with emphasis on development--that is 
the key to accelerating commercialization and movement to market.
  This measure does not reinvent the wheel. Instead, it takes what we 
have learned thus far and focuses our efforts for the future. Providing 
developmental targets and accountability will also allow us to adjust 
our priorities appropriately.
  Introduction of this measure could not come at a more critical time. 
Today, oil prices are at an all time high of $57.00 a barrel. This 
increase has directly hit consumers where it hurts most--in their 
wallets. Today in the State of North Dakota, consumers will spend 
$330,000 more for gasoline than they did this time last year. This is 
nothing more than an additional tax on hard working families who have 
to drive around during the course of their daily lives. It is no longer 
a question of whether you can afford to sign your children up for extra 
curricular activities like baseball or ballet; it is now a question of 
whether you can afford to even take them to these activities.
  It shouldn't be this way, especially in America. However, we continue 
to be beholden to the same generational argument: Where can we dig and 
drill next? We need to jump over this debate and I believe this measure 
does that.
  Let me describe why I think we ought to do this and why focusing our 
attention and resources is important. I will harken back to the Apollo 
program. On May 25, 1961, President John F. Kennedy announced our 
Nation was establishing a goal of sending a man to the Moon and having 
a safe return by the end of the decade.
  The Apollo project was an enormous undertaking. The NASA annual 
budget increased from $500 million in 1960 to $5.2 billion in 1965. It 
represented 5.3 percent of the Federal budget in 1965. Think about 
that. In today's terms, that would be over $115 billion. NASA engaged 
private industry, university research, and academia in a massive way 
and contractor employees increased by a factor of 10, to 376,000 
people, in 1965.
  When President Kennedy said in 1961 it was his vision to have a man 
walk on the Moon by the end of the decade, there was no technological 
capability to do so at that moment and no guarantee it could even be 
done. During the height of the cold war, the Soviets had an advantage 
in space flight and that advantage was of great concern to us. They had 
put up a satellite called Sputnik and the technological barriers facing 
the U.S. in catching up were very significant. The expense and resolve 
were daunting, but yet, on July 20, 1969, Neil Armstrong and Buzz 
Aldrin stood on the surface of the Moon and pantomimed a golf game. In

[[Page 5330]]

a single decade, the President and the country set and reached an 
unthinkable goal.
  Now let's talk about another goal, another big idea, one that we 
ought to establish now for this country and for its future. That is the 
goal of deciding, as President Bush has suggested, that we move toward 
a hydrogen economy and fuel-cells for our vehicles. I will describe why 
I think this is important.
  America's energy security is threatened by our dependence on foreign 
oil. Oil prices are at record highs and America now imports 62 percent 
of the oil it consumes. Our import level is expected to grow to 68 
percent by 2025. Nearly all of our cars and trucks run on gasoline, and 
they are the main reason America imports so much oil. Two-thirds of the 
oil Americans use each day is used for transportation; fuel-cell 
vehicles offer the best hope of dramatically reducing our long-term 
dependence on foreign oil and protecting our national security 
interests.
  The American economy is and will be held hostage by our ability to 
find and import oil from outside of our country's borders. Should this 
cause all of us great concern? Yes. This is a very serious problem. If 
we wake up tomorrow morning, God forbid, and terrorists have 
interrupted the supply of oil to this country--and, yes, that could 
happen--this country's economy will be flat on its back. It will be 
flat on its back because we rely on oil from sources outside this 
country, much of it from very troubled parts of the world. And our 
dependence is only expected to increase.
  Whenever we discuss oil, the debate centers around two issues--
drilling in ANWR and CAFE standards. If it is only those two issues, we 
lose. We need to move beyond these issues. Yes, we can address them, 
but it seems to me if these are our only options, every few years we 
will debate exactly the same issues: Where do we drill next? and, How 
much more efficient can we make a carburetor, through which we run 
gasoline?
  If our energy strategy for this country's future is simply digging 
and drilling, then it is a strategy I call `yesterday forever,' which 
means it doesn't really change very much. Every few years we can debate 
the issue of how dependent we are on oil imports and how dangerous it 
is for us. I think we should have a different debate, one that breaks 
our normal cycle.
  That does not mean we should not dig and drill. We will, we can, and 
we should. We will always use fossil fuels. But these resources must be 
used in a sustainable and efficient manner. We will continue to dig and 
drill, but that cannot be all we do. If it is, we really have not moved 
the ball forward at all. So what else can we do? I believe we should 
chart a different course.
  First of all, using fuel-cells and hydrogen is twice as efficient in 
getting power to a wheel as using the internal combustion engine. 
Second, when we use hydrogen fuel-cells in automobiles or vehicles, we 
are sending water vapor out the tailpipe. What a wonderful thing for 
our environment and our economy. We double the efficiency of the energy 
source, while at the same time eliminating the pollution out of the 
tailpipe. That makes great sense to me.
  In the past I have introduced legislation saying let's move to a 
different kind of technology, a different kind of energy economy; let's 
move to a hydrogen economy using fuel-cells. This bill is different 
from my previous bills because it would not only authorize higher 
funding levels, but just as importantly, it would change the way the 
program works.
  My point is simple. We need accountability and targets and timetables 
in all the programs developing hydrogen. While this measure 
specifically states that we should set a target of 100,000 vehicles on 
the road by 2010 and 2.5 million by 2020, it also includes 
developmental milestones within each program, essentially giving us a 
roadmap of where we need to go and how to get there. If we do not set 
this out, we will not get there. If we do not have the same resolve 
towards establishing a hydrogen fuel-cell economy as President Kennedy 
had in putting a man on the Moon then we are not going to get there. 
Not without the focus and commitment needed.
  Are there issues that need to be resolved? Sure there are, but we 
will never resolve them unless we implement a plan to do so. That is 
why I feel this legislation is the best approach. We focus on what is 
needed, while building on what we have. Instead of having two or more 
projects moving in different directions, with no connection, we set out 
a more focused approach where we can see exactly the progress we are 
making.
  This commitment is what is needed and this direction is supported 
throughout the hydrogen industry. We cannot let this opportunity pass 
us by. If we sit and do nothing when the price of oil is at its 
highest, then I fear we will never do anything. This type of commitment 
and resolve is needed for our economic future, as well as to ensure our 
national security interests.
  If we start now, I have no doubt that hydrogen fueled vehicles will 
be to our grandchildren what gasoline was to our grandparents.
  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. 665

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Hydrogen 
     and Fuel Cell Technology Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Hydrogen and fuel cell technology authorization.
Sec. 3. Public utilities.
Sec. 4. Tax incentives to build the hydrogen economy.

     SEC. 2. HYDROGEN AND FUEL CELL TECHNOLOGY AUTHORIZATION.

       The Spark M. Matsunaga Hydrogen Research, Development, and 
     Demonstration Act of 1990 (42 U.S.C. 12401 et seq.) is 
     amended to read as follows:

     ``SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       ``(a) Short Title.--This Act may be cited as the `Spark M. 
     Matsunaga Hydrogen Research, Development, and Demonstration 
     Act of 1990.'.
       ``(b) Table of Contents.--The table of contents of this Act 
     is as follows:

``Sec. 1. Short title; table of contents.
``Sec. 2. Definitions.
``Sec. 3. Findings.
``Sec. 4. Purposes.

                   ``TITLE I--HYDROGEN AND FUEL CELLS

``Sec. 101. Hydrogen and fuel cell technology research and development.
``Sec. 102. Task Force.
``Sec. 103. Technology transfer.
``Sec. 104. Authorization of appropriations.

            ``TITLE II--HYDROGEN AND FUEL CELL DEMONSTRATION

``Sec. 201. Hydrogen supply and fuel cell demonstration program.
``Sec. 202. Authorization of appropriations.

                   ``TITLE III--TRANSITION TO MARKET

``Sec. 301. Federal procurement of fuel cell vehicles and hydrogen 
              energy systems.
``Sec. 302. Federal procurement of stationary and micro fuel cells.

                   ``TITLE IV--REGULATORY MANAGEMENT

``Sec. 401. Codes and standards.
``Sec. 402. Authorization of appropriations.

                           ``TITLE V--REPORTS

``Sec. 501. Deployment of hydrogen technology.
``Sec. 502. Authorization of appropriations.

                  ``TITLE VI--TERMINATION OF AUTHORITY

``Sec. 601. Termination of authority.

     ``SEC. 2. DEFINITIONS.

       ``In this Act:
       ``(1) Carbon footprint.--The term `carbon footprint' means 
     the sum of carbon equivalent emissions from all energy 
     conversion processes occurring from raw material through 
     hydrogen production, distribution, and use.
       ``(2) Department.--The term `Department' means the 
     Department of Energy.
       ``(3) Fuel cell.--The term `fuel cell' means a device that 
     directly converts the chemical energy of a fuel and an 
     oxidant into electricity by electrochemical processes 
     occurring at separate electrodes in the device.
       ``(4) Infrastructure.--The term `infrastructure' means the 
     equipment, systems, or facilities used to produce, 
     distribute, deliver, or store hydrogen (except for onboard 
     storage).

[[Page 5331]]

       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Energy.
       ``(6) Stationary; portable.--The terms `stationary' and 
     `portable', when used in reference to a fuel cell, include--
       ``(A) continuous electric power; and
       ``(B) backup electric power.
       ``(7) Task force.--The term `Task Force' means the Hydrogen 
     and Fuel Cell Technical Task Force established under section 
     102(a).
       ``(8) Technical advisory committee.--The term `Technical 
     Advisory Committee' means the independent Technical Advisory 
     Committee of the Task Force selected under section 102(d).

     ``SEC. 3. FINDINGS.

       ``Congress finds that--
       ``(1) the United States imports 60 percent of all the oil 
     and products that it consumes, most of it used in 
     transportation;
       ``(2) there is little fuel diversity in the transportation 
     sector of the United States, making it extremely sensitive to 
     volatile oil supplies;
       ``(3) rapidly rising energy prices have raised the imported 
     oil bill of the United States to nearly $250,000,000,000 in 
     2004, which is a direct offshore wealth transfer from the 
     U.S. that could otherwise be invested in a hydrogen economy 
     to create many new jobs;
       ``(4) although the United States has become a more 
     efficient and cleaner user of energy, total energy use 
     continues to grow as the economy expands, along with total 
     vehicle emissions;
       ``(5) without dramatic action, 68 percent of oil demand 
     will come from imports by 2025;
       ``(6) over the next 10 years, oil imports could cost nearly 
     $3,000,000,000,000, while protecting foreign supplies adds 
     even more to that cost;
       ``(7) hydrogen and fuel cells offer the best hope of 
     realizing more efficient, cleaner means of regaining control 
     of the energy security of the United States, and achieving 
     quality economic growth;
       ``(8) in the spirit of the Apollo project that put us on 
     the Moon, and the practical vision that built the United 
     States interstate highway system, the U.S. needs to commit 
     sufficient public investment to develop and commercialize 
     hydrogen and fuel cell technologies, in partnership with our 
     private sector; and
       ``(9) economies must grow to sustain their health, and 
     strong public investments in research and development will 
     harness the skills of our universities, national 
     laboratories, and innovative private industry to create the 
     hydrogen economy.

     ``SEC. 4. PURPOSES.

       ``The purposes of this Act are--
       ``(1) to enable and promote comprehensive development, 
     demonstration, and commercialization of hydrogen and fuel 
     cell technology in partnership with industry;
       ``(2) to make critical public investments in building 
     strong links to private industry, universities, national 
     laboratories, and research institutions to expand innovation 
     and industrial growth;
       ``(3) to build a mature hydrogen economy that creates fuel 
     diversity in the massive transportation sector of the United 
     States;
       ``(4) to sharply decrease the dependency of the United 
     States on imported oil, eliminate most emissions from the 
     transportation sector, and greatly enhance our energy 
     security; and
       ``(5) to create, strengthen, and protect a sustainable 
     national energy economy.

                   ``TITLE I--HYDROGEN AND FUEL CELLS

     ``SEC. 101. HYDROGEN AND FUEL CELL TECHNOLOGY RESEARCH AND 
                   DEVELOPMENT.

       ``(a) In General.--The Secretary, in consultation with 
     other Federal agencies and the private sector, shall conduct 
     a research and development program on technologies relating 
     to the production, purification, distribution, storage, and 
     use of hydrogen energy, fuel cells, and related 
     infrastructure.
       ``(b) Goal.--The goal of the program shall be to 
     demonstrate and commercialize the use of hydrogen for 
     transportation (in light and heavy vehicles), utility, 
     industrial, commercial, residential, and defense 
     applications.
       ``(c) Focus.--In carrying out activities under this 
     section, the Secretary shall focus on mutually supportive 
     developmental factors that are common to the development of 
     hydrogen infrastructure and the supply of vehicle and 
     electric power for critical consumer and commercial 
     applications, and that achieve continuous technical evolution 
     and cost reduction, particularly for hydrogen production, the 
     supply of hydrogen, storage of hydrogen, and end uses of 
     hydrogen that--
       ``(1) steadily increase production, distribution, and end 
     use efficiency and reduce carbon footprints;
       ``(2) resolve critical problems relating to catalysts, 
     membranes, storage, lightweight materials, electronic 
     controls, and other problems that emerge from research and 
     development;
       ``(3) enhance sources of renewable fuels and biofuels for 
     hydrogen production; and
       ``(4) enable widespread use of distributed electricity 
     generation and storage.
       ``(d) Public Education and Research.--In carrying out this 
     section, the Secretary shall support enhanced public 
     education and university research in fundamental sciences, 
     application design, and systems concepts (including education 
     and research relating to materials, subsystems, 
     manufacturability, maintenance, and safety) relating to 
     hydrogen and fuel cells.
       ``(e) Funding.--
       ``(1) In general.--The Secretary shall carry out the 
     activities under this section through a competitive, merit-
     based review process consistent with any generally applicable 
     Federal law (including regulations) that applies to an award 
     of financial assistance, a contract, or another agreement.
       ``(2) Research centers.--The Secretary may provide funds to 
     a university-based or Federal laboratory or research center 
     in accordance with paragraph (1) to carry out an activity 
     under this section.
       ``(f) Cost Sharing.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Federal share of the cost of carrying out any project or 
     activity under this section shall be 80 percent.
       ``(2) Waiver of non-federal share.--The Secretary may waive 
     the non-Federal share of the cost of carrying out a project 
     or activity under this section if the non-Federal share would 
     otherwise be paid by a small business or an institution of 
     higher education (as defined in section 102 of the Higher 
     Education Act of 1965 (20 U.S.C. 1002)), as determined by the 
     Secretary.

     ``SEC. 102. TASK FORCE.

       ``(a) Establishment.--The Secretary, in cooperation with 
     the Secretary of Defense, the Secretary of Transportation, 
     and the Secretary of Commerce, shall establish an interagency 
     Task Force, to be known as the `Hydrogen and Fuel Cell 
     Technical Task Force' to advise the Secretary in carrying out 
     programs under this Act.
       ``(b) Membership.--
       ``(1) In general.--The Task Force shall be comprised of 
     such representatives of the Council on Environmental Quality, 
     the Office of Science and Technology Policy, the Council of 
     Economic Advisors, the Environmental Protection Agency, and 
     the National Security Council, and such other representatives 
     of Federal agencies, conferences of governors, and regional 
     organizations, as the Secretary, Secretary of Defense, 
     Secretary of Transportation, and Secretary of Commerce 
     determine to be appropriate.
       ``(2) Voting.--A member of the Task Force that does not 
     represent a Federal agency shall serve on the Task Force only 
     in a nonvoting, advisory capacity.
       ``(c) Duties.--The Task Force shall review and make any 
     necessary recommendations to the Secretary on implementation 
     and conduct of programs under this Act.
       ``(d) Technical Advisory Committee.--
       ``(1) In general.--The Secretary shall select such number 
     of members as the Secretary considers to be appropriate to 
     form an independent, nonpolitical Technical Advisory 
     Committee.
       ``(2) Membership.--
       ``(A) In general.--Each member of the Technical Advisory 
     Committee shall have scientific, technical, or industrial 
     expertise, as determined by the Secretary.
       ``(B) National laboratories.--At least 1 member of the 
     Technical Advisory Committee shall represent a national 
     laboratory.
       ``(3) Duties.--The Technical Advisory Committee shall 
     provide technical advice and assistance to the Task Force and 
     the Secretary.

     ``SEC. 103. TECHNOLOGY TRANSFER.

       ``In carrying out this Act, the Secretary shall carry out 
     programs that--
       ``(1) provide for the transfer of critical hydrogen and 
     fuel cell technologies to the private sector;
       ``(2) accelerate wider application of those technologies in 
     the global market;
       ``(3) foster the exchange of generic, nonproprietary 
     information; and
       ``(4) assess technical and commercial viability of 
     technologies relating to the production, distribution, 
     storage, and use of hydrogen energy and fuel cells.

     ``SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) Hydrogen Supply.--There are authorized to be 
     appropriated to carry out projects and activities relating to 
     hydrogen production, storage, distribution and dispensing, 
     transport, education and coordination, and technology 
     transfer under this title--
       ``(1) $200,000,000 for fiscal year 2006;
       ``(2) $210,000,000 for fiscal year 2007;
       ``(3) $220,000,000 for fiscal year 2008;
       ``(4) $230,000,000 for fiscal year 2009;
       ``(5) $250,000,000 for fiscal year 2010;
       ``(6) $240,000,000 for fiscal year 2011;
       ``(7) $230,000,000 for fiscal year 2012;
       ``(8) $220,000,000 for fiscal year 2013;
       ``(9) $180,000,000 for fiscal year 2014; and
       ``(10) $120,000,000 for fiscal year 2015.
       ``(b) Fuel Cell Technologies.--There are authorized to be 
     appropriated to carry out projects and activities relating to 
     fuel cell technologies under this title--
       ``(1) $160,000,000 for fiscal year 2006;
       ``(2) $170,000,000 for fiscal year 2007;
       ``(3) $180,000,000 for fiscal year 2008;
       ``(4) $200,000,000 for fiscal year 2009;
       ``(5) $210,000,000 for fiscal year 2010;
       ``(6) $200,000,000 for fiscal year 2011;
       ``(7) $190,000,000 for fiscal year 2012;
       ``(8) $170,000,000 for fiscal year 2013;
       ``(9) $150,000,000 for fiscal year 2014; and
       ``(10) $100,000,000 for fiscal year 2015.

[[Page 5332]]



            ``TITLE II--HYDROGEN AND FUEL CELL DEMONSTRATION

     ``SEC. 201. HYDROGEN SUPPLY AND FUEL CELL DEMONSTRATION 
                   PROGRAM.

       ``(a) In General.--The Secretary, in consultation with the 
     Task Force and the Technical Advisory Committee, shall carry 
     out a program to demonstrate developmental hydrogen and fuel 
     cell systems for mobile, portable, and stationary uses, using 
     improved versions of the learning demonstrations program 
     concept of the Department, including demonstrations 
     involving--
       ``(1) light duty vehicles;
       ``(2) fleet delivery vans;
       ``(3) heavier duty vehicles;
       ``(4) specialty industrial and farm vehicles; and
       ``(5) commercial and residential portable, continuous, and 
     backup electric power generation.
       ``(b) Other Demonstration Programs.--To develop widespread 
     hydrogen supply and use options, and assist evolution of 
     technology, the Secretary shall--
       ``(1) carry out demonstrations of evolving hydrogen and 
     fuel cell technologies in national parks, remote island 
     areas, and on Indian tribal land, as selected by the 
     Secretary;
       ``(2) in accordance with any code or standards developed in 
     a region, fund prototype, pilot fleet, and infrastructure 
     regional hydrogen supply corridors along the interstate 
     highway system in varied climates across the United States; 
     and
       ``(3) fund demonstration programs that explore the use of 
     hydrogen blends, hybrid hydrogen, and hydrogen reformed from 
     renewable agricultural fuels, including the use of hydrogen 
     in hybrid electric, heavier duty, and advanced internal 
     combustion-powered vehicles.
       ``(c) System Demonstrations.--
       ``(1) In general.--As a component of the demonstration 
     program under this section, the Secretary shall provide 
     grants, on a cost share basis as appropriate, to eligible 
     entities (as determined by the Secretary) for use in--
       ``(A) devising system design concepts that provide for the 
     use of advanced composite vehicles in programs under title 
     III that--
       ``(i) have as a primary goal the reduction of drive energy 
     requirements;
       ``(ii) after 2010, add another research and development 
     phase to the vehicle and infrastructure partnerships 
     developed under the learning demonstrations program concept 
     of the Department; and
       ``(iii) are managed through an enhanced FreedomCAR program 
     within the Department that encourages involvement in cost-
     shared projects by domestic and international manufacturers 
     and governments; and
       ``(B) designing a local distributed energy system that--
       ``(i) incorporates renewable hydrogen production, off-grid 
     electricity production, and fleet applications in industrial 
     or commercial service;
       ``(ii) integrates energy or applications described in 
     clause (i), such as stationary, portable, micro, and mobile 
     fuel cells, into a high-density commercial or residential 
     building complex or agricultural community; and
       ``(iii) is managed in cooperation with industry, State, 
     tribal, and local governments, agricultural organizations, 
     and nonprofit generators and distributors of electricity.
       ``(2) Cost sharing.--The Federal share of the cost of a 
     project or activity carried out using funds from a grant 
     under paragraph (1) shall not exceed 50% percent, as 
     determined by the Secretary.
       ``(d) Identification of New Research and Development 
     Requirements.--In carrying out the demonstrations under 
     subsection (a), the Secretary, in consultation with the Task 
     Force and the Technical Advisory Committee, shall--
       ``(1) after 2008 for stationary and portable applications, 
     and after 2010 for vehicles, identify new research and 
     development requirements that refine technological concepts, 
     planning, and applications; and
       ``(2) during the second phase of the learning 
     demonstrations under subsection (c)(1)(A)(ii), redesign 
     subsequent research and development to incorporate those 
     requirements.

     ``SEC. 202. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     title--
       ``(1) $185,000,000 for fiscal year 2006;
       ``(2) $200,000,000 for fiscal year 2007;
       ``(3) $300,000,000 for fiscal year 2008;
       ``(4) $350,000,000 for fiscal year 2009;
       ``(5) $425,000,000 for fiscal year 2010;
       ``(6) $335,000,000 for fiscal year 2011;
       ``(7) $310,000,000 for fiscal year 2012;
       ``(8) $270,000,000 for fiscal year 2013;
       ``(9) $200,000,000 for fiscal year 2014; and
       ``(10) $100,000,000 for fiscal year 2015.

                   ``TITLE III--TRANSITION TO MARKET

     ``SEC. 301. FEDERAL PROCUREMENT OF FUEL CELL VEHICLES AND 
                   HYDROGEN ENERGY SYSTEMS.

       ``(a) Purposes.--The purposes of this section are--
       ``(1) to stimulate acceptance by the market of fuel cell 
     vehicles and hydrogen energy systems;
       ``(2) to support development of technologies relating to 
     fuel cell vehicles, public refueling stations, and hydrogen 
     energy systems; and
       ``(3) to require the Federal government, which is the 
     largest single user of energy in the United States, to adopt 
     those technologies as soon as practicable after the 
     technologies are developed, in conjunction with private 
     industry partners.
       ``(b) Federal Leases and Purchases.--
       ``(1) Requirement.--
       ``(A) In general.--Not later than January 1, 2010, the head 
     of any Federal agency that uses a light-duty or heavy-duty 
     vehicle fleet shall lease or purchase fuel cell vehicles and 
     hydrogen energy systems to meet any applicable energy savings 
     goal described in subsection (c).
       ``(B) Learning demonstration vehicles.--The Secretary may 
     lease or purchase appropriate vehicles developed under the 
     learning demonstrations program concept of the Department 
     under title II to meet the requirement in subparagraph (A).
       ``(2) Costs of leases and purchases.--
       ``(A) In general.--The Secretary, in cooperation with the 
     Task Force and the Technical Advisory Committee, shall pay to 
     Federal agencies (or share the cost under interagency 
     agreements) the difference in cost between--
       ``(i) the cost to the agencies of leasing or purchasing 
     fuel cell vehicles and hydrogen energy systems under 
     paragraph (1); and
       ``(ii) the cost to the agencies of a feasible alternative 
     to leasing or purchasing fuel cell vehicles and hydrogen 
     energy systems, as determined by the Secretary.
       ``(B) Competitive costs and management structures.--In 
     carrying out subparagraph (A), the Secretary, in consultation 
     with the agency, may use the General Services Administration 
     or any commercial vendor to ensure--
       ``(i) a cost-effective purchase of a fuel cell vehicle or 
     hydrogen energy system; or
       ``(ii) a cost-effective management structure of the lease 
     of a fuel cell vehicle or hydrogen energy system.
       ``(3) Exception.--
       ``(A) In general.--If the Secretary determines that the 
     head of an agency described in paragraph (1) cannot find an 
     appropriately efficient and reliable fuel cell vehicle or 
     hydrogen energy system in accordance with paragraph (1), that 
     agency shall be excepted from compliance with paragraph (1).
       ``(B) Consideration.--In making a determination under 
     subparagraph (A), the Secretary shall consider--
       ``(i) the needs of the agency; and
       ``(ii) an evaluation performed by--

       ``(I) the Task Force; or
       ``(II) the Technical Advisory Committee.

       ``(c) Energy Savings Goals.--
       ``(1) In general.--
       ``(A) Regulations.--Not later than December 31, 2006, the 
     Secretary shall--
       ``(i) in cooperation with the Task Force, promulgate 
     regulations for the period of 2008 through 2010 that extend 
     and augment energy savings goals for each Federal agency, in 
     accordance with any Executive order issued after March 2000; 
     and
       ``(ii) promulgate regulations to expand the minimum Federal 
     fleet requirement and credit allowances for fuel cell vehicle 
     systems under section 303 of the Energy Policy Act of 1992 
     (42 U.S.C. 13212).
       ``(B) Review, evaluation, and new regulations.--Not later 
     than December 31, 2010, the Secretary shall--
       ``(i) review the regulations promulgated under subparagraph 
     (A);
       ``(ii) evaluate any progress made toward achieving energy 
     savings by Federal agencies; and
       ``(iii) promulgate new regulations for the period of 2011 
     through 2015 to achieve additional energy savings by Federal 
     agencies relating to technical and cost-performance 
     standards.
       ``(2) Offsetting energy savings goals.--An agency that 
     leases or purchases a fuel cell vehicle or hydrogen energy 
     system in accordance with subsection (b)(1) may use that 
     lease or purchase to count toward an energy savings goal of 
     the agency.
       ``(3) Use of energy savings performance contracts.--An 
     agency that leases or purchases a fuel cell vehicle or 
     hydrogen energy system in accordance with subsection (b)(1) 
     may use any energy savings performance contract under title 
     VIII of the National Energy Conservation Policy Act (42 
     U.S.C. 8287 et seq.) (including a pilot program for mobility 
     uses in an expanded energy savings performance contract) to 
     count toward an energy savings goal of the agency.
       ``(d) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section--
       ``(1) $10,000,000 for fiscal year 2008;
       ``(2) $15,000,000 for fiscal year 2009;
       ``(3) $50,000,000 for fiscal year 2010;
       ``(4) $100,000,000 for fiscal year 2011;
       ``(5) $150,000,000 for fiscal year 2012;
       ``(6) $165,000,000 for fiscal year 2013;
       ``(7) $195,000,000 for fiscal year 2014; and
       ``(8) $200,000,000 for fiscal year 2015.

     ``SEC. 302. FEDERAL PROCUREMENT OF STATIONARY, PORTABLE, AND 
                   MICRO FUEL CELLS.

       ``(a) Purposes.--The purposes of this section are--

[[Page 5333]]

       ``(1) to stimulate acceptance by the market of stationary, 
     portable, and micro fuel cells; and
       ``(2) to support development of technologies relating to 
     stationary, portable, and micro fuel cells.
       ``(b) Federal Leases and Purchases.--
       ``(1) In general.--Not later than January 1, 2006, the head 
     of any Federal agency that uses electrical power from 
     stationary, portable, or microportable devices shall lease or 
     purchase a stationary, portable, or micro fuel cell to meet 
     any applicable energy savings goal described in subsection 
     (c).
       ``(2) Costs of leases and purchases.--
       ``(A) In general.--The Secretary, in cooperation with the 
     Task Force and the Technical Advisory Committee, shall pay 
     the cost to Federal agencies (or share the cost under 
     interagency agreements) of leasing or purchasing stationary, 
     portable, and micro fuel cells under paragraph (1).
       ``(B) Competitive costs and management structures.--In 
     carrying out subparagraph (A), the Secretary, in consultation 
     with the agency, may use the General Services Administration 
     or any commercial vendor to ensure--
       ``(i) a cost-effective purchase of a stationary, portable, 
     or micro fuel cell; or
       ``(ii) a cost-effective management structure of the lease 
     of a stationary, portable, or micro fuel cell.
       ``(3) Exception.--
       ``(A) In general.--If the Secretary determines that the 
     head of an agency described in paragraph (1) cannot find an 
     appropriately efficient and reliable stationary, portable, or 
     micro fuel cell in accordance with paragraph (1), that agency 
     shall be excepted from compliance with paragraph (1).
       ``(B) Consideration.--In making a determination under 
     subparagraph (A), the Secretary shall consider--
       ``(i) the needs of the agency; and
       ``(ii) an evaluation performed by--

       ``(I) the Task Force; or
       ``(II) the Technical Advisory Committee of the Task Force.

       ``(c) Energy Savings Goals.--
       ``(1) Offsetting energy savings goals.--An agency that 
     leases or purchases a stationary, portable, or micro fuel 
     cell in accordance with subsection (b)(1) may use that lease 
     or purchase to count toward an energy savings goal described 
     in section 301(c)(1) that is applicable to the agency.
       ``(2) Use of energy savings performance contracts.--An 
     agency that leases or purchases a stationary, portable, or 
     micro fuel cell in accordance with subsection (b)(1) may use 
     any energy savings performance contract under title VIII of 
     the National Energy Conservation Policy Act (42 U.S.C. 8287 
     et seq.) (including a pilot program in an expanded energy 
     savings performance contract) to count toward an energy 
     savings goal of the agency.
       ``(d) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section--
       ``(1) $20,000,000 for fiscal year 2006;
       ``(2) $50,000,000 for fiscal year 2007;
       ``(3) $75,000,000 for fiscal year 2008;
       ``(4) $100,000,000 for fiscal year 2009;
       ``(5) $100,000,000 for fiscal year 2010;
       ``(6) $100,000,000 for fiscal year 2011;
       ``(7) $55,000,000 for fiscal year 2012;
       ``(8) $50,000,000 for fiscal year 2013;
       ``(9) $50,000,000 for fiscal year 2014; and
       ``(10) $25,000,000 for fiscal year 2015.

                   ``TITLE IV--REGULATORY MANAGEMENT

     ``SEC. 401. CODES AND STANDARDS.

       ``(a) In General.--The Secretary, in cooperation with the 
     Task Force, shall provide grants to, or offer to enter into 
     contracts with such professional organizations, public 
     service organizations, and government agencies as the 
     Secretary determines appropriate to support timely and 
     extensive development of safety codes and standards relating 
     to fuel cell vehicles, hydrogen energy systems, and 
     stationary, portable, and micro fuel cells.
       ``(b) Educational Efforts.--The Secretary shall support 
     educational efforts by organizations and agencies described 
     in subsection (a) to share information, including information 
     relating to best practices, among those organizations and 
     agencies.

     ``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated to carry out this 
     title--
       ``(1) $4,000,000 for fiscal year 2006;
       ``(2) $7,000,000 for fiscal year 2007;
       ``(3) $8,000,000 for fiscal year 2008;
       ``(4) $8,000,000 for fiscal year 2009;
       ``(5) $10,000,000 for fiscal year 2010;
       ``(6) $9,000,000 for fiscal year 2011; and
       ``(7) $9,000,000 for fiscal year 2012.

                           ``TITLE V--REPORTS

     ``SEC. 501. DEPLOYMENT OF HYDROGEN TECHNOLOGY.

       ``(a) Secretary.--Subject to subsection (c), not later than 
     2 years after the date of enactment of the Hydrogen and Fuel 
     Cell Technology Act of 2005, and biannually thereafter, the 
     Secretary shall submit to Congress--
       ``(1) a report describing--
       ``(A) any activity carried out by the Department of Energy 
     under this Act, including a research, development, 
     demonstration, and commercial application program for 
     hydrogen and fuel cell technology;
       ``(B) measures the Secretary has taken during the preceding 
     2 years to support the transition of primary industry (or a 
     related industry) to a fully-commercialized hydrogen economy;
       ``(C) any change made to a research, development, or 
     deployment strategy of the Secretary relating to hydrogen and 
     fuel cell technology to reflect the results of a learning 
     demonstration under title II;
       ``(D) progress, including progress in infrastructure, made 
     toward achieving the goal of producing and deploying not less 
     than--
       ``(i) 100,000 hydrogen-fueled vehicles in the United States 
     by 2010; and
       ``(ii) 2,500,000 hydrogen-fueled vehicles by 2020;
       ``(E) progress made toward achieving the goal of supplying 
     hydrogen at a sufficient number of fueling stations in the 
     United States by 2010 can be achieved by integrating--
       ``(i) hydrogen activities; and
       ``(ii) associated targets and timetables for the 
     development of hydrogen technologies;
       ``(F) any problem relating to the design, execution, or 
     funding of a program under this Act; and
       ``(G) progress made toward and goals achieved in carrying 
     out this Act and updates to the developmental roadmap, 
     including the results of the reviews conducted by the 
     National Academy of Sciences under subsection (d) for the 
     fiscal years covered by the report; and
       ``(2) a strategic plan describing--
       ``(A) a remedy for any problems described in paragraph 
     (1)(D); and
       ``(B) any approach by which the Secretary could achieve a 
     substantial decrease in the dependence on and consumption of 
     natural gas and imported oil by the Federal Government, 
     including by increasing the use of fuel cell vehicles, 
     stationary and portable fuel cells, and hydrogen energy 
     systems described in title III.
       ``(b) Task Force.--Subject to subsection (c), not later 
     than 3 years after the date of enactment of the Hydrogen and 
     Fuel Cell Technology Act of 2005, and triennially thereafter, 
     the Task Force shall submit to Congress a report describing--
       ``(1) the degree of success of each program under this Act; 
     and
       ``(2) the degree to which the success of programs under 
     this Act has led to evolution of a hydrogen economy and 
     improved potential for economic growth.
       ``(c) Combination of Reports.--
       ``(1) In general.--The Secretary may decide to combine the 
     reports under subsections (a) and (b) before the reports are 
     submitted to Congress, as the Secretary determines 
     appropriate.
       ``(2) Requirements.--If the Secretary decides to combine 
     the reports under paragraph (1), the Secretary shall--
       ``(A) not later than 2 years after the date of enactment of 
     the Hydrogen and Fuel Cell Technology Act of 2005, provide 
     notice of the decision to the Task Force; and
       ``(B) not later than 3 years after the date of enactment of 
     the Hydrogen and Fuel Cell Technology Act of 2005, and 
     triennially thereafter, submit the combined reports to 
     Congress.
       ``(3) Task force.--Not later than 180 days after receiving 
     notice from the Secretary under paragraph (2)(A), and 
     triennially thereafter, the Task Force shall submit to the 
     Secretary a report in accordance with subsection (b).
       ``(d) National Academy of Sciences.--
       ``(1) In general.--Not later than September 30, 2007, and 
     triennially thereafter, the National Academy of Sciences 
     shall conduct and submit to the Secretary--
       ``(A) the results of a review of the projects and 
     activities carried out under this Act; and
       ``(B) recommendations for any new authorities or resources 
     needed to achieve strategic goals.
       ``(2) Reauthorization.--The Secretary shall use the results 
     of reviews conducted under paragraph (1) in proposing to 
     Congress any legislative changes relating to reauthorization 
     of this Act.

     ``SEC. 502. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated to carry out this 
     title $900,000 for each of fiscal years 2006 through 2015.

                  ``TITLE VI--TERMINATION OF AUTHORITY

     ``SEC. 601. TERMINATION OF AUTHORITY.

       ``This Act and the authority provided by this Act terminate 
     on September 30, 2015.''.

     SEC. 3. TAX INCENTIVES TO BUILD THE HYDROGEN ECONOMY.

       It is the sense of the Senate that Congress should provide 
     any necessary tax incentives to encourage investment in and 
     production and use of hydrogen and fuel cell systems during 
     critical stages of market growth, including--
       (1) a hydrogen fuel cell motor vehicle credit;
       (2) a credit for the installation of hydrogen fuel cell 
     motor vehicle fueling stations;
       (3) a credit for residential fuel cell property; and
       (4) a credit for business installation of qualified fuel 
     cells.

[[Page 5334]]




           the hydrogen and fuel cell technology act of 2005

  Mr. AKAKA. Mr. President, I rise today in support of the Hydrogen and 
Fuel Cell Technology Act of 2005, a bill to amend the Spark M. 
Matsunaga Hydrogen Research, Development, and Demonstration Act of 
1990. A reauthorization of the Matsunaga Act is badly needed. I have 
introduced bills in the 106th Congress, in the 107th Congress jointly 
with my friend Senator Harkin, and in the 108th Congress to reauthorize 
the essential hydrogen research and development programs in the 
Department of Energy. The core provisions of these bills were included 
in each of the omnibus energy bills, whether we were in the majority or 
in the minority, suggesting widespread, bipartisan agreement that we 
need a robust hydrogen program for the future.
  As a founding member of the Senate's Hydrogen and Fuel Cell Caucus, I 
have worked with my colleagues to draft this bill and am pleased to be 
an original cosponsor. The caucus has heard from a wide variety of 
interest groups, engineers, and scientists providing input on the 
potential for a ``hydrogen economy.'' The caucus, under the able 
coleadership of my colleagues Senator Dorgan and Senator Graham, has 
actively solicited input from fuel cell producers anti councils, 
automobile manufacturers, oil and gas companies, utilities, university 
research institutes, the Department of Energy, and national 
associations. The recommendations of the National Commission on Energy 
Policy and the National Academy of Sciences were instrumental in 
developing this bill.
  I am more convinced than ever that we need to move now to reauthorize 
the Matsunaga Act and to refine and enhance the Department of Energy's 
responsibilities while maintaining strong oversight over the progress 
of the activities. We cannot delay the move to a ``hydrogen economy.''
  This bill does several things that are important for the management 
of hydrogen programs in the Department of Energy and will help move the 
nation toward using hydrogen as an energy source in our daily lives. It 
provides greater focus for the hydrogen fuel cell technology research 
and development programs without losing the focus on renewable sources 
of hydrogen. It emphasizes factors that are critical to the development 
of hydrogen infrastructure and the supply of vehicles and electric 
power. It directs the Secretary to carry out activities to improve 
technology with the goal of cost reduction, particularly for hydrogen 
production, the supply of hydrogen, storage of hydrogen, and the end 
uses of hydrogen. The bill authorizes $200 million for hydrogen supply 
and $160 million for fuel cell technologies in fiscal year 2006. It 
emphasizes the importance of enhancing sources of renewable fuels and 
biofuels for hydrogen production, a factor that is critical to remote 
areas and island states such as Hawaii where we need local sources of 
energy.
  This bill is a realistic one, providing specific footpaths to the 
hydrogen economy domestically and internationally. The bill 
acknowledges that transportation and the availability of reasonably 
priced cars may be the first market break through for the hydrogen 
economy.
  Title II authorizes demonstration programs through the Department of 
Energy for fuel cell systems for mobile, portable, and stationary uses. 
Demonstrations are a critical component of moving a product to market. 
Title III of the bill, ``Transition to Market,'' succinctly states the 
goal of this section. Section 301 authorizes Federal procurement of 
fuel cell vehicles and hydrogen energy systems. This provision is 
intended to stimulate the market by requiring the Federal Government, 
the largest single user of energy in the United States, to adopt 
hydrogen technologies as soon as practicable. Energy savings are an 
important part of this title. The Department is required to collect 
data on energy savings as a result of this program and to evaluate 
whether the program is achieving energy savings.
  Lastly, this bill provides important directions to the Secretary to 
address the development of safety codes and standards relating to fuel 
cell vehicles, hydrogen energy systems, and stationary, portable, and 
micro fuel cells. This provision recognizes the importance of public 
acceptance of hydrogen as a safe and secure energy source; and it 
recognizes the industry's needs for standards of safety codes and 
standards for hydrogen energy systems whether stationary, mobile, or 
portable. The bill does not require the standards to be developed ``in-
house'' within the Department of Energy, but importantly authorizes the 
Secretary of Energy to enter into cooperative agreements, grants, and 
contracts with industry groups and with the cooperation of the Federal 
interagency Hydrogen and Fuel Cell Technical Task Force.
  Mr. President, I urge my colleagues in the Senate to support this 
bill.
                                 ______
                                 
      By Mr. DeWINE (for himself, Mr. Kennedy, Mr. Lugar, Mr. Harkin, 
        Ms. Collins, Mr. Durbin, Mr. Smith, Mr. Dodd, Mr. Cornyn, Mr. 
        Lautenberg, Mr. McCain, Mr. Reed, Ms. Snowe, Ms. Murkowski, Mr. 
        Chafee, and Mr. Specter):
  S. 666. A bill to protect the public health by providing the Food and 
Drug Administration with certain authority to regulate tobacco 
products; to the Committee on Health, Education, Labor, and Pensions.
  Mr. DeWINE. Mr. President, today I join our colleagues Senators 
Kennedy, Lugar, Collins, Smith, Cornyn, McCain, Snowe, Harkin, Durbin, 
Dodd, Lautenberg, Reed, Murkowski, Chafee and Specter to introduce a 
bill designed to help protect consumers--especially children--from the 
dangers of tobacco. Simply, our bill would finally give the Food and 
Drug Administration (FDA) the authority it needs to effectively 
regulate the manufacture and sale of tobacco products.
  I say finally, because there are some tobacco proponents who would 
have you believe that the Master Settlement Agreement, which was signed 
in 1998 by 46 states, resolved the issue of tobacco use by imposing 
advertising restrictions.
  I say finally, because my colleagues--first Senator McCain, then 
Senator Frist, then Senator Gregg, and then Senator Kennedy and I--have 
been seeking FDA regulation of tobacco products since the mid- to late-
1990's.
  And, I say finally, because the bill that we are introducing today is 
the product of long and hard discussions and negotiations that I have 
had with Senator Kennedy and public interest groups and industry. Our 
bill has the support of the Campaign for Tobacco Free Kids, Philip 
Morris, the American Heart Association, the American Lung Association, 
and the American Cancer Association. It is a bill that I am proud of--
one that is worthy of the Senate's consideration, and one that will 
provide the FDA--finally--with strong and effective authority over the 
regulation of tobacco products.
  The introduction of this bill couldn't come at a better time. The 
budget is on the Floor, and people anticipate the slowed-spending in 
Medicaid, and the economic burden of cigarettes is enormous. According 
to the 2004 Surgeon General's Report entitled The Health Consequences 
of Smoking, from 1995 to 1999, smoking-related costs totaled $157.7 
billion each year. This figure includes more than $75 billion in direct 
medical costs for adults (things like ambulatory care, hospital care, 
prescription drugs, nursing homes, and other care), about $82 billion 
in indirect costs from lost productivity, and $366 million for neonatal 
care. This equals an estimated $3,000 per smoker, per year.
  In a budget year when Congress is looking to find savings in 
Medicaid--in the ballpark of $15 billion over 5 years--Congress should 
look at the cost savings that would be made possible by FDA regulation 
of tobacco. We already know that doing nothing costs our country, our 
taxpayers, and our employers and employees $157 billion a year. Isn't 
it time that the federal government consider that it has a 
responsibility to find savings through the regulation of tobacco?
  Not having access to all the information about this deadly product 
makes no sense and it is something that needs

[[Page 5335]]

to change. By introducing this bill, we are saying that. we are not 
going to let tobacco manufacturers have free reign over their markets 
and consumers any more. We are taking a step toward making sure the 
public gets adequate information about whether to continue to smoke or 
even to start smoking in the first place. With this bill, we are not 
just saying ``buyer beware.'' We are saying ``tobacco companies be 
honest.'' We are saying ``tobacco companies stop marketing to innocent 
children and tell consumers about what they are really buying.''
  Ultimately, our bill would give consumers the information they need 
to make healthier and better choices about tobacco use. I have faith 
that informed consumers make better choices, and those choices could 
lead to cost-savings for the society overall.
  Our bill would give the FDA the authority to regulate a product that 
has gone unregulated for far too long--a product that for the past 
century has not revealed its ingredients to the consumer--a product 
whose manufacturing facilities are not inspected or accountable for 
following good manufacturing practices--a product that is never 
reviewed or approved before reaching the hands of 40 million consumers, 
many of whom are just children. Mr. President, Congress should put an 
end to this. Congress should put an end to the marketing of tobacco 
products to our children. Congress should put an end to the ability of 
tobacco companies to make claims, whether they are implied claims or 
direct claims, about their products. Congress should put an end to 
tobacco companies putting any ingredient they want into their products 
without disclosing it to the consumer. It is time Congress gives the 
FDA authority to it needs to fix these problems.
  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. 666

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Family 
     Smoking Prevention and Tobacco Control Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
Sec. 5. Severability.

         TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic act.
Sec. 102. Interim final rule.
Sec. 103. Conforming and other amendments to general provisions.

 TITLE II--TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT 
                               DISCLOSURE

Sec. 201. Cigarette label and advertising warnings.
Sec. 202. Authority to revise cigarette warning label statements.
Sec. 203. State regulation of cigarette advertising and promotion.
Sec. 204. Smokeless tobacco labels and advertising warnings.
Sec. 205. Authority to revise smokeless tobacco product warning label 
              statements.
Sec. 206. Tar, nicotine, and other smoke constituent disclosure to the 
              public.

       TITLE III--PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS

Sec. 301. Labeling, recordkeeping, records inspection.
Sec. 302. Study and report.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) The use of tobacco products by the Nation's children is 
     a pediatric disease of considerable proportions that results 
     in new generations of tobacco-dependent children and adults.
       (2) A consensus exists within the scientific and medical 
     communities that tobacco products are inherently dangerous 
     and cause cancer, heart disease, and other serious adverse 
     health effects.
       (3) Nicotine is an addictive drug.
       (4) Virtually all new users of tobacco products are under 
     the minimum legal age to purchase such products.
       (5) Tobacco advertising and marketing contribute 
     significantly to the use of nicotine-containing tobacco 
     products by adolescents.
       (6) Because past efforts to restrict advertising and 
     marketing of tobacco products have failed adequately to curb 
     tobacco use by adolescents, comprehensive restrictions on the 
     sale, promotion, and distribution of such products are 
     needed.
       (7) Federal and State governments have lacked the legal and 
     regulatory authority and resources they need to address 
     comprehensively the public health and societal problems 
     caused by the use of tobacco products.
       (8) Federal and State public health officials, the public 
     health community, and the public at large recognize that the 
     tobacco industry should be subject to ongoing oversight.
       (9) Under article I, section 8 of the Constitution, the 
     Congress is vested with the responsibility for regulating 
     interstate commerce and commerce with Indian tribes.
       (10) The sale, distribution, marketing, advertising, and 
     use of tobacco products are activities in and substantially 
     affecting interstate commerce because they are sold, 
     marketed, advertised, and distributed in interstate commerce 
     on a nationwide basis, and have a substantial effect on the 
     Nation's economy.
       (11) The sale, distribution, marketing, advertising, and 
     use of such products substantially affect interstate commerce 
     through the health care and other costs attributable to the 
     use of tobacco products.
       (12) It is in the public interest for Congress to enact 
     legislation that provides the Food and Drug Administration 
     with the authority to regulate tobacco products and the 
     advertising and promotion of such products. The benefits to 
     the American people from enacting such legislation would be 
     significant in human and economic terms.
       (13) Tobacco use is the foremost preventable cause of 
     premature death in America. It causes over 400,000 deaths in 
     the United States each year and approximately 8,600,000 
     Americans have chronic illnesses related to smoking.
       (14) Reducing the use of tobacco by minors by 50 percent 
     would prevent well over 10,000,000 of today's children from 
     becoming regular, daily smokers, saving over 3,000,000 of 
     them from premature death due to tobacco induced disease. 
     Such a reduction in youth smoking would also result in 
     approximately $75,000,000,000 in savings attributable to 
     reduced health care costs.
       (15) Advertising, marketing, and promotion of tobacco 
     products have been especially directed to attract young 
     persons to use tobacco products and these efforts have 
     resulted in increased use of such products by youth. Past 
     efforts to oversee these activities have not been successful 
     in adequately preventing such increased use.
       (16) In 2002, the tobacco industry spent more than 
     $12,466,000,000 to attract new users, retain current users, 
     increase current consumption, and generate favorable long-
     term attitudes toward smoking and tobacco use.
       (17) Tobacco product advertising often misleadingly 
     portrays the use of tobacco as socially acceptable and 
     healthful to minors.
       (18) Tobacco product advertising is regularly seen by 
     persons under the age of 18, and persons under the age of 18 
     are regularly exposed to tobacco product promotional efforts.
       (19) Through advertisements during and sponsorship of 
     sporting events, tobacco has become strongly associated with 
     sports and has become portrayed as an integral part of sports 
     and the healthy lifestyle associated with rigorous sporting 
     activity.
       (20) Children are exposed to substantial and unavoidable 
     tobacco advertising that leads to favorable beliefs about 
     tobacco use, plays a role in leading young people to 
     overestimate the prevalence of tobacco use, and increases the 
     number of young people who begin to use tobacco.
       (21) The use of tobacco products in motion pictures and 
     other mass media glamorizes its use for young people and 
     encourages them to use tobacco products.
       (22) Tobacco advertising expands the size of the tobacco 
     market by increasing consumption of tobacco products 
     including tobacco use by young people.
       (23) Children are more influenced by tobacco advertising 
     than adults, they smoke the most advertised brands.
       (24) Tobacco company documents indicate that young people 
     are an important and often crucial segment of the tobacco 
     market. Children, who tend to be more price-sensitive than 
     adults, are influenced by advertising and promotion practices 
     that result in drastically reduced cigarette prices.
       (25) Comprehensive advertising restrictions will have a 
     positive effect on the smoking rates of young people.
       (26) Restrictions on advertising are necessary to prevent 
     unrestricted tobacco advertising from undermining legislation 
     prohibiting access to young people and providing for 
     education about tobacco use.
       (27) International experience shows that advertising 
     regulations that are stringent and comprehensive have a 
     greater impact on overall tobacco use and young people's use 
     than weaker or less comprehensive ones.
       (28) Text only requirements, although not as stringent as a 
     ban, will help reduce underage use of tobacco products while 
     preserving the informational function of advertising.

[[Page 5336]]

       (29) It is in the public interest for Congress to adopt 
     legislation to address the public health crisis created by 
     actions of the tobacco industry.
       (30) The final regulations promulgated by the Secretary of 
     Health and Human Services in the August 28, 1996, issue of 
     the Federal Register (61 Fed. Reg. 44615-44618) for inclusion 
     as part 897 of title 21, Code of Federal Regulations, are 
     consistent with the First Amendment to the United States 
     Constitution and with the standards set forth in the 
     amendments made by this subtitle for the regulation of 
     tobacco products by the Food and Drug Administration and the 
     restriction on the sale and distribution, including access to 
     and the advertising and promotion of, tobacco products 
     contained in such regulations are substantially related to 
     accomplishing the public health goals of this Act.
       (31) The regulations described in paragraph (30) will 
     directly and materially advance the Federal Government's 
     substantial interest in reducing the number of children and 
     adolescents who use cigarettes and smokeless tobacco and in 
     preventing the life-threatening health consequences 
     associated with tobacco use. An overwhelming majority of 
     Americans who use tobacco products begin using such products 
     while they are minors and become addicted to the nicotine in 
     those products before reaching the age of 18. Tobacco 
     advertising and promotion plays a crucial role in the 
     decision of these minors to begin using tobacco products. 
     Less restrictive and less comprehensive approaches have not 
     and will not be effective in reducing the problems addressed 
     by such regulations. The reasonable restrictions on the 
     advertising and promotion of tobacco products contained in 
     such regulations will lead to a significant decrease in the 
     number of minors using and becoming addicted to those 
     products.
       (32) The regulations described in paragraph (30) impose no 
     more extensive restrictions on communication by tobacco 
     manufacturers and sellers than are necessary to reduce the 
     number of children and adolescents who use cigarettes and 
     smokeless tobacco and to prevent the life-threatening health 
     consequences associated with tobacco use. Such regulations 
     are narrowly tailored to restrict those advertising and 
     promotional practices which are most likely to be seen or 
     heard by youth and most likely to entice them into tobacco 
     use, while affording tobacco manufacturers and sellers ample 
     opportunity to convey information about their products to 
     adult consumers.
       (33) Tobacco dependence is a chronic disease, one that 
     typically requires repeated interventions to achieve long-
     term or permanent abstinence.
       (34) Because the only known safe alternative to smoking is 
     cessation, interventions should target all smokers to help 
     them quit completely.
       (35) Tobacco products have been used to facilitate and 
     finance criminal activities both domestically and 
     internationally. Illicit trade of tobacco products has been 
     linked to organized crime and terrorist groups.
       (36) It is essential that the Food and Drug Administration 
     review products sold or distributed for use to reduce risks 
     or exposures associated with tobacco products and that it be 
     empowered to review any advertising and labeling for such 
     products. It is also essential that manufacturers, prior to 
     marketing such products, be required to demonstrate that such 
     products will meet a series of rigorous criteria, and will 
     benefit the health of the population as a whole, taking into 
     account both users of tobacco products and persons who do not 
     currently use tobacco products.
       (37) Unless tobacco products that purport to reduce the 
     risks to the public of tobacco use actually reduce such 
     risks, those products can cause substantial harm to the 
     public health to the extent that the individuals, who would 
     otherwise not consume tobacco products or would consume such 
     products less, use tobacco products purporting to reduce 
     risk. Those who use products sold or distributed as modified 
     risk products that do not in fact reduce risk, rather than 
     quitting or reducing their use of tobacco products, have a 
     substantially increased likelihood of suffering disability 
     and premature death. The costs to society of the widespread 
     use of products sold or distributed as modified risk products 
     that do not in fact reduce risk or that increase risk include 
     thousands of unnecessary deaths and injuries and huge costs 
     to our health care system.
       (38) As the National Cancer Institute has found, many 
     smokers mistakenly believe that ``low tar'' and ``light'' 
     cigarettes cause fewer health problems than other cigarettes. 
     As the National Cancer Institute has also found, mistaken 
     beliefs about the health consequences of smoking ``low tar'' 
     and ``light'' cigarettes can reduce the motivation to quit 
     smoking entirely and thereby lead to disease and death.
       (39) Recent studies have demonstrated that there has been 
     no reduction in risk on a population-wide basis from ``low 
     tar'' and ``light'' cigarettes and such products may actually 
     increase the risk of tobacco use.
       (40) The dangers of products sold or distributed as 
     modified risk tobacco products that do not in fact reduce 
     risk are so high that there is a compelling governmental 
     interest in insuring that statements about modified risk 
     tobacco products are complete, accurate, and relate to the 
     overall disease risk of the product.
       (41) As the Federal Trade Commission has found, consumers 
     have misinterpreted advertisements in which one product is 
     claimed to be less harmful than a comparable product, even in 
     the presence of disclosures and advisories intended to 
     provide clarification.
       (42) Permitting manufacturers to make unsubstantiated 
     statements concerning modified risk tobacco products, whether 
     express or implied, even if accompanied by disclaimers would 
     be detrimental to the public health.
       (43) The only way to effectively protect the public health 
     from the dangers of unsubstantiated modified risk tobacco 
     products is to empower the Food and Drug Administration to 
     require that products that tobacco manufacturers sold or 
     distributed for risk reduction be approved in advance of 
     marketing, and to require that the evidence relied on to 
     support approval of these products is rigorous.

     SEC. 3. PURPOSE.

       The purposes of this Act are--
       (1) to provide authority to the Food and Drug 
     Administration to regulate tobacco products under the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by 
     recognizing it as the primary Federal regulatory authority 
     with respect to the manufacture, marketing, and distribution 
     of tobacco products;
       (2) to ensure that the Food and Drug Administration has the 
     authority to address issues of particular concern to public 
     health officials, especially the use of tobacco by young 
     people and dependence on tobacco;
       (3) to authorize the Food and Drug Administration to set 
     national standards controlling the manufacture of tobacco 
     products and the identity, public disclosure, and amount of 
     ingredients used in such products;
       (4) to provide new and flexible enforcement authority to 
     ensure that there is effective oversight of the tobacco 
     industry's efforts to develop, introduce, and promote less 
     harmful tobacco products;
       (5) to vest the Food and Drug Administration with the 
     authority to regulate the levels of tar, nicotine, and other 
     harmful components of tobacco products;
       (6) in order to ensure that consumers are better informed, 
     to require tobacco product manufacturers to disclose research 
     which has not previously been made available, as well as 
     research generated in the future, relating to the health and 
     dependency effects or safety of tobacco products;
       (7) to continue to permit the sale of tobacco products to 
     adults in conjunction with measures to ensure that they are 
     not sold or accessible to underage purchasers;
       (8) to impose appropriate regulatory controls on the 
     tobacco industry;
       (9) to promote cessation to reduce disease risk and the 
     social costs associated with tobacco related diseases; and
       (10) to strengthen legislation against illicit trade in 
     tobacco products.

     SEC. 4. SCOPE AND EFFECT.

       (a) Intended Effect.--Nothing in this Act (or an amendment 
     made by this Act) shall be construed to--
       (1) establish a precedent with regard to any other 
     industry, situation, circumstance, or legal action; or
       (2) affect any action pending in Federal, State, or Tribal 
     court, or any agreement, consent decree, or contract of any 
     kind.
       (b) Agricultural Activities.--The provisions of this Act 
     (or an amendment made by this Act) which authorize the 
     Secretary to take certain actions with regard to tobacco and 
     tobacco products shall not be construed to affect any 
     authority of the Secretary of Agriculture under existing law 
     regarding the growing, cultivation, or curing of raw tobacco.

     SEC. 5. SEVERABILITY.

       If any provision of this Act, the amendments made by this 
     Act, or the application of any provision of this Act to any 
     person or circumstance is held to be invalid, the remainder 
     of this Act, the amendments made by this Act, and the 
     application of the provisions of this Act to any other person 
     or circumstance shall not be affected and shall continue to 
     be enforced to the fullest extent possible.

         TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION

     SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT.

       (a) Definition of Tobacco Products.--Section 201 of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) is 
     amended by adding at the end the following:
       ``(nn)(1) The term `tobacco product' means any product made 
     or derived from tobacco that is intended for human 
     consumption, including any component, part, or accessory of a 
     tobacco product (except for raw materials other than tobacco 
     used in manufacturing a component, part, or accessory of a 
     tobacco product).
       ``(2) The term `tobacco product' does not mean--
       ``(A) a product in the form of conventional food (including 
     water and chewing gum), a product represented for use as or 
     for use in a conventional food, or a product that is intended 
     for ingestion in capsule, tablet, softgel, or liquid form; or

[[Page 5337]]

       ``(B) an article that is approved or is regulated as a drug 
     by the Food and Drug Administration.
       ``(3) The products described in paragraph (2)(A) shall be 
     subject to chapter IV or chapter V of this Act and the 
     articles described in paragraph (2)(B) shall be subject to 
     chapter V of this Act.
       ``(4) A tobacco product may not be marketed in combination 
     with any other article or product regulated under this Act 
     (including a drug, biologic, food, cosmetics, medical device, 
     or a dietary supplement).''.
       (b) FDA Authority Over Tobacco Products.--The Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
       (1) by redesignating chapter IX as chapter X;
       (2) by redesignating sections 901 through 907 as sections 
     1001 through 1007; and
       (3) by inserting after section 803 the following:

                     ``CHAPTER IX--TOBACCO PRODUCTS

     ``SEC. 900. DEFINITIONS.

       ``In this chapter:
       ``(1) Additive.--The term `additive' means any substance 
     the intended use of which results or may reasonably be 
     expected to result, directly or indirectly, in its becoming a 
     component or otherwise affecting the characteristic of any 
     tobacco product (including any substances intended for use as 
     a flavoring, coloring or in producing, manufacturing, 
     packing, processing, preparing, treating, packaging, 
     transporting, or holding), except that such term does not 
     include tobacco or a pesticide chemical residue in or on raw 
     tobacco or a pesticide chemical.
       ``(2) Brand.--The term `brand' means a variety of tobacco 
     product distinguished by the tobacco used, tar content, 
     nicotine content, flavoring used, size, filtration, or 
     packaging, logo, registered trademark or brand name, 
     identifiable pattern of colors, or any combination of such 
     attributes.
       ``(3) Cigarette.--The term `cigarette' has the meaning 
     given that term by section 3(1) of the Federal Cigarette 
     Labeling and Advertising Act (15 U.S.C. 1332(1)), but also 
     includes tobacco, in any form, that is functional in the 
     product, which, because of its appearance, the type of 
     tobacco used in the filler, or its packaging and labeling, is 
     likely to be offered to, or purchased by, consumers as a 
     cigarette or as roll-your-own tobacco.
       ``(4) Cigarette tobacco.--The term `cigarette tobacco' 
     means any product that consists of loose tobacco that is 
     intended for use by consumers in a cigarette. Unless 
     otherwise stated, the requirements for cigarettes shall also 
     apply to cigarette tobacco.
       ``(5) Commerce.--The term `commerce' has the meaning given 
     that term by section 3(2) of the Federal Cigarette Labeling 
     and Advertising Act (15 U.S.C. 1332(2)).
       ``(6) Counterfeit tobacco product.--The term `counterfeit 
     tobacco product' means a tobacco product (or the container or 
     labeling of such a product) that, without authorization, 
     bears the trademark, trade name, or other identifying mark, 
     imprint or device, or any likeness thereof, of a tobacco 
     product listed in a registration under section 905(i)(1).
       ``(7) Distributor.--The term `distributor' as regards a 
     tobacco product means any person who furthers the 
     distribution of a tobacco product, whether domestic or 
     imported, at any point from the original place of manufacture 
     to the person who sells or distributes the product to 
     individuals for personal consumption. Common carriers are not 
     considered distributors for purposes of this chapter.
       ``(8) Illicit trade.--The term `illicit trade' means any 
     practice or conduct prohibited by law which relates to 
     production, shipment, receipt, possession, distribution, 
     sale, or purchase of tobacco products including any practice 
     or conduct intended to facilitate such activity.
       ``(9) Indian tribe.--The term `Indian tribe' has the 
     meaning given such term in section 4(e) of the Indian Self 
     Determination and Education Assistance Act (25 U.S.C. 
     450b(e)).
       ``(10) Little cigar.--The term `little cigar' has the 
     meaning given that term by section 3(7) of the Federal 
     Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
       ``(11) Nicotine.--The term `nicotine' means the chemical 
     substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or 
     C[10]H[14]N[2], including any salt or complex of nicotine.
       ``(12) Package.--The term `package' means a pack, box, 
     carton, or container of any kind or, if no other container, 
     any wrapping (including cellophane), in which a tobacco 
     product is offered for sale, sold, or otherwise distributed 
     to consumers.
       ``(13) Retailer.--The term `retailer' means any person who 
     sells tobacco products to individuals for personal 
     consumption, or who operates a facility where self-service 
     displays of tobacco products are permitted.
       ``(14) Roll-your-own tobacco.--The term `roll-your-own 
     tobacco' means any tobacco which, because of its appearance, 
     type, packaging, or labeling, is suitable for use and likely 
     to be offered to, or purchased by, consumers as tobacco for 
     making cigarettes.
       ``(15) Smoke constituent.--The term `smoke constituent' 
     means any chemical or chemical compound in mainstream or 
     sidestream tobacco smoke that either transfers from any 
     component of the cigarette to the smoke or that is formed by 
     the combustion or heating of tobacco, additives, or other 
     component of the tobacco product.
       ``(16) Smokeless tobacco.--The term `smokeless tobacco' 
     means any tobacco product that consists of cut, ground, 
     powdered, or leaf tobacco and that is intended to be placed 
     in the oral or nasal cavity.
       ``(17) State.--The term `State' means any State of the 
     United States and, for purposes of this chapter, includes the 
     District of Columbia, the Commonwealth of Puerto Rico, Guam, 
     the Virgin Islands, American Samoa, Wake Island, Midway 
     Islands, Kingman Reef, Johnston Atoll, the Northern Mariana 
     Islands, and any other trust territory or possession of the 
     United States.
       ``(18) Tobacco product manufacturer.--Term `tobacco product 
     manufacturer' means any person, including any repacker or 
     relabeler, who--
       ``(A) manufactures, fabricates, assembles, processes, or 
     labels a tobacco product; or
       ``(B) imports a finished cigarette or smokeless tobacco 
     product for sale or distribution in the United States.
       ``(19) United states.--The term `United States' means the 
     50 States of the United States of America and the District of 
     Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
     Islands, American Samoa, Wake Island, Midway Islands, Kingman 
     Reef, Johnston Atoll, the Northern Mariana Islands, and any 
     other trust territory or possession of the United States.

     ``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS.

        ``(a) In General.--Tobacco products shall be regulated by 
     the Secretary under this chapter and shall not be subject to 
     the provisions of chapter V, unless--
       ``(1) such products are intended for use in the diagnosis, 
     cure, mitigation, treatment, or prevention of disease (within 
     the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
       ``(2) a claim is made for such products under section 
     201(g)(1)(C) or 201(h)(3);
     other than modified risk tobacco products approved in 
     accordance with section 911.
       ``(b) Applicability.--This chapter shall apply to all 
     tobacco products subject to the regulations referred to in 
     section 102 of the Family Smoking Prevention and Tobacco 
     Control Act, and to any other tobacco products that the 
     Secretary by regulation deems to be subject to this chapter.
       ``(c) Scope.--
       ``(1) In general.--Nothing in this chapter, or any policy 
     issued or regulation promulgated thereunder, or the Family 
     Smoking Prevention and Tobacco Control Act, shall be 
     construed to affect the Secretary's authority over, or the 
     regulation of, products under this Act that are not tobacco 
     products under chapter V or any other chapter.
       ``(2) Limitation of authority.--
       ``(A) In general.--The provisions of this chapter shall not 
     apply to tobacco leaf that is not in the possession of a 
     manufacturer of tobacco products, or to the producers of 
     tobacco leaf, including tobacco growers, tobacco warehouses, 
     and tobacco grower cooperatives, nor shall any employee of 
     the Food and Drug Administration have any authority to enter 
     onto a farm owned by a producer of tobacco leaf without the 
     written consent of such producer.
       ``(B) Exception.--Notwithstanding any other provision of 
     this subparagraph, if a producer of tobacco leaf is also a 
     tobacco product manufacturer or controlled by a tobacco 
     product manufacturer, the producer shall be subject to this 
     chapter in the producer's capacity as a manufacturer.
       ``(C) Rule of construction.--Nothing in this chapter shall 
     be construed to grant the Secretary authority to promulgate 
     regulations on any matter that involves the production of 
     tobacco leaf or a producer thereof, other than activities by 
     a manufacturer affecting production.

     ``SEC. 902. ADULTERATED TOBACCO PRODUCTS.

       ``A tobacco product shall be deemed to be adulterated if--
       ``(1) it consists in whole or in part of any filthy, 
     putrid, or decomposed substance, or is otherwise contaminated 
     by any added poisonous or added deleterious substance that 
     may render the product injurious to health;
       ``(2) it has been prepared, packed, or held under 
     insanitary conditions whereby it may have been contaminated 
     with filth, or whereby it may have been rendered injurious to 
     health;
       ``(3) its package is composed, in whole or in part, of any 
     poisonous or deleterious substance which may render the 
     contents injurious to health;
       ``(4) it is, or purports to be or is represented as, a 
     tobacco product which is subject to a tobacco product 
     standard established under section 907 unless such tobacco 
     product is in all respects in conformity with such standard;
       ``(5)(A) it is required by section 910(a) to have premarket 
     approval and does not have an approved application in effect; 
     or
       ``(B) it is in violation of the order approving such an 
     application;
       ``(6) the methods used in, or the facilities or controls 
     used for, its manufacture, packing or storage are not in 
     conformity with applicable requirements under section 
     906(e)(1) or an applicable condition prescribed by an order 
     under section 906(e)(2); or
       ``(7) it is in violation of section 911.

[[Page 5338]]



     ``SEC. 903. MISBRANDED TOBACCO PRODUCTS.

       ``(a) In General.--A tobacco product shall be deemed to be 
     misbranded--
       ``(1) if its labeling is false or misleading in any 
     particular;
       ``(2) if in package form unless it bears a label 
     containing--
       ``(A) the name and place of business of the tobacco product 
     manufacturer, packer, or distributor;
       ``(B) an accurate statement of the quantity of the contents 
     in terms of weight, measure, or numerical count;
       ``(C) an accurate statement of the percentage of the 
     tobacco used in the product that is domestically grown 
     tobacco and the percentage that is foreign grown tobacco; and
       ``(D) the statement required under section 921(a),

     except that under subparagraph (B) reasonable variations 
     shall be permitted, and exemptions as to small packages shall 
     be established, by regulations prescribed by the Secretary;
       ``(3) if any word, statement, or other information required 
     by or under authority of this chapter to appear on the label 
     or labeling is not prominently placed thereon with such 
     conspicuousness (as compared with other words, statements or 
     designs in the labeling) and in such terms as to render it 
     likely to be read and understood by the ordinary individual 
     under customary conditions of purchase and use;
       ``(4) if it has an established name, unless its label 
     bears, to the exclusion of any other nonproprietary name, its 
     established name prominently printed in type as required by 
     the Secretary by regulation;
       ``(5) if the Secretary has issued regulations requiring 
     that its labeling bear adequate directions for use, or 
     adequate warnings against use by children, that are necessary 
     for the protection of users unless its labeling conforms in 
     all respects to such regulations;
       ``(6) if it was manufactured, prepared, propagated, 
     compounded, or processed in any State in an establishment not 
     duly registered under section 905(b), 905(c), 905(d), or 
     905(h), if it was not included in a list required by section 
     905(i), if a notice or other information respecting it was 
     not provided as required by such section or section 905(j), 
     or if it does not bear such symbols from the uniform system 
     for identification of tobacco products prescribed under 
     section 905(e) as the Secretary by regulation requires;
       ``(7) if, in the case of any tobacco product distributed or 
     offered for sale in any State--
       ``(A) its advertising is false or misleading in any 
     particular; or
       ``(B) it is sold or distributed in violation of regulations 
     prescribed under section 906(d);
       ``(8) unless, in the case of any tobacco product 
     distributed or offered for sale in any State, the 
     manufacturer, packer, or distributor thereof includes in all 
     advertisements and other descriptive printed matter issued or 
     caused to be issued by the manufacturer, packer, or 
     distributor with respect to that tobacco product--
       ``(A) a true statement of the tobacco product's established 
     name as described in paragraph (4), printed prominently; and
       ``(B) a brief statement of--
       ``(i) the uses of the tobacco product and relevant 
     warnings, precautions, side effects, and contraindications; 
     and
       ``(ii) in the case of specific tobacco products made 
     subject to a finding by the Secretary after notice and 
     opportunity for comment that such action is appropriate to 
     protect the public health, a full description of the 
     components of such tobacco product or the formula showing 
     quantitatively each ingredient of such tobacco product to the 
     extent required in regulations which shall be issued by the 
     Secretary after an opportunity for a hearing;
       ``(9) if it is a tobacco product subject to a tobacco 
     product standard established under section 907, unless it 
     bears such labeling as may be prescribed in such tobacco 
     product standard; or
       ``(10) if there was a failure or refusal--
       ``(A) to comply with any requirement prescribed under 
     section 904 or 908; or
       ``(B) to furnish any material or information required under 
     section 909.
       ``(b) Prior Approval of Label Statements.--The Secretary 
     may, by regulation, require prior approval of statements made 
     on the label of a tobacco product. No regulation issued under 
     this subsection may require prior approval by the Secretary 
     of the content of any advertisement, except for modified risk 
     tobacco products as provided in section 911. No advertisement 
     of a tobacco product published after the date of enactment of 
     the Family Smoking Prevention and Tobacco Control Act shall, 
     with respect to the language of label statements as 
     prescribed under section 4 of the Cigarette Labeling and 
     Advertising Act and section 3 of the Comprehensive Smokeless 
     Tobacco Health Education Act of 1986 or the regulations 
     issued under such sections, be subject to the provisions of 
     sections 12 through 15 of the Federal Trade Commission Act 
     (15 U.S.C. 52 through 55).

     ``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE 
                   SECRETARY.

       ``(a) Requirement.--Not later than 6 months after the date 
     of enactment of the Family Smoking Prevention and Tobacco 
     Control Act, each tobacco product manufacturer or importer, 
     or agents thereof, shall submit to the Secretary the 
     following information:
       ``(1) A listing of all ingredients, including tobacco, 
     substances, compounds, and additives that are, as of such 
     date, added by the manufacturer to the tobacco, paper, 
     filter, or other part of each tobacco product by brand and by 
     quantity in each brand and subbrand.
       ``(2) A description of the content, delivery, and form of 
     nicotine in each tobacco product measured in milligrams of 
     nicotine in accordance with regulations promulgated by the 
     Secretary in accordance with section 4(a)(4) of the Federal 
     Cigarette Labeling and Advertising Act.
       ``(3) A listing of all constituents, including smoke 
     constituents as applicable, identified by the Secretary as 
     harmful or potentially harmful to health in each tobacco 
     product, and as applicable in the smoke of each tobacco 
     product, by brand and by quantity in each brand and subbrand. 
     Effective beginning 2 years after the date of enactment of 
     this chapter, the manufacturer, importer, or agent shall 
     comply with regulations promulgated under section 916 in 
     reporting information under this paragraph, where applicable.
       ``(4) All documents developed after the date of enactment 
     of the Family Smoking Prevention and Tobacco Control Act that 
     relate to health, toxicological, behavioral, or physiologic 
     effects of current or future tobacco products, their 
     constituents (including smoke constituents), ingredients, 
     components, and additives.
       ``(b) Data Submission.--At the request of the Secretary, 
     each tobacco product manufacturer or importer of tobacco 
     products, or agents thereof, shall submit the following:
       ``(1) Any or all documents (including underlying scientific 
     information) relating to research activities, and research 
     findings, conducted, supported, or possessed by the 
     manufacturer (or agents thereof) on the health, 
     toxicological, behavioral, or physiologic effects of tobacco 
     products and their constituents (including smoke 
     constituents), ingredients, components, and additives.
       ``(2) Any or all documents (including underlying scientific 
     information) relating to research activities, and research 
     findings, conducted, supported, or possessed by the 
     manufacturer (or agents thereof) that relate to the issue of 
     whether a reduction in risk to health from tobacco products 
     can occur upon the employment of technology available or 
     known to the manufacturer.
       ``(3) Any or all documents (including underlying scientific 
     or financial information) relating to marketing research 
     involving the use of tobacco products or marketing practices 
     and the effectiveness of such practices used by tobacco 
     manufacturers and distributors.

     An importer of a tobacco product not manufactured in the 
     United States shall supply the information required of a 
     tobacco product manufacturer under this subsection.
       ``(c) Time for Submission.--
       ``(1) In general.--At least 90 days prior to the delivery 
     for introduction into interstate commerce of a tobacco 
     product not on the market on the date of enactment of the 
     Family Smoking Prevention and Tobacco Control Act, the 
     manufacturer of such product shall provide the information 
     required under subsection (a).
       ``(2) Disclosure of additive.--If at any time a tobacco 
     product manufacturer adds to its tobacco products a new 
     tobacco additive or increases the quantity of an existing 
     tobacco additive, the manufacturer shall, except as provided 
     in paragraph (3), at least 90 days prior to such action so 
     advise the Secretary in writing.
       ``(3) Disclosure of other actions.--If at any time a 
     tobacco product manufacturer eliminates or decreases an 
     existing additive, or adds or increases an additive that has 
     by regulation been designated by the Secretary as an additive 
     that is not a human or animal carcinogen, or otherwise 
     harmful to health under intended conditions of use, the 
     manufacturer shall within 60 days of such action so advise 
     the Secretary in writing.
       ``(d) Data List.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of the Family Smoking Prevention and Tobacco 
     Control Act, and annually thereafter, the Secretary shall 
     publish in a format that is understandable and not misleading 
     to a lay person, and place on public display (in a manner 
     determined by the Secretary) the list established under 
     subsection (e).
       ``(2) Consumer research.--The Secretary shall conduct 
     periodic consumer research to ensure that the list published 
     under paragraph (1) is not misleading to lay persons. Not 
     later than 5 years after the date of enactment of the Family 
     Smoking Prevention and Tobacco Control Act, the Secretary 
     shall submit to the appropriate committees of Congress a 
     report on the results of such research, together with 
     recommendations on whether such publication should be 
     continued or modified.
       ``(e) Data Collection.--Not later than 12 months after the 
     date of enactment of the Family Smoking Prevention and 
     Tobacco Control Act, the Secretary shall establish a list of 
     harmful and potentially harmful constituents, including smoke 
     constituents, to health in each tobacco product by brand and 
     by quantity in each brand and subbrand. The

[[Page 5339]]

     Secretary shall publish a public notice requesting the 
     submission by interested persons of scientific and other 
     information concerning the harmful and potentially harmful 
     constituents in tobacco products and tobacco smoke.

     ``SEC. 905. ANNUAL REGISTRATION.

       ``(a) Definitions.--In this section:
       ``(1) Manufacture, preparation, com-
     pounding, or processing.--The term `manufacture, preparation, 
     compounding, or processing' shall include repackaging or 
     otherwise changing the container, wrapper, or labeling of any 
     tobacco product package in furtherance of the distribution of 
     the tobacco product from the original place of manufacture to 
     the person who makes final delivery or sale to the ultimate 
     consumer or user.
       ``(2) Name.--The term `name' shall include in the case of a 
     partnership the name of each partner and, in the case of a 
     corporation, the name of each corporate officer and director, 
     and the State of incorporation.
       ``(b) Registration by Owners and Operators.--On or before 
     December 31 of each year every person who owns or operates 
     any establishment in any State engaged in the manufacture, 
     preparation, compounding, or processing of a tobacco product 
     or tobacco products shall register with the Secretary the 
     name, places of business, and all such establishments of that 
     person.
       ``(c) Registration of New Owners and Operators.--Every 
     person upon first engaging in the manufacture, preparation, 
     compoun-
     ding, or processing of a tobacco product or tobacco products 
     in any establishment owned or operated in any State by that 
     person shall immediately register with the Secretary that 
     person's name, place of business, and such establishment.
       ``(d) Registration of Added Establishments.--Every person 
     required to register under subsection (b) or (c) shall 
     immediately register with the Secretary any additional 
     establishment which that person owns or operates in any State 
     and in which that person begins the manufacture, preparation, 
     com-
     pounding, or processing of a tobacco product or tobacco 
     products.
       ``(e) Uniform Product Identification System.--The Secretary 
     may by regulation prescribe a uniform system for the 
     identification of tobacco products and may require that 
     persons who are required to list such tobacco products under 
     subsection (i) shall list such tobacco products in accordance 
     with such system.
       ``(f) Public Access to Registration Information.--The 
     Secretary shall make available for inspection, to any person 
     so requesting, any registration filed under this section.
       ``(g) Biennial Inspection of Registered Establishments.--
     Every establishment in any State registered with the 
     Secretary under this section shall be subject to inspection 
     under section 704, and every such establishment engaged in 
     the manufacture, compounding, or processing of a tobacco 
     product or tobacco products shall be so inspected by 1 or 
     more officers or employees duly designated by the Secretary 
     at least once in the 2-year period beginning with the date of 
     registration of such establishment under this section and at 
     least once in every successive 2-year period thereafter.
       ``(h) Foreign Establishments Shall Register.--Any 
     establishment within any foreign country engaged in the 
     manufacture, preparation, compounding, or processing of a 
     tobacco product or tobacco products, shall register under 
     this section under regulations promulgated by the Secretary. 
     Such regulations shall require such establishment to provide 
     the information required by subsection (i) of this section 
     and shall include provisions for registration of any such 
     establishment upon condition that adequate and effective 
     means are available, by arrangement with the government of 
     such foreign country or otherwise, to enable the Secretary to 
     determine from time to time whether tobacco products 
     manufactured, prepared, compounded, or processed in such 
     establishment, if imported or offered for import into the 
     United States, shall be refused admission on any of the 
     grounds set forth in section 801(a).
       ``(i) Registration Information.--
       ``(1) Product list.--Every person who registers with the 
     Secretary under subsection (b), (c), (d), or (h) shall, at 
     the time of registration under any such subsection, file with 
     the Secretary a list of all tobacco products which are being 
     manufactured, prepared, compounded, or processed by that 
     person for commercial distribution and which has not been 
     included in any list of tobacco products filed by that person 
     with the Secretary under this paragraph or paragraph (2) 
     before such time of registration. Such list shall be prepared 
     in such form and manner as the Secretary may prescribe and 
     shall be accompanied by--
       ``(A) in the case of a tobacco product contained in the 
     applicable list with respect to which a tobacco product 
     standard has been established under section 907 or which is 
     subject to section 910, a reference to the authority for the 
     marketing of such tobacco product and a copy of all labeling 
     for such tobacco product;
       ``(B) in the case of any other tobacco product contained in 
     an applicable list, a copy of all consumer information and 
     other labeling for such tobacco product, a representative 
     sampling of advertisements for such tobacco product, and, 
     upon request made by the Secretary for good cause, a copy of 
     all advertisements for a particular tobacco product; and
       ``(C) if the registrant filing a list has determined that a 
     tobacco product contained in such list is not subject to a 
     tobacco product standard established under section 907, a 
     brief statement of the basis upon which the registrant made 
     such determination if the Secretary requests such a statement 
     with respect to that particular tobacco product.
       ``(2) Biannual report of any change in product list.--Each 
     person who registers with the Secretary under this section 
     shall report to the Secretary once during the month of June 
     of each year and once during the month of December of each 
     year the following:
       ``(A) A list of each tobacco product introduced by the 
     registrant for commercial distribution which has not been 
     included in any list previously filed by that person with the 
     Secretary under this subparagraph or paragraph (1). A list 
     under this subparagraph shall list a tobacco product by its 
     established name and shall be accompanied by the other 
     information required by paragraph (1).
       ``(B) If since the date the registrant last made a report 
     under this paragraph that person has discontinued the 
     manufacture, preparation, compounding, or processing for 
     commercial distribution of a tobacco product included in a 
     list filed under subparagraph (A) or paragraph (1), notice of 
     such discontinuance, the date of such discontinuance, and the 
     identity of its established name.
       ``(C) If since the date the registrant reported under 
     subparagraph (B) a notice of discontinuance that person has 
     resumed the manufacture, preparation, compounding, or 
     processing for commercial distribution of the tobacco product 
     with respect to which such notice of discontinuance was 
     reported, notice of such resumption, the date of such 
     resumption, the identity of such tobacco product by 
     established name, and other information required by paragraph 
     (1), unless the registrant has previously reported such 
     resumption to the Secretary under this subparagraph.
       ``(D) Any material change in any information previously 
     submitted under this paragraph or paragraph (1).
       ``(j) Report Preceding Introduction of Certain 
     Substantially-Equivalent Products Into Interstate Commerce.--
       ``(1) In general.--Each person who is required to register 
     under this section and who proposes to begin the introduction 
     or delivery for introduction into interstate commerce for 
     commercial distribution of a tobacco product intended for 
     human use that was not commercially marketed (other than for 
     test marketing) in the United States as of June 1, 2003, 
     shall, at least 90 days prior to making such introduction or 
     delivery, report to the Secretary (in such form and manner as 
     the Secretary shall prescribe)--
       ``(A) the basis for such person's determination that the 
     tobacco product is substantially equivalent, within the 
     meaning of section 910, to a tobacco product commercially 
     marketed (other than for test marketing) in the United States 
     as of June 1, 2003, that is in compliance with the 
     requirements of this Act; and
       ``(B) action taken by such person to comply with the 
     requirements under section 907 that are applicable to the 
     tobacco product.
       ``(2) Application to certain post june 1, 2003 products.--A 
     report under this subsection for a tobacco product that was 
     first introduced or delivered for introduction into 
     interstate commerce for commercial distribution in the United 
     States after June 1, 2003, and prior to the date that is 15 
     months after the date of enactment of the Family Smoking 
     Prevention and Tobacco Control Act shall be submitted to the 
     Secretary not later than 15 months after such date of 
     enactment.
       ``(3) Exemptions.--
       ``(A) In general.--The Secretary may by regulation, exempt 
     from the requirements of this subsection tobacco products 
     that are modified by adding or deleting a tobacco additive, 
     or increasing or decreasing the quantity of an existing 
     tobacco additive, if the Secretary determines that--
       ``(i) such modification would be a minor modification of a 
     tobacco product authorized for sale under this Act;
       ``(ii) a report under this subsection is not necessary to 
     ensure that permitting the tobacco product to be marketed 
     would be appropriate for protection of the public health; and
       ``(iii) an exemption is otherwise appropriate.
       ``(B) Regulations.--Not later than 9 months after the date 
     of enactment of the Family Smoking Prevention and Tobacco 
     Control Act, the Secretary shall issue regulations to 
     implement this paragraph.

     ``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO 
                   PRODUCTS.

       ``(a) In General.--Any requirement established by or under 
     section 902, 903, 905, or 909 applicable to a tobacco product 
     shall apply to such tobacco product until the applicability 
     of the requirement to the tobacco product has been changed by 
     action taken under section 907, section 910, section 911, or 
     subsection (d) of this section, and any requirement 
     established by or under section

[[Page 5340]]

     902, 903, 905, or 909 which is inconsistent with a 
     requirement imposed on such tobacco product under section 
     907, section 910, section 911, or subsection (d) of this 
     section shall not apply to such tobacco product.
       ``(b) Information on Public Access and Comment.--Each 
     notice of proposed rulemaking under section 907, 908, 909, 
     910, or 911 or under this section, any other notice which is 
     published in the Federal Register with respect to any other 
     action taken under any such section and which states the 
     reasons for such action, and each publication of findings 
     required to be made in connection with rulemaking under any 
     such section shall set forth--
       ``(1) the manner in which interested persons may examine 
     data and other information on which the notice or findings is 
     based; and
       ``(2) the period within which interested persons may 
     present their comments on the notice or findings (including 
     the need therefore) orally or in writing, which period shall 
     be at least 60 days but may not exceed 90 days unless the 
     time is extended by the Secretary by a notice published in 
     the Federal Register stating good cause therefore.
       ``(c) Limited Confidentiality of Information.--Any 
     information reported to or otherwise obtained by the 
     Secretary or the Secretary's representative under section 
     903, 904, 907, 908, 909, 910, 911, or 704, or under 
     subsection (e) or (f) of this section, which is exempt from 
     disclosure under subsection (a) of section 552 of title 5, 
     United States Code, by reason of subsection (b)(4) of that 
     section shall be considered confidential and shall not be 
     disclosed, except that the information may be disclosed to 
     other officers or employees concerned with carrying out this 
     chapter, or when relevant in any proceeding under this 
     chapter.
       ``(d) Restrictions.--
       ``(1) In general.--The Secretary may by regulation require 
     restrictions on the sale and distribution of a tobacco 
     product, including restrictions on the access to, and the 
     advertising and promotion of, the tobacco product, if the 
     Secretary determines that such regulation would be 
     appropriate for the protection of the public health. The 
     Secretary may by regulation impose restrictions on the 
     advertising and promotion of a tobacco product consistent 
     with and to full extent permitted by the first amendment to 
     the Constitution. The finding as to whether such regulation 
     would be appropriate for the protection of the public health 
     shall be determined with respect to the risks and benefits to 
     the population as a whole, including users and non-users of 
     the tobacco product, and taking into account--
       ``(A) the increased or decreased likelihood that existing 
     users of tobacco products will stop using such products; and
       ``(B) the increased or decreased likelihood that those who 
     do not use tobacco products will start using such products.

     No such regulation may require that the sale or distribution 
     of a tobacco product be limited to the written or oral 
     authorization of a practitioner licensed by law to prescribe 
     medical products.
       ``(2) Label statements.--The label of a tobacco product 
     shall bear such appropriate statements of the restrictions 
     required by a regulation under subsection (a) as the 
     Secretary may in such regulation prescribe.
       ``(3) Limitations.--
       ``(A) In general.--No restrictions under paragraph (1) 
     may--
       ``(i) prohibit the sale of any tobacco product in face-to-
     face transactions by a specific category of retail outlets; 
     or
       ``(ii) establish a minimum age of sale of tobacco products 
     to any person older than 18 years of age.
       ``(B) Matchbooks.--For purposes of any regulations issued 
     by the Secretary, matchbooks of conventional size containing 
     not more than 20 paper matches, and which are customarily 
     given away for free with the purchase of tobacco products 
     shall be considered as adult written publications which shall 
     be permitted to contain advertising. Notwithstanding the 
     preceding sentence, if the Secretary finds that such 
     treatment of matchbooks is not appropriate for the protection 
     of the public health, the Secretary may determine by 
     regulation that matchbooks shall not be considered adult 
     written publications.
       ``(e) Good Manufacturing Practice Requirements.--
       ``(1) Methods, facilities, and controls to conform.--
       ``(A) In general.--The Secretary may, in accordance with 
     subparagraph (B), prescribe regulations (which may differ 
     based on the type of tobacco product involved) requiring that 
     the methods used in, and the facilities and controls used 
     for, the manufacture, pre-production design validation 
     (including a process to assess the performance of a tobacco 
     product), packing and storage of a tobacco product, conform 
     to current good manufacturing practice, as prescribed in such 
     regulations, to assure that the public health is protected 
     and that the tobacco product is in compliance with this 
     chapter. Good manufacturing practices may include the testing 
     of raw tobacco for pesticide chemical residues regardless of 
     whether a tolerance for such chemical residues has been 
     established.
       ``(B) Requirements.--The Secretary shall--
       ``(i) before promulgating any regulation under subparagraph 
     (A), afford the Tobacco Products Scientific Advisory 
     Committee an opportunity to submit recommendations with 
     respect to the regulation proposed to be promulgated;
       ``(ii) before promulgating any regulation under 
     subparagraph (A), afford opportunity for an oral hearing;
       ``(iii) provide the advisory committee a reasonable time to 
     make its recommendation with respect to proposed regulations 
     under subparagraph (A); and
       ``(iv) in establishing the effective date of a regulation 
     promulgated under this subsection, take into account the 
     differences in the manner in which the different types of 
     tobacco products have historically been produced, the 
     financial resources of the different tobacco product 
     manufacturers, and the state of their existing manufacturing 
     facilities, and shall provide for a reasonable period of time 
     for such manufacturers to conform to good manufacturing 
     practices.
       ``(2) Exemptions; variances.--
       ``(A) Petition.--Any person subject to any requirement 
     prescribed under paragraph (1) may petition the Secretary for 
     a permanent or temporary exemption or variance from such 
     requirement. Such a petition shall be submitted to the 
     Secretary in such form and manner as the Secretary shall 
     prescribe and shall--
       ``(i) in the case of a petition for an exemption from a 
     requirement, set forth the basis for the petitioner's 
     determination that compliance with the requirement is not 
     required to assure that the tobacco product will be in 
     compliance with this chapter;
       ``(ii) in the case of a petition for a variance from a 
     requirement, set forth the methods proposed to be used in, 
     and the facilities and controls proposed to be used for, the 
     manufacture, packing, and storage of the tobacco product in 
     lieu of the methods, facilities, and controls prescribed by 
     the requirement; and
       ``(iii) contain such other information as the Secretary 
     shall prescribe.
       ``(B) Referral to the tobacco products scientific advisory 
     committee.--The Secretary may refer to the Tobacco Products 
     Scientific Advisory Committee any petition submitted under 
     subparagraph (A). The Tobacco Products Scientific Advisory 
     Committee shall report its recommendations to the Secretary 
     with respect to a petition referred to it within 60 days 
     after the date of the petition's referral. Within 60 days 
     after--
       ``(i) the date the petition was submitted to the Secretary 
     under subparagraph (A); or
       ``(ii) the day after the petition was referred to the 
     Tobacco Products Scientific Advisory Committee,

     whichever occurs later, the Secretary shall by order either 
     deny the petition or approve it.
       ``(C) Approval.--The Secretary may approve--
       ``(i) a petition for an exemption for a tobacco product 
     from a requirement if the Secretary determines that 
     compliance with such requirement is not required to assure 
     that the tobacco product will be in compliance with this 
     chapter; and
       ``(ii) a petition for a variance for a tobacco product from 
     a requirement if the Secretary determines that the methods to 
     be used in, and the facilities and controls to be used for, 
     the manufacture, packing, and storage of the tobacco product 
     in lieu of the methods, controls, and facilities prescribed 
     by the requirement are sufficient to assure that the tobacco 
     product will be in compliance with this chapter.
       ``(D) Conditions.--An order of the Secretary approving a 
     petition for a variance shall prescribe such conditions 
     respecting the methods used in, and the facilities and 
     controls used for, the manufacture, packing, and storage of 
     the tobacco product to be granted the variance under the 
     petition as may be necessary to assure that the tobacco 
     product will be in compliance with this chapter.
       ``(E) Hearing.--After the issuance of an order under 
     subparagraph (B) respecting a petition, the petitioner shall 
     have an opportunity for an informal hearing on such order.
       ``(3) Compliance.--Compliance with requirements under this 
     subsection shall not be required before the period ending 3 
     years after the date of enactment of the Family Smoking 
     Prevention and Tobacco Control Act.
       ``(f) Research and Development.--The Secretary may enter 
     into contracts for research, testing, and demonstrations 
     respecting tobacco products and may obtain tobacco products 
     for research, testing, and demonstration purposes without 
     regard to section 3324(a) and (b) of title 31, United States 
     Code, and section 5 of title 41, United States Code.

     ``SEC. 907. TOBACCO PRODUCT STANDARDS.

       ``(a) In General.--
       ``(1) Special rule for cigarettes.--A cigarette or any of 
     its component parts (including the tobacco, filter, or paper) 
     shall not contain, as a constituent (including a smoke 
     constituent) or additive, an artificial or natural flavor 
     (other than tobacco or menthol) or an herb or spice, 
     including strawberry, grape, orange, clove, cinnamon, 
     pineapple, vanilla, coconut, licorice, cocoa, chocolate, 
     cherry, or coffee, that is a characterizing flavor of the 
     tobacco product or tobacco smoke.

[[Page 5341]]

     Nothing in this subparagraph shall be construed to limit the 
     Secretary's authority to take action under this section or 
     other sections of this Act applicable to menthol or any 
     artificial or natural flavor, herb, or spice not specified in 
     this paragraph.
       ``(2) Revision of tobacco product standards.--The Secretary 
     may revise the tobacco product standards in paragraph (1) in 
     accordance with subsection (b).
       ``(3) Tobacco product standards.--The Secretary may adopt 
     tobacco product standards in addition to those in paragraph 
     (1) if the Secretary finds that a tobacco product standard is 
     appropriate for the protection of the public health. This 
     finding shall be determined with respect to the risks and 
     benefits to the population as a whole, including users and 
     non-users of the tobacco product, and taking into account--
       ``(A) the increased or decreased likelihood that existing 
     users of tobacco products will stop using such products; and
       ``(B) the increased or decreased likelihood that those who 
     do not use tobacco products will start using such products.
       ``(4) Content of tobacco product standards.--A tobacco 
     product standard established under this section for a tobacco 
     product--
       ``(A) shall include provisions that are appropriate for the 
     protection of the public health, including provisions, where 
     appropriate--
       ``(i) for the reduction of nicotine yields of the product;
       ``(ii) for the reduction or elimination of other 
     constituents, including smoke constituents, or harmful 
     components of the product; or
       ``(iii) relating to any other requirement under (B);
       ``(B) shall, where appropriate for the protection of the 
     public health, include--
       ``(i) provisions respecting the construction, components, 
     ingredients, additives, constituents, including smoke 
     constituents, and properties of the tobacco product;
       ``(ii) provisions for the testing (on a sample basis or, if 
     necessary, on an individual basis) of the tobacco product;
       ``(iii) provisions for the measurement of the tobacco 
     product characteristics of the tobacco product;
       ``(iv) provisions requiring that the results of each or of 
     certain of the tests of the tobacco product required to be 
     made under clause (ii) show that the tobacco product is in 
     conformity with the portions of the standard for which the 
     test or tests were required; and
       ``(v) a provision requiring that the sale and distribution 
     of the tobacco product be restricted but only to the extent 
     that the sale and distribution of a tobacco product may be 
     restricted under a regulation under section 906(d); and
       ``(C) shall, where appropriate, require the use and 
     prescribe the form and content of labeling for the proper use 
     of the tobacco product.
       ``(5) Periodic re-evaluation of tobacco product 
     standards.--The Secretary shall provide for periodic 
     evaluation of tobacco product standards established under 
     this section to determine whether such standards should be 
     changed to reflect new medical, scientific, or other 
     technological data. The Secretary may provide for testing 
     under paragraph (4)(B) by any person.
       ``(6) Involvement of other agencies; informed persons.--In 
     carrying out duties under this section, the Secretary shall 
     endeavor to--
       ``(A) use personnel, facilities, and other technical 
     support available in other Federal agencies;
       ``(B) consult with other Federal agencies concerned with 
     standard-setting and other nationally or internationally 
     recognized standard-setting entities; and
       ``(C) invite appropriate participation, through joint or 
     other conferences, workshops, or other means, by informed 
     persons representative of scientific, professional, industry, 
     agricultural, or consumer organizations who in the 
     Secretary's judgment can make a significant contribution.
       ``(b) Establishment of Standards.--
       ``(1) Notice.--
       ``(A) In general.--The Secretary shall publish in the 
     Federal Register a notice of proposed rulemaking for the 
     establishment, amendment, or revocation of any tobacco 
     product standard.
       ``(B) Requirements of notice.--A notice of proposed 
     rulemaking for the establishment or amendment of a tobacco 
     product standard for a tobacco product shall--
       ``(i) set forth a finding with supporting justification 
     that the tobacco product standard is appropriate for the 
     protection of the public health;
       ``(ii) set forth proposed findings with respect to the risk 
     of illness or injury that the tobacco product standard is 
     intended to reduce or eliminate; and
       ``(iii) invite interested persons to submit an existing 
     tobacco product standard for the tobacco product, including a 
     draft or proposed tobacco product standard, for consideration 
     by the Secretary.
       ``(C) Standard.--Upon a determination by the Secretary that 
     an additive, constituent (including smoke constituent), or 
     other component of the product that is the subject of the 
     proposed tobacco product standard is harmful, it shall be the 
     burden of any party challenging the proposed standard to 
     prove that the proposed standard will not reduce or eliminate 
     the risk of illness or injury.
       ``(D) Finding.--A notice of proposed rulemaking for the 
     revocation of a tobacco product standard shall set forth a 
     finding with supporting justification that the tobacco 
     product standard is no longer appropriate for the protection 
     of the public health.
       ``(E) Consideration by secretary.--The Secretary shall 
     consider all information submitted in connection with a 
     proposed standard, including information concerning the 
     countervailing effects of the tobacco product standard on the 
     health of adolescent tobacco users, adult tobacco users, or 
     non-tobacco users, such as the creation of a significant 
     demand for contraband or other tobacco products that do not 
     meet the requirements of this chapter and the significance of 
     such demand, and shall issue the standard if the Secretary 
     determines that the standard would be appropriate for the 
     protection of the public health.
       ``(F) Comment.--The Secretary shall provide for a comment 
     period of not less than 60 days.
       ``(2) Promulgation.--
       ``(A) In general.--After the expiration of the period for 
     comment on a notice of proposed rulemaking published under 
     paragraph (1) respecting a tobacco product standard and after 
     consideration of such comments and any report from the 
     Tobacco Products Scientific Advisory Committee, the Secretary 
     shall--
       ``(i) promulgate a regulation establishing a tobacco 
     product standard and publish in the Federal Register findings 
     on the matters referred to in paragraph (1); or
       ``(ii) publish a notice terminating the proceeding for the 
     development of the standard together with the reasons for 
     such termination.
       ``(B) Effective date.--A regulation establishing a tobacco 
     product standard shall set forth the date or dates upon which 
     the standard shall take effect, but no such regulation may 
     take effect before 1 year after the date of its publication 
     unless the Secretary determines that an earlier effective 
     date is necessary for the protection of the public health. 
     Such date or dates shall be established so as to minimize, 
     consistent with the public health, economic loss to, and 
     disruption or dislocation of, domestic and international 
     trade.
       ``(3) Power reserved to congress.--Because of the 
     importance of a decision of the Secretary to issue a 
     regulation establishing a tobacco product standard--
       ``(A) banning all cigarettes, all smokeless tobacco 
     products, all little cigars, all cigars other than little 
     cigars, all pipe tobacco, or all roll your own tobacco 
     products; or
       ``(B) requiring the reduction of nicotine yields of a 
     tobacco product to zero,
     Congress expressly reserves to itself such power.
       ``(4) Amendment; revocation.--
       ``(A) Authority.--The Secretary, upon the Secretary's own 
     initiative or upon petition of an interested person may by a 
     regulation, promulgated in accordance with the requirements 
     of paragraphs (1) and (2)(B), amend or revoke a tobacco 
     product standard.
       ``(B) Effective date.--The Secretary may declare a proposed 
     amendment of a tobacco product standard to be effective on 
     and after its publication in the Federal Register and until 
     the effective date of any final action taken on such 
     amendment if the Secretary determines that making it so 
     effective is in the public interest.
       ``(5) Reference to advisory committee.--The Secretary may--
       ``(A) on the Secretary's own initiative, refer a proposed 
     regulation for the establishment, amendment, or revocation of 
     a tobacco product standard; or
       ``(B) upon the request of an interested person which 
     demonstrates good cause for referral and which is made before 
     the expiration of the period for submission of comments on 
     such proposed regulation,

     refer such proposed regulation to the Tobacco Products 
     Scientific Advisory Committee, for a report and 
     recommendation with respect to any matter involved in the 
     proposed regulation which requires the exercise of scientific 
     judgment. If a proposed regulation is referred under this 
     paragraph to the Tobacco Products Scientific Advisory 
     Committee, the Secretary shall provide the advisory committee 
     with the data and information on which such proposed 
     regulation is based. The Tobacco Products Scientific Advisory 
     Committee shall, within 60 days after the referral of a 
     proposed regulation and after independent study of the data 
     and information furnished to it by the Secretary and other 
     data and information before it, submit to the Secretary a 
     report and recommendation respecting such regulation, 
     together with all underlying data and information and a 
     statement of the reason or basis for the recommendation. A 
     copy of such report and recommendation shall be made public 
     by the Secretary.

     ``SEC. 908. NOTIFICATION AND OTHER REMEDIES.

       ``(a) Notification.--If the Secretary determines that--
       ``(1) a tobacco product which is introduced or delivered 
     for introduction into interstate

[[Page 5342]]

     commerce for commercial distribution presents an unreasonable 
     risk of substantial harm to the public health; and
       ``(2) notification under this subsection is necessary to 
     eliminate the unreasonable risk of such harm and no more 
     practicable means is available under the provisions of this 
     chapter (other than this section) to eliminate such risk,

     the Secretary may issue such order as may be necessary to 
     assure that adequate notification is provided in an 
     appropriate form, by the persons and means best suited under 
     the circumstances involved, to all persons who should 
     properly receive such notification in order to eliminate such 
     risk. The Secretary may order notification by any appropriate 
     means, including public service announcements. Before issuing 
     an order under this subsection, the Secretary shall consult 
     with the persons who are to give notice under the order.
       ``(b) No Exemption From Other Liability.--Compliance with 
     an order issued under this section shall not relieve any 
     person from liability under Federal or State law. In awarding 
     damages for economic loss in an action brought for the 
     enforcement of any such liability, the value to the plaintiff 
     in such action of any remedy provided under such order shall 
     be taken into account.
       ``(c) Recall Authority.--
       ``(1) In general.--If the Secretary finds that there is a 
     reasonable probability that a tobacco product contains a 
     manufacturing or other defect not ordinarily contained in 
     tobacco products on the market that would cause serious, 
     adverse health consequences or death, the Secretary shall 
     issue an order requiring the appropriate person (including 
     the manufacturers, importers, distributors, or retailers of 
     the tobacco product) to immediately cease distribution of 
     such tobacco product. The order shall provide the person 
     subject to the order with an opportunity for an informal 
     hearing, to be held not later than 10 days after the date of 
     the issuance of the order, on the actions required by the 
     order and on whether the order should be amended to require a 
     recall of such tobacco product. If, after providing an 
     opportunity for such a hearing, the Secretary determines that 
     inadequate grounds exist to support the actions required by 
     the order, the Secretary shall vacate the order.
       ``(2) Amendment of order to require recall.--
       ``(A) In general.--If, after providing an opportunity for 
     an informal hearing under paragraph (1), the Secretary 
     determines that the order should be amended to include a 
     recall of the tobacco product with respect to which the order 
     was issued, the Secretary shall, except as provided in 
     subparagraph (B), amend the order to require a recall. The 
     Secretary shall specify a timetable in which the tobacco 
     product recall will occur and shall require periodic reports 
     to the Secretary describing the progress of the recall.
       ``(B) Notice.--An amended order under subparagraph (A)--
       ``(i) shall not include recall of a tobacco product from 
     individuals; and
       ``(ii) shall provide for notice to persons subject to the 
     risks associated with the use of such tobacco product.

     In providing the notice required by clause (ii), the 
     Secretary may use the assistance of retailers and other 
     persons who distributed such tobacco product. If a 
     significant number of such persons cannot be identified, the 
     Secretary shall notify such persons under section 705(b).
       ``(3) Remedy not exclusive.--The remedy provided by this 
     subsection shall be in addition to remedies provided by 
     subsection (a) of this section.

     ``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

       ``(a) In General.--Every person who is a tobacco product 
     manufacturer or importer of a tobacco product shall establish 
     and maintain such records, make such reports, and provide 
     such information, as the Secretary may by regulation 
     reasonably require to assure that such tobacco product is not 
     adulterated or misbranded and to otherwise protect public 
     health. Regulations prescribed under the preceding sentence--
       ``(1) may require a tobacco product manufacturer or 
     importer to report to the Secretary whenever the manufacturer 
     or importer receives or otherwise becomes aware of 
     information that reasonably suggests that one of its marketed 
     tobacco products may have caused or contributed to a serious 
     unexpected adverse experience associated with the use of the 
     product or any significant increase in the frequency of a 
     serious, expected adverse product experience;
       ``(2) shall require reporting of other significant adverse 
     tobacco product experiences as determined by the Secretary to 
     be necessary to be reported;
       ``(3) shall not impose requirements unduly burdensome to a 
     tobacco product manufacturer or importer, taking into account 
     the cost of complying with such requirements and the need for 
     the protection of the public health and the implementation of 
     this chapter;
       ``(4) when prescribing the procedure for making requests 
     for reports or information, shall require that each request 
     made under such regulations for submission of a report or 
     information to the Secretary state the reason or purpose for 
     such request and identify to the fullest extent practicable 
     such report or information;
       ``(5) when requiring submission of a report or information 
     to the Secretary, shall state the reason or purpose for the 
     submission of such report or information and identify to the 
     fullest extent practicable such report or information; and
       ``(6) may not require that the identity of any patient or 
     user be disclosed in records, reports, or information 
     required under this subsection unless required for the 
     medical welfare of an individual, to determine risks to 
     public health of a tobacco product, or to verify a record, 
     report, or information submitted under this chapter.

     In prescribing regulations under this subsection, the 
     Secretary shall have due regard for the professional ethics 
     of the medical profession and the interests of patients. The 
     prohibitions of paragraph (6) continue to apply to records, 
     reports, and information concerning any individual who has 
     been a patient, irrespective of whether or when he ceases to 
     be a patient.
       ``(b) Reports of Removals and Corrections.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Secretary shall by regulation require a tobacco product 
     manufacturer or importer of a tobacco product to report 
     promptly to the Secretary any corrective action taken or 
     removal from the market of a tobacco product undertaken by 
     such manufacturer or importer if the removal or correction 
     was undertaken--
       ``(A) to reduce a risk to health posed by the tobacco 
     product; or
       ``(B) to remedy a violation of this chapter caused by the 
     tobacco product which may present a risk to health.

     A tobacco product manufacturer or importer of a tobacco 
     product who undertakes a corrective action or removal from 
     the market of a tobacco product which is not required to be 
     reported under this subsection shall keep a record of such 
     correction or removal.
       ``(2) Exception.--No report of the corrective action or 
     removal of a tobacco product may be required under paragraph 
     (1) if a report of the corrective action or removal is 
     required and has been submitted under subsection (a).

     ``SEC. 910. APPLICATION FOR REVIEW OF CERTAIN TOBACCO 
                   PRODUCTS.

       ``(a) In General.--
       ``(1) New tobacco product defined.--For purposes of this 
     section the term `new tobacco product' means--
       ``(A) any tobacco product (including those products in test 
     markets) that was not commercially marketed in the United 
     States as of June 1, 2003; or
       ``(B) any modification (including a change in design, any 
     component, any part, or any constituent, including a smoke 
     constituent, or in the content, delivery or form of nicotine, 
     or any other additive or ingredient) of a tobacco product 
     where the modified product was commercially marketed in the 
     United States after June 1, 2003.
       ``(2) Premarket approval required.--
       ``(A) New products.--Approval under this section of an 
     application for premarket approval for any new tobacco 
     product is required unless--
       ``(i) the manufacturer has submitted a report under section 
     905(j); and
       ``(ii) the Secretary has issued an order that the tobacco 
     product--

       ``(I) is substantially equivalent to a tobacco product 
     commercially marketed (other than for test marketing) in the 
     United States as of June 1, 2003; and
       ``(II)(aa) is in compliance with the requirements of this 
     Act; or
       ``(bb) is exempt from the requirements of section 905(j) 
     pursuant to a regulation issued under section 905(j)(3).

       ``(B) Application to certain post june 1, 2003 products.--
     Subparagraph (A) shall not apply to a tobacco product--
       ``(i) that was first introduced or delivered for 
     introduction into interstate commerce for commercial 
     distribution in the United States after June 1, 2003, and 
     prior to the date that is 15 months after the date of 
     enactment of the Family Smoking Prevention and Tobacco 
     Control Act; and
       ``(ii) for which a report was submitted under section 
     905(j) within such 15-month period, until the Secretary 
     issues an order that the tobacco product is not substantially 
     equivalent.
       ``(3) Substantially equivalent defined.--
       ``(A) In general.--In this section and section 905(j), the 
     terms `substantially equivalent' or `substantial equivalence' 
     mean, with respect to the tobacco product being compared to 
     the predicate tobacco product, that the Secretary by order 
     has found that the tobacco product--
       ``(i) has the same characteristics as the predicate tobacco 
     product; or
       ``(ii) has different characteristics and the information 
     submitted contains information, including clinical data if 
     deemed necessary by the Secretary, that demonstrates that it 
     is not appropriate to regulate the product under this section 
     because the product does not raise different questions of 
     public health.
       ``(B) Characteristics.--In subparagraph (A), the term 
     `characteristics' means the materials, ingredients, design, 
     composition, heating source, or other features of a tobacco 
     product.
       ``(C) Limitation.--A tobacco product may not be found to be 
     substantially equivalent

[[Page 5343]]

     to a predicate tobacco product that has been removed from the 
     market at the initiative of the Secretary or that has been 
     determined by a judicial order to be misbranded or 
     adulterated.
       ``(4) Health information.--
       ``(A) Summary.--As part of a submission under section 
     905(j) respecting a tobacco product, the person required to 
     file a premarket notification under such section shall 
     provide an adequate summary of any health information related 
     to the tobacco product or state that such information will be 
     made available upon request by any person.
       ``(B) Required information.--Any summary under subparagraph 
     (A) respecting a tobacco product shall contain detailed 
     information regarding data concerning adverse health effects 
     and shall be made available to the public by the Secretary 
     within 30 days of the issuance of a determination that such 
     tobacco product is substantially equivalent to another 
     tobacco product.
       ``(b) Application.--
       ``(1) Contents.--An application for premarket approval 
     shall contain--
       ``(A) full reports of all information, published or known 
     to, or which should reasonably be known to, the applicant, 
     concerning investigations which have been made to show the 
     health risks of such tobacco product and whether such tobacco 
     product presents less risk than other tobacco products;
       ``(B) a full statement of the components, ingredients, 
     additives, and properties, and of the principle or principles 
     of operation, of such tobacco product;
       ``(C) a full description of the methods used in, and the 
     facilities and controls used for, the manufacture, 
     processing, and, when relevant, packing and installation of, 
     such tobacco product;
       ``(D) an identifying reference to any tobacco product 
     standard under section 907 which would be applicable to any 
     aspect of such tobacco product, and either adequate 
     information to show that such aspect of such tobacco product 
     fully meets such tobacco product standard or adequate 
     information to justify any deviation from such standard;
       ``(E) such samples of such tobacco product and of 
     components thereof as the Secretary may reasonably require;
       ``(F) specimens of the labeling proposed to be used for 
     such tobacco product; and
       ``(G) such other information relevant to the subject matter 
     of the application as the Secretary may require.
       ``(2) Reference to tobacco products scientific advisory 
     committee.--Upon receipt of an application meeting the 
     requirements set forth in paragraph (1), the Secretary--
       ``(A) may, on the Secretary's own initiative; or
       ``(B) may, upon the request of an applicant,

     refer such application to the Tobacco Products Scientific 
     Advisory Committee for reference and for submission (within 
     such period as the Secretary may establish) of a report and 
     recommendation respecting approval of the application, 
     together with all underlying data and the reasons or basis 
     for the recommendation.
       ``(c) Action on Application.--
       ``(1) Deadline.--
       ``(A) In general.--As promptly as possible, but in no event 
     later than 180 days after the receipt of an application under 
     subsection (b), the Secretary, after considering the report 
     and recommendation submitted under paragraph (2) of such 
     subsection, shall--
       ``(i) issue an order approving the application if the 
     Secretary finds that none of the grounds for denying approval 
     specified in paragraph (2) of this subsection applies; or
       ``(ii) deny approval of the application if the Secretary 
     finds (and sets forth the basis for such finding as part of 
     or accompanying such denial) that 1 or more grounds for 
     denial specified in paragraph (2) of this subsection apply.
       ``(B) Restrictions on sale and distribution.--An order 
     approving an application for a tobacco product may require as 
     a condition to such approval that the sale and distribution 
     of the tobacco product be restricted but only to the extent 
     that the sale and distribution of a tobacco product may be 
     restricted under a regulation under section 906(d).
       ``(2) Denial of approval.--The Secretary shall deny 
     approval of an application for a tobacco product if, upon the 
     basis of the information submitted to the Secretary as part 
     of the application and any other information before the 
     Secretary with respect to such tobacco product, the Secretary 
     finds that--
       ``(A) there is a lack of a showing that permitting such 
     tobacco product to be marketed would be appropriate for the 
     protection of the public health;
       ``(B) the methods used in, or the facilities or controls 
     used for, the manufacture, processing, or packing of such 
     tobacco product do not conform to the requirements of section 
     906(e);
       ``(C) based on a fair evaluation of all material facts, the 
     proposed labeling is false or misleading in any particular; 
     or
       ``(D) such tobacco product is not shown to conform in all 
     respects to a tobacco product standard in effect under 
     section 907, compliance with which is a condition to approval 
     of the application, and there is a lack of adequate 
     information to justify the deviation from such standard.
       ``(3) Denial information.--Any denial of an application 
     shall, insofar as the Secretary determines to be practicable, 
     be accompanied by a statement informing the applicant of the 
     measures required to place such application in approvable 
     form (which measures may include further research by the 
     applicant in accordance with 1 or more protocols prescribed 
     by the Secretary).
       ``(4) Basis for finding.--For purposes of this section, the 
     finding as to whether approval of a tobacco product is 
     appropriate for the protection of the public health shall be 
     determined with respect to the risks and benefits to the 
     population as a whole, including users and nonusers of the 
     tobacco product, and taking into account--
       ``(A) the increased or decreased likelihood that existing 
     users of tobacco products will stop using such products; and
       ``(B) the increased or decreased likelihood that those who 
     do not use tobacco products will start using such products.
       ``(5) Basis for action.--
       ``(A) Investigations.--For purposes of paragraph (2)(A), 
     whether permitting a tobacco product to be marketed would be 
     appropriate for the protection of the public health shall, 
     when appropriate, be determined on the basis of well-
     controlled investigations, which may include 1 or more 
     clinical investigations by experts qualified by training and 
     experience to evaluate the tobacco product.
       ``(B) Other evidence.--If the Secretary determines that 
     there exists valid scientific evidence (other than evidence 
     derived from investigations described in subparagraph (A)) 
     which is sufficient to evaluate the tobacco product the 
     Secretary may authorize that the determination for purposes 
     of paragraph (2)(A) be made on the basis of such evidence.
       ``(d) Withdrawal and Temporary Suspension.--
       ``(1) In general.--The Secretary shall, upon obtaining, 
     where appropriate, advice on scientific matters from an 
     advisory committee, and after due notice and opportunity for 
     informal hearing to the holder of an approved application for 
     a tobacco product, issue an order withdrawing approval of the 
     application if the Secretary finds--
       ``(A) that the continued marketing of such tobacco product 
     no longer is appropriate for the protection of the public 
     health;
       ``(B) that the application contained or was accompanied by 
     an untrue statement of a material fact;
       ``(C) that the applicant--
       ``(i) has failed to establish a system for maintaining 
     records, or has repeatedly or deliberately failed to maintain 
     records or to make reports, required by an applicable 
     regulation under section 909;
       ``(ii) has refused to permit access to, or copying or 
     verification of, such records as required by section 704; or
       ``(iii) has not complied with the requirements of section 
     905;
       ``(D) on the basis of new information before the Secretary 
     with respect to such tobacco product, evaluated together with 
     the evidence before the Secretary when the application was 
     approved, that the methods used in, or the facilities and 
     controls used for, the manufacture, processing, packing, or 
     installation of such tobacco product do not conform with the 
     requirements of section 906(e) and were not brought into 
     conformity with such requirements within a reasonable time 
     after receipt of written notice from the Secretary of 
     nonconformity;
       ``(E) on the basis of new information before the Secretary, 
     evaluated together with the evidence before the Secretary 
     when the application was approved, that the labeling of such 
     tobacco product, based on a fair evaluation of all material 
     facts, is false or misleading in any particular and was not 
     corrected within a reasonable time after receipt of written 
     notice from the Secretary of such fact; or
       ``(F) on the basis of new information before the Secretary, 
     evaluated together with the evidence before the Secretary 
     when the application was approved, that such tobacco product 
     is not shown to conform in all respects to a tobacco product 
     standard which is in effect under section 907, compliance 
     with which was a condition to approval of the application, 
     and that there is a lack of adequate information to justify 
     the deviation from such standard.
       ``(2) Appeal.--The holder of an application subject to an 
     order issued under paragraph (1) withdrawing approval of the 
     application may, by petition filed on or before the 30th day 
     after the date upon which such holder receives notice of such 
     withdrawal, obtain review thereof in accordance with 
     subsection (e).
       ``(3) Temporary suspension.--If, after providing an 
     opportunity for an informal hearing, the Secretary determines 
     there is reasonable probability that the continuation of 
     distribution of a tobacco product under an approved 
     application would cause serious, adverse health consequences 
     or death, that is greater than ordinarily caused by tobacco 
     products on the market, the Secretary shall by order 
     temporarily suspend the approval of the application approved 
     under this section. If the Secretary issues such an order, 
     the Secretary shall proceed expeditiously under paragraph (1) 
     to withdraw such application.

[[Page 5344]]

       ``(e) Service of Order.--An order issued by the Secretary 
     under this section shall be served--
       ``(1) in person by any officer or employee of the 
     department designated by the Secretary; or
       ``(2) by mailing the order by registered mail or certified 
     mail addressed to the applicant at the applicant's last known 
     address in the records of the Secretary.
       ``(f) Records.--
       ``(1) Additional information.--In the case of any tobacco 
     product for which an approval of an application filed under 
     subsection (b) is in effect, the applicant shall establish 
     and maintain such records, and make such reports to the 
     Secretary, as the Secretary may by regulation, or by order 
     with respect to such application, prescribe on the basis of a 
     finding that such records and reports are necessary in order 
     to enable the Secretary to determine, or facilitate a 
     determination of, whether there is or may be grounds for 
     withdrawing or temporarily suspending such approval.
       ``(2) Access to records.--Each person required under this 
     section to maintain records, and each person in charge or 
     custody thereof, shall, upon request of an officer or 
     employee designated by the Secretary, permit such officer or 
     employee at all reasonable times to have access to and copy 
     and verify such records.
       ``(g) Investigational Tobacco Product Exemption for 
     Investigational Use.--The Secretary may exempt tobacco 
     products intended for investigational use from the provisions 
     of this chapter under such conditions as the Secretary may by 
     regulation prescribe.

     ``SEC. 911. MODIFIED RISK TOBACCO PRODUCTS.

       ``(a) In General.--No person may introduce or deliver for 
     introduction into interstate commerce any modified risk 
     tobacco product unless approval of an application filed 
     pursuant to subsection (d) is effective with respect to such 
     product.
       ``(b) Definitions.--In this section:
       ``(1) Modified risk tobacco product.--The term `modified 
     risk tobacco product' means any tobacco product that is sold 
     or distributed for use to reduce harm or the risk of tobacco-
     related disease associated with commercially marketed tobacco 
     products.
       ``(2) Sold or distributed.--
       ``(A) In general.--With respect to a tobacco product, the 
     term `sold or distributed for use to reduce harm or the risk 
     of tobacco-related disease associated with commercially 
     marketed tobacco products' means a tobacco product--
       ``(i) the label, labeling, or advertising of which 
     represents explicitly or implicitly that--

       ``(I) the tobacco product presents a lower risk of tobacco-
     related disease or is less harmful than one or more other 
     commercially marketed tobacco products;
       ``(II) the tobacco product or its smoke contains a reduced 
     level of a substance or presents a reduced exposure to a 
     substance; or
       ``(III) the tobacco product or its smoke does not contain 
     or is free of a substance;

       ``(ii) the label, labeling, or advertising of which uses 
     the descriptors `light', `mild', or `low' or similar 
     descriptors; or
       ``(iii) the tobacco product manufacturer of which has taken 
     any action directed to consumers through the media or 
     otherwise, other than by means of the tobacco product's 
     label, labeling or advertising, after the date of enactment 
     of the Family Smoking Prevention and Tobacco Control Act, 
     respecting the product that would be reasonably expected to 
     result in consumers believing that the tobacco product or its 
     smoke may present a lower risk of disease or is less harmful 
     than one or more commercially marketed tobacco products, or 
     presents a reduced exposure to, or does not contain or is 
     free of, a substance or substances.
       ``(B) Limitation.--No tobacco product shall be considered 
     to be `sold or distributed for use to reduce harm or the risk 
     of tobacco-related disease associated with commercially 
     marketed tobacco products', except as described in 
     subparagraph (A).
       ``(c) Tobacco Dependence Products.--A product that is 
     intended to be used for the treatment of tobacco dependence, 
     including smoking cessation, is not a modified risk tobacco 
     product under this section and is subject to the requirements 
     of chapter V.
       ``(d) Filing.--Any person may file with the Secretary an 
     application for a modified risk tobacco product. Such 
     application shall include--
       ``(1) a description of the proposed product and any 
     proposed advertising and labeling;
       ``(2) the conditions for using the product;
       ``(3) the formulation of the product;
       ``(4) sample product labels and labeling;
       ``(5) all documents (including underlying scientific 
     information) relating to research findings conducted, 
     supported, or possessed by the tobacco product manufacturer 
     relating to the effect of the product on tobacco-related 
     diseases and health-related conditions, including information 
     both favorable and unfavorable to the ability of the product 
     to reduce risk or exposure and relating to human health;
       ``(6) data and information on how consumers actually use 
     the tobacco product; and
       ``(7) such other information as the Secretary may require.
       ``(e) Public Availability.--The Secretary shall make the 
     application described in subsection (d) publicly available 
     (except matters in the application which are trade secrets or 
     otherwise confidential, commercial information) and shall 
     request comments by interested persons on the information 
     contained in the application and on the label, labeling, and 
     advertising accompanying such application.
       ``(f) Advisory Committee.--
       ``(1) In general.--The Secretary shall refer to an advisory 
     committee any application submitted under this subsection.
       ``(2) Recommendations.--Not later than 60 days after the 
     date an application is referred to an advisory committee 
     under paragraph (1), the advisory committee shall report its 
     recommendations on the application to the Secretary.
       ``(g) Approval.--
       ``(1) Modified risk products.--Except as provided in 
     paragraph (2), the Secretary shall approve an application for 
     a modified risk tobacco product filed under this section only 
     if the Secretary determines that the applicant has 
     demonstrated that such product, as it is actually used by 
     consumers, will--
       ``(A) significantly reduce harm and the risk of tobacco-
     related disease to individual tobacco users; and
       ``(B) benefit the health of the population as a whole 
     taking into account both users of tobacco products and 
     persons who do not currently use tobacco products.
       ``(2) Special rule for certain products.--
       ``(A) In general.--The Secretary may approve an application 
     for a tobacco product that has not been approved as a 
     modified risk tobacco product pursuant to paragraph (1) if 
     the Secretary makes the findings required under this 
     paragraph and determines that the applicant has demonstrated 
     that--
       ``(i) the approval of the application would be appropriate 
     to promote the public health;
       ``(ii) any aspect of the label, labeling, and advertising 
     for such product that would cause the tobacco product to be a 
     modified risk tobacco product under subsection (b)(2) is 
     limited to an explicit or implicit representation that such 
     tobacco product or its smoke contains or is free of a 
     substance or contains a reduced level of a substance, or 
     presents a reduced exposure to a substance in tobacco smoke;
       ``(iii) scientific evidence is not available and, using the 
     best available scientific methods, cannot be made available 
     without conducting long-term epidemiological studies for an 
     application to meet the standards set forth in paragraph (1); 
     and
       ``(iv) the scientific evidence that is available without 
     conducting long-term epidemiological studies demonstrates 
     that a measurable and substantial reduction in morbidity or 
     mortality among individual tobacco users is anticipated in 
     subsequent studies.
       ``(B) Additional findings required.--In order to approve an 
     application under subparagraph (A) the Secretary must also 
     find that the applicant has demonstrated that--
       ``(i) the magnitude of the overall reductions in exposure 
     to the substance or substances which are the subject of the 
     application is substantial, such substance or substances are 
     harmful, and the product as actually used exposes consumers 
     to the specified reduced level of the substance or 
     substances;
       ``(ii) the product as actually used by consumers will not 
     expose them to higher levels of other harmful substances 
     compared to the similar types of tobacco products then on the 
     market unless such increases are minimal and the anticipated 
     overall impact of use of the product remains a substantial 
     and measurable reduction in overall morbidity and mortality 
     among individual tobacco users;
       ``(iii) testing of actual consumer perception shows that, 
     as the applicant proposes to label and market the product, 
     consumers will not be misled into believing that the 
     product--

       ``(I) is or has been demonstrated to be less harmful; or
       ``(II) presents or has been demonstrated to present less of 
     a risk of disease than 1 or more other commercially marketed 
     tobacco products; and

       ``(iv) approval of the application is expected to benefit 
     the health of the population as a whole taking into account 
     both users of tobacco products and persons who do not 
     currently use tobacco products.
       ``(C) Conditions of approval.--
       ``(i) In general.--Applications approved under this 
     paragraph shall be limited to a term of not more than 5 
     years, but may be renewed upon a finding by the Secretary 
     that the requirements of this paragraph continue to be 
     satisfied based on the filing of a new application.
       ``(ii) Agreements by applicant.--Applications approved 
     under this paragraph shall be conditioned on the applicant's 
     agreement to conduct post-market surveillance and studies and 
     to submit to the Secretary the results of such surveillance 
     and studies to determine the impact of the application 
     approval on consumer perception, behavior, and health and to 
     enable the Secretary to review the accuracy of the 
     determinations upon which the approval was based in 
     accordance with a protocol approved by the Secretary.
       ``(iii) Annual submission.--The results of such post-market 
     surveillance and studies

[[Page 5345]]

     described in clause (ii) shall be submitted annually.
       ``(3) Basis.--The determinations under paragraphs (1) and 
     (2) shall be based on--
       ``(A) the scientific evidence submitted by the applicant; 
     and
       ``(B) scientific evidence and other information that is 
     available to the Secretary.
       ``(4) Benefit to health of individuals and of population as 
     a whole.--In making the determinations under paragraphs (1) 
     and (2), the Secretary shall take into account--
       ``(A) the relative health risks to individuals of the 
     tobacco product that is the subject of the application;
       ``(B) the increased or decreased likelihood that existing 
     users of tobacco products who would otherwise stop using such 
     products will switch to the tobacco product that is the 
     subject of the application;
       ``(C) the increased or decreased likelihood that persons 
     who do not use tobacco products will start using the tobacco 
     product that is the subject of the application;
       ``(D) the risks and benefits to persons from the use of the 
     tobacco product that is the subject of the application as 
     compared to the use of products for smoking cessation 
     approved under chapter V to treat nicotine dependence; and
       ``(E) comments, data, and information submitted by 
     interested persons.
       ``(h) Additional Conditions for Approval.--
       ``(1) Modified risk products.--The Secretary shall require 
     for the approval of an application under this section that 
     any advertising or labeling concerning modified risk products 
     enable the public to comprehend the information concerning 
     modified risk and to understand the relative significance of 
     such information in the context of total health and in 
     relation to all of the diseases and health-related conditions 
     associated with the use of tobacco products.
       ``(2) Comparative claims.--
       ``(A) In general.--The Secretary may require for the 
     approval of an application under this subsection that a claim 
     comparing a tobacco product to 1 or more other commercially 
     marketed tobacco products shall compare the tobacco product 
     to a commercially marketed tobacco product that is 
     representative of that type of tobacco product on the market 
     (for example the average value of the top 3 brands of an 
     established regular tobacco product).
       ``(B) Quantitative comparisons.--The Secretary may also 
     require, for purposes of subparagraph (A), that the percent 
     (or fraction) of change and identity of the reference tobacco 
     product and a quantitative comparison of the amount of the 
     substance claimed to be reduced shall be stated in immediate 
     proximity to the most prominent claim.
       ``(3) Label disclosure.--
       ``(A) In general.--The Secretary may require the disclosure 
     on the label of other substances in the tobacco product, or 
     substances that may be produced by the consumption of that 
     tobacco product, that may affect a disease or health-related 
     condition or may increase the risk of other diseases or 
     health-related conditions associated with the use of tobacco 
     products.
       ``(B) Conditions of use.--If the conditions of use of the 
     tobacco product may affect the risk of the product to human 
     health, the Secretary may require the labeling of conditions 
     of use.
       ``(4) Time.--The Secretary shall limit an approval under 
     subsection (g)(1) for a specified period of time.
       ``(5) Advertising.--The Secretary may require that an 
     applicant, whose application has been approved under this 
     subsection, comply with requirements relating to advertising 
     and promotion of the tobacco product.
       ``(i) Postmarket Surveillance and Studies.--
       ``(1) In general.--The Secretary shall require that an 
     applicant under subsection (g)(1) conduct post market 
     surveillance and studies for a tobacco product for which an 
     application has been approved to determine the impact of the 
     application approval on consumer perception, behavior, and 
     health, to enable the Secretary to review the accuracy of the 
     determinations upon which the approval was based, and to 
     provide information that the Secretary determines is 
     otherwise necessary regarding the use or health risks 
     involving the tobacco product. The results of post-market 
     surveillance and studies shall be submitted to the Secretary 
     on an annual basis.
       ``(2) Surveillance protocol.--Each applicant required to 
     conduct a surveillance of a tobacco product under paragraph 
     (1) shall, within 30 days after receiving notice that the 
     applicant is required to conduct such surveillance, submit, 
     for the approval of the Secretary, a protocol for the 
     required surveillance. The Secretary, within 60 days of the 
     receipt of such protocol, shall determine if the principal 
     investigator proposed to be used in the surveillance has 
     sufficient qualifications and experience to conduct such 
     surveillance and if such protocol will result in collection 
     of the data or other information designated by the Secretary 
     as necessary to protect the public health.
       ``(j) Withdrawal of Approval.--The Secretary, after an 
     opportunity for an informal hearing, shall withdraw the 
     approval of an application under this section if the 
     Secretary determines that--
       ``(1) the applicant, based on new information, can no 
     longer make the demonstrations required under subsection (g), 
     or the Secretary can no longer make the determinations 
     required under subsection (g);
       ``(2) the application failed to include material 
     information or included any untrue statement of material 
     fact;
       ``(3) any explicit or implicit representation that the 
     product reduces risk or exposure is no longer valid, 
     including if--
       ``(A) a tobacco product standard is established pursuant to 
     section 907;
       ``(B) an action is taken that affects the risks presented 
     by other commercially marketed tobacco products that were 
     compared to the product that is the subject of the 
     application; or
       ``(C) any postmarket surveillance or studies reveal that 
     the approval of the application is no longer consistent with 
     the protection of the public health;
       ``(4) the applicant failed to conduct or submit the 
     postmarket surveillance and studies required under subsection 
     (g)(2)(C)(ii) or (i); or
       ``(5) the applicant failed to meet a condition imposed 
     under subsection (h).
       ``(k) Chapter IV or V.--A product approved in accordance 
     with this section shall not be subject to chapter IV or V.
       ``(l) Implementing Regulations or Guidance.--
       ``(1) Scientific evidence.--Not later than 2 years after 
     the date of enactment of the Family Smoking Prevention and 
     Tobacco Control Act, the Secretary shall issue regulations or 
     guidance (or any combination thereof) on the scientific 
     evidence required for assessment and ongoing review of 
     modified risk tobacco products. Such regulations or guidance 
     shall--
       ``(A) establish minimum standards for scientific studies 
     needed prior to approval to show that a substantial reduction 
     in morbidity or mortality among individual tobacco users is 
     likely;
       ``(B) include validated biomarkers, intermediate clinical 
     endpoints, and other feasible outcome measures, as 
     appropriate;
       ``(C) establish minimum standards for post market studies, 
     that shall include regular and long-term assessments of 
     health outcomes and mortality, intermediate clinical 
     endpoints, consumer perception of harm reduction, and the 
     impact on quitting behavior and new use of tobacco products, 
     as appropriate;
       ``(D) establish minimum standards for required postmarket 
     surveillance, including ongoing assessments of consumer 
     perception; and
       ``(E) require that data from the required studies and 
     surveillance be made available to the Secretary prior to the 
     decision on renewal of a modified risk tobacco product.
       ``(2) Consultation.--The regulations or guidance issued 
     under paragraph (1) shall be developed in consultation with 
     the Institute of Medicine, and with the input of other 
     appropriate scientific and medical experts, on the design and 
     conduct of such studies and surveillance.
       ``(3) Revision.--The regulations or guidance under 
     paragraph (1) shall be revised on a regular basis as new 
     scientific information becomes available.
       ``(4) New tobacco products.--Not later than 2 years after 
     the date of enactment of the Family Smoking Prevention and 
     Tobacco Control Act, the Secretary shall issue a regulation 
     or guidance that permits the filing of a single application 
     for any tobacco product that is a new tobacco product under 
     section 910 and for which the applicant seeks approval as a 
     modified risk tobacco product under this section.
       ``(m) Distributors.--No distributor may take any action, 
     after the date of enactment of the Family Smoking Prevention 
     and Tobacco Control Act, with respect to a tobacco product 
     that would reasonably be expected to result in consumers 
     believing that the tobacco product or its smoke may present a 
     lower risk of disease or is less harmful than one or more 
     commercially marketed tobacco products, or presents a reduced 
     exposure to, or does not contain or is free of, a substance 
     or substances.

     ``SEC. 912. JUDICIAL REVIEW.

       ``(a) Right To Review.--
       ``(1) In general.--Not later than 30 days after--
       ``(A) the promulgation of a regulation under section 907 
     establishing, amending, or revoking a tobacco product 
     standard; or
       ``(B) a denial of an application for approval under section 
     910(c),

     any person adversely affected by such regulation or denial 
     may file a petition for judicial review of such regulation or 
     denial with the United States Court of Appeals for the 
     District of Columbia or for the circuit in which such person 
     resides or has their principal place of business.
       ``(2) Requirements.--
       ``(A) Copy of petition.--A copy of the petition filed under 
     paragraph (1) shall be transmitted by the clerk of the court 
     involved to the Secretary.
       ``(B) Record of proceedings.--On receipt of a petition 
     under subparagraph (A), the Secretary shall file in the court 
     in which such petition was filed--
       ``(i) the record of the proceedings on which the regulation 
     or order was based; and

[[Page 5346]]

       ``(ii) a statement of the reasons for the issuance of such 
     a regulation or order.
       ``(C) Definition of record.--In this section, the term 
     `record' means--
       ``(i) all notices and other matter published in the Federal 
     Register with respect to the regulation or order reviewed;
       ``(ii) all information submitted to the Secretary with 
     respect to such regulation or order;
       ``(iii) proceedings of any panel or advisory committee with 
     respect to such regulation or order;
       ``(iv) any hearing held with respect to such regulation or 
     order; and
       ``(v) any other information identified by the Secretary, in 
     the administrative proceeding held with respect to such 
     regulation or order, as being relevant to such regulation or 
     order.
       ``(b) Standard of Review.--Upon the filing of the petition 
     under subsection (a) for judicial review of a regulation or 
     order, the court shall have jurisdiction to review the 
     regulation or order in accordance with chapter 7 of title 5, 
     United States Code, and to grant appropriate relief, 
     including interim relief, as provided for in such chapter. A 
     regulation or denial described in subsection (a) shall be 
     reviewed in accordance with section 706(2)(A) of title 5, 
     United States Code.
       ``(c) Finality of Judgment.--The judgment of the court 
     affirming or setting aside, in whole or in part, any 
     regulation or order shall be final, subject to review by the 
     Supreme Court of the United States upon certiorari or 
     certification, as provided in section 1254 of title 28, 
     United States Code.
       ``(d) Other Remedies.--The remedies provided for in this 
     section shall be in addition to, and not in lieu of, any 
     other remedies provided by law.
       ``(e) Regulations and Orders Must Recite Basis in Record.--
     To facilitate judicial review, a regulation or order issued 
     under section 906, 907, 908, 909, 910, or 916 shall contain a 
     statement of the reasons for the issuance of such regulation 
     or order in the record of the proceedings held in connection 
     with its issuance.

     ``SEC. 913. EQUAL TREATMENT OF RETAIL OUTLETS.

       ``The Secretary shall issue regulations to require that 
     retail establishments for which the predominant business is 
     the sale of tobacco products comply with any advertising 
     restrictions applicable to retail establishments accessible 
     to individuals under the age of 18.

     ``SEC. 914. JURISDICTION OF AND COORDINATION WITH THE FEDERAL 
                   TRADE COMMISSION.

       ``(a) Jurisdiction.--
       ``(1) In general.--Except where expressly provided in this 
     chapter, nothing in this chapter shall be construed as 
     limiting or diminishing the authority of the Federal Trade 
     Commission to enforce the laws under its jurisdiction with 
     respect to the advertising, sale, or distribution of tobacco 
     products.
       ``(2) Enforcement.--Any advertising that violates this 
     chapter or a provision of the regulations referred to in 
     section 102 of the Family Smoking Prevention and Tobacco 
     Control Act, is an unfair or deceptive act or practice under 
     section 5(a) of the Federal Trade Commission Act (15 U.S.C. 
     45(a)) and shall be considered a violation of a rule 
     promulgated under section 18 of that Act (15 U.S.C. 57a).
       ``(b) Coordination.--With respect to the requirements of 
     section 4 of the Federal Cigarette Labeling and Advertising 
     Act (15 U.S.C. 1333) and section 3 of the Comprehensive 
     Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 
     4402)--
       ``(1) the Chairman of the Federal Trade Commission shall 
     coordinate with the Secretary concerning the enforcement of 
     such Act as such enforcement relates to unfair or deceptive 
     acts or practices in the advertising of cigarettes or 
     smokeless tobacco; and
       ``(2) the Secretary shall consult with the Chairman of such 
     Commission in revising the label statements and requirements 
     under such sections.

     ``SEC. 915. CONGRESSIONAL REVIEW PROVISIONS.

       ``In accordance with section 801 of title 5, United States 
     Code, Congress shall review, and may disapprove, any rule 
     under this chapter that is subject to section 801. This 
     section and section 801 do not apply to the regulations 
     referred to in section 102 of the Family Smoking Prevention 
     and Tobacco Control Act.

     ``SEC. 916. REGULATION REQUIREMENT.

       ``(a) Testing, Reporting, and Disclosure.--Not later than 
     24 months after the date of enactment of the Family Smoking 
     Prevention and Tobacco Control Act, the Secretary, acting 
     through the Commissioner of the Food and Drug Administration, 
     shall promulgate regulations under this Act that meet the 
     requirements of subsection (b).
       ``(b) Contents of Rules.--The regulations promulgated under 
     subsection (a) shall require testing and reporting of tobacco 
     product constituents, ingredients, and additives, including 
     smoke constituents, by brand and sub-brand that the Secretary 
     determines should be tested to protect the public health. The 
     regulations may require that tobacco product manufacturers, 
     packagers, or importers make disclosures relating to the 
     results of the testing of tar and nicotine through labels or 
     advertising or other appropriate means, and make disclosures 
     regarding the results of the testing of other constituents, 
     including smoke constituents, ingredients, or additives, that 
     the Secretary determines should be disclosed to the public to 
     protect the public health and will not mislead consumers 
     about the risk of tobacco related disease.
       ``(c) Authority.--The Food and Drug Administration shall 
     have the authority under this chapter to conduct or to 
     require the testing, reporting, or disclosure of tobacco 
     product constituents, including smoke constituents.

     ``SEC. 917. PRESERVATION OF STATE AND LOCAL AUTHORITY.

       ``(a) In General.--
       ``(1) Preservation.--Nothing in this chapter, or rules 
     promulgated under this chapter, shall be construed to limit 
     the authority of a Federal agency (including the Armed 
     Forces), a State or political subdivision of a State, or the 
     government of an Indian tribe to enact, adopt, promulgate, 
     and enforce any law, rule, regulation, or other measure with 
     respect to tobacco products that is in addition to, or more 
     stringent than, requirements established under this chapter, 
     including a law, rule, regulation, or other measure relating 
     to or prohibiting the sale, distribution, possession, 
     exposure to, access to, advertising and promotion of, or use 
     of tobacco products by individuals of any age, information 
     reporting to the State, or measures relating to fire safety 
     standards for tobacco products. No provision of this chapter 
     shall limit or otherwise affect any State, Tribal, or local 
     taxation of tobacco products.
       ``(2) Preemption of certain state and local requirements.--
       ``(A) In general.--Except as provided in paragraph (1) and 
     subparagraph (B), no State or political subdivision of a 
     State may establish or continue in effect with respect to a 
     tobacco product any requirement which is different from, or 
     in addition to, any requirement under the provisions of this 
     chapter relating to tobacco product standards, premarket 
     approval, adulteration, misbranding, labeling, registration, 
     good manufacturing standards, or modified risk tobacco 
     products.
       ``(B) Exception.--Subparagraph (A) does not apply to 
     requirements relating to the sale, distribution, possession, 
     information reporting to the State, exposure to, access to, 
     the advertising and promotion of, or use of, tobacco products 
     by individuals of any age, or relating to fire safety 
     standards for tobacco products. Information disclosed to a 
     State under subparagraph (A) that is exempt from disclosure 
     under section 554(b)(4) of title 5, United States Code, shall 
     be treated as trade secret and confidential information by 
     the State.
       ``(b) Rule of Construction Regarding Product Liability.--No 
     provision of this chapter relating to a tobacco product shall 
     be construed to modify or otherwise affect any action or the 
     liability of any person under the product liability law of 
     any State.

     ``SEC. 918. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.

       ``(a) Establishment.--Not later than 1 year after the date 
     of enactment of the Family Smoking Prevention and Tobacco 
     Control Act, the Secretary shall establish a 11-member 
     advisory committee, to be known as the `Tobacco Products 
     Scientific Advisory Committee'.
       ``(b) Membership.--
       ``(1) In general.--
       ``(A) Members.--The Secretary shall appoint as members of 
     the Tobacco Products Scientific Advisory Committee 
     individuals who are technically qualified by training and 
     experience in the medicine, medical ethics, science, or 
     technology involving the manufacture, evaluation, or use of 
     tobacco products, who are of appropriately diversified 
     professional backgrounds. The committee shall be composed 
     of--
       ``(i) 7 individuals who are physicians, dentists, 
     scientists, or health care professionals practicing in the 
     area of oncology, pulmonology, cardiology, toxicology, 
     pharmacology, addiction, or any other relevant specialty;
       ``(ii) 1 individual who is an officer or employee of a 
     State or local government or of the Federal Government;
       ``(iii) 1 individual as a representative of the general 
     public;
       ``(iv) 1 individual as a representative of the interests in 
     the tobacco manufacturing industry; and
       ``(v) 1 individual as a representative of the interests of 
     the tobacco growers.
       ``(B) Nonvoting members.--The members of the committee 
     appointed under clauses (iv) and (v) of subparagraph (A) 
     shall serve as consultants to those described in clauses (i) 
     through (iii) of subparagraph (A) and shall be nonvoting 
     representatives.
       ``(2) Limitation.--The Secretary may not appoint to the 
     Advisory Committee any individual who is in the regular full-
     time employ of the Food and Drug Administration or any agency 
     responsible for the enforcement of this Act. The Secretary 
     may appoint Federal officials as ex officio members.
       ``(3) Chairperson.--The Secretary shall designate 1 of the 
     members of the Advisory Committee to serve as chairperson.
       ``(c) Duties.--The Tobacco Products Scientific Advisory 
     Committee shall provide advice, information, and 
     recommendations to the Secretary--

[[Page 5347]]

       ``(1) as provided in this chapter;
       ``(2) on the effects of the alteration of the nicotine 
     yields from tobacco products;
       ``(3) on whether there is a threshold level below which 
     nicotine yields do not produce dependence on the tobacco 
     product involved; and
       ``(4) on its review of other safety, dependence, or health 
     issues relating to tobacco products as requested by the 
     Secretary.
       ``(d) Compensation; Support; FACA.--
       ``(1) Compensation and travel.--Members of the Advisory 
     Committee who are not officers or employees of the United 
     States, while attending conferences or meetings of the 
     committee or otherwise engaged in its business, shall be 
     entitled to receive compensation at rates to be fixed by the 
     Secretary, which may not exceed the daily equivalent of the 
     rate in effect for level 4 of the Senior Executive Schedule 
     under section 5382 of title 5, United States Code, for each 
     day (including travel time) they are so engaged; and while so 
     serving away from their homes or regular places of business 
     each member may be allowed travel expenses, including per 
     diem in lieu of subsistence, as authorized by section 5703 of 
     title 5, United States Code, for persons in the Government 
     service employed intermittently.
       ``(2) Administrative support.--The Secretary shall furnish 
     the Advisory Committee clerical and other assistance.
       ``(3) Nonapplication of faca.--Section 14 of the Federal 
     Advisory Committee Act (5 U.S.C. App.) does not apply to the 
     Advisory Committee.
       ``(e) Proceedings of Advisory Panels and Committees.--The 
     Advisory Committee shall make and maintain a transcript of 
     any proceeding of the panel or committee. Each such panel and 
     committee shall delete from any transcript made under this 
     subsection information which is exempt from disclosure under 
     section 552(b) of title 5, United States Code.

     ``SEC. 919. DRUG PRODUCTS USED TO TREAT TOBACCO DEPENDENCE.

       ``The Secretary shall--
       ``(1) at the request of the applicant, consider designating 
     nicotine replacement products as fast track research and 
     approval products within the meaning of section 506;
       ``(2) consider approving the extended use of nicotine 
     replacement products (such as nicotine patches, nicotine gum, 
     and nicotine lozenges) for the treatment of tobacco 
     dependence; and
       ``(3) review and consider the evidence for additional 
     indications for nicotine replacement products, such as for 
     craving relief or relapse prevention.

     ``SEC. 920. USER FEE.

       ``(a) Establishment of Quarterly User Fee.--The Secretary 
     shall assess a quarterly user fee with respect to every 
     quarter of each fiscal year commencing fiscal year 2005, 
     calculated in accordance with this section, upon each 
     manufacturer and importer of tobacco products subject to this 
     chapter.
       ``(b) Funding of FDA Regulation of Tobacco Products.--The 
     Secretary shall make user fees collected pursuant to this 
     section available to pay, in each fiscal year, for the costs 
     of the activities of the Food and Drug Administration related 
     to the regulation of tobacco products under this chapter.
       ``(c) Assessment of User Fee.--
       ``(1) Amount of assessment.--Except as provided in 
     paragraph (4), the total user fees assessed each year 
     pursuant to this section shall be sufficient, and shall not 
     exceed what is necessary, to pay for the costs of the 
     activities described in subsection (b) for each fiscal year.
       ``(2) Allocation of assessment by class of tobacco 
     products.--
       ``(A) In general.--Subject to paragraph (3), the total user 
     fees assessed each fiscal year with respect to each class of 
     importers and manufacturers shall be equal to an amount that 
     is the applicable percentage of the total costs of activities 
     of the Food and Drug Administration described in subsection 
     (b).
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A) the applicable percentage for a fiscal year shall be the 
     following:
       ``(i) 92.07 percent shall be assessed on manufacturers and 
     importers of cigarettes;
       ``(ii) 0.05 percent shall be assessed on manufacturers and 
     importers of little cigars;
       ``(iii) 7.15 percent shall be assessed on manufacturers and 
     importers of cigars other than little cigars;
       ``(iv) 0.43 percent shall be assessed on manufacturers and 
     importers of snuff;
       ``(v) 0.10 percent shall be assessed on manufacturers and 
     importers of chewing tobacco;
       ``(vi) 0.06 percent shall be assessed on manufacturers and 
     importers of pipe tobacco; and
       ``(vii) 0.14 percent shall be assessed on manufacturers and 
     importers of roll-your-own tobacco.
       ``(3) Distribution of fee shares of manufacturers and 
     importers exempt from user fee.--Where a class of tobacco 
     products is not subject to a user fee under this section, the 
     portion of the user fee assigned to such class under 
     subsection (d)(2) shall be allocated by the Secretary on a 
     pro rata basis among the classes of tobacco products that are 
     subject to a user fee under this section. Such pro rata 
     allocation for each class of tobacco products that are 
     subject to a user fee under this section shall be the 
     quotient of--
       ``(A) the sum of the percentages assigned to all classes of 
     tobacco products subject to this section; divided by
       ``(B) the percentage assigned to such class under paragraph 
     (2).
       ``(4) Annual limit on assessment.--The total assessment 
     under this section--
       ``(A) for fiscal year 2005 shall be $85,000,000;
       ``(B) for fiscal year 2006 shall be $175,000,000;
       ``(C) for fiscal year 2007 shall be $300,000,000; and
       ``(D) for each subsequent fiscal year, shall not exceed the 
     limit on the assessment imposed during the previous fiscal 
     year, as adjusted by the Secretary (after notice, published 
     in the Federal Register) to reflect the greater of--
       ``(i) the total percentage change that occurred in the 
     Consumer Price Index for all urban consumers (all items; 
     United States city average) for the 12-month period ending on 
     June 30 of the preceding fiscal year for which fees are being 
     established; or
       ``(ii) the total percentage change for the previous fiscal 
     year in basic pay under the General Schedule in accordance 
     with section 5332 of title 5, United States Code, as adjusted 
     by any locality-based comparability payment pursuant to 
     section 5304 of such title for Federal employees stationed in 
     the District of Columbia.
       ``(5) Timing of user fee assessment.--The Secretary shall 
     notify each manufacturer and importer of tobacco products 
     subject to this section of the amount of the quarterly 
     assessment imposed on such manufacturer or importer under 
     subsection (f) during each quarter of each fiscal year. Such 
     notifications shall occur not earlier than 3 months prior to 
     the end of the quarter for which such assessment is made, and 
     payments of all assessments shall be made not later than 60 
     days after each such notification.
       ``(d) Determination of User Fee by Company Market Share.--
       ``(1) In general.--The user fee to be paid by each 
     manufacturer or importer of a given class of tobacco products 
     shall be determined in each quarter by multiplying--
       ``(A) such manufacturer's or importer's market share of 
     such class of tobacco products; by
       ``(B) the portion of the user fee amount for the current 
     quarter to be assessed on manufacturers and importers of such 
     class of tobacco products as determined under subsection (e).
       ``(2) No fee in excess of market share.--No manufacturer or 
     importer of tobacco products shall be required to pay a user 
     fee in excess of the market share of such manufacturer or 
     importer.
       ``(e) Determination of Volume of Domestic Sales.--
       ``(1) In general.--The calculation of gross domestic volume 
     of a class of tobacco product by a manufacturer or importer, 
     and by all manufacturers and importers as a group, shall be 
     made by the Secretary using information provided by 
     manufacturers and importers pursuant to subsection (f), as 
     well as any other relevant information provided to or 
     obtained by the Secretary.
       ``(2) Measurement.--For purposes of the calculations under 
     this subsection and the information provided under subsection 
     (f) by the Secretary, gross domestic volume shall be measured 
     by--
       ``(A) in the case of cigarettes, the number of cigarettes 
     sold;
       ``(B) in the case of little cigars, the number of little 
     cigars sold;
       ``(C) in the case of large cigars, the number of cigars 
     weighing more than 3 pounds per thousand sold; and
       ``(D) in the case of other classes of tobacco products, in 
     terms of number of pounds, or fraction thereof, of these 
     products sold.
       ``(f) Measurement of Gross Domestic Volume.--
       ``(1) In general.--Each manufacturer and importer of 
     tobacco products shall submit to the Secretary a certified 
     copy of each of the returns or forms described by this 
     paragraph that are required to be filed with a Government 
     agency on the same date that those returns or forms are 
     filed, or required to be filed, with such agency. The returns 
     and forms described by this paragraph are those returns and 
     forms related to the release of tobacco products into 
     domestic commerce, as defined by section 5702(k) of the 
     Internal Revenue Code of 1986, and the repayment of the taxes 
     imposed under chapter 52 of such Code (ATF Form 500.24 and 
     United States Customs Form 7501 under currently applicable 
     regulations).
       ``(2) Penalties.--Any person that knowingly fails to 
     provide information required under this subsection or that 
     provides false information under this subsection shall be 
     subject to the penalties described in section 1003 of title 
     18, United States Code. In addition, such person may be 
     subject to a civil penalty in an amount not to exceed 2 
     percent of the value of the kind of tobacco products 
     manufactured or imported by such person during the applicable 
     quarter, as determined by the Secretary.
       ``(h) Effective Date.--The user fees prescribed by this 
     section shall be assessed in fiscal year 2005, based on 
     domestic sales of tobacco products during fiscal year 2004 
     and shall be assessed in each fiscal year thereafter.''.

[[Page 5348]]



     SEC. 102. INTERIM FINAL RULE.

       (a) Cigarettes and Smokeless Tobacco.--
       (1) In general.--Not later than 30 days after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall publish in the Federal Register an interim 
     final rule regarding cigarettes and smokeless tobacco, which 
     is hereby deemed to be in compliance with the Administrative 
     Procedures Act and other applicable law.
       (2) Contents of rule.--Except as provided in this 
     subsection, the interim final rule published under paragraph 
     (1), shall be identical in its provisions to part 897 of the 
     regulations promulgated by the Secretary of Health and Human 
     Services in the August 28, 1996, issue of the Federal 
     Register (61 Fed. Reg., 44615-44618). Such rule shall--
       (A) provide for the designation of jurisdictional authority 
     that is in accordance with this subsection;
       (B) strike Subpart C--Labeling and section 897.32(c); and
       (C) become effective not later than 1 year after the date 
     of enactment of this Act.
       (3) Amendments to rule.--Prior to making amendments to the 
     rule published under paragraph (1), the Secretary shall 
     promulgate a proposed rule in accordance with the 
     Administrative Procedures Act.
       (4) Rule of construction.--Except as provided in paragraph 
     (3), nothing in this section shall be construed to limit the 
     authority of the Secretary to amend, in accordance with the 
     Administrative Procedures Act, the regulation promulgated 
     pursuant to this section.
       (b) Limitation on Advisory Opinions.--As of the date of 
     enactment of this Act, the following documents issued by the 
     Food and Drug Administration shall not constitute advisory 
     opinions under section 10.85(d)(1) of title 21, Code of 
     Federal Regulations, except as they apply to tobacco 
     products, and shall not be cited by the Secretary of Health 
     and Human Services or the Food and Drug Administration as 
     binding precedent:
       (1) The preamble to the proposed rule in the document 
     entitled ``Regulations Restricting the Sale and Distribution 
     of Cigarettes and Smokeless Tobacco Products to Protect 
     Children and Adolescents'' (60 Fed. Reg. 41314-41372 (August 
     11, 1995)).
       (2) The document entitled ``Nicotine in Cigarettes and 
     Smokeless Tobacco Products is a Drug and These Products Are 
     Nicotine Delivery Devices Under the Federal Food, Drug, and 
     Cosmetic Act'' (60 Fed. Reg. 41453-41787 (August 11, 1995)).
       (3) The preamble to the final rule in the document entitled 
     ``Regulations Restricting the Sale and Distribution of 
     Cigarettes and Smokeless Tobacco to Protect Children and 
     Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).
       (4) The document entitled ``Nicotine in Cigarettes and 
     Smokeless Tobacco is a Drug and These Products are Nicotine 
     Delivery Devices Under the Federal Food, Drug, and Cosmetic 
     Act; Jurisdictional Determination'' (61 Fed. Reg. 44619-45318 
     (August 28, 1996)).

     SEC. 103. CONFORMING AND OTHER AMENDMENTS TO GENERAL 
                   PROVISIONS.

       (a) Amendment of Federal Food, Drug, and Cosmetic Act.--
     Except as otherwise expressly provided, whenever in this 
     section an amendment is expressed in terms of an amendment 
     to, or repeal of, a section or other provision, the reference 
     is to a section or other provision of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 301 et seq.).
       (b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
       (1) in subsection (a), by inserting ``tobacco product,'' 
     after ``device,'';
       (2) in subsection (b), by inserting ``tobacco product,'' 
     after ``device,'';
       (3) in subsection (c), by inserting ``tobacco product,'' 
     after ``device,'';
       (4) in subsection (e), by striking ``515(f), or 519'' and 
     inserting ``515(f), 519, or 909'';
       (5) in subsection (g), by inserting ``tobacco product,'' 
     after ``device,'';
       (6) in subsection (h), by inserting ``tobacco product,'' 
     after ``device,'';
       (7) in subsection (j), by striking ``708, or 721'' and 
     inserting ``708, 721, 904, 905, 906, 907, 908, 909, or 
     section 921(b)'';
       (8) in subsection (k), by inserting ``tobacco product,'' 
     after ``device,'';
       (9) by striking subsection (p) and inserting the following:
       ``(p) The failure to register in accordance with section 
     510 or 905, the failure to provide any information required 
     by section 510(j), 510(k), 905(i), or 905(j), or the failure 
     to provide a notice required by section 510(j)(2) or 
     905(i)(2).'';
       (10) by striking subsection (q)(1) and inserting the 
     following:
       ``(q)(1) The failure or refusal--
       ``(A) to comply with any requirement prescribed under 
     section 518, 520(g), 903(b)(8), or 908, or condition 
     prescribed under section 903(b)(6)(B)(ii)(II);
       ``(B) to furnish any notification or other material or 
     information required by or under section 519, 520(g), 904, 
     909, or section 921; or
       ``(C) to comply with a requirement under section 522 or 
     913.'';
       (11) in subsection (q)(2), by striking ``device,'' and 
     inserting ``device or tobacco product,'';
       (12) in subsection (r), by inserting ``or tobacco product'' 
     after ``device'' each time that it appears; and
       (13) by adding at the end the following:
       ``(aa) The sale of tobacco products in violation of a no-
     tobacco-sale order issued under section 303(f).
       ``(bb) The introduction or delivery for introduction into 
     interstate commerce of a tobacco product in violation of 
     section 911.
       ``(cc)(1) Forging, counterfeiting, simulating, or falsely 
     representing, or without proper authority using any mark, 
     stamp (including tax stamp), tag, label, or other 
     identification device upon any tobacco product or container 
     or labeling thereof so as to render such tobacco product a 
     counterfeit tobacco product.
       ``(2) Making, selling, disposing of, or keeping in 
     possession, control, or custody, or concealing any punch, 
     die, plate, stone, or other item that is designed to print, 
     imprint, or reproduce the trademark, trade name, or other 
     identifying mark, imprint, or device of another or any 
     likeness of any of the foregoing upon any tobacco product or 
     container or labeling thereof so as to render such tobacco 
     product a counterfeit tobacco product.
       ``(3) The doing of any act that causes a tobacco product to 
     be a counterfeit tobacco product, or the sale or dispensing, 
     or the holding for sale or dispensing, of a counterfeit 
     tobacco product.
       ``(dd) The charitable distribution of tobacco products.
       ``(ee) The failure of a manufacturer or distributor to 
     notify the Attorney General of their knowledge of tobacco 
     products used in illicit trade.''.
       (c) Section 303.--Section 303 (21 U.S.C. 333(f)) is amended 
     in subsection (f)--
       (1) by striking the subsection heading and inserting the 
     following:
       ``(f) Civil Penalties; No-Tobacco-Sale Orders.--'';
       (2) in paragraph (1)(A), by inserting ``or tobacco 
     products'' after ``devices'';
       (3) in paragraph (2)(C), by striking ``paragraph (3)(A)'' 
     and inserting ``paragraph (4)(A)'';
       (4) by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (4), (5), and (6), and inserting after paragraph 
     (2) the following:
       ``(3) If the Secretary finds that a person has committed 
     repeated violations of restrictions promulgated under section 
     906(d) at a particular retail outlet then the Secretary may 
     impose a no-tobacco-sale order on that person prohibiting the 
     sale of tobacco products in that outlet. A no-tobacco-sale 
     order may be imposed with a civil penalty under paragraph 
     (1).'';
       (5) in paragraph (4) as so redesignated--
       (A) in subparagraph (A)--
       (i) by striking ``assessed'' the first time it appears and 
     inserting ``assessed, or a no-tobacco-sale order may be 
     imposed,''; and
       (ii) by striking ``penalty'' and inserting ``penalty, or 
     upon whom a no-tobacco-order is to be imposed,'';
       (B) in subparagraph (B)--
       (i) by inserting after ``penalty,'' the following: ``or the 
     period to be covered by a no-tobacco-sale order,''; and
       (ii) by adding at the end the following: ``A no-tobacco-
     sale order permanently prohibiting an individual retail 
     outlet from selling tobacco products shall include provisions 
     that allow the outlet, after a specified period of time, to 
     request that the Secretary compromise, modify, or terminate 
     the order.''; and
       (C) by adding at the end, the following:
       ``(D) The Secretary may compromise, modify, or terminate, 
     with or without conditions, any no-tobacco-sale order.'';
       (6) in paragraph (5) as so redesignated--
       (A) by striking ``(3)(A)'' as redesignated, and inserting 
     ``(4)(A)'';
       (B) by inserting ``or the imposition of a no-tobacco-sale 
     order'' after ``penalty'' the first 2 places it appears; and
       (C) by striking ``issued.'' and inserting ``issued, or on 
     which the no-tobacco-sale order was imposed, as the case may 
     be.''; and
       (7) in paragraph (6), as so redesignated, by striking 
     ``paragraph (4)'' each place it appears and inserting 
     ``paragraph (5)''.
       (d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
       (1) in subsection (a)(2)--
       (A) by striking ``and'' before ``(D)''; and
       (B) by striking ``device.'' and inserting the following: 
     ``, (E) Any adulterated or misbranded tobacco product.'';
       (2) in subsection (d)(1), by inserting ``tobacco product,'' 
     after ``device,'';
       (3) in subsection (g)(1), by inserting ``or tobacco 
     product'' after ``device'' each place it appears; and
       (4) in subsection (g)(2)(A), by inserting ``or tobacco 
     product'' after ``device'' each place it appears.
       (e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is 
     amended--
       (1) by inserting ``(1)'' after ``(a)''; and
       (2) by adding at the end thereof the following:
       ``(2) For a tobacco product, to the extent feasible, the 
     Secretary shall contract with the States in accordance with 
     paragraph (1) to carry out inspections of retailers within 
     that State in connection with the enforcement of this Act.''.
       (f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
       (1) by inserting ``tobacco product,'' after ``device,'' 
     each place it appears; and
       (2) by inserting ``tobacco products,'' after ``devices,'' 
     each place it appears.

[[Page 5349]]

       (g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
       (1) in subsection (a)(1)(A), by inserting ``tobacco 
     products,'' after ``devices,'' each place it appears;
       (2) in subsection (a)(1)(B), by inserting ``or tobacco 
     product'' after ``restricted devices'' each place it appears; 
     and
       (3) in subsection (b), by inserting ``tobacco product,'' 
     after ``device,''.
       (h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is 
     amended by inserting ``tobacco products,'' after 
     ``devices,''.
       (i) Section 709.--Section 709 (21 U.S.C. 379) is amended by 
     inserting ``or tobacco product'' after ``device''.
       (j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
       (1) in subsection (a)--
       (A) by inserting ``tobacco products,'' after ``devices,'' 
     the first time it appears;
       (B) by inserting ``or section 905(j)'' after ``section 
     510''; and
       (C) by striking ``drugs or devices'' each time it appears 
     and inserting ``drugs, devices, or tobacco products'';
       (2) in subsection (e)(1), by inserting ``tobacco product,'' 
     after ``device,''; and
       (3) by adding at the end the following:
       ``(p)(1) Not later than 2 years after the date of enactment 
     of the Family Smoking Prevention and Tobacco Control Act, and 
     annually thereafter, the Secretary shall submit to the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Energy and Commerce of the House 
     of Representatives, a report regarding--
       ``(A) the nature, extent, and destination of United States 
     tobacco product exports that do not conform to tobacco 
     product standards established pursuant to this Act;
       ``(B) the public health implications of such exports, 
     including any evidence of a negative public health impact; 
     and
       ``(C) recommendations or assessments of policy alternatives 
     available to Congress and the Executive Branch to reduce any 
     negative public health impact caused by such exports.
       ``(2) The Secretary is authorized to establish appropriate 
     information disclosure requirements to carry out this 
     subsection.''.
       (k) Section 1003.--Section 1003(d)(2)(C) (as redesignated 
     by section 101(a)) is amended--
       (1) by striking ``and'' after ``cosmetics,''; and
       (2) inserting a comma and ``and tobacco products'' after 
     ``devices''.
       (l) Guidance and Effective Dates.--
       (1) In general.--The Secretary of Health and Human Services 
     shall issue guidance--
       (A) defining the term ``repeated violation'', as used in 
     section 303(f) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 333(f)) as amended by subsection (c), by 
     identifying the number of violations of particular 
     requirements over a specified period of time at a particular 
     retail outlet that constitute a repeated violation;
       (B) providing for timely and effective notice to the 
     retailer of each alleged violation at a particular retail 
     outlet;
       (C) providing for an expedited procedure for the 
     administrative appeal of an alleged violation;
       (D) providing that a person may not be charged with a 
     violation at a particular retail outlet unless the Secretary 
     has provided notice to the retailer of all previous 
     violations at that outlet;
       (E) establishing a period of time during which, if there 
     are no violations by a particular retail outlet, that outlet 
     will not be considered to have been the site of repeated 
     violations when the next violation occurs; and
       (F) providing that good faith reliance on the presentation 
     of a false government issued photographic identification that 
     contains a date of birth does not constitute a violation of 
     any minimum age requirement for the sale of tobacco products 
     if the retailer has taken effective steps to prevent such 
     violations, including--
       (i) adopting and enforcing a written policy against sales 
     to minors;
       (ii) informing its employees of all applicable laws;
       (iii) establishing disciplinary sanctions for employee 
     noncompliance; and
       (iv) requiring its employees to verify age by way of 
     photographic identification or electronic scanning device.
       (2) General effective date.--The amendments made by 
     subsection (c), other than the amendment made by paragraph 
     (2) of such subsection, shall take effect upon the issuance 
     of guidance described in paragraph (1).
       (3) Special effective date.--The amendments made by 
     paragraph (2) of subsection (c) shall take effect on the date 
     of enactment of this Act.

 TITLE II--TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT 
                               DISCLOSURE

     SEC. 201. CIGARETTE LABEL AND ADVERTISING WARNINGS.

       Section 4 of the Federal Cigarette Labeling and Advertising 
     Act (15 U.S.C. 1333) is amended to read as follows:

     ``SEC. 4. LABELING.

       ``(a) Label Requirements.--
       ``(1) In general.--It shall be unlawful for any person to 
     manufacture, package, sell, offer to sell, distribute, or 
     import for sale or distribution within the United States any 
     cigarettes the package of which fails to bear, in accordance 
     with the requirements of this section, one of the following 
     labels:

     `WARNING: Cigarettes are addictive'.
     `WARNING: Tobacco smoke can harm your children'.
     `WARNING: Cigarettes cause fatal lung disease'.
     `WARNING: Cigarettes cause cancer'.
     `WARNING: Cigarettes cause strokes and heart disease'.
     `WARNING: Smoking during pregnancy can harm your baby'.
     `WARNING: Smoking can kill you'.
     `WARNING: Tobacco smoke causes fatal lung disease in non-
     smokers'.
     `WARNING: Quitting smoking now greatly reduces serious risks 
     to your health'.
       ``(2) Placement; typography; etc.--
       ``(A) In general.--Each label statement required by 
     paragraph (1) shall be located in the upper portion of the 
     front and rear panels of the package, directly on the package 
     underneath the cellophane or other clear wrapping. Except as 
     provided in subparagraph (B), each label statement shall 
     comprise at least the top 30 percent of the front and rear 
     panels of the package. The word `WARNING' shall appear in 
     capital letters and all text shall be in conspicuous and 
     legible 17-point type, unless the text of the label statement 
     would occupy more than 70 percent of such area, in which case 
     the text may be in a smaller conspicuous and legible type 
     size, provided that at least 60 percent of such area is 
     occupied by required text. The text shall be black on a white 
     background, or white on a black background, in a manner that 
     contrasts, by typography, layout, or color, with all other 
     printed material on the package, in an alternating fashion 
     under the plan submitted under subsection (b)(4).
       ``(B) Hinged lid boxes.--For any cigarette brand package 
     manufactured or distributed before January 1, 2000, which 
     employs a hinged lid style (if such packaging was used for 
     that brand in commerce prior to June 21, 1997), the label 
     statement required by paragraph (1) shall be located on the 
     hinged lid area of the package, even if such area is less 
     than 25 percent of the area of the front panel. Except as 
     provided in this paragraph, the provisions of this subsection 
     shall apply to such packages.
       ``(3) Does not apply to foreign distribution.--The 
     provisions of this subsection do not apply to a tobacco 
     product manufacturer or distributor of cigarettes which does 
     not manufacture, package, or import cigarettes for sale or 
     distribution within the United States.
       ``(4) Applicability to retailers.--A retailer of cigarettes 
     shall not be in violation of this subsection for packaging 
     that is supplied to the retailer by a tobacco product 
     manufacturer, importer, or distributor and is not altered by 
     the retailer in a way that is material to the requirements of 
     this subsection except that this paragraph shall not relieve 
     a retailer of liability if the retailer sells or distributes 
     tobacco products that are not labeled in accordance with this 
     subsection.
       ``(b) Advertising Requirements.--
       ``(1) In general.--It shall be unlawful for any tobacco 
     product manufacturer, importer, distributor, or retailer of 
     cigarettes to advertise or cause to be advertised within the 
     United States any cigarette unless its advertising bears, in 
     accordance with the requirements of this section, one of the 
     labels specified in subsection (a) of this section.
       ``(2) Typography, etc.--Each label statement required by 
     subsection (a) of this section in cigarette advertising shall 
     comply with the standards set forth in this paragraph. For 
     press and poster advertisements, each such statement and 
     (where applicable) any required statement relating to tar, 
     nicotine, or other constituent (including a smoke 
     constituent) yield shall comprise at least 20 percent of the 
     area of the advertisement and shall appear in a conspicuous 
     and prominent format and location at the top of each 
     advertisement within the trim area. The Secretary may revise 
     the required type sizes in such area in such manner as the 
     Secretary determines appropriate. The word `WARNING' shall 
     appear in capital letters, and each label statement shall 
     appear in conspicuous and legible type. The text of the label 
     statement shall be black if the background is white and white 
     if the background is black, under the plan submitted under 
     paragraph (4) of this subsection. The label statements shall 
     be enclosed by a rectangular border that is the same color as 
     the letters of the statements and that is the width of the 
     first downstroke of the capital `W' of the word `WARNING' in 
     the label statements. The text of such label statements shall 
     be in a typeface pro rata to the following requirements: 45-
     point type for a whole-page broadsheet newspaper 
     advertisement; 39-point type for a half-page broadsheet 
     newspaper advertisement; 39-point type for a whole-page 
     tabloid newspaper advertisement; 27-point type for a half-
     page tabloid newspaper advertisement; 31.5-point type for a 
     double page spread magazine or whole-page magazine 
     advertisement; 22.5-point type for a 28 centimeter by 3 
     column advertisement; and 15-point type for a 20 centimeter 
     by 2 column advertisement. The label statements

[[Page 5350]]

     shall be in English, except that in the case of--
       ``(A) an advertisement that appears in a newspaper, 
     magazine, periodical, or other publication that is not in 
     English, the statements shall appear in the predominant 
     language of the publication; and
       ``(B) in the case of any other advertisement that is not in 
     English, the statements shall appear in the same language as 
     that principally used in the advertisement.
       ``(3) Matchbooks.--Notwithstanding paragraph (2), for 
     matchbooks (defined as containing not more than 20 matches) 
     customarily given away with the purchase of tobacco products, 
     each label statement required by subsection (a) may be 
     printed on the inside cover of the matchbook.
       ``(4) Adjustment by secretary.--The Secretary may, through 
     a rulemaking under section 553 of title 5, United States 
     Code, adjust the format and type sizes for the label 
     statements required by this section or the text, format, and 
     type sizes of any required tar, nicotine yield, or other 
     constituent (including smoke constituent) disclosures, or to 
     establish the text, format, and type sizes for any other 
     disclosures required under the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 301 et. seq.). The text of any such 
     label statements or disclosures shall be required to appear 
     only within the 20 percent area of cigarette advertisements 
     provided by paragraph (2) of this subsection. The Secretary 
     shall promulgate regulations which provide for adjustments in 
     the format and type sizes of any text required to appear in 
     such area to ensure that the total text required to appear by 
     law will fit within such area.
       ``(c) Marketing Requirements.--
       ``(1) Random display.--The label statements specified in 
     subsection (a)(1) shall be randomly displayed in each 12-
     month period, in as equal a number of times as is possible on 
     each brand of the product and be randomly distributed in all 
     areas of the United States in which the product is marketed 
     in accordance with a plan submitted by the tobacco product 
     manufacturer, importer, distributor, or retailer and approved 
     by the Secretary.
       ``(2) Rotation.--The label statements specified in 
     subsection (a)(1) shall be rotated quarterly in alternating 
     sequence in advertisements for each brand of cigarettes in 
     accordance with a plan submitted by the tobacco product 
     manufacturer, importer, distributor, or retailer to, and 
     approved by, the Secretary.
       ``(3) Review.--The Secretary shall review each plan 
     submitted under paragraph (2) and approve it if the plan--
       ``(A) will provide for the equal distribution and display 
     on packaging and the rotation required in advertising under 
     this subsection; and
       ``(B) assures that all of the labels required under this 
     section will be displayed by the tobacco product 
     manufacturer, importer, distributor, or retailer at the same 
     time.
       ``(4) Applicability to retailers.--This subsection and 
     subsection (b) apply to a retailer only if that retailer is 
     responsible for or directs the label statements required 
     under this section except that this paragraph shall not 
     relieve a retailer of liability if the retailer displays, in 
     a location open to the public, an advertisement that is not 
     labeled in accordance with the requirements of this 
     subsection and subsection (b).''.

     SEC. 202. AUTHORITY TO REVISE CIGARETTE WARNING LABEL 
                   STATEMENTS.

       Section 4 of the Federal Cigarette Labeling and Advertising 
     Act (15 U.S.C. 1333), as amended by section 201, is further 
     amended by adding at the end the following:
       ``(d) Change in Required Statements.--The Secretary may, by 
     a rulemaking conducted under section 553 of title 5, United 
     States Code, adjust the format, type size, and text of any of 
     the label requirements, require color graphics to accompany 
     the text, increase the required label area from 30 percent up 
     to 50 percent of the front and rear panels of the package, or 
     establish the format, type size, and text of any other 
     disclosures required under the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary finds 
     that such a change would promote greater public understanding 
     of the risks associated with the use of tobacco products.''.

     SEC. 203. STATE REGULATION OF CIGARETTE ADVERTISING AND 
                   PROMOTION.

       Section 5 of the Federal Cigarette Labeling and Advertising 
     Act (15 U.S.C. 1334) is amended by adding at the end the 
     following:
       ``(c) Exception.--Notwithstanding subsection (b), a State 
     or locality may enact statutes and promulgate regulations, 
     based on smoking and health, that take effect after the 
     effective date of the Family Smoking Prevention and Tobacco 
     Control Act, imposing specific bans or restrictions on the 
     time, place, and manner, but not content, of the advertising 
     or promotion of any cigarettes.''.

     SEC. 204. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

       Section 3 of the Comprehensive Smokeless Tobacco Health 
     Education Act of 1986 (15 U.S.C. 4402) is amended to read as 
     follows:

     ``SEC. 3. SMOKELESS TOBACCO WARNING.

       ``(a) General Rule.--
       ``(1) It shall be unlawful for any person to manufacture, 
     package, sell, offer to sell, distribute, or import for sale 
     or distribution within the United States any smokeless 
     tobacco product unless the product package bears, in 
     accordance with the requirements of this Act, one of the 
     following labels:

     `WARNING: This product can cause mouth cancer'.
     `WARNING: This product can cause gum disease and tooth loss'.
     `WARNING: This product is not a safe alternative to 
     cigarettes'.
     `WARNING: Smokeless tobacco is addictive'.
       ``(2) Each label statement required by paragraph (1) shall 
     be--
       ``(A) located on the 2 principal display panels of the 
     package, and each label statement shall comprise at least 30 
     percent of each such display panel; and
       ``(B) in 17-point conspicuous and legible type and in black 
     text on a white background, or white text on a black 
     background, in a manner that contrasts by typography, layout, 
     or color, with all other printed material on the package, in 
     an alternating fashion under the plan submitted under 
     subsection (b)(3), except that if the text of a label 
     statement would occupy more than 70 percent of the area 
     specified by subparagraph (A), such text may appear in a 
     smaller type size, so long as at least 60 percent of such 
     warning area is occupied by the label statement.
       ``(3) The label statements required by paragraph (1) shall 
     be introduced by each tobacco product manufacturer, packager, 
     importer, distributor, or retailer of smokeless tobacco 
     products concurrently into the distribution chain of such 
     products.
       ``(4) The provisions of this subsection do not apply to a 
     tobacco product manufacturer or distributor of any smokeless 
     tobacco product that does not manufacture, package, or import 
     smokeless tobacco products for sale or distribution within 
     the United States.
       ``(5) A retailer of smokeless tobacco products shall not be 
     in violation of this subsection for packaging that is 
     supplied to the retailer by a tobacco products manufacturer, 
     importer, or distributor and that is not altered by the 
     retailer unless the retailer offers for sale, sells, or 
     distributes a smokeless tobacco product that is not labeled 
     in accordance with this subsection.
       ``(b) Required Labels.--
       ``(1) It shall be unlawful for any tobacco product 
     manufacturer, packager, importer, distributor, or retailer of 
     smokeless tobacco products to advertise or cause to be 
     advertised within the United States any smokeless tobacco 
     product unless its advertising bears, in accordance with the 
     requirements of this section, one of the labels specified in 
     subsection (a).
       ``(2) Each label statement required by subsection (a) in 
     smokeless tobacco advertising shall comply with the standards 
     set forth in this paragraph. For press and poster 
     advertisements, each such statement and (where applicable) 
     any required statement relating to tar, nicotine, or other 
     constituent yield shall--
       ``(A) comprise at least 20 percent of the area of the 
     advertisement, and the warning area shall be delineated by a 
     dividing line of contrasting color from the advertisement; 
     and
       ``(B) the word `WARNING' shall appear in capital letters 
     and each label statement shall appear in conspicuous and 
     legible type. The text of the label statement shall be black 
     on a white background, or white on a black background, in an 
     alternating fashion under the plan submitted under paragraph 
     (3).
       ``(3)(A) The label statements specified in subsection 
     (a)(1) shall be randomly displayed in each 12-month period, 
     in as equal a number of times as is possible on each brand of 
     the product and be randomly distributed in all areas of the 
     United States in which the product is marketed in accordance 
     with a plan submitted by the tobacco product manufacturer, 
     importer, distributor, or retailer and approved by the 
     Secretary.
       ``(B) The label statements specified in subsection (a)(1) 
     shall be rotated quarterly in alternating sequence in 
     advertisements for each brand of smokeless tobacco product in 
     accordance with a plan submitted by the tobacco product 
     manufacturer, importer, distributor, or retailer to, and 
     approved by, the Secretary.
       ``(C) The Secretary shall review each plan submitted under 
     subparagraph (B) and approve it if the plan--
       ``(i) will provide for the equal distribution and display 
     on packaging and the rotation required in advertising under 
     this subsection; and
       ``(ii) assures that all of the labels required under this 
     section will be displayed by the tobacco product 
     manufacturer, importer, distributor, or retailer at the same 
     time.
       ``(D) This paragraph applies to a retailer only if that 
     retailer is responsible for or directs the label statements 
     under this section, unless the retailer displays in a 
     location open to the public, an advertisement that is not 
     labeled in accordance with the requirements of this 
     subsection.
       ``(c) Television and Radio Advertising.--It is unlawful to 
     advertise smokeless tobacco on any medium of electronic 
     communications subject to the jurisdiction of the Federal 
     Communications Commission.''.

[[Page 5351]]



     SEC. 205. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT 
                   WARNING LABEL STATEMENTS.

       Section 3 of the Comprehensive Smokeless Tobacco Health 
     Education Act of 1986 (15 U.S.C. 4402), as amended by section 
     203, is further amended by adding at the end the following:
       ``(d) Authority To Revise Warning Label Statements.--The 
     Secretary may, by a rulemaking conducted under section 553 of 
     title 5, United States Code, adjust the format, type size, 
     and text of any of the label requirements, require color 
     graphics to accompany the text, increase the required label 
     area from 30 percent up to 50 percent of the front and rear 
     panels of the package, or establish the format, type size, 
     and text of any other disclosures required under the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), if the 
     Secretary finds that such a change would promote greater 
     public understanding of the risks associated with the use of 
     smokeless tobacco products.''.

     SEC. 206. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT 
                   DISCLOSURE TO THE PUBLIC.

       Section 4(a) of the Federal Cigarette Labeling and 
     Advertising Act (15 U.S.C. 1333 (a)), as amended by section 
     201, is further amended by adding at the end the following:
       ``(4)(A) The Secretary shall, by a rulemaking conducted 
     under section 553 of title 5, United States Code, determine 
     (in the Secretary's sole discretion) whether cigarette and 
     other tobacco product manufacturers shall be required to 
     include in the area of each cigarette advertisement specified 
     by subsection (b) of this section, or on the package label, 
     or both, the tar and nicotine yields of the advertised or 
     packaged brand. Any such disclosure shall be in accordance 
     with the methodology established under such regulations, 
     shall conform to the type size requirements of subsection (b) 
     of this section, and shall appear within the area specified 
     in subsection (b) of this section.
       ``(B) Any differences between the requirements established 
     by the Secretary under subparagraph (A) and tar and nicotine 
     yield reporting requirements established by the Federal Trade 
     Commission shall be resolved by a memorandum of understanding 
     between the Secretary and the Federal Trade Commission.
       ``(C) In addition to the disclosures required by 
     subparagraph (A) of this paragraph, the Secretary may, under 
     a rulemaking conducted under section 553 of title 5, United 
     States Code, prescribe disclosure requirements regarding the 
     level of any cigarette or other tobacco product constituent 
     including any smoke constituent. Any such disclosure may be 
     required if the Secretary determines that disclosure would be 
     of benefit to the public health, or otherwise would increase 
     consumer awareness of the health consequences of the use of 
     tobacco products, except that no such prescribed disclosure 
     shall be required on the face of any cigarette package or 
     advertisement. Nothing in this section shall prohibit the 
     Secretary from requiring such prescribed disclosure through a 
     cigarette or other tobacco product package or advertisement 
     insert, or by any other means under the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 301 et seq.).
       ``(D) This paragraph applies to a retailer only if that 
     retailer is responsible for or directs the label statements 
     required under this section, except that this paragraph shall 
     not relieve a retailer of liability if the retailer sells or 
     distributes tobacco products that are not labeled in 
     accordance with the requirements of this subsection.''.

       TITLE III--PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS

     SEC. 301. LABELING, RECORDKEEPING, RECORDS INSPECTION.

       Chapter IX of the Federal Food, Drug, and Cosmetic Act, as 
     added by section 101, is further amended by adding at the end 
     the following:

     ``SEC. 921. LABELING, RECORDKEEPING, RECORDS INSPECTION.

       ``(a) Origin Labeling.--The label, packaging, and shipping 
     containers of tobacco products for introduction or delivery 
     for introduction into interstate commerce in the United 
     States shall bear the statement `sale only allowed in the 
     United States.'
       ``(b) Regulations Concerning Recordkeeping for Tracking and 
     Tracing.--
       ``(1) In general.--Not later than 9 months after the date 
     of enactment of the Family Smoking Prevention and Tobacco 
     Control Act, the Secretary shall promulgate regulations 
     regarding the establishment and maintenance of records by any 
     person who manufactures, processes, transports, distributes, 
     receives, packages, holds, exports, or imports tobacco 
     products.
       ``(2) Inspection.--In promulgating the regulations 
     described in paragraph (1), the Secretary shall consider 
     which records are needed for inspection to monitor the 
     movement of tobacco products from the point of manufacture 
     through distribution to retail outlets to assist in 
     investigating potential illicit trade, smuggling or 
     counterfeiting of tobacco products.
       ``(3) Codes.--The Secretary may require codes on the labels 
     of tobacco products or other designs or devices for the 
     purpose of tracking or tracing the tobacco product through 
     the distribution system.
       ``(4) Size of business.--The Secretary shall take into 
     account the size of a business in promulgating regulations 
     under this section.
       ``(5) Recordkeeping by retailers.--The Secretary shall not 
     require any retailer to maintain records relating to 
     individual purchasers of tobacco products for personal 
     consumption.
       ``(c) Records Inspection.--If the Secretary has a 
     reasonable belief that a tobacco product is part of an 
     illicit trade or smuggling or is a counterfeit product, each 
     person who manufactures, processes, transports, distributes, 
     receives, holds, packages, exports, or imports tobacco 
     products shall, at the request of an officer or employee duly 
     designated by the Secretary, permit such officer or employee, 
     at reasonable times and within reasonable limits and in a 
     reasonable manner, upon the presentation of appropriate 
     credentials and a written notice to such person, to have 
     access to and copy all records (including financial records) 
     relating to such article that are needed to assist the 
     Secretary in investigating potential illicit trade, smuggling 
     or counterfeiting of tobacco products.
       ``(d) Knowledge of Illegal Transaction.--If the 
     manufacturer or distributor of a tobacco product has 
     knowledge which reasonably supports the conclusion that a 
     tobacco product manufactured or distributed by such 
     manufacturer or distributor that has left the control of such 
     person may be or has been--
       ``(A) imported, exported, distributed or offered for sale 
     in interstate commerce by a person without paying duties or 
     taxes required by law; or
       ``(B) imported, exported, distributed or diverted for 
     possible illicit marketing,
     the manufacturer or distributor shall promptly notify the 
     Attorney General of such knowledge.
       ``(2) Knowledge defined.--For purposes of this subsection, 
     the term `knowledge' as applied to a manufacturer or 
     distributor means--
       ``(A) the actual knowledge that the manufacturer or 
     distributor had; or
       ``(B) the knowledge which a reasonable person would have 
     had under like circumstances or which would have been 
     obtained upon the exercise of due care.''.

     SEC. 302. STUDY AND REPORT.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of cross-border trade in tobacco 
     products to--
       (1) collect data on cross-border trade in tobacco products, 
     including illicit trade and trade of counterfeit tobacco 
     products and make recommendations on the monitoring of such 
     trade;
       (2) collect data on cross-border advertising (any 
     advertising intended to be broadcast, transmitted, or 
     distributed from the United States to another country) of 
     tobacco products and make recommendations on how to prevent 
     or eliminate, and what technologies could help facilitate the 
     elimination of, cross-border advertising.
       (b) Report.--Not later than 18 months after the date of 
     enactment of this Act, the Comptroller General of the United 
     States shall submit to the Committee on Health, Education, 
     Labor, and Pensions of the Senate and the Committee on Energy 
     and Commerce of the House of Representatives a report on the 
     study described in subsection (a).

  Mr. KENNEDY. Mr. President, today, Senator DeWine and I are 
introducing legislation to give the Food and Drug Administration broad 
authority to regulate tobacco products for the protection of the public 
health. We cannot in good conscience allow the fuderal agency most 
responsible for protecting the public health to remain powerless to 
deal with the enormous risks of tobacco, the most deadly of all 
consumer products.
  Last year, a large bipartisan majority of the Senate voted to grant 
the FDA authority to regulate tobacco products. It was a major step 
forward in the long-term effort to enact this legislation, which health 
experts believe is the most important action Congress could take to 
protect children from this deadly addiction. Unfortunately, the 
legislation was blocked by a small group of House conferees.
  We are reintroducing our bill today and we are hopeful that 2005 will 
be the year when Congress takes the final steps to enact this 
extraordinarily important health legislation. This bill has majority 
support in the Senate and strong support amongst rank and file members 
in the House. Now is the time to make it the law of the land.
  The stakes are vast. Five thousand children have their first 
cigarette every day, and two thousand of them become daily smokers. 
Nearly a thousand of them will die prematurely from tobacco-induced 
diseases. Smoking is the number one preventable cause of death in the 
nation today. Cigarettes kill well over four hundred thousand Americans 
each year. That is more lives lost than from automobile accidents, 
alcohol abuse, illegal drugs,

[[Page 5352]]

AIDS, murder, suicide, and fires combined. Our response to a public 
health problem of this magnitude must consist of more than half-way 
measures.
  We must deal firmly with tobacco company marketing practices that 
target children and mislead the public. The Food and Drug 
Administration needs broad authority to regulate the sale, 
distribution, and advertising of cigarettes and smokeless tobacco.
  The tobacco industry currently spends over eleven billion dollars a 
year to promote its products. Much of that money is spent in ways 
designed to tempt children to start smoking, before they are mature 
enough to appreciate the enormity of the health risk. The industry 
knows that more than 90 percent of smokers begin as children and are 
addicted by the time they reach adulthood.
  Documents obtained from tobacco companies prove, in the companies' 
own words, the magnitude of the industry's efforts to trap children 
into dependency on their deadly product. Recent studies by the 
Institute of Medicine and the Centers for Disease Control show the 
substantial role of industry advertising in decisions by young people 
to use tobacco products.
  If we are serious about reducing youth smoking, FDA must have the 
power to prevent industry advertising designed to appeal to children 
wherever it will be seen by children. This legislation will give FDA 
the ability to stop tobacco advertising which glamorizes smoking from 
appearing where it will be seen by significant numbers of children. It 
grants FDA full authority to regulate tobacco advertising ``consistent 
with and to the full extent permitted by the First Amendment.''
  FDA authority must also extend to the sale of tobacco products. 
Nearly every state makes it illegal to sell cigarettes to children 
under 18, but surveys show that those laws are rarely enforced and 
frequently violated. FDA must have the power to limit the sale of 
cigarettes to face-to-face transactions in which the age of the 
purchaser can be verified by identification. This means an end to self-
service displays and vending machine sales. There must also be serious 
enforcement efforts with real penalties for those caught selling 
tobacco products to children. This is the only way to ensure that 
children under 18 are not able to buy cigarettes.
  The FDA conducted the longest rule-making proceeding in its history, 
studying which regulations would most effectively reduce the number of 
children who smoke. Seven hundred thousand public comments were 
received in the course of that rulemaking. At the conclusion of its 
proceeding, the Agency promulgated rules on the manner in which 
cigarettes are advertised and sold. Due to litigation, most of those 
regulations were never implemented. If we are serious about curbing 
youth smoking as much as possible, as soon as possible; it makes no 
sense to require FDA to reinvent the wheel by conducting a new multi-
year rulemaking process on the same issues. This legislation will give 
the youth access and advertising restrictions already developed by FDA 
the immediate force of law, as if they had been issued under the new 
statute.
  The legislation also provides for stronger warnings on all cigarette 
and smokeless tobacco packages, and in all print advertisements. These 
warnings will be more explicit in their description of the medical 
problems which can result from tobacco use. The FDA is given the 
authority to change the text of these warning labels periodically, to 
keep their impact strong.
  Nicotine in cigarettes is highly addictive. Medical experts say that 
it is as addictive as heroin or cocaine. Yet for decades, tobacco 
companies have vehemently denied the addictiveness of their products. 
No one can forget the parade of tobacco executives who testified under 
oath before Congress that smoking cigarettes is not addictive. 
Overwhelming evidence in industry documents obtained through the 
discovery process proves that the companies not only knew of this 
addictive-
ness for decades, but actually relied on it as the basis for their 
marketing strategy. As we now know, cigarette manufacturers chemically 
manipulated the nicotine in their products to make it even more 
addictive.
  The tobacco industry has a long, dishonorable history of providing 
misleading information about the health consequences of smoking. These 
companies have repeatedly sought to characterize their products as far 
less hazardous than they are. They made minor innovations in product 
design seem far more significant for the health of the user than they 
actually were. It is essential that FDA have clear and unambiguous 
authority to prevent such misrepresentations in the future. The largest 
disinformation campaign in the history of the corporate world must end.
  Given the addictiveness of tobacco products, it is essential that the 
FDA regulate them for the protection of the public health. Over forty 
million Americans are currently addicted to cigarettes. No responsible 
public health official believes that cigarettes should be banned. A ban 
would leave forty million people without a way to satisfy their drug 
dependency. FDA should be able to take the necessary steps to help 
addicted smokers overcome their addiction, and to make the product less 
toxic for smokers who are unable or unwilling to stop. To do so, FDA 
must have the authority to reduce or remove hazardous ingredients from 
cigarettes, to the extent that it becomes scientifically feasible. The 
inherent risk in smoking should not be unnecessarily compounded.
  Recent statements by several tobacco companies make clear that they 
plan to develop what they characterize as ``reduced risk'' cigarettes. 
This legislation will require manufacturers to submit such ``reduced 
risk'' products to the FDA for analysis before they can be marketed. No 
health-related claims will be permitted until they have been verified 
to the FDA's satisfaction. These safeguards are essential to prevent 
deceptive industry marketing campaigns, which could lull the public 
into a false sense of health safety.
  Smoking is the number one preventable cause of death in America. 
Congress must vest FDA not only with the responsibility for regulating 
tobacco products, but with full authority to do the job effectively.
  This legislation will give the FDA the legal authority it needs--to 
reduce youth smoking by preventing tobacco advertising which targets 
children--to prevent the sale of tobacco products to minors--to help 
smokers overcome their addiction--to make tobacco products less toxic 
for those who continue to use them--and to prevent the tobacco industry 
from misleading the public about the dangers of smoking.
  Enacting this bill this year is the right thing to do for America's 
children.
                                 ______
                                 
      By Mr. SPECTER:
  S. 668. A bill to provide enhanced criminal penalties for willful 
violations of occupational standards for asbestos; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. SPECTER. Mr. President, today I rise to introduce the ``Asbestos 
Standards Enforcement Act.'' This legislation provides for enhanced 
criminal penalties for willful violations of occupational standards for 
asbestos.
  Currently, the Occupational Safety and Health Act provides for 
criminal sanctions only in those cases where a willful violation of 
standards results in the death of a worker. This circumstance is not 
likely to occur when an employer is cited for an asbestos violation, 
due to the long latency of the disease, and the fact that the 
Occupational Safety and Health Administration is required to issue 
citations within six months after inspectors find workplace violations.
  This legislation would subject employers who willfully violate OSHA 
asbestos standards to fines at levels set by the Uniform Criminal Code, 
as well as imprisonment of up to five years, or both. If the conviction 
is for a violation committed after a first conviction, this legislation 
would provide punishment by penalties in accordance with the Uniform 
Criminal Code, imprisonment for not more than ten years, or both.
  Strong enforcement actions against parties that violate OSHA asbestos

[[Page 5353]]

rules are necessary to avoid putting workers and the public at risk of 
asbestos related diseases. I have incorporated these strong measures in 
my discussion draft of the ``Fairness in Asbestos Injury Resolution 
Act.'' While that legislation is being considered, there is no reason 
not to proceed with OSHA legislation that would come before the Senate 
Health, Education, Labor, and Pension Committee.
  There are still egregious practices by employers, particularly when 
it comes to asbestos abatement, that must be stopped. In a recent case, 
owners of an asbestos removal firm were convicted of exposing hundreds 
of workers to such high levels of asbestos that many of these workers 
are almost certain to contract asbestosis, lung cancers, and 
mesothelioma. Yet this case involved criminal prosecution under 
environmental laws because the OSHA Act does not contain sufficient 
authority for criminal prosecution in such cases. In many other 
asbestos cases, it may not be possible to successfully apply 
environmental laws to protect workers. The bill I am introducing today 
would permit criminal prosecution directly under the OSHA Act, the law 
that is supposed to protect safety and health in the workplace. I urge 
the Senate to pass this legislation.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Salazar):
  S. 670. A bill to authorize the Secretary of the Interior to conduct 
a special resource study of sites associated with the life of Cesar 
Estrada Chavez and the farm labor movement; to the Committee on Energy 
and Natural Resources.
  Mr. McCAIN. Mr. President, I am pleased to be joined today by Senator 
Salazar in introducing the Cesar Estrada Chavez Study Act. This 
legislation would authorize the Secretary of the Interior to conduct a 
special resource study of sites associated with the life of Cesar 
Chavez. Mr. Chavez's legacy is an inspiration to us all and he will be 
remembered for helping Americans to transcend distinctions of 
experience and share equally in the rights and responsibilities of 
freedom. It is important that we honor his struggle and do what we can 
to preserve appropriate sites that are significant to his life.
  Cesar Chavez, an Arizonan born in Yuma, was the son of migrant farm 
workers. While his formal education ended in the eighth grade, his 
insatiable intellectual curiosity and determination helped make him 
known as one of the great American leaders for his successes in 
organizing migrant farm workers. His efforts on behalf of some of the 
most oppressed individuals in our society is an inspiration and through 
his work he made America a bigger and a better nation.
  While Chavez and his family migrated across the southwest looking for 
farm work, he evolved into a defender of worker's rights. He founded 
the National Farm Workers Association in 1962, which later became the 
United Farm Workers of America. He gave a voice to those who had no 
voice. In his words, ``We cannot seek achievement for ourselves and 
forget about progress and prosperity for our community . . . our 
ambitions must be broad enough to include the aspirations and needs of 
others, for their sakes and for our own.''
  This legislation, which passed the Senate unanimously during the last 
Congress, has received an overwhelming positive response, not only from 
my fellow Arizonans, but from Americans all across the Nation. The bill 
would direct the Secretary of the Interior to determine whether any of 
the sites significant to Chavez's life meet the criteria for being 
listed on the National Register of Historic Landmarks. The goal of this 
legislation is to establish a foundation for future legislation that 
would then designate land for the appropriate sites to become historic 
landmarks.
  Cesar Chavez was a humble man of deep conviction who understood what 
it meant to serve and sacrifice for others. His motto in life, ``si se 
puede'' or it can be done, epitomizes his life's work and continues to 
influence those wishing to improve our Nation. Honoring the places of 
his life will enable his legacy to inspire and serve as an example for 
our future leaders.
  Mr. SALAZAR. Mr. President, I rise today to speak about an exemplary 
American and passionate champion of human and civil rights, Cesar 
Estrada Chavez, and to introduce legislation that takes an important 
first step in memorializing his tremendous contributions to our 
country.
  Together with Senator John McCain, I will introduce the Cesar Estrada 
Chavez Study Act. This bill will direct the Secretary of the Interior 
to conduct a study of sites associated with the life of Cesar Chavez 
and will lay the necessary groundwork for the preservation of these 
sites as national historic landmarks. In the 108th Congress, Senator 
McCain and Representative Hilda Solis sponsored similar legislation in 
the House of Representatives, and I am pleased to join their efforts.
  Like many great American heroes, Cesar Chavez came from humble roots, 
but his strength of character led him to achieve great things. Chavez 
was born on March 31, 1927 in Yuma, AZ, where he spent his early years 
on his family's farm. At age 10, his family lost their farm in a bank 
foreclosure, forcing them to join the thousands of farm workers that 
wandered the Southwest to find work. They worked in fields and 
vineyards, harvesting the fresh fruits and vegetables that people 
throughout the world enjoyed unaware of the daily hardships endured by 
farm workers.
  Cesar Chavez experienced these hardships and witnessed first hand the 
injustices in farm worker life. He became determined to bring dignity 
to farm workers and in 1962, he founded the National Farmworkers 
Association, which would later become the United Farmworkers of America 
(UFW). Through the UFW, Chavez called attention to the terrible working 
and living conditions of America's farm workers. Most importantly, he 
organized thousands of migrant farm workers to fight for fair wages, 
health care coverage, pension benefits, livable housing, and respect.
  Like Cesar Chavez, I am the son of farmers. Everyday, I am reminded 
of my family's tradition of working the land by the sign on my desk 
that reads ``No Farms, No Food.'' And without farm workers, who would 
harvest the fruits and vegetables we all enjoy? Cesar Chavez understood 
this--he championed the rights of these forgotten Americans and helped 
shine a light of their plight. He once remarked, ``It is my deepest 
belief that only by giving our lives do we find life.'' He gave his 
life to ensure farm workers, and all workers, were afforded the rights 
and dignity they deserved.
  For these reasons and many more, I proudly join my colleague from 
Arizona in introducing significant legislation that will honor Cesar 
Chavez. It is my hope that Congress can work together to quickly pass 
this important bill that honor the places of Chavez' life and allow his 
legacy to inspire and serve as an example for our future leaders.
                                 ______
                                 
      By Mr. CORZINE:
  S. 674. A bill to provide assistance to combat HIV/AIDS in India, and 
for other purposes; to the Committee on Foreign Relations.
  Mr. CORZINE. Mr. President, today I am introducing legislation to 
make India eligible for assistance under the Emergency Plan for AIDS 
Relief (PEPFAR).
  India is at a tipping point. A silent tsunami is at hand, and we can 
either act now or witness the preventable deaths of millions of people. 
An estimated 5.1 million people are infected with the HIV virus in 
India, second only to South Africa. HIV/AIDS has been reported in 
almost all the states and union territories of the country. In some 
parts of the country, the prevalence rates are similar to those in the 
hardest-hit areas of sub-Saharan Africa. In Belgaun in Karnataka, for 
instance, a district whose population is greater than that of Ireland, 
4.5 percent are infected.
  The epidemic is spreading rapidly from urban to rural areas and from 
high-risk groups such as sex workers and IV drug users to the general 
population. The mobility of India's population threatens to spread HIV/
AIDS around the country. And with an overall population larger than the 
whole of

[[Page 5354]]

Africa, there exists a serious threat of catastrophe. One estimate, by 
the CIA, predicted that 20 to 25 million could be infected by 2010, 
more than in any other country in the world.
  India's political leaders, public health officials, non-governmental 
organizations, and medical and scientific communities have taken 
important steps to combat HIV/AIDS. India, the world's largest 
democracy, has skilled governmental and civil society actors who are 
committed to a new awareness of the AIDS crisis and strategic 
approaches to combating the disease. But significant gaps remain in the 
Indian health care system's ability to address the crisis. Only 29 
cents per capita are spent in India to combat HIV/AIDS. This amount is 
significantly less than in countries that have succeeded at stemming 
the disease, such as Thailand (55 cents) and Uganda ($1.85).
  There is an urgent need for assistance in care and treatment. More 
resources are necessary for public education, as demonstrated by the 
fact that 90 percent of Indians with HIV do not know they are infected. 
There is also a desperate need for assistance in tracking and 
monitoring the epidemic, merely to ascertain its full scope. These and 
other gaps require immediate and sustained U.S. engagement and 
contribution of resources.
  The U.S. government is doing important work to combat HIV/AIDS in 
India, but the available resources are insufficient. To provide the 
necessary assistance, and to demonstrate America's commitment to 
helping India combat HIV/AIDS, it is critical that India become 
eligible for the President's Emergency Plan for AIDS Relief. Smaller 
countries may seem more manageable. Combating HIV/AIDS in a country the 
size of India may seem daunting. But if we invest now in stopping this 
epidemic, if we take advantage of this window of opportunity, we can 
head off a catastrophe.
  In addition to adding India to the list of countries eligible for 
PEPFAR assistance, this bill authorizes whatever funds are necessary to 
provide this assistance. It thus ensures that confronting the epidemic 
in India does not come at the expense of other countries. We must 
continue to expand the list of eligible countries in recognition of the 
global nature of this pandemic. We must also accelerate assistance to 
African and Caribbean countries already included as focus countries. 
Finally, we must increase overall funding to combat HIV/AIDS.
  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. 674

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

     SECTION 1. ASSISTANCE TO COMBAT HIV/AIDS IN INDIA.

       Section 1(f)(2)(B)(ii)(VII) of the State Department Basic 
     Authorities Act of 1956 (22 U.S.C. 2651a(f)(2)(B)(ii)(VII)) 
     is amended by inserting ``India,'' after ``Haiti,''.

     SEC. 2. AUTHORIZATION OF APPROPRIATIONS.

       In addition to any amounts otherwise available for such 
     purpose, there is authorized to be appropriated to the 
     President such sums as may be necessary for fiscal years 2006 
     through 2008 to provide assistance to India pursuant to the 
     United States Leadership Against HIV/AIDS, Tuberculosis, and 
     Malaria Act of 2003 (22 U.S.C. 7601 et seq.) and the 
     amendments made by that Act.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Hagel, Mr. Brownback, Mr. 
        Johnson, Mr. Durbin, Mr. Burns, Mr. Conrad, Mr. Dayton, and Mr. 
        Harkin):
  S. 675. A bill to reward the hard work and risk of individuals who 
choose to live in and help preserve America's small, rural towns, and 
for other purposes; to the Committee on Finance.
  Mr. DORGAN. Mr. President, today Senators Hagel, Brownback, Johnson 
and many of our colleagues are re-introducing the New Homestead Act 
that will help address one of the most serious threats to the future of 
America's Heartland--the loss of its residents and Main Street 
businesses.
  Over the past several years, we have described for our colleagues--
and the American people--the economic devastation that population loss 
has had on America's Heartland. Hundreds of thousands of people have 
left small towns in rural areas throughout the Great Plains in search 
of opportunities elsewhere.
  In North Dakota, we have experienced greater than 10 percent net out-
migration in nearly 90 percent of our counties over the past two 
decades. My home county, Hettinger, saw its population dwindle from 
4,257 in 1980 to just 2,715 in 2000. Its population is projected to 
drop to just 1,877 by 2020.
  However, this out-migration problem isn't limited to North Dakota. 
Nearly all of America's Heartland is facing population losses of epic 
proportions. Seventy percent of the rural counties in the Great Plains 
have seen their population shrink by at least one-third.
  If you are a business owner, mayor, school board member, minister or 
resident of one of these rural communities, you know firsthand about 
this problem. People who are from these areas know that you simply 
can't grow or run a business in an environment where the overall 
economy is shrinking, current and potential customers are leaving, and 
public and private investment is falling. Too many communities in North 
Dakota and other rural States lack the critical mass of people and 
resources it takes to keep a community alive and growing.
  The New Homestead Act of2005 that we are introducing today will help 
stem the problem of chronic rural out-migration and allow many rural 
areas to grow and prosper again. This one-of-a kind bill is virtually 
identical to the bill we introduced in the last Congress. The New 
Homestead Act gives people who are willing to commit to live and work 
in high out-migration areas for 5 years added incentives to buy a home, 
pay for college, build a nest egg, and start a business--or just plain 
get ahead in life. These incentives include repaying a portion of 
college loans, offering a tax credit for the purchase of a new home, 
protecting home values by allowing losses in home value to be deducted 
from Federal income taxes, and establishing Individual Homestead 
Accounts that will help people build savings and have access to credit.
  This legislation also would establish a new venture capital fund with 
state and local governments as partners to ensure that entrepreneurs 
and companies in these areas get the capital they need to start and 
grow their businesses.
  Our rural areas have been fighting for their very survival for years, 
yet until recently, most Amen:s didn't even know about this struggle. 
Today, however, general awareness about the problem of chronic rural 
out-migration is growing. This issue has been the subject of national 
symposiums, forums, town hall meetings and congressional hearings.
  Last year, the U.S. Senate acted on some provisions from the New 
Homestead Act that offer state and local governments much-needed tools 
to encourage businesses to locate or stay in rural areas that are 
suffering from high out-migration. With the help of the leaders of the 
tax-writing Senate Finance Committee, Chairman Chuck Grassley of Iowa 
and Ranking Democrat Max Baucus of Montana, the Senate passed two key 
investment tax credit measures in the New Homestead Act as part of a 
major corporate tax bill considered last year. These investment tax 
credits would have been used to encourage businesses to move to or 
expand their operations in high out-migration rural counties. Together, 
these rural investment tax provisions would have made an estimated $641 
million in tax credits available for business over the next decade.
  Regrettably, these tax provisions were dropped from the final tax 
bill sent to the President. But the Senate's action sent a message of 
hope and opportunity to many rural communities: Federal policymakers do 
understand that rural out-migration is a serious threat to the economic 
well-being of the Nation's Heartland and that the New Homestead Act is 
a serious proposal for addressing it.
  I think our colleagues would agree that our Nation's rural areas are 
great places to live and raise a family. Most rural communities have 
good schools,

[[Page 5355]]

low crime rates, and a level of civic involvement that would make any 
public official proud. But unfortunately it has been a constant 
struggle for many rural communities in North Dakota and the Great 
Plains to survive. This shouldn't be the case.
  I look forward to working with all of my Senate colleagues to try to 
reverse the trend of population loss and grow the economies of rural 
areas in North Dakota, Nebraska, Iowa, Kansas and the rest of America's 
Heartland. Enacting the policy changes recommended in the New Homestead 
Act is a very good place to start.
  I urge my colleagues to support the New Homestead Act in the 109th 
Congress by cosponsoring it and helping us move this important bill 
forward, once again, in the legislative process.
                                 ______
                                 
      By Mr. STEVENS (for himself, Mr. Frist, Mr. Specter, Mr. 
        Alexander, Mr. DeWine, Mrs. Clinton, and Mrs. Hutchison):
  S. 676. A bill to provide for Project GRAD programs, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mr. STEVENS. Mr. President, I have introduced today the Graduation 
Really Achieves Dreams, GRAD, Act, which will help improve our nation's 
graduation rate by authorizing a program that has a proven track 
record--Project GRAD USA. I am joined by my colleagues, Senators Frist, 
Clinton, Alexander, DeWine, Hutchison and Specter.
  Currently in our Nation, we graduate only 70 percent of our students 
from high school. In high poverty urban districts, we often graduate 
fewer than half that many--one in three. In rural areas, where one-
third of American students are educated--only 58.8 percent of students 
attend colleges and universities, compared with 68.2 percent in urban 
and suburban areas. The problem is especially acute in Alaska, where 
Alaska Natives are almost twice as likely as other students to drop out 
of high school.
  We must provide better support and resources for our most vulnerable 
students. Project GRAD USA is already doing that job in 12 sites 
nationwide, including one in my own State of Alaska.
  Project GRAD USA is a national program to increase the number of low-
income and at-risk students who attend college and earn degrees. Unlike 
other national programs, Project GRAD USA is a comprehensive non-profit 
K-12 education reform program. It serves at-risk students, beginning in 
kindergarten, and staying with them through college, by offering 
research-based programs in reading, math, classroom management, social 
services, and college preparation. Students who qualify then receive a 
four-year college scholarship. Scholarships are funded by private-
industry donations and foundation grants, as well as previously-
appropriated Federal dollars.
  In Alaska, Project GRAD established a program in the Kenai Peninsula 
and serves six K-12 schools and one K-10 school, reaching 600 students. 
Three schools serve small Alaska Native communities; three serve 
Russian Old Believer communities; and the seventh school serves a mixed 
community of Alaska Natives, Russians and other Caucasians. More than 
47 percent of the students Project GRAD Kenai serves are at poverty 
level, and 49.2 percent of Kenai students report that a language other 
than English is spoken at home. Project GRAD is committed to 
maintaining cultural relevance in each of the schools it serves and 
creating individualized components developed with community leaders, 
teachers and families.
  This legislation would provide funds so Project GRAD can continue to 
grow in the States where it now operates and expand its proven model 
elsewhere. It also requires the local sites to match federal funds it 
receives with local dollars and in-kind support. In this way, federal 
funds are leveraged to increase support for needed educational reform 
and enhancement.
  When I visit the Kenai Peninsula in Alaska, I see first hand the 
impact Project GRAD has made on the students in this district as well 
as the significant economic impact to the overall Peninsula. In the 
first five years of the program, over $6 million will be invested in 
program development and implementation and nearly $250,000 will be 
awarded in scholarships.
  Project GRAD USA has proven its effectiveness nationwide and now 
serves over 133,000 students. High school graduation rates for long-
term participants have increased by 85 percent, and those who have gone 
on to college have earned college degrees at a rate of 89 percent above 
the national average. These results have not gone unnoticed as 
President Bush and Majority Leader Frist have both strongly supported 
the program. Further, Fortune magazine chose GRAD as its ``charity of 
choice'' for 2004.
  Proven education, retention and graduation initiatives aimed at our 
students most at-risk deserve every policy maker's attention as we aim 
to do the most good with limited resources. I am proud to support this 
legislation, and I encourage my colleagues to join me to ensure Project 
GRAD's continued success for our children.
                                 ______
                                 
      By Mr. SANTORUM (for himself, Mr. Kerry, Mr. Ensign, Mr. 
        Lieberman, Mr. Brownback, Mrs. Clinton, Mr. Smith, Mr. Schumer, 
        Mr. Talent, Mr. Corzine, Mr. Coburn, and Mr. Hatch):
  S. 677. A bill to amend title VII of the Civil Rights Act of 1964 to 
establish provisions with respect to religious accommodation in 
employment, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. SANTORUM. Mr. President, I rise today to introduce the Workplace 
Religious Freedom Act. I am pleased to be joined in this effort by 
Senator Kerry and appreciate the work he has done on this bill over the 
years. I am also pleased to have a number of Senators, both Democrats 
and Republicans, liberals and conservatives, join me in cosponsoring 
this important legislation.
  The bill we introduce today is intended to ensure that employees are 
not forced to choose between their religious beliefs and practices and 
keeping their jobs. It recognizes that an individual's faith impacts 
every part of their life, including the many hours spent in the 
workplace. America is distinguished internationally as a land of 
religious freedom, and it should be a place where people are not forced 
to choose between keeping their faith and keeping their job. This 
simple proposition is why we are re-introducing the Workplace Religious 
Freedom Act (WRFA), which provides a balanced approach to reconciling 
the needs of people of faith in the workplace with those of employers.
  Title VII of the Civil Rights Act of 1964 was meant to address 
conflicts between religion and work. It requires employers to 
reasonably accommodate the religious needs of their employees so long 
as it does not impose an undue hardship on the employer. The problem is 
that our federal courts have essentially ruled that any hardship is an 
undue hardship and have thus left religiously observant workers with 
little or no legal protection. WRFA will re-establish the principle 
that employers must reasonably accommodate the religious needs of 
employees. This legislation is carefully crafted and strikes an 
appropriate balance, respecting religious accommodation while ensuring 
that an undue burden is not forced upon employers. WRFA is also careful 
to ensure that the accommodation of an individual employee's religious 
conscience will not adversely affect the delivery of products or 
services to an employer's customers or clients.
  The balance that this legislation seeks to establish is evident in 
the broad spectrum of groups supporting this bill, including the Union 
of Orthodox Jewish Congregations, the Southern Baptist Convention, the 
National Council of Churches, the North American Council for Muslim 
Women, the Sikh Resource Taskforce, the Seventh Day Adventist Church, 
the American Jewish Committee, Agudath Israel of America, the U.S. 
Conference of Catholic Bishops and many others.

[[Page 5356]]

  America is a great nation because we honor not only the freedom of 
conscience, but also the freedom to exercise one's religion according 
to the dictates of that religious conscience. This fundamental freedom 
is protected and strengthened in this legislation by re-establishing an 
appropriate balance between the demands of work and the principles of 
faith.
  Mr. President, I ask unanimous consent that a copy of this 
legislation be printed in the Record after my statement.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 677

       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 ``Workplace Religious Freedom 
     Act of 2005''.

     SEC. 2. AMENDMENTS.

       (a) Definitions.--Section 701(j) of the Civil Rights Act of 
     1964 (42 U.S.C. 2000e(j)) is amended--
       (1) by inserting ``(1)'' after ``(j)'';
       (2) by inserting ``, after initiating and engaging in an 
     affirmative and bona fide effort,'' after ``unable'';
       (3) by striking ``an employee's'' and all that follows 
     through ``religious'' and inserting ``an employee's 
     religious''; and
       (4) by adding at the end the following:
       ``(2)(A) In this subsection, the term `employee' includes 
     an employee (as defined in subsection (f)), or a prospective 
     employee, who, with or without reasonable accommodation, is 
     qualified to perform the essential functions of the 
     employment position that such individual holds or desires.
       ``(B) In this paragraph, the term `perform the essential 
     functions' includes carrying out the core requirements of an 
     employment position and does not include carrying out 
     practices relating to clothing, practices relating to taking 
     time off, or other practices that may have a temporary or 
     tangential impact on the ability to perform job functions, if 
     any of the practices described in this subparagraph restrict 
     the ability to wear religious clothing, to take time off for 
     a holy day, or to participate in a religious observance or 
     practice.
       ``(3) In this subsection, the term `undue hardship' means 
     an accommodation requiring significant difficulty or expense. 
     For purposes of determining whether an accommodation requires 
     significant difficulty or expense, factors to be considered 
     in making the determination shall include--
       ``(A) the identifiable cost of the accommodation, including 
     the costs of loss of productivity and of retraining or hiring 
     employees or transferring employees from 1 facility to 
     another;
       ``(B) the overall financial resources and size of the 
     employer involved, relative to the number of its employees; 
     and
       ``(C) for an employer with multiple facilities, the 
     geographic separateness or administrative or fiscal 
     relationship of the facilities.''.
       (b) Employment Practices.--Section 703 of such Act (42 
     U.S.C. 2000e-2) is amended by adding at the end the 
     following:
       ``(o)(1) In this subsection:
       ``(A) The term `employee' has the meaning given the term in 
     section 701(j)(2).
       ``(B) The term `leave of general usage' means leave 
     provided under the policy or program of an employer, under 
     which--
       ``(i) an employee may take leave by adjusting or altering 
     the work schedule or assignment of the employee according to 
     criteria determined by the employer; and
       ``(ii) the employee may determine the purpose for which the 
     leave is to be utilized.
       ``(2) For purposes of determining whether an employer has 
     committed an unlawful employment practice under this title by 
     failing to provide a reasonable accommodation to the 
     religious observance or practice of an employee, for an 
     accommodation to be considered to be reasonable, the 
     accommodation shall remove the conflict between employment 
     requirements and the religious observance or practice of the 
     employee.
       ``(3) An employer shall be considered to commit such a 
     practice by failing to provide such a reasonable 
     accommodation for an employee if the employer refuses to 
     permit the employee to utilize leave of general usage to 
     remove such a conflict solely because the leave will be used 
     to accommodate the religious observance or practice of the 
     employee.''.

     SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as provided in subsection (b), 
     this Act and the amendments made by section 2 take effect on 
     the date of enactment of this Act.
       (b) Application of Amendments.--The amendments made by 
     section 2 do not apply with respect to conduct occurring 
     before the date of enactment of this Act.
                                 ______
                                 
      By Mr. REID:
  S. 678. A bill to amend the Federal Election Campaign Act of 1971 to 
exclude communications over the Internet from the definition of public 
communication; to the Committee on Rules and Administration.
  Mr. REID. 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. 678

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

     SECTION 1. MODIFICATION OF DEFINITION OF PUBLIC 
                   COMMUNICATION.

       Paragraph (22) of section 301 of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 431(22)) is amended by adding 
     at the end the following new sentence: ``Such term shall not 
     include communications over the Internet.''.
                                 ______
                                 
      By Mr. COLEMAN (for himself and Mr. Levin):
  S. 679. A bill to amend title 10, United States Code, to require the 
registration of contractors' taxpayer identification numbers in the 
Central Contractor Registry database of the Department of Defense, and 
for other purposes; to the Committee on Armed Services.
  Mr. COLEMAN. Mr. President, today I am reintroducing the Central 
Contractor Registry Act. This legislation is particularly relevant this 
week, as we debate a tough budget to restore fiscal discipline.
  Last year the Government Accountability Office testified at a hearing 
before the Permanent Subcommittee on Investigations that over 27,000 
contractors at the Department of Defense owed over $3 billion in unpaid 
Federal taxes. If we want to demonstrate fiscal discipline, it seems to 
me that we ought to be looking at places like this before we start 
talking about cuts to Medicaid or the farm bill. Asking companies that 
win lucrative government contracts to simply pay their taxes seems like 
common sense to me.
  That's why I have introduced the Central Contractor Registry Act. 
This bill will close a $3 billion tax loophole and will help to recover 
over $100 million annually from federal contractors who have not filed 
federal tax returns or who have not paid the taxes they owe the 
government.
  The bill is simple: it establishes a centralized contractor database 
within the Department of Defense, and requires federal contractors who 
register in that database to provide their taxpayer identification 
number and their consent to verifying that number with the Internal 
Revenue Service as a condition that must precede the awarding of a 
contract by the Department of Defense.
  Normally, companies that are delinquent in paying their taxes are 
levied 15 percent of the payments they receive as government 
contractors. In fiscal year 2002, this should have amounted to over 
$100 million from tax delinquent Department of Defense contractors. 
However, actual collections for that year were less than $500,000. And 
in 2001, over 26,000 of the defense contracts submitted to the IRS to 
determine contractors' tax liability were unusable.
  One of the principal reasons for this anemic state of collections and 
the large volume of unusable information returns is the inability of 
the Department of Defense and the Internal Revenue Service to reach an 
accord on verifying the taxpayer identification numbers of the 
contractors who have registered in the Department of Defense's Central 
Contractor Registration database. Under current law, the Department of 
Defense's authority to verify contractors' taxpayer identification 
numbers is limited to those contractors who have contracts with the 
Department of Defense and for whom the department is required to report 
miscellaneous income to the Internal Revenue Service on a Form 1099 
information return. However, there are contractors who have registered 
in the Central Contractor Registration for whom the Department of 
Defense lacks authority to verify their taxpayer identification 
numbers, including individuals and companies who would like to contract 
with the federal government and contractors who have contracts with 
agencies and departments other

[[Page 5357]]

than the Department of Defense. And often the numbers provided are 
incorrect, but there is no recourse.
  My bill will resolve the impasse between the Department of Defense 
and the Internal Revenue Service by requesting contractors' consent to 
the validation of their taxpayer identification number as part of the 
registration process. Contractors will not be required to provide their 
consent. But if they do not, they will not be awarded a contract by the 
Department of Defense.
  Further, my bill requires the Department of Defense to warn 
contractors as part of the registration process that if they do not 
provide a valid taxpayer identification number they may be subject to 
backup withholding. This would apply to those contractors who list an 
invalid taxpayer identification number, have a contract with the 
Department of Defense, and will earn miscellaneous income that is 
required to be reported to the Internal Revenue Service.
  I would like to briefly summarize the major provisions of my bill. It 
provides a statutory basis for the Central Contractor Registration and 
renames the database as the Central Contractor Registry. It requires 
that the registry contain contractors' taxpayer identification numbers, 
their consent to verifying their numbers with the Internal Revenue 
Service and for the Internal Revenue Service to provide a corrected 
number if possible. It requires that registrants furnish this 
information as a condition for registration, and requires the 
Department of Defense to warn contractors who fail to provide a valid 
taxpayer identification number that they may be subject to backup 
withholding and requires implementation of backup withholding in cases 
where it is required. It precludes awarding a contract to any 
registrant who has not provided a valid taxpayer identification number 
and excludes from coverage any registrant who is not required to have a 
taxpayer identification number. It directs the Secretary of Defense to 
apply to the Internal Revenue Service for inclusion in the Taxpayer 
Identification Number Matching Program and directs the Commissioner of 
Internal Revenue to provide response to the Department of Defense. It 
directs the Secretary of Defense to provide any registrant who is 
determined to have an invalid taxpayer identification number with an 
opportunity to provide a valid number. It further requires that the 
Central Contractor Registry clearly indicate whether a registrant's 
taxpayer identification number is valid, under review, invalid, or not 
required. Finally, it requires that contractors' taxpayer 
identification numbers be treated as confidential by federal contract 
officers who have access to the Central Contractor Registry.
  This bill will ensure that tax cheats are not rewarded with Federal 
contracts. As we debate the budget this week, I encourage my colleagues 
to join me in supporting 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. 679

       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 ``Central Contractor Registry 
     Act of 2005''.

     SEC. 2. CENTRAL CONTRACTOR REGISTRY DATABASE.

       (a) Authority.--Chapter 137 of title 10, United States 
     Code, is amended by inserting after section 2302d the 
     following new section:

     ``Sec. 2302e. Central contractor registry

       ``(a) Establishment.--The Secretary of Defense shall 
     maintain a centralized, electronic database for the 
     registration of sources of property and services who seek to 
     participate in contracts and other procurements entered into 
     by the various procurement officials of the United States. 
     The database shall be known as the `Central Contractor 
     Registry'.
       ``(b) Taxpayer Information.--(1) The Central Contractor 
     Registry shall include the following tax-related information 
     for each source registered in that registry:
       ``(A) Each of that source's taxpayer identification 
     numbers.
       ``(B) The source's authorization for the Secretary of 
     Defense to obtain from the Commissioner of Internal Revenue--
       ``(i) verification of the validity of each of that source's 
     taxpayer identification numbers; and
       ``(ii) in the case of any of such source's registered 
     taxpayer identification numbers that is determined invalid, 
     the correct taxpayer identification number (if any).
       ``(2)(A) The Secretary of Defense shall require each 
     source, as a condition for registration in the Central 
     Contractor Registry, to provide the Secretary with the 
     information and authorization described in paragraph (1).
       ``(B) The Secretary shall--
       ``(i) warn each source seeking to register in the Central 
     Contractor Registry that the source may be subject to backup 
     withholding for a failure to submit each such number to the 
     Secretary; and
       ``(ii) take the actions necessary to initiate the backup 
     withholding in the case of a registrant who fails to register 
     each taxpayer identification number valid for the registrant 
     and is subject to the backup withholding requirement.
       ``(3) A source registered in the Central Contractor 
     Registry is not eligible for a contract entered into under 
     this chapter or title III of the Federal Property and 
     Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) 
     if that source--
       ``(A) has failed to provide the authorization described in 
     paragraph (1)(B);
       ``(B) has failed to register in that registry all valid 
     taxpayer identification numbers for that source; or
       ``(C) has registered in that registry an invalid taxpayer 
     identification number and fails to correct that registration.
       ``(4)(A) The Secretary of Defense shall make arrangements 
     with the Commissioner of Internal Revenue for each head of an 
     agency within the Department of Defense to participate in the 
     taxpayer identification number matching program of the 
     Internal Revenue Service.
       ``(B) The Commissioner of Internal Revenue shall cooperate 
     with the Secretary of Defense to determine the validity of 
     taxpayer identification numbers registered in the Central 
     Contractor Registry. As part of the cooperation, the 
     Commissioner shall promptly respond to a request of the 
     Secretary of Defense or the head of an agency within the 
     Department of Defense for electronic validation of a taxpayer 
     identification number for a registrant by notifying the 
     Secretary or head of an agency, respectively, of--
       ``(i) the validity of that number; and
       ``(ii) in the case of an invalid taxpayer identification 
     number, any correct taxpayer identification number for such 
     registrant that the Commissioner can promptly and reasonably 
     determine.
       ``(C) The Secretary shall transmit to a registrant a 
     notification of each of the registrant's taxpayer 
     identification numbers, if any, that is determined invalid by 
     the Commissioner of Internal Revenue and shall provide the 
     registrant with an opportunity to substitute a valid taxpayer 
     identification number.
       ``(5) The Secretary of Defense shall require that, at the 
     place in the Central Contractor Registry where the taxpayer 
     identification numbers of a registrant are to be displayed, 
     the display bear (as applicable)--
       ``(A) for each taxpayer identification number of that 
     registrant, an indicator of whether such number has been 
     determined valid, is being reviewed for validity, or has been 
     determined invalid; or
       ``(B) an indicator that no taxpayer identification number 
     is required for the registrant.
       ``(6) This subsection applies to each source who registers 
     any information regarding that source in the Central 
     Contractor Registry after December 31, 2005, except that 
     paragraphs (1), (2), and (3) do not apply to a source who 
     establishes to the satisfaction of the Secretary of Defense 
     that such source is not required to have a taxpayer 
     identification number.
       ``(c) Confidentiality of Information.--The Secretary of 
     Defense shall ensure that taxpayer identification numbers in 
     the Central Contractor Registry are not made available to the 
     public. The Secretary shall prescribe a requirement for 
     procurement officials of the United States having access to 
     such numbers in that registry to maintain the confidentiality 
     of those numbers.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 2302d the following new item:

``2302e. Central Contractor Registry.''.


              INTRODUCING CENTRAL CONTRACTOR REGISTRY ACT

  Mr. LEVIN. Mr. President, I join my colleagues, Senators Norm 
Coleman, Susan Collins and Jack Reed, in introducing the Central 
Contractor Registry Act of 2005. The purpose of this bipartisan bill is 
to strengthen the ability of the Federal Government to stop tax cheats 
from obtaining Federal contracts, and for those who have managed to 
obtain contracts, to use a portion of their contract payments to repay 
their tax debts.
  Now, even more than when we introduced a similar bill in May 2004, it 
is

[[Page 5358]]

clear that new legislation is essential to confront the problem of 
Federal contractor tax debt. Last year the Permanent Subcommittee on 
Investigations, on which Senator Coleman and I sit, raised this issue 
in a hearing based on a report issued by the Government Accountability 
Office, GAO. The report showed that over 27,000 contractors at the 
Department of Defense, DOD, owed $3 billion in unpaid taxes. 
Approximately 90 percent of these unpaid taxes were payroll taxes, 
money that should be going to help fund the social security and 
medicare expenditures that are climbing so rapidly. Too many 
contractors are continuing to duck payment of these payroll taxes, 
while at the same time holding out their hands for taxpayer dollars.
  Beyond the loss in substantial government revenue, allowing tax 
cheats to bid on Federal contracts is a disservice to all citizens who 
meet their tax obligations. It is also a disservice to all of the 
honest companies that compete for the same government contracts, since 
companies that do not pay their taxes have lower costs and a 
competitive advantage over the companies that do.
  Current law requires DOD and other government agencies to identify 
any government contractor with unpaid taxes, to withhold 15 percent or 
more of their contract payments, and to forward that money to the IRS 
to be applied to the contractor's tax debt. The official title of the 
DOD program to carry out this obligation is the Federal Payment Levy 
Program, sometimes referred to as the DOD tax levy program.
  In order to identify tax delinquent contractors before they receive 
payment, DOD and other agencies participate in a computer matching 
program administered by the Treasury Department that cross-checks lists 
of upcoming contractor payments with IRS lists of delinquent taxpayers. 
If a match occurs, DOD--in the case of defense contractors--and the 
Treasury Department for all other government contractors is supposed to 
withhold money from the identified contractor's upcoming contract 
payments.
  The problem is that the computer matching program has so far produced 
relatively few matches. In 2003, for example, DOD collected only about 
$680,000 of back taxes through its tax levy program instead of the $100 
million that GAO estimates should have been collected. That means DOD 
collected less than one percent of the back taxes it should have.
  One major impediment to the computer matching program has been that 
it depends upon a Federal agency's providing the correct taxpayer 
identification number or TIN for each of its contractors, when many 
contractors have either failed to submit a TIN or supplied an incorrect 
number. When a TIN is incorrect or missing, the computer matching 
program is unable to determine whether the relevant government 
contractor is on the IRS list of delinquent taxpayers. For example, in 
1 year, data indicates that DOD sent the IRS over 26,000 invalid TINs 
that could not be used.
  To increase the efficiency of the computer matching program, the IRS 
has tried to improve the accuracy of the TINs in agency contractor 
data. The IRS has, for example, set up a computer-based TIN validation 
system that can electronically verify a TIN number in seconds. This 
electronic system is available for use by DOD and all other federal 
agencies. Unfortunately, the IRS has also interpreted certain tax laws 
as prohibiting DOD from obtaining TIN validations for many types of 
contracts. In addition, in the case of TIN numbers with clerical 
errors, the IRS has interpreted current taxpayer confidentiality laws 
as prohibiting it from supplying a DOD with a corrected number.
  The bill we are introducing today would eliminate this bureaucratic 
redtape and significantly increase the effectiveness of the tax levy 
program by increasing the accuracy of the TINs used by DOD.
  The bill would strengthen TIN accuracy by focusing primarily on the 
TINs in the Central Contractor Registry, a government-wide database of 
persons wishing to bid on Federal contracts. This registry is currently 
administered by DOD, and current Federal regulations require potential 
bidders to self-register in the system by supplying specified 
information. As part of the process, registrants are supposed to supply 
a TIN, but many either do not or supply an incorrect number. The bill 
would, for the first time, impose a legal requirement on registrants to 
supply a valid TIN and would also bar contracts from being awarded to 
contractors who fail to supply a valid TIN.
  In addition, the bill would require registrants to authorize DOD to 
validate their TINs with the IRS and obtain a corrected TIN from the 
IRS, if needed and possible. This requirement would apply to all 
registrants in the Central Contractor Registry, no matter what type of 
contract is involved and whether the contract is with DOD or another 
Federal agency. It would also allow the IRS to supply corrected TINs 
where it can promptly and reasonably do so.
  If, by chance, a registrant managed to obtain a DOD contract without 
having supplied a valid TIN, the bill would direct DOD to withhold a 
portion of their contract payments to satisfy their tax debt as 
specified under existing law. Although this backup holding requirement 
has been on the books for years, DOD has not implemented it. The bill 
would require DOD to start doing so.
  Finally, the bill would provide a number of protections. It would 
protect privacy by prohibiting DOD and other Federal procurement 
officials from making TIN numbers available to the public. The 
information would be kept confidential within the procurement community 
using the Central Contractor Registry. It would explicitly exempt from 
the TIN requirements any contractor, such as a foreign business, not 
required by U.S. law to have a taxpayer identification number. The bill 
would also require DOD to show in the registry database whether a 
particular TIN has been validated, is awaiting validation, has been 
found invalid, or is not required, so that procurement officials using 
the database will know the status of a contractor's TIN. If the IRS 
were to determine that a particular TIN was invalid, the bill would 
require DOD to give the relevant contractor an opportunity to correct 
the number. The bill would also require DOD to warn all registrants in 
the Central Contractor Registry of the possibility of backup 
withholding in the event a contractor fails to provide a valid TIN.
  DOD and the IRS have indicated that they are willing to undertake 
many of the changes suggested in the legislation, such as requiring all 
CCR registrants, as a condition of their registration, to authorize DOD 
to validate their TINs with the IRS and obtain a corrected TIN from the 
IRS, if needed and possible. DOD has even drafted possible language to 
accomplish this objective. The IRS, however, has yet to agree to the 
specific language or to take steps to improve TIN validation efforts, 
despite the passage of nearly a year since we introduced this bill in 
last Congress, and despite the fact that some CCR registrants continue 
either to omit their TINs or to provide an invalid TIN. Even if the IRS 
and DOD were to act as promised, the CCR and the privacy protections 
mentioned earlier would benefit from specific statutory language 
addressing this issue. That is why we are re-introducing this bill in 
the 109th Congress.
  It is common business sense for the Federal Government to require 
contractors who want to be paid with Federal taxpayer dollars to allow 
the United States to determine whether they owe any taxes and, if so, 
to offset a portion of their contract payments to reduce their tax 
debts. To accomplish that objective, the Federal Government has to do a 
better job in identifying federal contractors with unpaid taxes. Our 
bill, by improving the accuracy of taxpayer identification numbers in 
the Central Contractor Registry, will strengthen DOD's ability to 
identify tax delinquent contractors and either deny them new contracts 
or reduce their tax debts.
  I hope all my colleagues will join us in supporting this 
legislation's enactment during this Congress.

[[Page 5359]]


                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Dodd, Mr. Brownback, Mr. Harkin, 
        and Mr. Specter):
  S. 681. A bill to amend the Public Health Service Act to establish a 
National Cord Blood Stem Cell Bank Network to prepare, store, and 
distribute human umbilical cord blood stem cells for the treatment of 
patients and to support peer-reviewed research using such cells; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. HATCH. Mr. President, I am pleased to introduce ``The Cord Blood 
Stem Cell Act of 2005.'' I am particularly gratified that Senators 
Dodd, Brownback, Harkin, and Specter have joined me as cosponsors of 
this bipartisan bill. Since I first introduced this bill last Congress, 
there has been strong interest in Federal support for public cord blood 
banks as a widely accepted source of hematopoietic stem cells for 
transplant and research. The purpose of the Cord Blood Stem Cell Act is 
to create an easily accessible network to prepare, store, and 
distribute human umbilical cord blood stem cells for the treatment of 
patients and to support research using such cells.
  Today, thousands of Americans receive and are saved by bone marrow 
transplants each year. But thousands more die for lack of an 
appropriate donor. The good news is that research now suggests that the 
blood and stem cells from human placenta and umbilical cords may in 
some cases provide an alternative to bone marrow transplantation. For 
some patients, particularly those for whom a bone marrow match cannot 
be found, transplantation of these cells may be a life-saving therapy. 
Cord blood stem cell transplants are readily available, and they 
require less stringent matching from donors to recipients, thus 
decreasing the difficulty of finding a fully matched donor.
  Cord blood transplantation has been used successfully to treat 
leukemia, lymphoma, immunodeficiency diseases, sickle cell anemia, and 
certain metabolic diseases. However, the number of available cord blood 
stem cell units in the United States is insufficient to meet the need. 
The Cord Blood Stem Cell Act of 2005 proposes to establish an inventory 
of 150,000 cord blood stem cell units that reflects the diversity of 
the United States. In conjunction with the 5 million registered bone 
marrow donors, this registry will enable 95 percent of Americans to 
receive an appropriately matched transplant. The inventory would 
provide a critical additional resource for those in need of transplants 
and allocate a certain proportion of units to sustain further research 
on cord blood stem cells.
  In 2004, Congress asked the Institute of Medicine to provide an 
assessment of existing cord blood programs and inventories and to make 
recommendations to enhance the structure, function, and utility of such 
programs. Following a year-long process of review and evaluation, the 
Institute of Medicine will soon issue recommendations on the best 
methods to create and implement this public cord blood bank network. I 
look forward to reviewing these recommendations and ensuring that they 
are appropriately reflected in any legislation.
  Let me be clear--I am open to all options. It is my goal to create 
the best system to provide patients, clinicians, and families with 
access to these life-saving treatments by ensuring that the number of 
cord blood units available for transplant and research increases in the 
coming years.
  The system will include a network of qualified donor banks which will 
collect, test, and preserve cord blood stem cells. In addition, the 
system should educate and recruit donors, facilitate the rapid matching 
of donors and recipients, and quickly make such cells available to 
transplant centers for stem cell transplantation.
  I also strongly endorse the excellent work done by the National 
Marrow Donor Program (NMDP), which Congress created in 1986 and 
continues to fund. This registry already lists more than 42,000 units 
of umbilical cord blood and provides important patient advocacy and 
support services. It also provides an online service which allows 
physicians to compare potential cord blood matches with potential adult 
volunteer donor matches so that they can select the source of cells 
that best meets their patients' needs. Cord blood should be used to 
expand patient choices, not to restrict them. Patients, in consultation 
with their physicians, should have the ability to decide which is best 
for them.
  The establishment of a national infrastructure for cord blood will 
help save the lives of thousands of critically ill Americans. And while 
this legislation is not perfect, it is my hope that its introduction 
will encourage discussions on cord blood and the federal government's 
role in helping to increase the inventory of cord blood units in the 
United States.
  In my opinion, we must be sure that our nation can meet the needs of 
patients and physicians by ensuring a strong future for cord blood in 
this country. My primary goal is to ensure that the number of cord 
blood units available for transplant and research increases in the 
coming years. The only way that goal may be accomplished is through 
strong federal support. I look forward to working with my colleagues on 
doing everything possible to provide transplant patients with the best 
possible options by ensuring a strong future for cord blood 
transplantation in this country.
  Mr. DODD. Mr. President, I am pleased to join Senator Hatch and 
Senator Brownback in introducing legislation to advance the use of 
umbilical cord blood for clinical applications and research. I first 
became aware of the potential therapeutic benefits of cord blood when 
my first daughter was born three and a half years ago. At that time, 
our doctor informed me and my wife that preserving a small amount of 
blood from the umbilical cord could prove enormously beneficial later 
in her life. Should she become ill with a disease requiring bone marrow 
reconstitution, such as leukemia, her own cord blood stem cells could 
be used. This would eliminate the need to find a suitable bone marrow 
donor.
  The bill that we are introducing today will begin a new national 
commitment to the development of this technology--which has the 
potential to reduce pain and suffering and save the lives of so many 
Americans afflicted with some of the most debilitating illnesses. Cord 
blood has already been used successfully in treating a number of 
diseases, including sickle cell anemia and certain childhood cancers. 
However, the use of cord blood is still fledgling. Recent developments 
have suggested that the stem cells derived from cord blood may be 
useful in treating a much wider range of diseases, such as Parkinson's 
disease, diabetes, and heart disease.
  Like many Americans, I had never heard of cord blood before the birth 
of my daughter. It is not widely used--at least in this country. 
Approximately 95 percent of all bone marrow reconstitutions were done 
using a bone marrow transplant. Only five percent used cord blood. This 
figure is surprising when we consider the potential benefits of cord 
blood relative to bone marrow.
  First, it can be very difficult to find a suitable bone marrow donor. 
According to a General Accounting Office (GAO) report, of the 15,231 
individuals needing bone marrow transplants between 1997 and 2000 who 
conducted a preliminary search of the National Bone Marrow Donor 
Registry (NBMDR), only 4,056 received a transplant--a 27 percent 
success rate. This number is even lower for minorities. Cord blood 
would not only produce an additional source of donation; it also does 
not require as exact a match as bone marrow.
  In addition, cord blood is readily available. While it can take 
months between finding a bone marrow match and actually receiving a 
transplant, a unit of cord blood can be utilized in a matter of days or 
weeks. Cord blood also lowers the risk of complications for both the 
donor and the recipient. The need to extract bone marrow from the donor 
is eliminated, and the risk of infection or rejection by the recipient 
is significantly reduced. Finally, research has suggested that cord 
blood might produce better outcomes than bone marrow in children.

[[Page 5360]]

  Why then, given all of these benefits, has the use of cord blood not 
become much more prevalent in the United States? In Japan, where the 
use of cord blood in clinical setting is more advanced, nearly half of 
all transplants now use cord blood rather than bone marrow.
  The relatively infrequent use of cord blood in our country is at 
least partly attributable to the lack of a national infrastructure for 
the matching and distribution of cord blood units. There are a handful 
of cord blood banks around the country doing excellent work, but there 
is a much more developed infrastructure for bone marrow. This is thanks 
to legislation passed by Congress in 1986 that established a National 
Registry for bone marrow. By the way, that legislation is due to be 
reauthorized--and I would like to voice my strong support for that 
reauthorization.
  Our bill would create a similar infrastructure for cord blood. 
Specifically, it would direct the Secretary of Health and Human 
Services (HHS), acting through the Administrator of the Health 
Resources and Services Administration (HRSA), to establish a National 
Cord Blood Stem Cell Bank Network, as well as a registry of available 
cord blood units. The network and registry would be required to collect 
a minimum of 150,000 units, which should be sufficient to provide a 
suitable match for 90 percent of the U.S. population.
  Donor banks would also be required to educate the general public 
about the potential benefits of cord blood, and encourage an ethnically 
diverse population of cord blood donors. Given the untapped potential 
of cord blood, at least ten percent of the available units must also be 
made available for research. Finally, the legislation authorizes an 
appropriation of $15 million for fiscal year 2006, and such sums as may 
be necessary for fiscal years 2007 through 2010.
  Before finishing today I would like to make it clear that I strongly 
support the continuation of the excellent work done by the National 
Marrow Donor Program (NMDP). Cord blood should act as a complement to--
not a replacement for--bone marrow. In many cases, a bone marrow 
transplant is still the preferred therapy. Physicians should have the 
ability to decide on a case by case basis which is best for their 
patient.
  In the coming weeks, the Institute of Medicine (IOM) will release a 
report with recommendations about the appropriate structure for a cord 
blood registry. I look forward to reviewing those recommendations and, 
if necessary, making the appropriate changes to our legislation.
  I firmly believe that the creation of a national infrastructure for 
cord blood will, in time, save the lives of thousands of gravely ill 
Americans. We have a responsibility to encourage use of cord blood 
where appropriate today, and invest in research to fully tap the 
potential of this technology. I urge my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. DODD:
  S. 682. A bill to authorize the establishment of a Social Investment 
and Economic Development Fund for the Americans to provide assistance 
to reduce poverty and foster increased economic opportunity in the 
countries of the Western Hemisphere, and for other purposes; to the 
Committee on Foreign Relations.
  Mr. DODD. Mr. President, I rise today to introduce the Social 
Investment and Economic Development Fund for the Americas Act of 2005. 
This legislation would authorize critical assistance to fight poverty 
and increase economic opportunity in the countries of the Western 
Hemisphere.
  In January, my colleagues Senator Bill Nelson, Senator Lincoln Chafee 
and I visited Venezuela, Paraguay, Argentina, Peru and Ecuador. Our 
trip and discussions with political and economic leaders throughout the 
region underscored to me the danger that poverty and economic 
inequality continue to pose to regional stability, the rule of law, and 
to the continuation of market reforms.
  One third of the population in Latin America currently lives in 
poverty. 128 million people survive on less than two dollars a day, and 
50 million people on less than one dollar a day. In Haiti, the poorest 
country in the Western Hemisphere, 65 percent of the population lives 
below the poverty line. Despite economic growth throughout the 1990s, 
moreover, unemployment in Latin America actually increased. And as we 
all know such factors have the potential to increase instability and 
undermine democratic reforms and the rule of law. Indeed, individuals 
living in poverty are often forced by circumstances to engage in 
illicit activity, including narco-trafficking and even supporting 
terrorist related activities.
  But there is not only tremendous poverty. Income inequality in Latin 
America is the highest in the world. To illustrate that fact, consider 
that the richest one-tenth of all Latin Americans earn 48 percent of 
the total national income, whereas the bottom one tenth earns only 1.6 
percent. By contrast, in developed countries, the top ten percent earns 
29.1 percent, and the bottom 10 percent earns 2.5 percent. Is it any 
wonder that economic inequality in Uruguay, the most equal country in 
Latin America, is still greater than in the most unequal country in 
Eastern Europe?
  Poverty and inequality are not simply social injustices. They 
threaten the political stability of Latin America and the national 
interests of the United States. Indeed, according to a 2004 report by 
the United Nations Development Program, progress in extending elective 
democracy across Latin America is threatened by ongoing social and 
economic turmoil. Most troubling, the report suggests that over 50 
percent of the population of Latin America would be willing to 
sacrifice democratic government for real progress on the economic and 
social fronts. That is a frightening statistic. And it should make 
crystal clear the urgency of this situation. Two decades of progress in 
our hemisphere is at risk.
  The Social Investment and Economic Development Fund for the Americas 
Act of 2005 would seek to address these issues by investing in the 
peoples of the Americas. This important legislation would make it 
United States policy to promote market-based principles, economic 
integration, social development, and inter-American trade. To that end, 
it would authorize $250 million annually in bilateral economic 
assistance to the hemisphere through fiscal year 2010. It would also 
authorize multilateral assistance, directed through the Inter-American 
Development Bank, of no more than $250 million per year and $1.25 
billion in total.
  Certainly, strong trade relations remain a key to creating healthy 
economies both here in the United States and throughout the region. But 
trade alone cannot address the myriad challenges facing Latin America, 
when millions of citizens in the hemisphere remain marginalized by 
economic insecurity and social dislocation. That is another reason why 
this bill is so critical.
  To confront these challenges, we have to start at the grass roots. We 
have to start with the people. And the Social Investment and Economic 
Development Fund for the Americas would do that by supporting public-
private partnerships and micro-enterprise developments. It would give 
honest, hardworking families the chance to become entrepreneurial and 
to create a broad based ownership society in their countries. We 
promote these values here at home, and we should do so abroad.
  Investing in people also means investing in human capital. And there 
is clearly a need. According to the World Bank large portions of the 
population do not receive adequate services such as education and 
health care. Education, in particular, is identified as critical to 
development. Yet the quality of education varies significantly based on 
social status and income distribution. In Mexico, for example, the 
average individual in the bottom 20 percent income bracket has only 3.5 
years of schooling, whereas an individual in the top 20 percent income 
bracket has 11.6 years. My legislation would address these inequities 
by targeting assistance at projects which

[[Page 5361]]

would invest in education. It would also build human capital by 
investing in basic needs such as health care, disease prevention, 
nutrition, and housing.
  To move forward, we also have to help the people invest in good 
governance. Public corruption remains an especially persistent and 
pernicious problem in this hemisphere. Both Transparency International 
and the World Economic Forum report high levels of corruption 
throughout the region. Moreover, while full citizen participation in 
government is a key to strengthening democracy and ensuring that civil 
services work, many Latin American citizens do not express confidence 
in their political institutions. This Act would attempt to overcome 
these barriers to progress by enhancing efficiency and transparency in 
government services as well as increasing civil society participation 
in government.
  Lastly, marginalized populations, including indigenous groups, people 
of African descent, women, and people with disabilities, are 
particularly affected by problems of poverty and income inequality. 
This act would target funds to reduce poverty and decrease social 
dislocation among these populations.
  The funds authorized by this act would be distributed on the basis of 
competitive bidding and inter-American cooperation. To do so, this 
legislation would establish technical review committees which will 
partner with consultative committees in each country to make 
determinations on funding requests.
  Finally, the historic Summits of the Americas made it clear that 
economic and social integration are the responsibilities of all nations 
in the Western Hemisphere. Through this act, the United States would 
send a strong signal to others in the region that we take these 
responsibilities seriously. And it will challenge the other countries 
in the hemisphere to collectively match our efforts.
  We stand today at a moment of great opportunity and great risk in 
this hemisphere. The past two decades have witnessed the rise of 
democratic governments in nations that long languished under 
dictatorship. Yet this progress is endangered. Economic and social 
conditions for millions of men and women continue to lag dangerously 
far behind. It is in our moral and strategic interests to provide the 
necessary economic assistance to fight the scourges of poverty and 
social dislocation in this hemisphere. The Social Investment and 
Economic Development Fund for the Americas Act of 2005 is a vital first 
step to achieving this goal. I ask my colleagues to join me in 
supporting this important legislation.
  I ask unamimous 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. 682

       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 ``Social Investment and 
     Economic Development Fund for the Americas Act of 2005''.

     SEC. 2. FINDINGS; STATEMENT OF POLICY.

       (a) Findings.--Congress finds the following:
       (1) The historic economic, political, cultural, and 
     geographic relationships among the countries of the Western 
     Hemisphere are unique and of continuing special significance 
     to the United States.
       (2) The interests of the countries of the Western 
     Hemisphere are more interrelated today than ever before. 
     Consequently, sound economic, social, and democratic progress 
     in each of the countries continues to benefit other 
     countries, and lack of it in any country may have serious 
     repercussions in others.
       (3) Following the historic Summits of the Americas, the 
     1994 Summit in Miami, the 1998 Summit in Santiago, Chile, the 
     2001 Summit in Quebec City, Canada, and the 2004 Special 
     Summit in Monterrey, Mexico, the heads of state of the 
     countries of the Western Hemisphere accepted the formidable 
     challenge of economic and social integration in and between 
     their respective countries.
       (4) To make progress toward economic and social 
     integration, there is a compelling need to focus on the 
     social development of the people of the Americas which, in 
     turn, will promote the economic and political development of 
     the region.
       (5) Investment in social development in the Americas, 
     including investment in human and social capital, 
     specifically in education, health, housing, and labor markets 
     with the goal of combating social exclusion and social ills, 
     will consolidate political democracy and the rule of law and 
     promote regional economic integration and trade in the 
     region.
       (6) The challenge of achieving economic integration between 
     one of the world's most developed economies and some of the 
     poorest and most vulnerable countries requires a special 
     effort to promote social equality, develop skills, and 
     modernize the infrastructure in poorer countries that will 
     enable the people of these countries to maximize the amount 
     of benefits accrued from economic integration.
       (7) The particular challenge facing social and economic 
     development in Latin America is the historic and persistent 
     highly unequal distribution of wealth. Latin America suffers 
     from the most unequal distribution of wealth in the world 
     with huge inequities in the distribution of assets including 
     education, land, and credit.
       (8) Latin America also confronts the challenge of an 
     increasing number of poor people. As of today, approximately 
     one-third of the population lives in poverty and increasing 
     numbers live in extreme poverty. Poverty exists in all Latin 
     American countries but 70 percent of the region's poor live 
     in the five largest middle-income countries.
       (9) Marginalized groups, including indigenous populations, 
     people of African descent, women, people with disabilities, 
     and rural populations, are socially excluded and suffer from 
     poverty, stigma, and discrimination.
       (10) Democratic values are dominant throughout the 
     Americas, and nearly all governments in the region have come 
     to power through democratic elections.
       (11) Nonetheless, existing democratic governments and their 
     constituent institutions remain fragile and face critical 
     challenges including effective democratic civilian authority 
     over these institutions, including the military, the 
     consolidation or establishment of independent judicial 
     institutions and the rule of law, and the elimination of 
     corruption.
       (12) The prosperity, security, and well-being of the United 
     States is linked directly to peace, prosperity, and democracy 
     in the Americas. The entire region benefits by reducing 
     poverty, strengthening the middle class, and promoting the 
     rule of law which will also increase markets for United 
     States goods and create a better environment for regional 
     investment by United States businesses.
       (13) Section 101 of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2151) establishes as a principal objective of United 
     States foreign assistance the ``encouragement and sustained 
     support of the people of developing countries in their 
     efforts to acquire the knowledge and resources essential to 
     development and to build the economic, political, and social 
     institutions which will improve the quality of their lives''.
       (14) It is in the national interests of the United States 
     to assist developing countries in the Western Hemisphere as 
     they implement the economic and political policies which are 
     necessary to achieve equitable economic growth.
       (15) The Summit of the Americas has directly charged the 
     multilateral institutions of the Americas, including the 
     Organization of American States (OAS), the Inter-American 
     Development Bank (IADB), and the Inter-American Agency for 
     Cooperation and Development with mobilizing private-public 
     sector partnerships among industry and civil society to help 
     achieve equitable development objectives.
       (16) By supporting the purposes and objectives of 
     development and applying such purposes and objectives to the 
     Americas, a Social Investment and Economic Development Fund 
     for the Americas has the potential to advance the national 
     interests of the United States and directly improve the lives 
     of the poor and marginalized groups, encourage broad-based 
     economic growth while protecting the environment, build human 
     capital and knowledge, support meaningful participation in 
     democracy, and promote peace and justice in the Americas.
       (b) Statement of Policy.--It is the policy of the United 
     States--
       (1) to promote market-based principles, economic 
     integration, social development, and trade in and between 
     countries of the Americas by--
       (A) nurturing public-private partnerships and 
     microenterprise development;
       (B) improving the quality of life and investing in human 
     capital, specifically targeting education, health and disease 
     prevention, nutrition, and housing;
       (C) strengthening the rule of law through improved 
     efficiency and transparency in government services and 
     increasing civil society participation in government; and
       (D) reducing poverty and eliminating the exclusion of 
     marginalized populations, including people of African 
     descent, indigenous groups, women, and people with 
     disabilities; and
       (2) to establish an investment fund for the Western 
     Hemisphere to advance the national interests of the United 
     States, directly improve the lives of the poor and 
     marginalized,

[[Page 5362]]

     encourage broad-based economic growth while protecting the 
     environment, build human capital and knowledge, support 
     meaningful participation in democratic institutions and 
     processes, and promote peace and justice in the Americas.

     SEC. 3. AMENDMENT TO FOREIGN ASSISTANCE ACT OF 1961.

       Part I of the Foreign Assistance Act of 1961 (22 U.S.C. 
     2151 et seq.) is amended by adding at the end the following:

 ``CHAPTER 13--SOCIAL INVESTMENT AND ECONOMIC DEVELOPMENT FUND FOR THE 
                                AMERICAS

     ``SEC. 499H. AUTHORIZATION OF ASSISTANCE.

       ``(a) Statement of Policy.--It is the policy of the United 
     States--
       ``(1) to promote market-based principles, economic 
     integration, social development, and trade in and between 
     countries of the Americas by--
       ``(A) nurturing public-private partnerships and 
     microenterprise development;
       ``(B) improving the quality of life and investing in human 
     capital, specifically targeting education, health and disease 
     prevention, nutrition, and housing;
       ``(C) strengthening the rule of law through improved 
     efficiency and transparency in government services and 
     increasing civil society participation in government; and
       ``(D) reducing poverty and eliminating the exclusion of 
     marginalized populations, including people of African 
     descent, indigenous groups, women, and people with 
     disabilities; and
       ``(2) to establish an investment fund for the Western 
     Hemisphere to advance the national interests of the United 
     States, directly improve the lives of the poor and 
     marginalized, encourage broad-based economic growth while 
     protecting the environment, build human capital and 
     knowledge, support meaningful participation in democratic 
     institutions and processes, and promote peace and justice in 
     the Americas.
       ``(b) In General.--The President, acting through the 
     Administrator of the United States Agency for International 
     Development, shall provide assistance to reduce poverty and 
     foster increased economic opportunity in the countries of the 
     Western Hemisphere by--
       ``(1) nurturing public-private partnerships and 
     microenterprise development;
       ``(2) improving the quality of life and investing in human 
     capital, specifically targeting education, health and disease 
     prevention, nutrition, and housing;
       ``(3) strengthening the rule of law through improved 
     efficiency and transparency in government services and 
     increasing civil society participation in government; and
       ``(4) reducing poverty and eliminating the exclusion of 
     marginalized populations, including people of African 
     descent, indigenous groups, women, and people with 
     disabilities.
       ``(c) Terms and Conditions.--Assistance under this chapter 
     may be provided on such other terms and conditions as the 
     President may determine, consistent with the goal of 
     promoting economic and social development.

     ``SEC. 499I. TECHNICAL REVIEW COMMITTEE.

       ``(a) In General.--There is established within the United 
     States Agency for International Development a technical 
     review committee.
       ``(b) Membership.--
       ``(1) In general.--The President, by and with the advice 
     and consent of the Senate, shall appoint to serve on the 
     technical review committee--
       ``(A) individuals with technical expertise with respect to 
     the development projects, including grassroots development of 
     Latin America and the Caribbean; and
       ``(B) citizens of the United States with technical 
     expertise with respect to development projects and business 
     experience.
       ``(2) Criteria for appointment.--Technical expertise shall 
     be the sole criterion in making appointments to the technical 
     review committee.
       ``(c) Duties.--The technical review committee shall review 
     all projects proposed for funding using assistance provided 
     under section 499H(a), and make recommendations to the 
     President with respect to the guidelines to be used in 
     evaluating project proposals and the suitability of the 
     proposed projects for funding.
       ``(d) Conflicts of Interest.--A member of the technical 
     review committee shall not be permitted to review an 
     application submitted by an organization with which the 
     member has been or is affiliated.

     ``SEC. 499J. CONSULTATIVE COMMITTEE.

       ``(a) In General.--A country that receives assistance under 
     this chapter shall establish a Consultative Committee to make 
     recommendations regarding how such assistance should be used 
     to carry out the policy set out in section 499H(a).
       ``(b) Membership.--A Consultative Committee should include 
     individuals from civil society organizations that represent 
     or have experience in working in the following:
       ``(1) Marginalized populations.
       ``(2) Trade and small farmer unions.
       ``(3) Rural development and agrarian reform.
       ``(4) Microenterprise and grassroots development.
       ``(5) Access to government social services.
       ``(6) Rule of law and government reform.
       ``(c) Duties.--A Consultative Committee for a country 
     shall--
       ``(1) make recommendations to the technical review 
     committee established under section 499I and to the 
     appropriate country mission of the United States Agency for 
     International Development on projects proposed to receive 
     assistance under section 499H(a) that affect such country;
       ``(2) have access documents and other information related 
     to project proposals and funding decisions that affect such 
     country; and
       ``(3) develop and publish rules and procedures under which 
     the Committee will carry out its duties.
       ``(d) Conflicts of Interest.--A member of the Consultative 
     Committee may not be permitted to review an application 
     submitted by an organization with which the member has been 
     or is affiliated.

     ``SEC. 499K. REPORT.

       ``The President shall prepare and transmit to the Committee 
     on Foreign Relations of the Senate, the Committee on 
     International Relations of the House of Representatives, and 
     other appropriate congressional committees an annual report 
     on the specific programs, projects, and activities carried 
     out under this chapter during the preceding year, including 
     an evaluation of the results of such programs, projects, and 
     activities.

     ``SEC. 499L. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to carry out this chapter $250,000,000 for each of the fiscal 
     years 2006 through 2010.
       ``(b) Additional Authorities.--Amounts appropriated 
     pursuant to subsection (a)--
       ``(1) may be referred to as the `United States Social 
     Investment and Economic Development Fund for the Americas';
       ``(2) are authorized to remain available until expended; 
     and
       ``(3) are in addition to amounts otherwise available for 
     such purposes.
       ``(c) Funding Limitation.--Not more than 7 percent of the 
     amounts appropriated pursuant to subsection (a) for a fiscal 
     year may be used for administrative expenses.''.

     SEC. 4. AMENDMENT TO THE INTER-AMERICAN DEVELOPMENT BANK ACT.

       The Inter-American Development Bank Act (22 U.S.C. 283 et 
     seq.) is amended by adding at the end the following:

     ``SEC. 39. SOCIAL INVESTMENT AND ECONOMIC DEVELOPMENT FUND 
                   FOR THE AMERICAS.

       ``(a) In General.--The Secretary of the Treasury shall 
     instruct the United States Executive Director of the Bank to 
     use the voice, vote, and influence of the United States to 
     urge the Bank to establish an account to be known as the 
     `Social Investment and Economic Development Fund for the 
     Americas' (in this section referred to as the `Fund'), which 
     is to be operated and administered by the Board of Executive 
     Directors of the Bank consistent with subsection (b). The 
     United States Governor of the Bank may vote for a resolution 
     transmitted by the Board of Executive Directors which 
     provides for the establishment of such an account, and the 
     operation and administration of the account consistent with 
     subsection (b).
       ``(b) Governing Rules.--
       ``(1) Use of funds.--The Fund shall be used to provide 
     assistance to reduce poverty and foster increased economic 
     opportunity in the countries of the Western Hemisphere by--
       ``(A) nurturing public-private partnerships and 
     microenterprise development;
       ``(B) improving the quality of life and investing in human 
     capital, specifically targeting education, health and disease 
     prevention, nutrition, and housing;
       ``(C) strengthening the rule of law through improved 
     efficiency and transparency in government services and 
     increasing civil society participation in government; and
       ``(D) reducing poverty and eliminating the exclusion of 
     marginalized populations, including people of African 
     descent, indigenous groups, women, and people with 
     disabilities.
       ``(2) Application for funding through a competitive 
     process.--Any interested person or organization may submit an 
     application for funding by the Fund.
       ``(3) Technical review committee.--
       ``(A) In general.--The Fund shall have a technical review 
     committee.
       ``(B) Membership.--
       ``(i) In general.--The Board of Executive Directors of the 
     Bank shall appoint to serve on the technical review committee 
     individuals with technical expertise with respect to the 
     development of Latin America and the Caribbean.
       ``(ii) Criteria for appointment.--Technical expertise shall 
     be the sole criterion in making appointments to the technical 
     review committee.
       ``(C) Duties.--The technical review committee shall review 
     all projects proposed for funding by the Fund, and make 
     recommendations to the Board of Executive Directors of the 
     Bank with respect to the guidelines to be used in evaluating 
     project proposals and the suitability of the proposed 
     projects for funding.
       ``(D) Conflicts of interest.--A member of the technical 
     review committee shall not be permitted to review an 
     application submitted by an organization with which the 
     member has been or is affiliated.
       ``(4) Review of proposed projects.--Not more frequently 
     than once each year, the

[[Page 5363]]

     Board of Executive Directors of the Bank shall review and 
     make decisions on applications for projects to be funded by 
     the Fund, in accordance with procedures which provide for 
     transparency. The Board of Executive Directors shall provide 
     advance notice to all interested parties of any date on which 
     such a review will be conducted.
       ``(5) Consultative committee.--
       ``(A) In general.--Each country that receives assistance 
     under this section shall establish a Consultative Committee 
     to make recommendations regarding how such assistance should 
     be used to carry out the policy set out in section 2(b) of 
     the Social Investment and Economic Development Fund for the 
     Americas Act of 2005.
       ``(B) Membership.--A Consultative Committee should include 
     individuals from civil society organizations that represent 
     or have experience in the following:
       ``(i) Marginalized populations.
       ``(ii) Trade and small farmer unions.
       ``(iii) Rural development and agrarian reform.
       ``(iv) Microenterprise and grassroots development.
       ``(v) Access to government social services.
       ``(vi) Rule of law and government reform.
       ``(C) Duties.--A Consultative Committee in a country 
     shall--
       ``(i) make recommendations to the technical review 
     committee established under paragraph (3) and appropriate 
     country representative of the Bank on projects to receive 
     assistance provided under this section that affect such 
     country;
       ``(ii) have access documents and other information related 
     to project proposals and funding decisions that affect such 
     country; and
       ``(iii) develop and publish rules and procedures under 
     which the Committee will carry out its duties.
       ``(D) Conflicts of interest.--A member of a Consultative 
     Committee may not be permitted to review an application 
     submitted by an organization with which the member has been 
     or is affiliated.
       ``(c) Contribution Authority.--To the extent and in the 
     amounts provided in advance in appropriations Acts, the 
     United States Governor of the Bank may contribute 
     $1,250,000,000 to the Fund.
       ``(d) Limitations on Authorization of Appropriations.--
       ``(1) In general.--For the contribution authorized by 
     subsection (c), there are authorized to be appropriated for 
     payment to the Secretary of the Treasury $250,000,000 for 
     each fiscal year beginning with the fiscal year in which the 
     resolution described in subsection (a) is adopted.
       ``(2) Additional authorities.--Amounts appropriated 
     pursuant to paragraph (1)--
       ``(A) are authorized to remain available until expended; 
     and
       ``(B) are in addition to amounts otherwise available for 
     such purposes.
       ``(3) Funding limitation.--Not more than 7 percent of the 
     amounts appropriated pursuant to paragraph (1) for a fiscal 
     year may be used for administrative expenses.''.

     SEC. 5. SENSE OF CONGRESS.

       It is the sense of Congress that--
       (1) the countries of the Western Hemisphere should 
     collectively provide assistance equal to the amount of United 
     States bilateral assistance provided under chapter 13 of part 
     I of the Foreign Assistance Act of 1961, as added by section 
     3 of this Act, and multilateral assistance provided by the 
     Social Investment and Economic Development Fund for the 
     Americas under section 39 of the Inter-American Development 
     Bank Act, as added by section 4 of this Act, for the same 
     purpose for which such assistance was provided;
       (2) funds authorized to be appropriated to carry out this 
     Act or the amendments made by this Act should be in addition 
     to funds otherwise made available on an annual basis to 
     countries in the Americas pursuant to other United States 
     foreign assistance programs; and
       (3) it should be the policy of the United States to seek to 
     increase the amount of assistance provided to the countries 
     of the Americas from the United States and other members of 
     the Inter-American Development Bank for a fiscal year 
     beginning after the date of the enactment of this Act to an 
     amount that is more than such amount provided during fiscal 
     years beginning prior to such date.
                                 ______
                                 
      By Mr. REED:
  S. 684. A bill to amend the Natural Gas Act to provide additional 
requirements for the siting, construction, or operation of liquefied 
natural gas import facilities; to the Committee on Energy and Natural 
Resources.
  Mr. REED. Mr. President, today I introduce the Liquefied Natural Gas 
Safety and Security Act of 2005.
  The siting of liquefied natural gas (LNG) import terminals is an 
issue that has taken on critical importance for me and for the people 
of Rhode Island in recent months, as the Federal Energy Regulatory 
Commission (FERC) is now considering proposals by KeySpan Energy and 
Weaver's Cove Energy to establish LNG marine terminals in Providence, 
RI and Fall River, MA, respectively.
  I recognize that natural gas is an important and growing component of 
New England's and the Nation's energy supply, and that imported LNG 
offers a promising new supply source to complement our domestic natural 
gas supplies. In a post-September 11 world, however, we must consider 
the substantial safety and security risks associated with siting LNG 
marine terminals in urban communities and requiring LNG tankers to pass 
within close proximity to miles of densely populated coastline.
  The LNG Safety and Security Act would address these concerns by 
improving FERC's siting process, requiring closer collaboration between 
FERC and the Coast Guard, and protecting States' permitting rights 
under Federal and State law.
  First, the bill would improve FERC's approval process for LNG 
terminals. Instead of reviewing proposed LNG projects on a first come-
first served basis, the bill would require FERC to work with states and 
the Coast Guard to pursue a regional approach to LNG terminal siting, 
including a review of offshore and remote sites and a determination of 
how many LNG terminals a region needs. To address the substantial new 
costs faced by state and local agencies responsible for security and 
safety at the LNG terminal and along shipping routes, the bill would 
require the developer to create a cost-sharing plan describing direct 
cost reimbursements to these agencies. To make sure that FERC addresses 
all relevant safety and security issues in its Final Environmental 
Impact Statement (EIS) for an LNG terminal--and that the public has 
access to this information before FERC makes a final decision--the bill 
requires FERC to await the completion of an Incident Action Plan by the 
Coast Guard before issuing a Final EIS. It would require FERC to 
incorporate the non-security sensitive components of the Incident 
Action Plan into the Final EIS, including all safety and security 
resource requirements identified by the Coast Guard.
  Second, to ensure that States continue to have the authority to 
establish meaningful safety and security standards and to protect their 
fragile coastal environments, the bill requires FERC to comply with 
Federal laws that may be enforced by States, including the National 
Historic Preservation Act, the Coastal Zone Management Act, the Clean 
Water Act, and the Clean Air Act; clarifies the right of a State to 
review an application to site an LNG facility under any of these laws; 
and establishes that FERC has no authority to preempt a State 
permitting determination under federal or state law.
  Third, to ensure that the Department of Transportation's safety 
standards for LNG terminals truly encourage remote siting as Congress 
intended, the bill requires the Secretary of Transportation to issue 
new regulations establishing standards to promote the remote siting of 
LNG terminals.
  Finally, to protect coastal communities along LNG shipping routes, 
the bill requires the Coast Guard to issue regulations establishing 
thermal and vapor exclusion zones for vessels transporting LNG, based 
on existing DOT regulations for LNG terminals on land.
  I again want to emphasize that I recognize LNG's important role in 
the energy infrastructure of Rhode Island and the Nation, and I look 
forward to working with my colleagues to ensure reliable supplies of 
natural gas to our homes and businesses without siting LNG import 
terminals in densely populated urban areas. I am confident that we can 
achieve this goal by requiring FERC and other federal agencies to 
explore a broad list of alternatives--including offshore LNG 
facilities--to bring more natural gas to our communities while 
minimizing the risk to our citizens.
  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 5364]]



                                 S. 684

       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 ``Liquefied Natural Gas Safety 
     and Security Act of 2005''.

     SEC. 2. SITING OF LIQUEFIED NATURAL GAS IMPORT FACILITIES.

       Section 3 of the Natural Gas Act (15 U.S.C. 717b) is 
     amended by adding at the end the following:
       ``(d)(1) Before issuing an order authorizing an applicant 
     to site, construct, expand, or operate a liquefied natural 
     gas import facility, the Commission shall require the 
     applicant, in cooperation with the Commandant of the Coast 
     Guard and State and local agencies that provide for the 
     safety and security of the liquefied natural gas import 
     facility and any vessels that serve the facility, to develop 
     a cost-sharing plan.
       ``(2) A cost-sharing plan developed under paragraph (1) 
     shall include a description of any direct cost reimbursements 
     that the applicant agrees to provide to any State and local 
     agencies with responsibility for security and safety--
       ``(A) at the liquefied natural gas import facility; and
       ``(B) in proximity to vessels that serve the facility.
       ``(e)(1) In this subsection, the term `region' means a 
     census region designated by the Bureau of the Census as of 
     the date of enactment of this subsection.
       ``(2) Not later than 90 days after the date of enactment of 
     this subsection and annually thereafter, the Commission 
     shall--
       ``(A) review all applications for the siting, construction, 
     expansion, or operation of a liquefied natural gas import 
     facility in a region that are pending with the Commission;
       ``(B) consult with States in the region to identify remote 
     sites for the development of potential liquefied natural gas 
     import facilities in the region; and
       ``(C) in collaboration with the Commandant of the Coast 
     Guard, review--
       ``(i) any offshore liquefied natural gas projects proposed 
     for a region; and
       ``(ii) other potential offshore sites for the development 
     of liquefied natural gas.
       ``(3) Based on the reviews and consultations under 
     paragraph (1), the Commission shall determine--
       ``(A) whether liquefied natural gas import facilities are 
     needed in a region; and
       ``(B) if the Commission determines under subparagraph (A) 
     that liquefied natural gas import facilities are needed for a 
     region, the number of liquefied natural gas import facilities 
     that are needed for the region.
       ``(4) The Commission shall cooperate with the Commandant of 
     the Coast Guard and States to ensure that--
       ``(A) the Commission approves only the number of liquefied 
     natural gas import facilities that are needed for a region, 
     as determined under paragraph (3)(B); and
       ``(B) any liquefied natural gas import facilities approved 
     under subparagraph (A) are sited in locations that provide 
     maximum safety and security to the public.
       ``(f)(1) Notwithstanding any other provision of law, the 
     Commission shall not issue a final environmental impact 
     statement or similar analysis required under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 
     with respect to a proposed liquefied natural gas facility 
     before the date on which--
       ``(A) the applicant completes--
       ``(i) a security assessment for the proposed facility; and
       ``(ii) a security plan for the proposed facility; and
       ``(B) the Commandant of the Coast Guard completes an 
     incident action plan that identifies the resources needed to 
     support appropriate air, land, and sea security measures 
     during the transit and offload of a liquefied natural gas 
     vessel.
       ``(2) The Commission shall incorporate into the final 
     environmental impact statement or similar analysis the non-
     security sensitive components of the incident action plan and 
     all other safety and security resource requirements 
     identified by the Commandant of the Coast Guard for a 
     proposed liquefied natural gas import facility.
       ``(g)(1) For purposes of reviewing and approving or 
     disapproving an application to site, construct, or operate a 
     liquefied natural gas import facility, the Commission shall--
       ``(A) consult with the State in which the facility is 
     proposed to be located; and
       ``(B) comply with all applicable Federal laws, including--
       ``(i) the National Historic Preservation Act (16 U.S.C. 470 
     et seq.);
       ``(ii) the Coastal Zone Management Act of 1972 (16 U.S.C. 
     1451 et seq.);
       ``(iii) sections 401 and 402(b) of the Federal Water 
     Pollution Control Act (33 U.S.C. 1341, 1342(b)); and
       ``(iv) sections 107, 111(c), and 116 of the Clean Air Act 
     (42 U.S.C. 7401, 7411(c), 7416).
       ``(2) Nothing in this section precludes or denies the right 
     of any State to review an application to site, construct, or 
     operate a liquefied natural gas import facility under--
       ``(A) the National Historic Preservation Act (16 U.S.C. 470 
     et seq.);
       ``(B) the Coastal Zone Management Act of 1972 (16 U.S.C. 
     1451 et seq.);
       ``(C) sections 401 and 402(b) of the Federal Water 
     Pollution Control Act (33 U.S.C. 1341, 1342(b)); and
       ``(D) sections 107, 111(c), and 116 of the Clean Air Act 
     (42 U.S.C. 7401, 7411(c), 7416).
       ``(3) Notwithstanding any other provision of law, the 
     Commission shall have no authority to preempt a State 
     permitting determination with respect to a liquefied natural 
     gas import facility that is made under Federal or State 
     law.''.

     SEC. 3. STANDARDS FOR LIQUEFIED NATURAL GAS PIPELINE 
                   FACILITIES.

       Section 60103 of title 49, United States Code, is amended--
       (1) by redesignating subsections (e), (f), and (g) as 
     subsections (f), (g), and (h), respectively; and
       (2) by inserting after subsection (d) the following:
       ``(e) Remote Siting Standards.--Not later than 180 days 
     after the date of enactment of this Act, the Secretary shall 
     promulgate regulations establishing standards to promote the 
     remote siting of liquefied natural gas pipeline 
     facilities.''.

     SEC. 4. THERMAL AND VAPOR DISPERSION EXCLUSION ZONES.

       As soon as practicable after the date of enactment of this 
     Act, the Commandant of the Coast Guard shall issue 
     regulations establishing thermal and vapor dispersion 
     exclusion zone requirements for vessels transporting 
     liquefied natural gas that are based on sections 193.2057 and 
     193.2059 of title 49, Code of Federal Regulations (or any 
     successor regulations).
                                 ______
                                 
      By Mr. AKAKA:
  S. 685. A bill to amend title IV of the Employee Retirement Income 
Security Act of 1974 to require the Pension Benefit Guaranty 
Corporation, in the case of airline pilots who are required by 
regulation to retire at age 60, to compute the actuarial value of 
monthly benefits in the form of a life annuity commencing at age 60; to 
the Committee on Health, Education, Labor, and Pensions.
  Mr. AKAKA. Mr. President, last year, the Pension Benefit Guaranty 
Corporation, PBGC, announced that it was moving to assume 
responsibility for the pensions of more than 14,000 active and retired 
pilots at United Airlines. Today, the Air Line Pilots Association, 
which represents 6,400 active United pilots, is trying to negotiate an 
alternative to such a takeover.
  Mr. President, one of the reasons I am here today talking about 
United's pilots is that they are at risk of losing a significant amount 
of their pension, not just because the PBGC may be taking over their 
pension, but because of the age that they are mandated to retire. While 
I believe that Congress needs to address the issue of underfunded 
pension plans, I believe that it is also important for us to address an 
inequity with airline pilots that are mandated to retire at age 60.
  The bill that I introduced in the 108th Congress, and am 
reintroducing today, will ensure the fair treatment of commercial 
airline pilot retirees. The Pension Benefit Guaranty Corporation Pilots 
Equitable Treatment Act will lower the age requirement to receive the 
maximum pension benefits allowed by Pension Benefit Guaranty 
Corporation to age 60 for pilots, who are mandated by the Federal 
Aviation Administration, FAA, to retire before age 65.
  Again, with the airline industry experiencing severe financial 
distress, we need to enact this legislation to assist pilots whose 
companies have been or will be unable to continue their defined benefit 
pension plans. My bill will slightly alter Title IV ofthe Employee 
Retirement Income Security Act of 1974 to require the Pension Benefit 
Guaranty Corporation to take into account the fact that pilots are 
required to retire at the age of 60, when calculating their benefits.
  The Pension Benefit Guaranty Corporation was established to ensure 
that workers with defined benefit pension plans are able to receive 
some portion of their retirement income in cases where the employer 
does not have enough money to pay for all of the benefits owed. After 
the employer proves to the PBGC that the business is financially unable 
to support the plan, the PBGC takes over the plan as a trustee and 
ensures that the current and future retirees receive their pension 
benefits within the legal limits. Four of the ten largest claims in 
PBGC's history have been for airline pension plans. Although airline 
employees account for only two percent of participants historically 
covered by the PBGC, they

[[Page 5365]]

have constituted approximately 17 percent of claims. For example, 
Eastern Airlines, Pan American, Trans World Airlines, and US Airways 
have terminated their pension plans and their retirees rely on the PBGC 
for their basic pension benefits.
  The FAA requires commercial aviation pilots to retire when they reach 
the age of 60. Pilots are therefore denied the maximum pension benefit 
administered by the PBGC because they are required to retire before the 
age of 65. Herein lies the problem. Mr. President, if pilots want to 
work beyond the age 60, they have to request a waiver from the FAA. It 
is my understanding that the FAA does not grant many of these waivers, 
and I have even heard from some pilots that the FAA has never granted 
these waivers. Therefore, most of the pilots, if not all, do not 
receive the maximum pension guarantee because they are forced to retire 
at age 60. 
  The maximum guaranteed pension at the age of 65 for plans that 
terminate in 2003 is $43,977.24. However, the maximum pension guarantee 
for a retiree is decreased to $28,585.20 if a participant retires at 
the age of 60. This significant reduction in benefits puts pilots in a 
difficult position. With drastically reduced pensions and a prohibition 
on reentering the piloting profession because of age, many pilots are 
subjected to undue hardship. While it is my sincere hope that existing 
airlines will be able to maintain their pension programs and that the 
change this bill makes will not be needed for any additional airline 
pension programs, I believe that my legislation is necessary to ensure 
that, at the minimum, airline pilots are not unfairly penalized for 
their employer's ability to maintain a pension plan. My legislation 
ensures that pilots can obtain the maximum PBGC benefit without being 
unfairly penalized for having to retire at 60, if their pension plan is 
terminated.
  I urge my colleagues to support this bill. I ask that the text of my 
bill be printed in the Record.
  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. 685

       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 ``Pension Benefit Guaranty 
     Corporation Pilots Equitable Treatment Act''.

     SEC. 2. AGE REQUIREMENT FOR EMPLOYEES.

       (a) Single-Employer Plan Benefits Guaranteed.--Section 
     4022(b) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)) is amended in the flush matter 
     following paragraph (3), by adding at the end the following: 
     ``If, at the time of termination of a plan under this title, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age before age 
     65, paragraph (3) shall be applied to an individual who is a 
     participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (b) Multiemployer Plan Benefits Guaranteed.--Section 
     4022B(a) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322b(a)) is amended by adding at the end the 
     following: ``If, at the time of termination of a plan under 
     this title, regulations prescribed by the Federal Aviation 
     Administration require an individual to separate from service 
     as a commercial airline pilot after attaining any age before 
     age 65, this subsection shall be applied to an individual who 
     is a participant in the plan by reason of such service by 
     substituting such age for age 65.''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply to benefits 
     payable on or after the date of enactment of this Act.

                          ____________________