[Congressional Record (Bound Edition), Volume 152 (2006), Part 12]
[Senate]
[Pages 16970-17025]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. REED:
  S. 3784. A bill to provide wage parity for certain prevailing rate 
employees in Rhode Island; to the Committee on Homeland Security and 
Governmental Affairs.
  Mr. REED. Mr. President, today I am introducing the Rhode Island 
Federal Worker Fairness Act of 2006. This bill will merge the 
Narragansett Bay wage area with the Boston, MA, wage area to provide 
Rhode Island Federal blue-collar workers with pay equity in the region. 
These workers include janitors, mechanics, machine tool operators, 
munitions and explosive operators, electricians, and engineers.
  Federal employees within the Narragansett Bay wage area are paid 
under one of the lowest Federal wage system, FWS, pay scales while 
residing in an area with one of the highest costs of living. 
Significant disparities between Narragansett Bay wages and those in 
proximate wage areas raise serious questions about the fairness and 
equity of the Federal wage pay scales. The average wage grade worker in 
Rhode Island earns $18.01 per hour compared to the same worker in 
Boston who earns $20.25 per hour or an employee in Hartford who earns 
$20.05 per hour. As a result, Rhode Island may be losing experienced 
Federal employees to the same jobs, at the same grade levels, just 
miles away because of better pay. Enacting this legislation would help 
the approximately 500 wage rate workers in Rhode Island better provide 
for their families, and it will ensure that Rhode Island keeps 
qualified and trained Federal workers.
  Roughly 80 percent of all FWS employees in the United States work 
either in the Department of Defense or the Department of Veteran 
Affairs. Indeed, Naval Station Newport employs the most FWS workers in 
the Narragansett Bay area. These employees perform work that is 
important to our national security, and competitive compensation is the 
best way to ensure that these workers are qualified and effective. 
Merging these two wage areas would reduce the disparity between the 
salaries of these Federal workers and keep Federal workers in Rhode 
Island from abandoning their Government jobs for higher paying 
positions in Massachusetts and Connecticut.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3784

       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 ``Rhode Island Federal Worker 
     Fairness Act of 2006''.

     SEC. 2. WAGE PARITY FOR CERTAIN PREVAILING RATE EMPLOYEES IN 
                   RHODE ISLAND.

       The wage schedules and rates applicable to prevailing rate 
     employees (as defined in section 5342 of title 5, United 
     States Code) in the Narragansett Bay, Rhode Island, wage area 
     shall be the same as the wage schedules and rates applicable 
     to prevailing rate employees in the Boston, Massachusetts, 
     wage area.

     SEC. 3. EFFECTIVE DATE.

       Section 2 shall take effect beginning with the first pay 
     period beginning on or after the date of enactment of this 
     Act.
                                 ______
                                 
      By Ms. SNOWE:
  S. 3785. A bill to amend the Small Business Investment Act of 1958 to 
improve surety bond guarantees, and for other purposes; to the 
Committee on Small Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to introduce the Surety Bond 
Improvement Act, a bill designed to reinvigorate the Small Business 
Administration's Surety Bond Guarantee Program. This bill's primary 
purpose is to ensure that small businesses are able to secure the 
surety bonds they need to compete for contracts, grow, and hire more 
employees.
  Surety bonds are critical to small companies' survival and 
competitiveness. Without bonding, small firms cannot secure the 
contracts they need to grow. Unfortunately, many new, small businesses 
lack the stable credit histories and assets they need to secure surety 
bonding. Many sureties also refuse to bond small companies because of 
the greater risk that comes with insuring unproven firms. For many 
small businesses, difficulties obtaining surety bonds act as a barrier 
to entry and prevent them from competing in defense contracting, 
construction, services, and other markets.
  Insuring against loss, surety bonds are most often used on large 
contracts where the sequential work of many subcontractors is necessary 
to finish a project on time. The principal contractor will require that 
each subcontractor obtain a surety bond. A subcontractor's surety bond 
will guarantee that they will meet their contract's time and quality 
requirements whether it be for framing a building or installing 
specific computer equipment. The majority of small and large businesses 
fulfill their contractual obligations, and claims against surety bonds 
are infrequent. If a claim occurs, the surety firm is responsible for 
any monetary damages that occur because the bonded company did not 
fulfill its contractual obligations.
  Many new small contractors are only able to obtain surety bonds 
through the SBA's Surety Bond Guarantee Program. In order to reduce the 
risk to- surety firms, the SBA promises to cover between 70 and 90 
percent of any possible claims on bonds underwritten through the Surety 
Bond Guarantee Program. The Surety Bond Guarantee Program then helps 
small businesses establish a bonding history so that with time they can 
outgrow the program and obtain bonds in the competitive marketplace.
  It is critical to understand that the number of participating 
sureties in the Surety Bond Guarantee Program directly affects the 
number of small companies that can receive surety bonds. Over the last 
several years, a number of SBA actions have greatly reduced the 
profitability of surety companies participating in this SBA program. 
Declining profitability has forced sureties to leave the program, 
causing a severe downturn in the total number of small businesses 
obtaining surety bonds.

[[Page 16971]]

  In 2003, the Surety Bond Guarantee Program issued 8,974 bonds to 
small businesses. In 2004, the number declined to 7,803 bonds, and in 
2005, the number declined again to 5,678 bonds. This year, even though 
the need for surety bonds has not decreased, as of March 2006, only 
1,760 surety bonds have been issued. The sureties argue that SBA's 
outdated fee structure and other actions, such as unwinding bond 
guarantees and recent fee increases, make it impossible for them to 
earn a profit and continue participating in the program.
  One of the greatest obstacles to profitability is the Preferred 
Surety Bond Program's outdated fee structure. Currently, sureties in 
the preferred program are forced to use insurance rates set on August 
1, 1987, almost 20 years ago. Many sureties have left the program 
because the SBA's outdated rates prevent them from making a profit on 
the small business bonds they issue.
  To address this problem, my bill would grant participating sureties 
greater rate setting flexibility by allowing them to charge rates that 
are approved by the insurance commissioner of the State in which the 
contract will be performed. It will also raise the current limit on the 
maximum amount of a contract that a company can bond through the 
program from $2 million to $3 million, an adjustment that inflation 
makes necessary.
  My bill prohibits the SBA from unwinding a surety bond guarantee 
after the agency has already underwritten and approved the bond. 
Currently, the SBA will often find technical reasons, which should have 
been discovered during the underwriting process, to avoid paying on a 
claim against an SBA guaranteed bond. When this occurs, the surety 
companies must honor the SBA's financial obligations and cover any 
losses caused by the breach of contract. Most sureties can only afford 
to have the SBA unwind a bond once or twice before they are forced to 
leave the Surety Bond Program.
  My bill also addresses recent SBA fee increases. In August of 2005, 
the SBA moved to increase surety bonding companies' premium fees by 60 
percent and then directed that none of the fee increase could be passed 
along to small companies seeking surety bonds. I was concerned that 
this fee increase would provide an additional reason for surety 
companies to stop underwriting small companies and further decrease the 
ability of small firms to receive surety bonds.
  The SBA's fee increase made it necessary for me to evaluate the 
underlying terms of the surety program. After working with the SBA, 
eventually the agency agreed to allow the surety companies to split the 
fee increase with small firms, a much more palatable solution than 
forcing the bonding companies--or the small businesses--to absorb all 
of the increase.
  The bill requires the SBA to be transparent in its fee structure and 
any calculations the agency uses to justify future fee increases. The 
bill also clarifies that Congress does not require the Surety Bond 
Guarantee Program to be entirely self funding or self sufficient.
  I am working with the SBA to reverse the decline in participating 
sureties and increase the number of small businesses receiving surety 
bonding. To achieve this goal, the Surety Bond Guarantee Program is 
working to reduce approval times by increasing companies' ability to 
submit underwriting applications and claim requests online. The program 
also plans to restructure its field offices and conduct outreach to new 
sureties and small businesses needing surety bonding. These changes, 
along with the necessary legislative changes I have proposed today, 
will help the program attract new sureties and increase the overall 
number of small companies able to secure sureties underwriting through 
the program.
  Mr. President, I would like to encourage my colleagues to support the 
Surety Bond Improvement Act. This bill was written after consulting 
with small business owners and surety bonding companies on how best to 
revitalize this critical program. Without these changes, the number of 
sureties participating in the program will continue to decline--as will 
the ability of small businesses to secure surety bonds. Without these 
bonds many small businesses will be unable to compete for contracts and 
government work. For new companies, obtaining a surety bond will become 
a barrier to entry and competition they are unable to overcome.
                                 ______
                                 
      By Ms. SNOWE:
  S. 3786. A bill to reauthorize and improve the Small Business Act and 
the Small Business Investment Act of 1958, and for other purposes; to 
the Committee on Small Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to introduce the Small 
Business Information Security Act of 2006. This bill will establish 
within the Small Business Administration a Small Business Information 
Security Task Force to advise the SBA and help small businesses both 
understand the information security challenges they face and identify 
resources to help meet those challenges.
  As chair of the Senate Committee on Small Business and 
Entrepreneurship, one of my goals is to ensure small businesses are 
protected from the mounting information security threats they face 
every day. This legislation will create a clearinghouse of information, 
resources, and tools--compiled by a task force consisting of public and 
private sector experts in the field--that will ease the trouble, 
confusion, and cost often associated with enhancing information 
security measures within a small business. The task force will 
continually update information and resources as new technologies and 
new threats arise. Currently, potential and existing owners of small 
businesses turn to the SBA for resources regarding a number of other 
aspects when developing and maintaining their ventures. But information 
security resources are not as readily available. This measure will 
present an opportunity for the SBA to create a repository for small 
businesses to meet their information security needs.
  According to a 2005 survey by the Small Business Technology 
Institute, more than half of all small businesses in the United States 
experienced a security breach in the last year. Furthermore, the study 
concludes that nearly one-fifth of small businesses do not use virus-
scanning for e-mail, over 60 percent do not protect their wireless 
networks with encryption, and two-thirds of small businesses do not 
have an information security plan.
  As these statistics illustrate, small businesses are increasingly at 
risk of data breaches and other forms of malicious attacks on their 
information technology infrastructure. The Small Business Information 
Security Task Force will provide resources and information to small 
business owners to help them overcome these obstacles and decrease the 
risks posed to their small businesses by cybercriminals. I encourage 
all of my colleagues to support this vitally important legislation.
                                 ______
                                 
      By Mr. SANTORUM (for himself, Mr. Pryor and Mrs. Dole):
  S. 3787. A bill to establish a congressional Commission on the 
Abolition of Modern-Day Slavery; to the Committee on Foreign Relations.
  Mr. SANTORUM. Mr. President, I am joined today by Senator Pryor and 
Senator Dole to address an important issue that is all too often hidden 
from public view--the practice of modern day slavery.
  One of my political heroes is the 18th century British statesman, 
William Wilberforce. Wilberforce was one of the leaders of the moral 
crusade to rid the British empire of slavery. He devoted 20 years to 
abolishing the British slave trade and another 26 years to abolishing 
slavery altogether. He and his fellow abolitionists had a profound 
affect on the American abolitionist movement, and their dedication 
fueled some of our greatest leaders, including John Quincy Adams, 
Benjamin Franklin, James Monroe, and John Jay. His influence reached 
William Wells Brown, Paul Cuffe, Benjamin Hughes, Frederick Douglass, 
and Abraham Lincoln, and he helped pave the way for abolitionists like 
Thaddeus Stevens and Richard Allen.

[[Page 16972]]

  These great men opened the eyes of the United Kingdom and the United 
States to see the injustice that marked our countries. Thankfully, 
their work helped end the U.S. and U.K. slave trade. Later, our country 
constitutionally abolished slavery and took a significant step to 
effectuate the vision of the Declaration of Independence, that all 
people are created equal.
  We, as a country, often rush to divorce ourselves from our historic 
malfeasance. We want to forget the stories of human beings--women and 
children--suffocating on slave ships, tied to whipping posts and bound 
with bruising fetters. We want to forget the blatant oppression, our 
country's inhumane drive for profit and obvious disregard for the 
value, worth and freedom inherent in every life. The slavery of our 
past offends every modern sensibility we have; yet, we cannot bury 
these stories as just part of the distant past.
  Slavery exists today. Despite the heroic work of liberators centuries 
before us, and despite the fact that almost every country in this world 
has constitutionally outlawed slavery, as many as 27 million people are 
in bondage according to the 2006 Trafficking in Persons Report. This 
slavery, although in many ways different from the slavery in centuries 
past, is equally horrifying and brutal. Among other practices, it 
includes sexual exploitation, bonded labor, forced labor, forced 
marriage, chattel slavery and child labor.
  An estimated 800,000 persons are trafficked across international 
borders each year, and an estimated 18,000 to 20,000 victims are 
trafficked into the United States each year. Approximately 80 percent 
of the victims are female and an estimated 40 to 50 percent are 
children. Unfortunately, unlike the slavery of our past, modern-day 
slavery takes on myriad, subtler forms, making it more difficult to 
identify and eradicate. Within countries where the trade originates, a 
seemingly endless supply of victims remains available for exploitation, 
and within the destination countries there seems to be an endless 
demand for the ``services'' of victims. Organized criminal networks--
some large and some small--have taken control of this economic supply 
and demand situation, establishing an appalling, but often invisible 
trade of humans in the 21 century.
  This modern-day slavery is notable for the variety and complexity of 
the trafficking networks that operate and sustain it. The forms of 
slavery, such as sex-trafficking, are incredibly adaptive: these 
networks extend to every region and virtually every country in the 
world--representing a truly global industry. Slavery of all forms is 
extremely profitable for the exploiters, and they capitalize on the 
weak and vulnerable, the desperate and unstable. They are most 
successful in areas of conflict and postconflict, transitioning states, 
sudden political change, economic collapse, widespread poverty, and 
natural disasters. Weak legal infrastructure, corrupt law enforcement 
officials, globalization and the lack of equal employment opportunity 
have fed this iniquitous multibillion-dollar criminal industry.
  Women are often lured by promises of employment as shopkeepers, 
maids, seamstresses, nannies, or waitresses but then find themselves 
forced into prostitution upon arrival to their destination. Their 
traffickers seize travel documents, create enormous and unsubstantiated 
debt demands, and subject the women to brutal beatings if their 
earnings are unsatisfactory.
  Girls, as young as five, are often kidnapped or even sold by trusted 
relatives into the transatlantic sex trade. They are often raped, 
beaten, and forced to sleep with 10 to 15 men per night. These young 
children are manipulated, coerced, and held in bondage. Victims are 
often isolated, unable to speak the language of the land they are 
transported to, and are often unfamiliar with the culture. Without the 
support network of their family and friends, they are incredibly 
vulnerable to their oppressors' demands.
  The victims of modern-day slavery often face torture, violence, poor 
nutrition, and drug and alcohol addiction. They contract HIV/AIDS, 
suffer from severe trauma and depression, and are stripped of dignity 
and hope for their future. As I have continued to work on legislation 
that reaches the populations most deeply affected by the HIV/AIDS 
epidemic, violence against women, and child exploitation, I am offended 
by the complete disrespect for life that binds these horrors together.
  We, as a nation, cannot stand idle. As William Wilberforce said, ``it 
is we who are now truly on trial before the moral sense of [this 
world], and if we shrink from it, deeply shall we hereafter repent our 
conduct.'' As a Congress, we have come together to call our country and 
others to action in the fight against human trafficking; I commend the 
work of this administration, the NGOs, and the freedom-fighters 
throughout the world who have been working to address this nefarious 
issue.
  Yet despite our hard work, we have an obligation to do more. Today I 
am submitting a resolution and introducing a bill that call for a 
deeper commitment to the cause of abolishing modern-day slavery. The 
resolution calls us to make modern-day slavery a priority in our 
foreign and domestic policy. This resolution resolves that the 
abolition of modern-day slavery should be prioritized at the 2007 G8 
Summit and calls for the trade policy of the United States to reflect 
our commitment to freedom for all people.
  I am also introducing a bill for the formation of a bipartisan 
congressional commission that will conduct a thorough and thoughtful 
study of all matters relating to modern-day slavery, working alongside 
the programs we have implemented so far. This commission will make 
recommendations for our country and for abolitionists worldwide 
including identifying the countries which provide the greatest 
opportunity for abolition of modern-day slavery specific to U.S. 
involvement. Currently, many of the very qualified groups that work to 
free slaves are scattered. Some of these groups are better at 
extraction, while others are better at rehabilitation; the commission 
will make recommendations that seek to bring these incredible groups 
together to provide the most sustainable options for rescued victims.
  The commission will examine the economic impact on communities and 
countries that have demonstrated measured success in fighting modern-
day slavery. I recently learned of a small village in South Asia where 
over 70 emancipated slaves have now been elected to positions of 
leadership in their community. They have built their first well to 
serve the community and are representing others who are vulnerable to 
oppression.
  Additionally, this commission will make recommendations which work to 
increase education and awareness about modern-day slavery throughout 
the United States with the purpose of fighting modern-day slavery.
  The potential exists for real and systemic change. Together, this 
commission and this resolution will work to support a full and rich 
circle demonstrating the power of emancipation. We have a tremendous 
opportunity to reaffirm our commitment as a nation to spreading freedom 
for all people by eradicating the horrendous scourge of modern-day 
slavery. I look forward to following the example of the abolitionists 
before us to end this worldwide evil.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3787

       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 ``Congressional Commission on 
     the Abolition of Modern-Day Slavery Act''.

     SEC. 2. MODERN-DAY SLAVERY.

       In this Act, the term ``modern-day slavery'' means the 
     recruitment, harboring, transportation, receipt, procurement, 
     or control of persons through the use of force, fraud, 
     coercion, abduction, deception, abuse of power, or of a 
     position of vulnerability or of the giving or receiving of 
     payments or benefits to achieve the consent of a person 
     having control over another person, for the

[[Page 16973]]

     purpose of subjection to debt bondage, serfdom, involuntary 
     servitude, forced labor, chattel, forced marriage, peonage, 
     sexual exploitation, or trafficking.

     SEC. 3. FINDINGS.

       Congress makes the following findings:
       (1) The Declaration of Independence recognizes the inherent 
     dignity and worth of all people and states that all people 
     are created equal and are endowed by their Creator with 
     certain unalienable rights, and the right to be free from 
     slavery and involuntary servitude is among those unalienable 
     rights.
       (2) Despite international laws outlawing modern-day 
     slavery, modern-day slavery affects virtually every country 
     in the world, and as many as 27,000,000 people are victims. 
     Modern-day slavery is one of the fastest growing areas of 
     international criminal activity and is an increasing concern 
     to the United States Administration, Congress, and the 
     international community; the Federal Bureau of Investigation 
     estimated that modern-day slavery generates over 
     $9,000,000,000 every year.
       (3) Traffickers use threats, intimidation manipulation, 
     coercion, fraud, shame, and violence to force victims into 
     modern-day slavery. Traffickers capitalize on areas of 
     conflict and post-conflict, transitioning states, sudden 
     political change, economic collapse, civil unrest, internal 
     armed conflict, chronic unemployment, widespread poverty, 
     personal disaster, lack of economic opportunity, and natural 
     disasters.
       (4) Modern-day slavery: contributes to the breakdown of 
     societies due to the loss of family support networks; has a 
     negative impact on the labor market in countries; brutalizes 
     men, women, and children and exposes them to rape, torture, 
     HIV/AIDS and other sexually transmitted diseases, violence, 
     dangerous working conditions, poor nutrition, drug and 
     alcohol addiction, severe psychological trauma from 
     separation, coercion, sexual abuse, and depression; and 
     strips human beings of dignity, respect, and hope for their 
     future.
       (5) The United States has given priority to combating human 
     trafficking through the Victims of Trafficking and Violence 
     Protection Act of 2000 (Public Law 106-386) and the 
     Trafficking Victims Protection Reauthorization Act of 2005 
     (Public Law 109-164).
       (6) The State Department issued its sixth congressionally 
     mandated Trafficking in Persons Report (TIP) in June, 2006, 
     which categorizes countries into tiered groups according to 
     the efforts they are making to combat trafficking. The 
     countries that do not cooperate in the fight against 
     trafficking (Tier 3 Countries) have been made subject to 
     United States sanctions since 2003, under the President's 
     direction.

     SEC. 4. ESTABLISHMENT OF COMMISSION.

       (a) Establishment.--There is established a congressional 
     Commission on the Abolition of Modern-Day Slavery (referred 
     to in this Act as the ``Commission'').
       (b) Membership.--
       (1) Composition.--The Commission shall be composed of 12 
     members, of whom--
       (A) 3 shall be appointed by the Speaker of the House of 
     Representatives;
       (B) 3 shall be appointed by the majority leader of the 
     Senate;
       (C) 3 shall be appointed by the minority leader of the 
     House of Representatives; and
       (D) 3 shall be appointed by the minority leader of the 
     Senate.
       (2) Qualifications.--Members of the Commission shall be 
     appointed from among individuals with demonstrated expertise 
     and experience in combating modern-day slavery and 
     trafficking of persons.
       (3) Date.--The appointments of the members of the 
     Commission shall be made not later than 30 days after the 
     date of enactment of this Act.
       (c) Period of Appointment; Vacancies.--Members shall be 
     appointed for the life of the Commission. Any vacancy in the 
     Commission shall not affect its powers, but shall be filled 
     in the same manner as the original appointment.
       (d) Cochairpersons.--The Speaker of the House of 
     Representatives shall designate 1 of the members appointed 
     under subsection (b)(1)(A) as a cochairperson of the 
     Commission. The majority leader of the Senate shall designate 
     1 of the members appointed under subsection (b)(1)(B) as a 
     cochairperson of the Commission.
       (e) Initial Meeting.--Not later than 60 days after the date 
     of enactment of this Act, the Commission shall hold its first 
     meeting.
       (f) Meetings.--The Commission shall meet at the call of 
     either cochairperson.
       (g) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.

     SEC. 5. DUTIES OF THE COMMISSION.

       (a) Study.--
       (1) In general.--The Commission shall--
       (A) conduct a thorough and thoughtful study of all matters 
     relating to modern-day slavery, including vulnerabilities of 
     commonly affected populations, such as populations in areas 
     of conflict and post conflict, transitioning states, states 
     undergoing sudden political change, economic collapse, civil 
     unrest, internal armed conflict, chronic unemployment, 
     widespread poverty, lack of opportunity, and national 
     disasters;
       (B) study the roles of the rule of law, lack of 
     enforcement, and corruption within international law 
     enforcement institutions that allow the proliferation of 
     modern-day slavery;
       (C) review all relevant Governmental programs in existence 
     on the date of the beginning of the study, including the 
     United States Agency for International Development, the 
     Department of State, the Department of Defense, the 
     Department of Labor, the Department of Health and Human 
     Services, the Interagency Task Force to Monitor and Combat 
     Trafficking, and the Human Smuggling and Trafficking Center; 
     and
       (D) convene additional experts from relevant 
     nongovernmental organizations as part of the Commission's 
     thorough review.
       (2) Goals.--In making determinations under paragraph (1), 
     the Commission shall seek to promote goals of--
       (A) providing a comprehensive and fully integrated 
     evaluation of best practices, to prevent modern-day slavery;
       (B) providing a comprehensive and fully integrated 
     evaluation of the best practices to rescue and rehabilitate 
     victims of modern-day slavery;
       (C) providing a comprehensive and fully integrated 
     evaluation of the best practices for prosecution of 
     traffickers and increasing accountability within countries;
       (D) providing a comprehensive and fully integrated 
     evaluation of exportable models to prevent modern-day 
     slavery, rescue and rehabilitate victims of modern-day 
     slavery, prosecute offenders, and increase education and 
     accountability about modern-day slavery, which could 
     contribute governments, nongovernmental organizations, and 
     institutions;
       (E) identifying countries which provide the greatest 
     opportunity for abolition of modern-day slavery specific to 
     United States involvement;
       (F) connecting various organizations to facilitate 
     integration of information regarding identifying, extracting, 
     and rehabilitating victims;
       (G) examining the economic impact on communities and 
     countries that demonstrate measured success in fighting 
     modern-day slavery;
       (H) increasing education and awareness about modern-day 
     slavery throughout the United States to decrease modern-day 
     slavery within the United States and abroad; and
       (I) providing a comprehensive evaluation of best practices 
     to educate high-risk populations.
       (b) Recommendations.--The Commission shall develop 
     recommendations on how to best combat modern-day slavery, 
     including an economic, social, and judicial evaluation.
       (c) Report.--Not later than 11 months after the date of 
     enactment of this Act, the Commission shall submit a report 
     to the Speaker and minority leader of the House of 
     Representatives and the majority leader and minority leader 
     of the Senate, which shall contain a detailed statement of 
     the legislation and administrative actions as it considers 
     appropriate.

     SEC. 6. POWERS OF THE COMMISSION.

       (a) Hearings.--The Commission may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Commission considers necessary 
     to carry out this Act.
       (b) Information From Governmental Agencies.--The Commission 
     may secure directly from any department or agency such 
     information as the Commission considers necessary to carry 
     out this Act. Upon request of either cochairperson of the 
     Commission, the head of such department or agency shall 
     furnish such information to the Commission.

     SEC. 7. COMMISSION PERSONNEL MATTERS.

       (a) Compensation of Members.--Each member of the Commission 
     who is not an officer or employee of the Federal Government 
     shall be compensated at a rate equal to the daily equivalent 
     of the annual rate of basic pay prescribed for level IV of 
     the Executive Schedule under section 5313 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the performance of the duties 
     of the Commission. All members of the Commission who are 
     officers or employees of the United States shall serve 
     without compensation in addition to that received for their 
     services as officers or employees of the United States.
       (b) Travel Expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (c) Staff.--
       (1) In general.--The cochairpersons of the Commission, 
     acting jointly, may, without regard to the civil service laws 
     and regulations, appoint and terminate an executive director 
     and such other additional personnel as may be necessary to 
     enable the Commission to perform its duties. The employment 
     of an executive director shall be subject to confirmation by 
     the Commission.
       (2) Compensation.--The cochairpersons of the Commission, 
     acting jointly, may fix the compensation of the executive 
     director and other personnel without regard to chapter 51 and 
     subchapter III of chapter 53 of title 5, United Sates Code, 
     relating to classification

[[Page 16974]]

     of positions and General Schedule pay rates, except that the 
     rate of pay for the executive director and other personnel 
     may not exceed the rate payable for level V of the Executive 
     Schedule under section 5316 of such title.
       (d) Detail of Government Employees.--Federal Government 
     employees may be detailed to the Commission without 
     reimbursement, and such detail shall be without interruption 
     or loss of civil service status or privilege.
       (e) Procurement of Temporary and Intermittent Services.--
     The cochairpersons of the Commission, acting jointly, may 
     procure temporary and intermittent services under section 
     3109 (b) of title 5, United States Code, at rates for 
     individuals which do not exceed the daily equivalent of the 
     annual rate of basic pay prescribed for level V of the 
     Executive Schedule under section 5316 of such title.

     SEC. 8. TERMINATION OF THE COMMISSION.

       The Commission shall terminate 90 days after the date on 
     which the Commission submits its report under section 5.

     SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated to 
     the Commission for fiscal year 2007 such sums as may be 
     necessary to carry out this Act.
       (b) Availability.--Any sums appropriated under the 
     authorization contained in this section shall remain 
     available, without fiscal year limitation, until expensed.
                                 ______
                                 
      By Mrs. CLINTON:
  S. 3790. A bill to create a set of effective voluntary national 
expectations, and a voluntary national curriculum, for mathematics and 
science education in kindergarten through grade 12, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mrs. CLINTON. Mr. President, I rise today to introduce legislation to 
help ensure that American students are competitive in the global 
economy of 21st century. If approved, The National Mathematics and 
Science Consistency Act would ensure that America's children have 
access to a rigorous math and science education. This bill will help 
young men and women in America compete successfully with students from 
around the world.
  Last fall the National Academy of Sciences, NAS, outlined the 
challenges to American competitiveness in its report, ``Rising Above 
the Gathering Storm: Energizing and Employing America for a Brighter 
Economic Future.'' The reality is that modern technology makes it 
increasingly possible for employers to hire the most skilled workers 
wherever in the world they live. Unfortunately, too many American 
students--even some graduates of high school and college--are not 
equipped with the skills they need to compete successfully in the 
global economy.
  Among 12th graders, America ranks 21st out of 40 industrialized 
nations in tests of math and science knowledge. Just one in three of 
America's college graduates earn degrees in math, science, and 
engineering while two in three college graduates of other countries do 
so. We must act now to improve education and research in science, 
technology, engineering, and mathematics, STEM, if America is to retain 
leadership of the global economy in the 21st century.
  In ``Rising Above the Gathering Storm,'' the National Academy of 
Sciences made 20 recommendations for how America can increase its 
global competitiveness. Nineteen of the 20 recommendations were 
proposed in the PACE Acts--PACE-Education, PACE-Energy, and PACE-
Finance. I was proud to cosponsor these bills, and it is a testament to 
the widespread concern regarding this issue that each bill has been 
cosponsored by more than 60 Senators.
  The Mathematics and Science Consistency Act would implement the final 
NAS recommendation--for the Department of Education to convene a 
national panel of experts that will collect proven effective K-12 
science and mathematics teaching materials, and, if effective models 
don't exist, create new ones. All materials would be made available 
online, free of charge, as a voluntary national curriculum that would 
provide an effective standard for K-12 teachers to use as a resource.
  Regrettably, many States have set standards for math and science 
education at an abysmally low level. A Fordham report entitled ``The 
State of State Science Standards 2005'' found that nearly half of the 
States are doing a poor job of setting academic standards for science.
  The result of low State standards is that States think their students 
are passing, teachers think their students are passing, and students 
think they are passing when they in fact are not. For example, a review 
of 12 diverse States by a team at the University of California at 
Berkeley found that the typical State reports that 77 percent of its 
fourth graders are proficient in mathematics as assessed by the State 
standard, while just 36.5 percent of fourth grade students in the 
typical State score as proficient in mathematics as assessed by the 
gold-standard National Assessment of Education Progress. Lowering 
academic standards does not adequately prepare our students to meet the 
demands of the global economy.
  The Mathematics and Science Consistency Act will help States raise 
standards and invest in high-quality teaching through the collection of 
best practices and ensure that a world-class curriculum is available. 
Under my bill, it is entirely up to States whether to adopt the 
recommendations of the panel. States that do would be eligible for 
grants to acquire instructional materials, to make those materials 
available online and free to teachers and school staff, and to train 
teachers to effectively use the instructional materials.
  Again, I want to emphasize that this bill provides assistance to 
States that wish to work together to ensure that all children are 
taught a rigorous, common curriculum. The Mathematics and Science 
Consistency Act would implement the final recommendation made in the 
Gathering Storm report, and it will help ensure that our children are 
prepared to compete with success in the 21st century.
  It is high time to do what is best for our children and their 
economic future. I am hopeful that my Senate colleagues from both sides 
of the aisle will join me today to move this legislation to the floor 
without delay.
                                 ______
                                 
      By Mr. MARTINEZ:
  S. 3792. A bill to amend the Internal Revenue Code of 1986 to allow a 
credit against tax for qualified elementary and secondary education 
tuition; to the Committee on Finance.
  Mr. MARTINEZ. Mr. President, today I rise to discuss a bill that aims 
to give America's children access to greater educational opportunities. 
As history has taught us, advanced societies are always built on a 
foundation of a few shared values--and education is a chief component 
of that foundation.
  For 21st century America to continue to lead the world, the leaders 
of this great Nation of ours must remain committed to providing every 
American child the opportunity to succeed in the classroom. A quality 
education unlocks the doors that lead to bigger life opportunities. As 
the axiom goes, knowledge is power [attributed to Sir Francis Bacon].
  In addition, our educational system should be helping parents to make 
better choices, not taking choices away from them.
  That is why I am introducing the Tax and Education Assistance for 
Children (TEACH) Act of 2006.
  Representative Vito Fossella of New York has already introduced this 
bill in the House of Representatives, where it has collected 34 
cosponsors. Six of those cosponsors come from my home State of Florida. 
Those cosponsors are Jeff Miller, Ginny Brown-Waite, Dave Weldon, John 
Mica, Katherine Harris and Tom Feeney.
  There is a good reason for this. In Florida and across America today, 
our public schools are facing new and troubling challenges.
  Many public schools are suffering from overcrowding, leading to a 
myriad of problems such as teacher shortages, threats to campus 
security, a lack of books, desks, and computers, to name a few. In this 
country, known to the world as a ``land of opportunity,'' American 
parents deserve better than to have their children suffer through a 
failing school system.
  We live in a consumer-driven society where numerous choices abound: 
car or

[[Page 16975]]

SUV, caffeinated or decaf, book in print or book on tape.
  We live in a country where you can make airline reservations from a 
portable electronic device, where a doctor can remotely assist in a 
surgery from thousands of miles away, where we can power our homes with 
Sun, wind, or water, and yet too often parents do not have a basic 
choice for their children: public school or private school.
  Many parents would like to send their children to a traditional 
private, religious, or military school, however, they are often unable 
to do so because of the high costs of such an endeavor.
  Many middle-class parents make enough to take care of their families, 
but not enough for their families to pick up and move to a better 
school district or for them to send their children to a private school 
where they are living.
  As we know, it is the innate desire of parents to want to provide the 
very best for their children. While public schools are the right choice 
for tens of millions of American children each and every year, more 
than 5 million American students currently attend private schools at 
little or no cost to American taxpayers.
  We want to help students reach their maximum potential. In this 
country and around the globe, the best educated people are nearly 
always the ones leading their respective communities forward.
  This bill would establish a tax credit of up to $4,500 per family for 
private elementary or secondary school tuition. Single parents would 
also be eligible for the credit.
  And because we always want to be responsible with how taxpayers' 
money is spent, the tax credit is nonrefundable. To elaborate, this 
means that if tuition is only three thousand dollars at a school, 
families will only be able to deduct that amount.
  This credit would pass along a small portion of taxpayer savings back 
to the families that help generate it.
  For all those middle-class and lower income families across America 
who feel trapped, who feel as if they don't have the power to choose 
what is best for their children and their educational needs, the TEACH 
Act of 2006 will make it possible for them to choose the best learning 
environment for their children.
  It is also important to note that this bill does not institute a 
voucher program. Instead, as a Federal income tax credit, it helps 
families to have choices, while not detracting from the funding sources 
needed to continue upkeep of and improvements in our public schools.
  This bill would alleviate the financial burden on our public schools, 
and thus allow schools to devote greater resources toward improving the 
educational experience for all students.
  And the American taxpayer should not worry that this bill will reduce 
the funding for their child's school or for any other public school--it 
won't. What it will do is increase the value of every child's 
educational experience, be it in a public or private school.
  According to the U.S. Census Bureau statistics from 2004, the cost of 
educating a student in the public school system is close to $8,000 a 
year. Multiplied out, this comes to a total savings of over $42 billion 
a year for our public school systems.
  If the millions of privately educated students in this country were 
to be publicly educated, every taxpayer would have to bear that burden.
  With this legislation, parents win because their children get the 
best education possible and the American taxpayer wins because they owe 
nothing more.
  And where Florida is concerned, according to the aforementioned U.S. 
Census Bureau statistics, approximately, $6,000 is spent annually per 
public school student in the Sunshine State.
  With more than 350,000 students attending private schools in Florida 
annually, our State's taxpayers save $2.2 billion--and that savings can 
benefit public schools.
  The TEACH Act of 2006 would help to add to those savings.
  America is an ownership society where people get to make choices 
about how they spend their money and where they are going to spend it.
  With a choice as important as where and how our children are 
educated, we need to put more of the power in the hands of the parents.
  While this is in no way comprehensive education reform, it is another 
big step in the right direction.
  I encourage my Senate colleagues to learn more about the TEACH Act 
and to work with me to push through this legislation that will help our 
children across America receive the education that they need.
  Remember, if we do not continue to invest in our future today, 
tomorrow will not show us the bright promise that it can. Let us carry 
that promise home to more Americans today.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3792

       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 ``Tax and Education Assistance 
     for Children (TEACH) Act of 2006''.

     SEC. 2. CREDIT FOR QUALIFIED ELEMENTARY AND SECONDARY 
                   EDUCATION TUITION.

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

     ``SEC. 25E. QUALIFIED ELEMENTARY AND SECONDARY EDUCATION 
                   TUITION.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for a taxable 
     year an amount equal to the qualified elementary and 
     secondary education tuition paid or incurred by the taxpayer 
     during the taxable year.
       ``(b) Dollar Limitation.--The amount allowed as a credit 
     under subsection (a) with respect to the taxpayer for any 
     taxable year shall not exceed--
       ``(1) $4,500 in the case of a joint return,
       ``(2) $4,500 in the case of an individual who is not 
     married, and
       ``(3) $2,250 in the case of a married individual filing a 
     separate return.
       ``(c) Qualified Elementary and Secondary Education 
     Tuition.--
       ``(1) In general.--The term `qualified elementary and 
     secondary education tuition' means expenses for tuition which 
     are incurred in connection with the enrollment or attendance 
     of any dependent of the taxpayer with respect to whom the 
     taxpayer is allowed a deduction under section 151 as an 
     elementary or secondary school student at a private or 
     religious school.
       ``(2) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 of such Code is 
     amended by inserting after the item relating to section 25D 
     the following new item:

``Sec. 25E. Qualified elementary and secondary education tuition.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
                                 ______
                                 
      By Mr. CRAPO:
  S. 3794. A bill to provide for the implementation of the Owyhee 
Initiative Agreement, and for other purposes; to the Committee on 
Energy and Natural Resources.
  Mr. CRAPO. Mr. President, I am pleased to introduce the Owyhee 
Initiative Implementation Act of 2006, a bill which is the result of a 
5-year collaborative effort between all levels of government, multiple 
users of public lands, and conservationists to resolve decades of 
heated land-use conflict in the Owyhee Canyonlands in the southwestern 
part of my home State of Idaho.
  This is comprehensive land management legislation that enjoys far-
reaching support among a remarkably diverse group of interests that 
live, work and play in this special country.
  Owyhee County contains some of the most unique and beautiful 
canyonlands in the world and offers large areas in which all of us can 
enjoy the grandeur and experience of untouched western trails, rivers, 
and open sky. It is truly magical country, and its natural beauty and 
traditional uses should be preserved for future generations.
  Owyhee County is traditional ranching country. Seventy-three percent 
of

[[Page 16976]]

its land base is owned by the United States, and it is located within 
an hour's drive of one of the fastest growing areas in the nation, 
Boise, ID.
  This combination of attributes, including location, is having an 
explosive effect on property values, community expansion and 
development and ever-increasing demands on public land. Given this 
confluence of circumstances and events, Owyhee County has been at the 
core of decades of conflict with heated political and regulatory 
battles.
  The diverse land uses co-exist in an area of intense beauty and 
unique character. The conflict over land management is both inevitable 
and understandable--how do we manage for this diversity and do so in a 
way that protects and restores the quality of that fragile environment?
  In this context, the Owyhee County Commissioners and several others 
said ``enough is enough'' and decided to focus efforts on solving these 
problems rather than wasting resources on an endless fight. In 2001, 
The Owyhee County Commissioners, Hal Tolmie, Dick Reynolds and Chris 
Salove met with me and asked for my help.
  They asked whether I would support them if they could put together at 
one table the interested parties involved in the future of the County 
to try and reach some solutions. I told them that if they could get 
together a broad base of interests who would agree to collaborate in a 
process committed to problem-solving, I would dedicate myself to 
working with them and if they were successful, I would introduce 
resulting legislation. They agreed.
  Together, we set out on a 5-year journey on a road that is as 
challenging as any in the Owyhee Canyonlands. Sharp turns, steep 
inclines and declines, big sharp rocks, deep ruts, sand burrs, dust and 
a constant headwind is exactly what those of us who have worked so hard 
on this have faced every day.
  This is very difficult work and in speaking of difficult work, I want 
to acknowledge the effort of my friend and colleague from Idaho, 
Representative Mike Simpson, and the challenge he has taken on as he 
advocates his Central Idaho Economic Development Act. I support his 
work and his legislation.
  The Commissioners appointed a chairman, an extraordinary gentleman, 
Fred Grant. They formed the Work Group which included The Wilderness 
Society, Idaho Conservation League, The Nature Conservancy, Idaho 
Outfitters and Guides, the United States Air Force, the Sierra Club, 
the county Soil Conservation Districts, Owyhee Cattleman's Association, 
the Owyhee Borderlands Trust, People for the Owyhees, and the Shoshone 
Paiute Tribes to join in their efforts. All accepted, and work on this 
bill began.
  As this collaborative process gained momentum, the county 
commissioners expanded the Work Group to include the South Idaho Desert 
Racing Association, Idaho Rivers United and the Owyhee County Farm 
Bureau. Very recently, the commissioners have further expanded the 
effort to include the Foundation for North American Wild Sheep and the 
Idaho Backcountry Horsemen.
  The commissioners also requested that the Idaho State Department of 
Lands and the Bureau of Land Management serve, and those agencies have 
provided important support.
  This unique group of people chose to work without a professional 
facilitator, preferring instead to deal with differences face-to-face 
and together create new ideas. For me, one of the most gratifying and 
emotional outcomes has been to see this group transform itself from 
polarized camps into an extraordinary force that has become known for 
its intense effort, comity, trust and willingness to work toward a 
solution.
  They operated on a true consensus basis, only making decisions when 
there was no voiced objection to a proposal.
  They involved everyone who wanted to participate in the process and 
spent hundreds of hours discussing their findings, modifying 
preliminary proposals and ultimately reaching consensus solutions. They 
have driven thousands of miles inspecting roads and trails, listening 
to and soliciting ideas from people from all walks of life who have in 
common deep roots and deep interest in the Owyhee Canyonlands.
  They sought to ensure that they had a thorough understanding of the 
issues and could take proper advantage of the insights and experience 
of all these people.
  While this whole process and its outcomes are indeed remarkable, one 
of the more notable developments is the Memorandum of Agreement between 
the Shoshone Paiute Tribes and the County that establishes government-
to-government cooperation in several areas of mutual interest. I want 
to particularly note the efforts and support of Mr. Terry Gibson, 
Chairman of the Shoshone Paiute Tribes, a great leader and a personal 
friend of mine.
  All of these individuals and organizations have asked that I seek 
Senate approval of their collaborative effort, built from the ground up 
to chart their path forward.
  The Owyhee Initiative transforms conflict and uncertainty into 
conflict resolution and assurance of future activity. Ranchers can plan 
for subsequent generations. Off-road vehicle users have access assured. 
Wilderness is established. The Shoshone-Paiute Tribe knows its cultural 
resources will be protected. The Air Force will continue to train its 
pilots.
  Local, state and Federal agencies will have structure to assist their 
joint management of the region. And this will all happen within the 
context of the preservation of environmental and ecological health. 
This is indeed a revolutionary land management structure--and one that 
looks ahead to the future.
  Principal features of the legislation include:
  Development, funding and implementation of a landscape-scale program 
to review, recommend and coordinate landscape conservation and research 
projects;
  Scientific review process to assist the Bureau of Land Management;
  Designation of Wilderness and Wild and Scenic Rivers;
  Release of Wilderness Study Areas;
  Protections of tribal cultural and historical resources against 
intentional and unintentional abuse and desecration.
  Development and implementation by the BLM of travel plans for public 
lands;
  A board of directors with oversight over the administration and 
implementation of the Owyhee Initiative.
  This can't be called ranching bill, or a wilderness bill, or an Air 
Force bill, or a tribal bill. It is a comprehensive land management 
bill.
  Each interest got enough to enthusiastically support the final 
product, advocate for its enactment, and, most importantly, support the 
objectives of those with whom they had previous conflict.
  Opposition will come from a few principal sources: those who simply 
don't want to have wilderness designated; those who don't want 
livestock anywhere on public land; and, those who do not want to see 
collaboration succeed. While I respect that opposition, I prefer to 
move forward in an effort that manages conflict and land, rather than 
exploit disagreements.
  The status quo is unacceptable. The Owyhee Canyonlands and its 
inhabitants, including its people, deserve to have a process of 
conflict management and a path to sustainability. The need for this 
path forward is particularly acute given that this area is an hour's 
drive from one of the nation's most rapidly-growing communities. The 
Owyhee Initiative protects water rights, releases wilderness study 
areas and protects traditional uses.
  I commend the commitment and leadership of all involved. We have 
established a long-term, comprehensive management approach. It's been 
an honor for me to work with so many fine people and I will do 
everything in my power to turn this into law.
  The Owyhee Initiative sets a standard for managing and resolving 
difficult land management issues in our country. After all, what better 
place to forge an historical change in our approach to public land 
management, than in this magnificent land that symbolizes livelihood, 
heritage, diversity, opportunity and renewal?

[[Page 16977]]

  And with that, I would like to recognize and thank the people who 
have been the real driving force behind this process: Fred Grant, 
Chairman of the Owyhee Initiative Work Group, his assistant Staci 
Grant, and Dr. Ted Hoffman, Sheriff Gary Aman, the Owyhee County 
Commissioners: Hal Tolmie, Chris Salova, and Dick Reynolds and Chairman 
Terry Gibson of the Shoshone Paiute Tribes. I am grateful to Governor 
Jim Risch of the Great State of Idaho for all of his support.
  Thanks to: Colonel Rock of the United States Air Force at Mountain 
Home Air Force Base, Craig Gherke and John McCarthy of The Wilderness 
Society, Rick Johnson and John Robison of the Idaho Conservation 
League, Inez Jaca representing Owyhee County, Dr. Chad Gibson 
representing the Owyhee Cattleman's Association, Brenda Richards 
representing private property owners in Owyhee County, Cindy and Frank 
Bachman representing the Soil Conservation Districts in Owyhee County, 
Marcia Argust with the Campaign for America's Wilderness, Grant Simmons 
of the Idaho Outfitters and Guides Association, Bill Sedivy with Idaho 
Rivers United, Tim Lowry of the Owyhee County Farm Bureau, Bill Walsh 
representing Southern Idaho Desert Racing Association, Lou Lunte and 
Will Whelan of the Nature Conservancy for all of their hard work and 
dedication. I'd also like to thank the Idaho Back Country Horseman, the 
Foundation for North American Wild Sheep, Roger Singer of the Sierra 
Club, the South Board of Control, and the Owyhee Project managers, and 
all the other water rights holders who support me today. This process 
truly benefited from the diversity of these groups and their 
willingness to cooperate to reach a common goal.
  The Owyhee Canyonlands and its inhabitants are truly a treasure of 
Idaho and the United States; I hope you will join me in ensuring their 
future.
  It is my honor and privilege to introduce this legislation today to 
protect and preserve this tremendous part of Idaho and the people who 
live there.
                                 ______
                                 
      By Mr. SMITH (for himself, Mr. Rockefeller, Mr. Isakson, Mr. 
        DeWine, Mr. Burr, Mr. Bingaman, Ms. Stabenow, and Mr. 
        Menendez):
  S. 3795. A bill to amend title XVIII of the Social Security Act to 
provide for a two-year moratorium on certain Medicare physician payment 
reductions for imaging services; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today with my friend and 
colleague from Oregon, Senator Smith, to introduce the Access to 
Medicare Imaging Act of 2006. This legislation would require a 2-year 
moratorium on the imaging cuts enacted as part of the Deficit Reduction 
Act, pending the outcome of a comprehensive study of Medicare imaging 
utilization and payment by the Government Accountability Office, GAO.
  Each year, millions of Medicare patients receive medical imaging 
services, including x-rays, CT-scans, MRIs, and PET scans, to name just 
a few. Imaging devices allow doctors to more accurately diagnose and 
treat a wide range of human conditions, and patients who receive 
imaging services enjoy the peace of mind that comes from more precise 
diagnoses of disease. It would not be an overstatement to say that 
medical imaging has revolutionized the manner in which physicians 
practice medicine and the manner in which patients receive health care.
  The widespread use of digital imaging equipment allows providers to 
easily exchange images across the Internet, facilitating greater and 
more timely physician consultation and, most people believe, improving 
the quality of care received by the patient. This same technology 
allows greater access to radiology professionals across the country for 
individuals living in rural and other medically underserved areas, 
which is a big deal in West Virginia.
  Consider, if you will, Braxton Memorial Hospital in the small town of 
Gassaway in central West Virginia. Braxton Memorial is a remote, 
critical access hospital without the services of a radiologist. Because 
of imaging technology, trained medical staff at Braxton Memorial can 
take a digital x-ray and, within minutes, send a precise copy to a 
major medical facility in Charleston. There, it is read by a 
radiologist, who then returns a written report by e-mail. A few years 
back this was still science fiction, but now it happens every hour of 
every day across the country.
  As incredible as these services may seem and as important as they are 
to the practice of effective clinical medicine, there is a perception 
that imaging services also come with an increased cost. Over the past 
few years, the use of imaging services by Medicare beneficiaries has 
increased significantly. In fact, MedPAC reported in March 2005 that 
imaging grew at twice the rate of all other physician fee schedule 
services between 1999 and 2003. During that time, MRI and CT procedures 
increased by 15 percent to 20 percent per year on their own.
  In addition to rising costs, MedPAC further reinforced ongoing 
concerns about potential overuse of imaging services and the sudden 
increase of outpatient-based imaging in primary care settings. Citing a 
lack of training and implementation of imaging guidelines, MedPAC 
called upon Congress to direct the Secretary of Health and Human 
Services to define and execute such standards.
  Given the MedPAC report, imaging reimbursement became an easy budget 
target during the reconciliation debate last year. I am concerned, 
however, that the $8 billion in imaging cuts were prematurely added to 
the Deficit Reduction Act. I believe these cuts were arbitrarily 
determined in order to meet a budget target and were not based on sound 
public policy. I am also very concerned about the impact these cuts 
will have on the imaging profession and on Medicare beneficiaries' 
access to imaging services.
  We should not put the health of our seniors at risk in order to 
achieve an arbitrary budget target. So today I join Senators Smith, 
Bingaman, Isakson, Stabenow, DeWine, Menendez, and Burr in calling for 
a 2-year delay of these cuts so that a comprehensive GAO study can be 
completed. A thorough GAO analysis of Medicare reimbursement for 
imaging services will provide greater insight into this important field 
of medical practice and help inform our decisions going forward. I urge 
my colleagues to join with us in supporting this timely legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3795

       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 ``Access to Medicare Imaging 
     Act of 2006''.

     SEC. 2. TWO-YEAR MORATORIUM ON CERTAIN MEDICARE PHYSICIAN 
                   PAYMENT REDUCTIONS FOR IMAGING SERVICES.

       (a) Moratorium.--Subsections (b)(4)(A) and (c)(2)(B)(v)(II) 
     of section 1848 of the Social Security Act (42 U.S.C. 1395w-
     4), as added by section 5102(b) of the Deficit Reduction Act 
     of 2005, are each amended by striking ``2007'' and inserting 
     ``2009''.
       (b) GAO Study and Report on Imaging Services Furnished 
     Under the Medicare Program.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a comprehensive study on imaging services 
     furnished under the Medicare program.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General shall submit 
     to Congress and the Secretary of Health and Human Services a 
     report on the findings and conclusions of the study conducted 
     under paragraph (1) together with recommendations for such 
     legislation and administrative actions as the Comptroller 
     General considers appropriate.
                                 ______
                                 
      By Mrs. CLINTON (for herself and Mr. Johnson):
  S. 3797. A bill to establish demonstration projects to provide at-
home infant care benefits; to the Committee on Health, Education, 
Labor, and Pensions.
  Mrs. CLINTON. Mr. President, I am pleased to introduce today 
legislation to provide parents new options to balance family and work.

[[Page 16978]]

  The reality of today's economy is that most parents must work to 
provide economic security for their families--a reality that is 
particularly true when a new baby is welcomed into the family. In fact, 
55 percent of women with infants younger than one year of age work. As 
a result, working parents face the challenge of providing economic 
security for their family while simultaneously ensuring that their 
infant receives the quality care that he or she needs.
  Research shows that the quality of caretaking in the first months and 
years of life is critical to a newborn's brain development, social 
development and well-being. Yet there is currently a severe shortage of 
safe, affordable, quality care for infants. The number of licensed 
child care slots for infants meets only 18 percent of the need. The 
shortage is particularly acute in rural areas, and especially in rural 
areas that have many low-income residents.
  In the ideal circumstance, I think we would all agree, parents who 
need affordable, high-quality care for their infant would provide that 
care themselves. Unfortunately, in many low- and moderate-income 
families, having a parent quit his or her job or reduce work hours to 
care for an infant is not financially viable. Doing so would plunge the 
family into an economic crisis. Rather, parents should have the choice 
of using a state child care subsidy to obtain infant care outside the 
home or of keeping the subsidy so they can stay home and care for their 
child themselves without risking their family's financial security.
  The Choices in Child Care Act of 2006 would provide parents this 
choice. The bill amends the child care development block grant, CCDBG, 
so that low- and moderate-income parents have the option of forgoing a 
State childcare subsidy for infant care outside the home and instead 
receiving a comparable stipend to provide the care themselves while 
keeping the family economically stable. Providing support for at-home 
infant care would give thousands of working families the help they need 
to balance work and care for their infant children. The bill would also 
help meet the critical shortage of infant childcare, provide cost 
savings to state child care programs, support quality care for the 
critical first years of a child's development, and value parenting as a 
form of work.
  The time has come for us to recognize the challenges facing families 
today and give parents additional resources and options to address 
those challenges. I urge my colleagues to join me in supporting the 
Choices in Child Care Act of 2006.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 3798. A bill to direct the Secretary of the Interior to exclude 
and defer from the pooled reimbursable costs of the Central Valley 
Project the reimbursable capital costs of the unused capacity of the 
Folsom South Canal, Auburn-Folsom South Unit, Central Valley Project, 
and for other purposes; to the Committee on Energy and Natural 
Resources.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce a bill that 
is based on the simple fairness principle that you should pay for what 
you get, no more and no less. In this case California water districts 
have been paying for years for conveyance capacity on the Folsom South 
Canal that they do not use.
  This bill would direct the Secretary of the Interior to exclude and 
defer from the pooled, reimbursable costs of California's Central 
Valley Project, CVP, the capital costs of the unused capacity of the 
Folsom South Canal. Congressman Lungren has introduced similar 
legislation in the House of Representatives.
  In 1970, two CVP contractors signed contracts with the Bureau of 
Reclamation to take water from the Folsom South Canal, which had yet to 
be built. The canal diverts water out of Lake Natomas, a regulating 
reservoir immediately downstream of Reclamation's Folsom Reservoir, to 
areas in southern Sacramento County.
  The canal was originally designed to incorporate five ``reaches''--or 
sections--and deliver water to southern Sacramento County, San Joaquin 
County, and to the San Francisco Bay area. Because the planned East 
Side Division irrigation project was never constructed, the anticipated 
deliveries through the Folsom South Canal never materialized. Only two 
reaches of the canal were constructed, and those are dramatically 
overbuilt. In a departure from normal reclamation policy, which 
dictates that signed contracts are required prior to construction of 
projects, signed contracts were not obtained.
  The canal was built with the capacity to deliver 2.5 million acre-
feet of water per year, but the only entity currently diverting water 
through the canal--the Sacramento Municipal Utility District, SMUD--has 
only diverted a maximum of 20,000 acre-feet per year. In short, a 
significantly oversized canal has been used to deliver a very small 
quantity of water.
  Under reclamation policy, the agency allocates the capital costs of 
the canal to the pool of all CVP municipal and industrial water--M&I--
users regardless of whether they divert water through the Folsom South 
Canal. There are 32 M&I customers that are paying for the canal, 
including SMUD, Sacramento County Water District, East Bay MUD, Santa 
Clara Valley Water District and Contra Costa Water District. Today, 
only SMUD diverts any water through the canal, albeit only about 8 
percent of the canal's capacity; the other customers have little or no 
benefit to the project that they fund. This inequity is difficult to 
explain to ratepayers that are already burdened with replacing aging 
infrastructure and upgrading water treatment technologies.
  My legislation would direct the Secretary of the Interior to exclude 
and defer from those pooled reimbursable costs of the CVP, the costs of 
the unused capacity of the Folsom South Canal. While final deferral 
calculations will be performed by reclamation as directed by this bill, 
it is estimated that this bill will result in a deferral of 
approximately $35 million excess capacity costs.
  The concept of deferring costs is not unique to the Folsom South 
Canal. Congress has authorized deferrals for other elements of the CVP 
and in other reclamation projects. Even though there are many instances 
where customers pay for unused capacity, there are no instances that 
come close to approaching the absurd inequity of being forced to pay 
for a canal that is producing 8 percent of what reclamation promised it 
would deliver.
  Should the amount of CVP water conveyed through the Folsom South 
Canal change in the future, this bill includes a provision directing 
Interior to review the change and adjust the deferred costs accordingly 
for unused capacity.
  I strongly believe this deferral is the correct approach to this 
issue. Reclamation made the decision to oversize this canal based on 
future planned expansions--expansions that did not materialize. The 
water districts that use the existing canal for limited conveyances 
should not pay for the consequences of public policy decisions that 
resulted in a significantly oversized canal. Water districts should pay 
for the canal conveyance capacity that they use--I think this is a 
fairness principle that we can all accept.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3798

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

     SECTION 1. CERTAIN AMOUNTS EXCLUDE AND DEFER FROM THE POOLED 
                   REIMBURSABLE COSTS RELATED TO THE CENTRAL 
                   VALLEY PROJECT.

       (a) In General.--The Secretary of the Interior (referred to 
     in this section as the ``Secretary'') shall exclude and defer 
     from the pooled reimbursable costs of the Central Valley 
     Project the reimbursable capital costs of the unused capacity 
     of the Folsom South Canal, Auburn-Folsom South Unit, Central 
     Valley Project.
       (b) Calculation of Amount of Deferred Use.--The Secretary 
     shall calculate the amount to be assigned to deferred use as 
     soon as practical and such shall be reflected in future 
     years' water rates.

[[Page 16979]]

       (c) Calculation of Capital Costs.--For the purpose of 
     calculating the excluded reimbursable cost for the Folsom 
     South Canal facility, the Secretary shall multiply the 
     existing total reimbursable cost for the facility by a 
     factor, to be determined by dividing the current minimum 
     unused conveyance capacity of the canal by the original 
     design conveyance capacity of the canal. The minimum unused 
     conveyance capacity of the canal shall--
       (1) be determined by the Secretary;
       (2) be based upon actual historic measured flows in the 
     canal and planned future flows; and
       (3) include the amount of Central Valley Project water that 
     was originally conveyed or was historically projected to be 
     conveyed through the Folsom South Canal which may have been 
     contractually assigned to another entity.
       (d) Review and Adjustment.--The Secretary shall review and 
     adjust--
       (1) the amount described in subsection (b)(3) as 
     appropriate and recalculate the amount of such unused 
     capacity of the Folsom South Canal; and
       (2) the amount of reimbursable capital costs of the Folsom 
     South Canal.
       (e) Conveyance of Certain Water.--So long as an entity that 
     is allocated and that pays capital, interest, and operation 
     and maintenance costs associated with an amount of Central 
     Valley Project water historically assigned to the Folsom 
     South Canal does not use the Folsom South Canal for the 
     conveyance of Central Valley Project water, that entity shall 
     be entitled, without additional cost, to convey up to an 
     equivalent amount of non-Central Valley Project water through 
     the Folsom South Canal.
                                 ______
                                 
      By Mr. SMITH (for himself and Mr. Kennedy):
  S. 3801. A bill to support the implementation of the Darfur Peace 
Agreement and to protect the lives and address the humanitarian needs 
of the people of Darfur, and for other purposes; to the Committee on 
Foreign Relations.
  Mr. SMITH. Mr. President, I rise today to introduce the Peace In 
Darfur Act of 2006, along with my distinguished colleague from 
Massachusetts, Senator Kennedy. Our intention is to continue to press 
the Sudanese Government and rebel groups to honor the Abuja peace 
agreement reached on May 5 in Nigeria. We hope that this legislation 
will help bring about peace in the region.
  Mr. President, I will ask animous consent to have printed in the 
Record the following letters from the Hebrew Immigrant Aid Society, the 
American Jewish Committee and the Archdiocese of Portland, OR.
  Tragically, despite the Abuja peace agreement, the conflict in the 
Darfur region of Sudan has continued unabated throughout this spring 
and summer. The Janjaweed, a government supported militia, continues to 
attack innocent citizens and the government is unable, or unwilling, to 
stop this brutality.
  This violence has led to an increasingly--dire humanitarian 
situation. More then 3 million people are dependent upon humanitarian 
assistance. Imagine the entire state of Oregon, which has three and a 
half million citizens, dependent upon humanitarian aid. This is what we 
face in Darfur today.
  I commend the Bush administration for the work it has done in 
bringing about the Abuja peace agreement. America has been 
extraordinarily generous in providing over $1 billion worth of 
humanitarian assistance to those suffering in the region. Yet more must 
be done to bring an end to the conflict and give the Sudanese people a 
chance to live a normal life.
  The Peace in Darfur Act of 2006 seeks to increase the prospect of 
full implementation of the Abuja peace agreement and address the unmet 
humanitarian needs in Darfur. The bill supports the deployment of a 
United Nations peacekeeping force to Darfur, intensifying the 
international pressure on the Government of Sudan to comply with the 
agreement and allow in U.N. peacekeepers. This bill also codifies 
existing sanctions and calls for additional targeted sanctions on 
Sudan's leaders.
  While the African Union Mission in Sudan has performed admirably 
under difficult conditions, a stronger force must be deployed to 
provide stability, allow refugees to return to their homes, and restore 
some semblance of normalcy to those affected by the fighting. Section 4 
of our legislation calls upon the Government of Sudan to allow a United 
Nations peacekeeping force into Darfur to achieve these important 
objectives.
  Section 4 of our legislation also assigns the special envoy for 
Sudan, authorized in the fiscal year 2006 supplemental appropriations 
bill, the task of supporting the peace process. The urgency of this 
situation demands a constant level of attention at the highest level of 
our government, a task that the special envoy can facilitate.
  Section 5 of the bill codifies sanctions against Sudan that were 
imposed by Executive Order 13067. Codifying these sanctions will send a 
strong message to the Sudanese government that signing the peace 
agreement is not sufficient--we expect their full compliance and 
cooperation to bring about a peaceful resolution to the ongoing 
conflict.
  Section 6 of the bill requires the State Department to issue a report 
on the implementation of the Darfur Peace Agreement and a description 
of the humanitarian crisis. It also calls for the President to report 
on the international community's efforts to support the peace process 
and address humanitarian shortfalls. I believe this will hold 
accountable those countries that are actively undermining the peace 
agreement.
  If the President certifies that the Government of Sudan is 
implementing the peace agreement and has agreed to allow the presence 
of a U.N. peacekeeping mission, then the legislation requires the 
President to request recommendations to further the peace process from 
the special envoy for Sudan.
  However, if the President finds the Sudanese Government is impeding 
the peace process, the bill calls for the President to impose 
additional measures against Sudan, including enacting targeted 
sanctions on the Sudanese leadership and their immediate families.
  Section 7 requires a State Department report on those companies 
investing $5 million or more in Sudan. This information can then be 
used to deter investment groups, retirement funds, and others from 
investing in corporations doing business in Sudan. The legislation 
requires the Department of the Treasury to issue a report summarizing 
the assets of Sudanese leaders in the United States and elsewhere. This 
report will give a full accounting of the Sudanese leaders' assets and 
will allow the Department of the Treasury to take actions on these 
assets.
  Finally, section 8 of the legislation authorizes $150 million for 
humanitarian needs in Darfur (fiscal years 2008-2012 to alleviate the 
suffering of these needy people.
  Mr. President, I am pleased that Senator Kennedy has joined me in 
this effort. Our legislation is an important step in the efforts needed 
to bring peace to the region. We hope that it will continue to focus 
attention on the crisis and pressure the major actors to abide by the 
Abuja peace agreement.
  Mr. President, I ask unanimous consent that the letters to which I 
referred earlier be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                The American Jewish Committee,

                                   Washington, DC, August 2, 2006.
       Dear Senator: ``First they came first for the Communists, 
     and I did not speak out because I was not a Communist. Then 
     they came for the Socialists, and I did not speak out, 
     because I was not a Socialist; Then they came for the trade 
     unionists, and I did not speak out because I was not a trade 
     unionist. Then they came for the Jews, and I did not speak 
     out because I was not a Jew. Then they came for me, and there 
     was no one left to speak out for me.''
       In 1945 Lutheran Pastor Martin Niemoller's voice echoed 
     around the globe as the world grieved over millions of lives 
     lost at the hands of genocide. Sixty years later, America 
     grieves as millions of innocent victims are being displaced, 
     raped, tortured, and murdered in the Darfur region of Sudan.
       Pressure is mounting for the Sudanese government to end its 
     genocide. Over the past two years, Congress has allocated 
     more than $250 million to expand and strengthen the role of 
     the African Union Mission in Darfur and to provide additional 
     humanitarian disaster relief throughout the region. As the 
     nation's oldest human relations organization, the American 
     Jewish Committee applauds

[[Page 16980]]

     Congress' action in approving these funds, but we believe 
     that more must be done.
       The fragile peace agreement reached in May now seems 
     shattered as fighting continues to rage throughout the 
     region. To halt the killing and displacement, civilians must 
     be protected, the peace agreement must be implemented, and a 
     secure environment must be established for the delivery of 
     humanitarian aid. As atrocities, crimes against humanity and 
     genocidal acts continue throughout the region, we urge you to 
     take further action toward protecting besieged Sudanese 
     civilians by supporting the Peace in Darfur Act.
       The Peace in Darfur Act, introduced by Senators Gordon 
     Smith and Edward Kennedy, directs the President to appoint a 
     new special envoy to Sudan. The Special Envoy, in 
     collaboration with international partners, would be best 
     positioned to advance the Darfur peace process. The bill also 
     calls on the government of Sudan to allow a UN peacekeeping 
     force to enter Darfur; NATO to provide humanitarian, 
     logistical, and personnel support to the UN; NATO to enforce 
     the no-fly zone over Darfur; and the international community 
     to not only support the African Union Mission (AMIS) in 
     Sudan, but also to provide humanitarian assistance. The bill 
     also authorizes an additional $150 million in humanitarian 
     aid for Fiscal Years 2008-2012. Further, the bill mandates a 
     Presidential report on the situation in Darfur that will cast 
     new light on the Sudanese government's actions and provide a 
     basis to impose targeted sanctions if necessary.
       On behalf of a community that has suffered persecution and 
     even genocide all too often in our history, we urge you to 
     support this crucial piece of legislation. The time to act is 
     now. History has demonstrated the price of standing idly by 
     in the face of such horrors.
           Respectfully,
                                                Richard T. Foltin,
     Legislative Director and Counsel.
                                  ____

                                          The Hebrew Immigrant Aid


                                                      Society,

                                       New York, NY July 28, 2006.
     Hon. Gordon Smith,
     Senate Russell Office Building,
     Washington, DC.
     Hon. Edward M. Kennedy,
     Senate Russell Office Building,
     Washington, DC.
       Dear Senator Smith and Senator Kennedy: I am writing on 
     behalf of the Hebrew Immigrant Aid Society (HIAS) to express 
     our strong support for the ``Peace in Darfur Act of 2006.''
       For over 125 years, HIAS has helped millions of people 
     fleeing persecution and poverty through rescue, resettlement 
     and reunion. The Jewish tradition's emphasis on refugee 
     protection and our community's experience with the trauma of 
     genocide and refugee flight make what's happening in Darfur 
     an issue of primary concern for the Jewish community. We 
     therefore applaud this bill for taking concrete steps to 
     alleviate the inconceivable suffering and hardship that so 
     many innocent Sudanese have endured in the past three years.
       Specifically, we are pleased that this bill authorizes $150 
     million in additional funding to help meet tbe unmet 
     humanitarian needs in Darfur. With an office in eastern Chad 
     and programs in three refugee camps, HIAS has seen first-hand 
     the dire consequences when the basic necessities of life, 
     including food, water, and health services, are not met. In 
     June 2005, HIAS launched the Initiative for Sudanese Refugees 
     in Chad, which is intended to strengthen the refugees' 
     psychological and social conditions and to convey skills 
     needed to survive and function in the aftermath of extreme 
     violence. Re-acquisition of these basic skills is crucial to 
     break the chain of dependence and suffering caused by severe 
     psychological trauma. By allocating additional funding to 
     provide such basic necessities as food and water, this bill 
     will help remove yet another hurdle to the Darfuri refugees' 
     ability to support themselves and regain control over their 
     lives and well-being.
       The Jewish community, knowing all too well what results 
     when genocide is met with silence and inaction, has 
     aggressively denounced the genocide in Darfur and called on 
     the U.S. Government to do more in response. By requiring the 
     Administration to take several important actions, including 
     appointing a Special Envoy for Sudan, the ``Peace in Darfur 
     Act of 2006'' is a significant and vital bill that should be 
     supported by all Members of Congress. To us, ``never again'' 
     is more than just a quote--it is a mandate.
           Sincerely,
                                                   Gideon Aronoff,
     CEO and President.
                                  ____



                            Archdiocese of Portland in Oregon,

                                      Portland, OR, July 31, 2006.
     Sen. Gordon Smith,
     Portland, OR.
       Dear Senator Smith: Thank you for the opportunity to 
     comment on the draft legislation ``Supporting Peace and 
     Alleviating Suffering in Darfur'' that you are co-authoring 
     with Senator Kennedy. The continuing violence and atrocities 
     being committed in Darfur are tragic and deplorable. As 
     people of faith we are compelled to do everything in our 
     power to protect the lives and dignity of the victims. I 
     deeply appreciate your leadership on this issue, and in 
     particular your continuing efforts to introduce legislation 
     in the U.S. Senate.
       Archbishop Vlazny wrote that people of faith must 
     demonstrate a willingness ``to go beyond our own boundaries 
     to serve those in need and to work for global justice and 
     peace. Ours is a shrinking and suffering world. Every once in 
     a while a particular need in some corner of today's world 
     becomes so acute that, for a time, it serves as the unique 
     moral test of our society with respect to our care for the 
     weakest among us . . . The Khartoum government has the 
     greatest responsibility [for the violence and harassment 
     directed against the Fur Zagahawa and Masaalite black African 
     ethnic groups by the Janjaweed] and must be pressured to do 
     what it can to bring an end to the conflict. We continue to 
     urge the United Nations and our own government to apply that 
     pressure.'' (Catholic Sentinel, August 26, 2004)
       Even though the atrocities being committed against the 
     population of Darfur were declared to be genocide by the 
     international community in July 2004, the violence has 
     continued unabated. It is clear that much more intensive and 
     sustained engagement is required of the international 
     community.
       In May 2006, the Sudanese Government of National Unity and 
     the Sudan Liberation Movement signed the Darfur Peace 
     Agreement. Bishop Wenski, Chairman of the U.S. Conference of 
     Catholic Bishops Committee on International Policy, said the 
     peace accord ``will open the way for the United States to 
     hold the Sudanese government to its promise of allowing the 
     African Union peacekeeping force (AMIS) to be transformed 
     into a more robust and mobile UN mission with a strong 
     mandate. It is essential to strengthen significantly the 
     presence and responsiveness of peacekeeping forces in Darfur, 
     both to guarantee implementation of the peace agreement and 
     to win the confidence of the people.''
       In answer to the Gospel's call to protect human life and 
     dignity, the U.S. Conference of Catholic Bishops joined the 
     Save Darfur Coalition, an alliance of over 150 faith-based, 
     humanitarian, and human rights organizations that organized 
     the Million Voices for Darfur Campaign, in calling upon our 
     leaders to no longer remain silent in the face of the 
     killings, rape and wanton destruction occurring daily in 
     Darfur.
       The specific actions that were requested included:
       (1) Retain urgently needed funding for humanitarian relief 
     in the FY 2006 Emergency Supplemental Appropriations bill.
       (2) Pressure the government in Khartoum to disarm the 
     warring factions, cease all attacks against innocent 
     civilians, provide unimpeded humanitarian access and bring to 
     justice those perpetrating crimes against humanity.
       (3) Pressure both the government and the rebels to respect 
     the existing ceasefire agreement and to intensify the search 
     for a durable peace during ongoing negotiations in Abuja, 
     while simultaneously urging both Sudan and Chad to refrain 
     from any escalation that might lead to threatened 
     hostilities.
       (4) Urge the U.S. to use its voice in the U.N. Security 
     Council to ensure the continuation of the mandate of the 
     African Union in Darfur to monitor the ceasefire, protect 
     innocent civilians, and assist international humanitarian 
     relief organizations, while urging NATO to provide AMIS with 
     all possible logistical support until the transition to full-
     fledged UN peacekeeping force can be completed.
       (5) Hold the signatories to the Comprehensive Peace 
     Agreement fully accountable, and honor the promise to provide 
     substantial financial and political support to the government 
     of national unity to undertake the reconstruction of the 
     country and its civil society.
       (6) Urge the U.N. Security Council to continue its support 
     for the peacekeeping mission that is working with all parties 
     to the national-unity government to implement the peace 
     accord. The United States should provide adequate funding and 
     logistical support so that peace and security might be 
     achieved.
       The draft legislation that you have proposed (``Supporting 
     Peace and Alleviating Suffering in Darfur Act'', July 12, 
     2006 version) addresses these requested actions in a 
     comprehensive and thorough manner. We are deeply grateful 
     that you have demonstrated leadership on this issue and are 
     willing to take the necessary steps to protect the people of 
     Darfur from further harm. We join you in hoping that these 
     measures will be fully effective.
       The events of the past few months demonstrate that 
     significant progress can be made with high level engagement 
     on the part of the U.S. Congress and Administration. Please 
     share our appreciation and gratitude with everyone who made 
     this initial step toward peace possible. We offer our full 
     support for continued and sustained leadership in the 
     difficult time ahead.
           Sincerely,
                                             David Carrier, Ph.D.,
                            Director, Office of Justice and Peace.


[[Page 16981]]

  Mr. KENNEDY. Mr. President, Senator Smith and I have sent a bill to 
the desk to address the heart-wrenching crisis in Darfur and support 
the peace process there, and we look for its early consideration.
  The horrifying violence in the Darfur region of Sudan was recognized 
by Congress and the Bush administration as genocide over 2 years ago, 
and it continues unabated today. However, rays of hope for peace can be 
seen on the horizon. On May 5, the Government of Sudan and the main 
rebel group, the Sudan Liberation Movement led by Minni Minnawi, agreed 
to a plan that, if implemented, could bring peace to Darfur.
  The plan calls for an immediate cease-fire and requires the 
Government of Sudan to neutralize and disarm the Janjaweed militia, the 
gunmen supported by the government who have been conducting a bloody 
campaign to forcibly displace non-Arab tribes from Darfur.
  The Darfur Peace Agreement is an opportunity we need to seize. To do 
so, greater international pressure on the Sudanese government will be 
required in order to improve the prospects of effective implementation. 
Developments since its signing indicate that the present level of 
international pressure isn't enough.
  Three months have passed, but the Sudanese Government has done little 
to take the most important step in the peace plan--disarming the 
Janjaweed. Khartoum's past record is not encouraging. It has pledged to 
disarm the Janjaweed on previous occasions but then failed to follow 
through. This reluctance is not unexpected in light of the government's 
cynical use of the Janjaweed to exercise power in the Darfur region.
  In recent months, the violence in Darfur has spilled over into 
neighboring Chad. The two governments each support armed groups opposed 
to the other. Sudanese helicopters and planes attack innocent villagers 
in Darfur, despite a United Nations order not to fly over Darfur.
  The African Union Mission in Sudan, which has 7,000 peacekeepers in 
Darfur, has made a valiant effort to provide security and assist the 
people of Darfur. Nonetheless, the African Union peacekeepers are not 
able even to defend themselves, much less the two million refugees and 
internally displaced persons fleeing the violence. This mission is 
obviously unprepared and ill-equipped to press for and verify the 
implementation of the May 5 peace agreement.
  Sudan appears to be waiting to see whether the international 
community will again just lament the crisis and make hollow threats, or 
is now ready and willing to take concrete steps. As one high-ranking 
Sudanese Government official said to a Boston Globe reporter, ``The 
United Nations Security Council has threatened us so many times, we no 
longer take it seriously.'' It is time for the United States and the 
international community to let the Sudanese Government know that this 
time we expect Sudan to carry through on its commitments in the Darfur 
Peace Agreement. Fortunately, the international community has already 
taken initial actions to support the May 5 Peace Agreement. The African 
Union and the United Nations are planning for the transfer of 
peacekeeping responsibilities from the African Union to the United 
Nations. In addition, NATO has begun planning on how to support a U.N. 
peacekeeping mission, and the European Union hosted a conference in 
July on assistance for Darfur.
  Although the international community has signaled support for the 
Darfur Peace Agreement, Khartoum has been dragging its heels. In 
particular, it has not yet agreed to allow a U.N. peacekeeping mission 
into Darfur. The international community must strengthen its effort to 
persuade the Sudanese Government to comply with the agreement and 
permit the U.N. peacekeepers in Darfur.
  One of the tragic outcomes of the Darfur violence is an alarming 
humanitarian crisis. More than 3 million people in Darfur are dependent 
on humanitarian assistance for survival. The violence in Darfur has 
forced millions to flee from their homes. The U.N. Office for the 
Coordination of Humanitarian Assistance reports that significant needs 
for health, food and water, and sanitation are not being met in Darfur. 
The World Food Program warns of a $400 million shortfall in the funds 
it now has for Sudan. Because of the shortages in food relief, the 
refugees are receiving only partial rations.
  The children suffer most. One in four children in Darfur die before 
the age of five. The most needy frequently remain hidden, because 
insecurity in the region prevents them from making the dangerous trip 
to international relief centers.
  The United States has been the largest single donor of humanitarian 
assistance to the people of Darfur, and we must continue our effort in 
order to give the people of the region much-needed aid. We must do more 
to encourage the international community to do so as well.
  Sadly, the continuation of violence in the region has severely 
hindered humanitarian aid efforts. In the past 6 months, aid groups in 
eastern Chad have lost 26 vehicles to armed hijackers. One UNICEF 
worker was shot and nearly killed. It is unfair to put relief agencies 
in a situation where they must either risk having their aid workers 
murdered or raped, or pull out and leave thousands in Darfur to die. 
U.N. Secretary General Kofi Annan said of this crisis, ``Giving aid 
without protection is like putting a Band-Aid on an open wound.''
  To give peace the best chance of taking hold, peace, the Sudanese 
Government must be persuaded to implement its commitment to neutralize 
and disarm the Janjaweed. The Sudanese can be influenced by what the 
rest of the world does. Sudan is not an isolated, remote land. It is 
the largest country in Africa, and has significant economic and 
political ties to the rest of Africa and the world.
  Now is the time for the United States, in concert with other 
countries, to act on Darfur. This is why Senator Smith and I have 
introduced legislation to urge the Sudanese parties to honor their 
commitment in the peace accord. The bill also helps to address the 
unmet humanitarian needs in Darfur.
  At its core, the legislation is intended to encourage greater 
international pressure on the Government of Sudan to fulfill its 
obligations in the peace agreement and to allow U.N. peacekeepers into 
Darfur.
  In preparing this legislation, we have worked closely with the NGO 
community of experts. Groups such as the International Crisis Group, 
Refugees International, Save Darfur Coalition, the Hebrew International 
Aid Society, the American Jewish Committee, the American Jewish World 
Service, and Physicians for Human Rights have endorsed it. I will ask 
that the letters of endorsements that I have submitted be printed in 
the Record.
  The legislation assigns to the Presidential envoy for Sudan the 
responsibility for supporting the Darfur peace process and, together 
with the international community, to press the Sudanese parties to 
implement the agreed-upon ceasefire and disarm the Janjaweed militia.
  It calls on the Government of Sudan to immediately allow a U.N. 
peacekeeping force to enter Darfur and to implement the Darfur Peace 
Agreement.
  It calls on NATO to enforce the no-fly zone over Darfur, if requested 
by the U.N., and to provide airlift, and logistical and intelligence 
support to the peacekeepers.
  It calls on the international community to act promptly to meet the 
outstanding humanitarian assistance needs. We must do our part too. The 
legislation authorizes $150 million in additional funds for each of the 
next 5 fiscal years to meet these needs.
  Under the legislation, the President will report on whether the 
Sudanese Government is implementing the peace agreement and has agreed 
to allow a U.N. peacekeeping mission to enter Darfur. If so, then the 
Presidential special envoy for Sudan will be requested to develop 
recommendations to advance the peace process. If the Sudanese 
Government refuses, then the

[[Page 16982]]

President will impose sanctions targeted on the leaders of Sudan, urge 
the international community to do the same, and continue to oppose 
normalization of its relations with Sudan.
  In addition, the bill requires reports from the Commerce Department 
identifying companies investing $5 million or more in Sudan and a 
listing of the assets of Sudanese leaders in the United States and 
elsewhere.
  With so much other violence erupting in the world, we must not ignore 
the crisis in Darfur. Without international action, the genocide will 
go on. The Sudanese Government will balk or move slowly on disarming 
the Janjaweed and bringing an end to the violence. Experts estimate 
that since the conflict in Darfur began in 2004, up to 300,000 people 
have been killed, and an estimated 1.9 million have been displaced. 
Every day that we fail to act, those shameful numbers will increase.
  I urge my colleagues to support this legislation.
  Mr. President, I ask unanimous consent that the letters to which I 
referred be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   International Crisis Group,

                                   Washington, DC, August 1, 2006.
     Hon. Edward Kennedy,
     Russell Senate Building,
     Washington DC.
       Dear Senator Kennedy: The International Crisis Group 
     strongly supports the Peace in Darfur Act of 2006, which you 
     are co-sponsoring with Senator Smith.
       For the past 2 years, Crisis Group has advocated for tough 
     legislation to address the ongoing atrocities in Darfur, 
     Sudan. Last year, we endorsed the Darfur Accountability Act 
     (HR 1424) and the Darfur Peace and Accountability Act (HR 
     3127). The Peace in Darfur Act complements previous 
     legislation by calling explicitly for the U.S. to do the 
     following: name a special envoy and lead multilateral 
     efforts; increase pressure on the government of Sudan to 
     allow the deployment of a robust UN peace support mission 
     under Chapter VII of the UN Charter; and encourage non-
     signatories to sign the Darfur Peace Agreement by addressing 
     its inadequacies.
       Congressional action has been crucial in providing life-
     saving humanitarian assistance to millions of conflict-
     affected civilians in Darfur and in supporting African 
     peacekeepers, but the situation remains critical. Concerted 
     pressure on the government of Sudan, including U.S. support 
     for the work of the International Criminal Court, is vital to 
     hold perpetrators of atrocities accountable and to ensure 
     that UN forces are deployed to protect civilians.
           Yours sincerely,
                                                Mark L. Schneider,
     Senior Vice President.
                                  ____



                                       Refugees International,

                                   Washington, DC, August 1, 2006.
     Hon. Edward Kennedy,
     U.S. Senate,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kennedy: I am writing in support of the Peace 
     in Darfur Act of 2006, which you and Sen. Smith are co-
     sponsoring. This important piece of legislation keeps the 
     pressure on the government of Sudan and other parties to 
     honor and implement the Darfur Peace Agreement. It recognizes 
     the need to support the African Union force (AM IS) while 
     moving toward a UN force in Darfur, and it calls for the 
     continuation of necessary humanitarian aid.
       Last week I returned from Darfur, where death, displacement 
     and suffering are continuing, despite the signing of the 
     Darfur Peace Agreement on May 5th. Based on talks with 
     internally displaced people, rebel leaders, Sudanese 
     government officials, civil society leaders, diplomats and UN 
     officials, it is clear to me that the U.S. must keep the 
     pressure on the government of Sudan to disarm the Janjaweed 
     militia and work for peace. The appointment of a presidential 
     envoy will give the U.S. more leverage and focus in its 
     efforts to promote peace in Darfur.
       Please ask your office to contact me if I can be of further 
     assistance in supporting the Peace in Darfur Act of 2006.
           Sincerely,
     Kenneth H. Bacon,
                                  ____

                                                        President.


                                 Hebrew Immigrant Aid Society,

                                      New York, NY, July 28, 2006.
     Hon. Gordon Smith,
     Senate Russell Office Building,
     Washington, DC.
     Hon. Edward M. Kennedy,
     Senate Russell Office Building,
     Washington, DC.
       Dear Senator Smith and Senator Kennedy: I am writing on 
     behalf of the Hebrew Immigrant Aid Society (HIAS) to express 
     our strong support for the ``Peace in Darfur Act of 2006.''
       For over 125 years, HIAS has helped millions of people 
     fleeing persecution and poverty through rescue, resettlement 
     and reunion. The Jewish tradition's emphasis on refugee 
     protection and our community's experience with the trauma of 
     genocide and refugee flight make what's happening in Darfur 
     an issue of primary concern for the Jewish community. We 
     therefore applaud this bill for taking concrete steps to 
     alleviate the inconceivable suffering and hardship that so 
     many innocent Sudanese have endured in the past three years.
       Specifically, we are pleased that this bill authorizes $150 
     million in additional funding to help meet the unmet 
     humanitarian needs in Darfur. With an office in eastern Chad 
     and programs in three refugee camps, HIAS has seen first-hand 
     the dire consequences when the basic necessities of life, 
     including food, water, and health services, are not met. In 
     June 2005, HIAS launched the Initiative for Sudanese Refugees 
     in Chad, which is intended to strengthen the refugees' 
     psychological and social conditions and to convey skills 
     needed to survive and function in the aftermath of extreme 
     violence. Re-acquisition of these basic skills is crucial to 
     break the chain of dependence and suffering caused by severe 
     psychological trauma. By allocating additional funding to 
     provide such basic necessities as food and water, this bill 
     will help remove yet another hurdle to the Darfuri refugees' 
     ability to support themselves and regain control over their 
     lives and well-being.
       The Jewish community, knowing all too well what results 
     when genocide is met with silence and inaction, has 
     aggressively denounced the genocide in Darfur and called on 
     the U.S. Government to do more in response. By requiring the 
     Administration to take several important actions, including 
     appointing a Special Envoy for Sudan, the ``Peace in Darfur 
     Act of 2006'' is a significant and vital bill that should be 
     supported by all Members of Congress. To us, ``never again'' 
     is more than just a quote--it is a mandate.
           Sincerely,
                                                   Gideon Aronoff,
     CEO and President.
                                  ____



                                The American Jewish Committee,

                                   Washington, DC, August 2, 2006.
       Dear Senator: 
       ``First they came first for the Communists, and I did not 
     speak out because I was not a Communist. Then they came for 
     the Socialists, and I did not speak out, because I was not a 
     Socialist; Then they came for the trade unionists, and I did 
     not speak out because I was not a trade unionist. Then they 
     came for the Jews, and I did not speak out because I was not 
     a Jew. Then they came for me, and there was no one left to 
     speak out for me.''
       In 1945 Lutheran Pastor Martin Niemoller's voice echoed 
     around the globe as the world grieved over millions of lives 
     lost at the hands of genocide. Sixty years later, America 
     grieves as millions of innocent victims are being displaced, 
     raped, tortured, and murdered in the Darfur region of Sudan.
       Pressure is mounting for the Sudanese government to end its 
     genocide. Over the past two years, Congress has allocated 
     more than $250 million to expand and strengthen the role of 
     the African Union Mission in Darfur and to provide additional 
     humanitarian disaster relief throughout the region. As the 
     nation's oldest human relations organization, the American 
     Jewish Committee applauds Congress' action in approving these 
     funds, but we believe that more must be done.
       The fragile peace agreement reached in May now seems 
     shattered as fighting continues to rage throughout the 
     region. To halt the killing and displacement, civilians must 
     be protected, the peace agreement must be implemented, and a 
     secure environment must be established for the delivery of 
     humanitarian aid. As atrocities, crimes against humanity and 
     genocidal acts continue throughout the region, we urge you to 
     take further action toward protecting besieged Sudanese 
     civilians by supporting the Peace in Darfur Act.
       The Peace in Darfur Act, introduced by Senators Gordon 
     Smith and Edward Kennedy, directs the President to appoint a 
     new special envoy to Sudan. The Special Envoy, in 
     collaboration with international partners, would be best 
     positioned to advance the Darfur peace process. The bill also 
     calls on the government of Sudan to allow a UN peacekeeping 
     force to enter Darfur; NATO to provide humanitarian, 
     logistical, and personnel support to the UN; NATO to enforce 
     the no-fly zone over Darfur; and the international community 
     to not only support the African Union Mission (AMIS) in 
     Sudan, but also to provide humanitarian assistance. The bill 
     also authorizes an additional $150 million in humanitarian 
     aid for Fiscal Years 2008-2012. Further, the bill mandates a 
     Presidential report on the situation in Darfur that will cast 
     new light on the Sudanese government's actions and provide a 
     basis to impose targeted sanctions if necessary.
       On behalf of a community that has suffered persecution and 
     even genocide all too often in our history, we urge you to 
     support this crucial piece of legislation. The time to act is 
     now. History has demonstrated the price

[[Page 16983]]

     of standing idly by in the face of such horrors.
           Respectfully,
                                                Richard T. Foltin,
     Legislative Director and Counsel.
                                  ____



                                  Physicians for Human Rights,

                                   Washington, DC, August 2, 2006.
     Office of Senator Edward Kennedy.
       I wanted to let you know through this e-mail that 
     Physicians for Human Rights supports the Kennedy/Smith Darfur 
     legislation. You may use our name in list of organizations 
     supporting the bill.
       Thank you,
           Best regards,
                                                     Smita Baruah,
     Senior Manager for Government Affairs.
                                  ____



                                         Save Dafur Coalition,

                                   Washington, DC, August 2, 2006.
     Office of Senator Edward Kennedy.
       Please include the Save Darfur Coalition in your list of 
     organizations supporting this bill.
           Thanks,
                                                     Alex Meixner,
     Communications and Legislative Coordinator.
                                  ____



                                American Jewish World Service,

                                   Washington, DC, August 1, 2006.
     Office of Senator Edward Kennedy.
       American Jewish World Service can endorse the legislation.
           Thanks,
                                                 Stefanie Ostfeld.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 3802. A bill to amend the Consolidated Omnibus Budget 
Reconciliation Act of 1985 to expand the county organized health 
insuring organizations authorized to enroll Medicaid beneficiaries; to 
the Committee on Finance.
  Mrs. FEINSTEIN. Mr. President, this bill will allow two California 
counties, Ventura and Merced, to provide health care to Medi-Cal 
beneficiaries through the model they have determined best meets their 
communities' needs.
  This legislation allows Merced and Ventura to establish community 
operated health systems, COHS, and raises the percentage of Medi-Cal 
beneficiaries who are enrolled in these programs from 16 percent to 18 
percent.
  I urge my colleagues to support this legislation, and I ask unanimous 
consent that the text of the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3802

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

     SECTION 1. EXPANSION OF AUTHORIZED COUNTY MEDICAID ORGANIZED 
                   HEALTH INSURING ORGANIZATIONS.

       (a) In General.--Section 9517(c)(3) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1396b 
     note), as added by section 4734 of the Omnibus Budget 
     Reconciliation Act of 1990 and as amended by section 704 of 
     the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000, is amended--
       (1) in subparagraph (A), by inserting ``, in the case of 
     any health insuring organization described in such 
     subparagraph that is operated by a public entity established 
     by Ventura county, and in the case of any health insuring 
     organization described in such subparagraph that is operated 
     by a public entity established by Merced county'' after 
     ``described in subparagraph (B)''; and
       (2) in subparagraph (C), by striking ``14 percent'' and 
     inserting ``16 percent''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
                                 ______
                                 
      By Mr. AKAKA:
  S. 3804. A bill to prohibit commercial air tour operations over 
Kalaupapa National Historical Park, Kaloka-Honokohau National 
Historical Park, Pu'uhonua o Honaunau National Historical Park, and 
Pu'ukohola Heiau National Historic Site; to the Committee on Commerce, 
Science, and Transportation.
  Mr. AKAKA. Mr President, I rise today to introduce legislation that 
will prohibit commercial air tour operations over Kalaupapa National 
Historical Park, Kaloko-Honokohau National Historical Park, Pu`uhonua o 
Honaunau National Historical Park and Pu`ukohola Heiau National 
Historic Site.
  When Congress first established the Hawaii Volcanoes National Park in 
1916, the intent was to preserve the integrity and peace of the park's 
nearly 400 square miles of volcanoes, rivers, forests, wildlife and 
sacred sites. In the last few decades, however, the growth of the air 
tourism industry has considerably interrupted the tranquility of 
Hawaii's National Parks. Air tourism has had an adverse impact on the 
ability of Native Hawaiians to practice peaceful protocols of sacred 
sites. The sound from aircraft activity can significantly impinge on 
the solemnity of sacred sites and ceremonies.
  Sacred sites, including the airspace of the designated locales, are 
an important resource for the Hawaiian people and we must do what is 
necessary to ensure that the value of these sites is not diminished. By 
prohibiting air tourism over these areas, the Hawaiian Sacred Sites 
Noise Reduction Act affords Natives Hawaiians, residents and visitors 
to our beautiful state the peace and tranquility to enjoy these sacred 
sites. I urge my colleagues to support this important piece of 
legislation.
                                 ______
                                 
      By Ms. SNOWE (for herself, Mrs. Lincoln, Mrs. Hutchison, and Mr. 
        Kerry):
  S. 3806. A bill to amend the Internal Revenue Code of 1986 to provide 
a shorter recovery period for the depreciation of certain improvements 
to retail space; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today to introduce a bill that will 
provide relief and equity to our Nation's 1.5 million retail 
establishments, most of which have less than five employees. This 
legislation is one in a series of proposals that, if enacted, will 
reduce both the amount of taxes that small businesses pay, but also the 
administrative burden that unfairly saddles them as they attempt to 
comply with our Nation's tax laws.
  The proposal reduces from 39 to 15 years the depreciable life of 
improvements that are made to retail stores that are owned by the 
retailer. Under current law, only retailers that lease their property 
are allowed this accelerated depreciation, which means it excludes 
retailers that also own the property in which they operate. My bill 
simply seeks to provide equal treatment to all retailers.
  Before I talk about the specifics of this particular provision, let 
me first explain why it is so critical that we begin evaluating how we 
can best reform the Tax Code, which increasingly keeps our small 
businesses trapped in a paralyzing state of regulatory limbo. As is 
well-known small businesses are the foundation of our Nation's economy. 
According to the Small Business Administration, small businesses 
represent 99 percent of all employers, employ 51 percent the private-
sector workforce, and contribute 51 percent of the private-sector 
output.
  Despite the fact that small businesses are the real job-creators for 
our Nation's economy, the current tax system imposes large and 
expensive requirements in terms of satisfying their reporting and 
recordkeeping obligations. This is a problem Congress must address 
because small companies are disadvantaged most in terms of the money 
and time spent in satisfying their tax obligation. Why create 
distractions for them as they simply seek to comply with the law?
  For example, according to the Small Business Administration's Office 
of Advocacy, small businesses spend an astounding 8 billion hours each 
year complying with government reports. They also spend more than 80 
percent of this time on completing tax forms. What's even more 
troubling is that companies that employ fewer than 20 employees spend 
nearly $1,304 per employee in tax compliance costs; an amount that is 
nearly 67 percent more than larger firms.
  These statistics are disturbing for several reasons. First, the fact 
that small businesses are being required to spend so much money on 
compliance costs means they have fewer earnings to reinvest into their 
business. This, in turn, means that they have less money to spend on 
new equipment or on worker training, which unfortunately has an adverse 
effect on their overall production and the economy as a whole.
  Second, the fact that small business owners are required to make such 
a sizeable investment of their time into completing paperwork means 
they have less time to spend on doing what they do best--running their 
business and creating jobs.

[[Page 16984]]

  Let me be clear that I am in no way suggesting that small business 
owners are unique in having to pay income taxes, and I am certainly not 
expecting them to receive a free pass. What I am asking for, though, is 
a change to make the Tax Code fairer and simpler so that small 
companies can satisfy this obligation without having to expend the 
amount of resources that they do currently.
  For that reason, the package of proposals that I have introduced will 
provide not only targeted, affordable tax relief to small business 
owners but also simpler rules under the Tax Code. By simplifying the 
Tax Code, small business owners will be able to satisfy their tax 
obligation in a cheaper, more efficient manner, allowing them to be 
able to devote more time and resources to their business.
  Specifically, the proposal that I am introducing today will simply 
conform the tax codes to the realities that retailers on Main Street 
face. Studies conducted by the Treasury Department, Congressional 
Research Service and private economists have all found that the 39-year 
depreciation life for buildings is too long and that the 39-year 
depreciation life for building improvements is even worse. Retailers 
generally remodel their stores every 5 to 7 years to reflect changes in 
customer base and compete with newer stores. Moreover, many 
improvements such as interior partitions, ceiling tiles, restroom 
accessories, and paint, may only last a few years before requiring 
replacement.
  Mr. President, this legislation is a tremendous opportunity to help 
small enterprises succeed by providing an incentive for reinvestment. 
Every Member of this body has small retail constituents in small towns 
who may be in buildings that they have owned for generations and are 
struggling to compete. I urge my colleagues to join me in supporting 
this vital legislation as we work with the President to transform such 
a critical investment incentive into law. Finally, I would like to 
thank Senators Lincoln, Hutchison, and Kerry for joining me as 
cosponsors to this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3806

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

     SECTION 1. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN 
                   IMPROVEMENTS TO RETAIL SPACE.

       (a) 15-Year Recovery Period.--Subparagraph (E) of section 
     168(e)(3) of the Internal Revenue Code of 1986 (relating to 
     15-year property) is amended by striking ``and'' at the end 
     of clause (vii), by striking the period at the end of clause 
     (viii) and inserting ``, and'', and by adding at the end the 
     following new clause:
       ``(ix) any qualified retail improvement property.''.
       (b) Qualified Retail Improvement Property.--Subsection (e) 
     of section 168 of such Code is amended by adding at the end 
     the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the trade or business of selling tangible personal 
     property or services to the general public; and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator, or
       ``(iii) the internal structural framework of the 
     building.''.
       (c) Requirement to Use Straight Line Method.--Paragraph (3) 
     of section 168(b) of such Code is amended by adding at the 
     end the following new subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (d) Alternative System.--The table contained in section 
     168(g)(3)(B) of such Code is amended by inserting after the 
     item relating to subparagraph (E)(viii) the following new 
     item:

``(E)(ix).........................................................39''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to qualified retail improvement property placed 
     in service after the date of the enactment of this Act.

  Mr. KERRY. Mr. President, along Main Street, in a countless number of 
towns, many small businesses are placed at a competitive disadvantage 
by our tax laws. Business owners need to remodel their store every 5 to 
7 years. Consumers' tastes and needs change, and to stay competitive, a 
store needs to reflect those changes. If a store is owned, the owner is 
required to depreciate the renovation costs over 39 years, but a store 
that has leased space in the strip-mall across town, depreciates 
renovation costs over a 15-year period. The result: a Main Street store 
owner pays twice as much to renovate as their counterpart who leases.
  Today, I am introducing legislation along with Senator Snowe that 
will even the playing field for businesses that own the real estate 
where their business is located. We want parity between the business 
owners who own and those who lease their property.
  The Treasury Department, the Congressional Research Service, and 
private economists have found that the depreciation life for 
renovations is far too long. These tax rules generate high tax costs, 
laying the burden on small town, rural retailers who are more likely to 
own their property than retailers in urban areas. It is time to address 
this inequity by reducing the 39-year tax depreciation period to 15 
years. I urge my colleagues to support our Main Street stores through 
support of this legislation.
                                 ______
                                 
      By Mr. ENZI (for himself and Mr. Kennedy):
  S. 3807. A bill to amend the Public Health Service Act and the 
Federal Food, Drug, and Cosmetic Act to improve drug safety and 
oversight, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. ENZI. Mr. President, I rise today to introduce a very important 
bill, one that my colleague Senator Kennedy and I have been working on 
for some time.
  In 2005, the HELP Committee held two hearings on the issue of drug 
safety. We received over 50 recommendations from witnesses at those 
hearings. At that time, Senator Kennedy and I pledged to develop a 
comprehensive response to the drug safety issues raised. The Enhancing 
Drug Safety and Innovation Act is the product of working across party 
lines, and creates a structured framework for resolving safety 
concerns.
  Under the Enhancing Drug Safety and Innovation Act, FDA would begin 
to approve drugs and biologics, and new indications for these products, 
with risk evaluation and mitigation strategies, REMS. The REMS is 
designed to be an integrated, flexible mechanism to acquire and adapt 
to new safety information about a drug. The sponsor and FDA will assess 
and review an approved REMS at least annually for the first 3 years, as 
well as in applications for a new indication, when the sponsor suggests 
changes, or when FDA requests a review based on new safety information.
  The development of tools to evaluate medical products has not kept 
pace with discoveries in basic science. New tools are needed to better 
predict safety and efficacy, which in turn would increase the speed and 
efficiency of applied biomedical research. The Enhancing Drug Safety 
and Innovation Act would spur innovation by establishing a new public-
private partnership at the FDA to advance the Critical Path Initiative 
and improve the sciences of developing, manufacturing, and evaluating 
the safety and effectiveness of drugs, devices, biologics and 
diagnostics.
  The Enhancing Drug Safety and Innovation Act also establishes a 
central clearinghouse for information about clinical trials and their 
results to help patients, providers and researchers learn new 
information and make more informed health care decisions.
  Finally, the Enhancing Drug Safety and Innovation Act would make 
improvements to FDA's process for screening advisory committee members 
for financial conflicts of interest.

[[Page 16985]]

FDA relies on its 30 advisory committees to provide independent expert 
advice, lend credibility to the product review process, and inform 
consumers of trends in product development. The bill would clarify and 
streamline FDA's processes for evaluating candidates for service on an 
advisory committee, and address the key challenge of identifying a 
sufficient number of people with the necessary expertise and a minimum 
of potential conflicts of interest to serve on advisory committees.
  I want to thank the dozens of stakeholders, including the Food and 
Drug Administration, patient and consumer groups, industry 
associations, individual companies, and scientific experts who have 
taken the time and effort to give us their comments and input on the 
bill. Their assistance has been invaluable.
  I look forward to working with my colleagues to advance this 
important piece of legislation.
  Mr. KENNEDY. Mr. President, Senator Enzi, chairman of the Senate 
Health, Education, Labor, and Pensions Committee, and I are introducing 
the Enhancing Drug Safety and Innovation Act of 2006. The goals of this 
legislation are to enhance the Food and Drug Administration's authority 
over the safety of prescription drugs after they are approved; to 
encourage innovation in medical products; to improve access to clinical 
trials for patients and ensure that the doctors and patients learn 
about the results of clinical trials involving the drugs they prescribe 
and use; and to improve the screening of members of FDA's scientific 
advisory committees to avoid conflicts of interest.
  The withdrawal of the drug Vioxx from the market nearly 2 years ago 
showed us once again that all prescription drugs have risks, many of 
which we may not know about when a drug is approved or even for years 
after approval. That is why we need a more effective system to identify 
and assess the serious risks of drugs, inform health care providers and 
patients about such risks, and manage or minimize these risks as soon 
as they are detected.
  Our bill will require every drug to have a risk evaluation and 
mitigation strategy, or REMS, when it is approved. For many drugs, the 
REMS will include only the drug labeling, reports of adverse events, a 
justification for why only such reporting is needed, and a timetable 
for assessing how the REMS is working.
  The FDA will be able to include additional requirements for a drug 
that poses serious risks, such as by requiring the drug to be dispensed 
to patients with labeling that patients can understand, that the drug 
company have a plan to inform health care providers about how to use 
the drug safely, or that a drug should not be advertised directly to 
consumers for up to 2 years after approval. If a serious safety signal 
needs to be understood, FDA can require further studies or even 
clinical trials after the drug is approved. Enhanced data-collection 
and data-mining techniques will help identify risk signals earlier and 
more thoroughly.
  For a drug with the most serious side effects, FDA will be able to 
require that its REMS include the restrictions on distribution and use 
needed to assure its safe use.
  The FDA will be able to impose any of these requirements at the time 
a drug is approved, and the agency can also modify the labeling or 
otherwise alter a drug's REMS after the approval. The drug's 
manufacturer will propose the REMS, or modifications to it, and the FDA 
and the company will try to work out an adequate REMS. If the agency 
and the company cannot agree, the agency's Drug Safety Oversight Board 
can review the dispute and recommend a resolution to senior FDA 
officials, who will make the final decision.
  Civil monetary penalties are added to FDA's traditional enforcement 
tools to ensure compliance. Drug user fees will be used to review and 
implement the program.
  The bill formalizes and makes mandatory what is now only informal and 
voluntary. Our intent is not to change standards for approving drugs 
but to ensure that the FDA has the ability to identify, assess, and 
manage risks as they become known. Better risk management will mean 
that drugs with special benefits for some patients will remain 
available, despite their serious risks for other patients, because FDA 
can better identify the risks and minimize them.
  The bill helps to improve drug safety in other ways as well. The 
Reagan-Udall Institute for Applied Biomedical Research will be a new 
public-private partnership at the FDA to advance the agency's Critical 
Path Initiative, which is intended to improve the science of 
developing, manufacturing, and evaluating the safety and effectiveness 
of drugs, biologics, medical devices, and diagnostics.
  The institute will be supported by Federal funds and by contributions 
from the pharmaceutical and device industries. Philanthropic 
organizations will be able to supplement Federal support. The institute 
will have a board of directors and an executive director, and will 
report to Congress annually on its operations.
  The bill will also expand the public database at NIH to encourage 
more patients to enroll in clinical trials of drugs. This database 
would build on the current systems and would include late phase II, 
phase III, and all phase IV clinical trials for all drugs.
  A second, publicly available database would include the results of 
phase III and phase IV clinical trials of drugs, with the possibility 
that late phase II trials would be added later. Posting of results 
could be delayed for up to 2 years, pending the approval of the drug or 
the publication of trial results in a peer-reviewed journal. The public 
needs to know about the results of clinical trials on drugs. 
Tragically, such information was not adequately available for the 
clinical studies of antidepressants in children.
  Posting information in the clinical trials registry and the clinical 
trials results database will be requirements for Federal research 
funding and for drug review and approval by the FDA. Both the FDA and 
the Inspector General Office of the Department of Health and Human 
Services would review the content of submissions to the results 
database to ensure they are truthful and nonpromotional. These Federal 
requirements would preempt State requirements for clinical trial 
databases.
  Finally, the bill will improve FDA's process for screening advisory 
committee members for financial conflicts of interest. The agency 
relies on its advisory committees to provide independent, expert, 
nonbinding recommendations on significant issues. Ideally, committee 
members should be free of any financial ties to the companies affected 
by an issue before a committee. But at times, there may be no 
individual without financial ties to such companies--for example, when 
the issue involves a rare disease or a cutting edge medical technology. 
In these cases, the FDA must be able to grant a waiver to allow an 
individual with essential expertise to serve on the committee. The bill 
will require the agency to seek qualified experts with minimal 
conflicts, clarify how it makes waiver decisions, and disclose those 
decisions at least 15 days before a committee meeting.
  Our bill is a comprehensive response to drug safety and other 
important issues involving prescription drugs and other medical 
technologies. I commend Chairman Enzi and his dedicated staff--
especially Amy Muhlberg--for working closely with us on this proposal, 
and I urge our Senate colleagues to support it.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 3809. A bill for the relief of Jacqueline W. Coats; to the 
Committee on the Judiciary.
  Mrs. FEINSTEIN. Mr. President, I offer today private relief 
legislation to provide lawful permanent residence status to Jacqueline 
Coats, a 26-year-old widow currently living in San Francisco.
  Mrs. Coats came to the U.S. in 2001 from Kenya on a student visa to 
study mass communications at San Jose State University. Her visa status 
lapsed in 2003, and the Department of Homeland Security began 
deportation proceedings against her.

[[Page 16986]]

  Mrs. Coats married Marlin Coats on April 17, 2006, after dating for 
several years. The couple was happily married and planning to start a 
family when, on May 13, Mr. Coats tragically died in a heroic attempt 
to save two young boys from drowning.
  The couple had been on a Mother's Day outing at Ocean Beach with some 
of Mr. Coats's nephews when they heard cries for help. Having worked as 
a lifeguard in the past, Mr. Coats instinctively dove into the water. 
The two children were saved with the help of a rescue crew, but Mr. 
Coats, caught in a riptide, died. Mrs. Coats received a medal honoring 
her husband.
  Four days before Mr. Coats's death, the couple prepared and signed an 
application for a green card at their attorney's office. Unfortunately 
the petition was not filed until after his death, rendering it invalid. 
Mrs. Coats currently has a hearing before an immigration judge in San 
Francisco on August 24, but her attorney has informed my staff that she 
has no relief available to her and will be ordered deported.
  Mrs. Coats, devastated by the loss of her husband, is now caught in a 
battle for her right to stay in America. At a recent news conference 
with her lawyer, Thip Ark, she explained of her situation, ``I feel 
like I have nothing to live for. I have nothing to go home to. . . . 
I've been here 4 years. . . . It would be like starting a new life.''
  Ms. Ark explains that Mrs. Coats is extremely close with her late 
husband's family, with whom she lives in San Leandro, CA. Mrs. Coats 
has said that her husband's large family has become her own. Ramona 
Burton of San Francisco, one of Marlin Coats's seven brothers and 
sisters explains, ``She spent her first American Christmas with us, her 
first American Thanksgiving. . . . I can't imagine looking around and 
not seeing her there. She needs to be there.''
  The San Francisco and bay area community is rallying strong support 
for Mrs. Coats. The San Francisco chapters of the NAACP, the San 
Francisco Board of Supervisors, and the San Francisco Police 
Department, have all passed resolutions in support of Mrs. Coats's 
right to remain in the country.
  Unfortunately, if this private relief bill is not approved, this 
young woman, and the Coats family, will face yet another disorienting 
and heartbreaking tragedy. Mrs. Coats will be deported to Kenya, a 
country she has not lived in since she was 21. In her time of grieving, 
she will be forced to leave her home, her job with AC Transit, her new 
family, and everything she has known for the past 5 years.
  I cannot think of a compelling reason why the United States should 
not allow this young widow to continue the green card process. Had her 
husband lived, Mrs. Coats would have filed the papers without 
difficulty. It was because of her husband's selfless and heroic act 
that Mrs. Coats must now struggle to remain in the country. As one 
concerned California constituent wrote to me, ``If ever there was a 
case where common fairness, morality and decency should reign over 
legal technicalities, this is it. We, as a country, need to reward 
heroism and good.''
  I believe that we can reward the late Mr. Coats for his noble actions 
by granting his wife citizenship. It is what he intended for her. It 
can even be argued that a green card for his wife was one of his dying 
wishes, as the papers were signed just 4 days prior to his death.
  For these reasons, I offer this private relief immigration bill and 
ask my colleagues to support it on behalf of Mrs. Coats.
  I also unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3809

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

     SECTION 1. PERMANENT RESIDENT STATUS FOR JACQUELINE W. COATS.

       (a) In General.--Notwithstanding subsections (a) and (b) of 
     section 201 of the Immigration and Nationality Act (8 U.S.C. 
     1151), Jacqueline W. Coats shall be eligible for issuance of 
     an immigrant visa or for adjustment of status to that of an 
     alien lawfully admitted for permanent residence upon filing 
     an application for issuance of an immigrant visa under 
     section 204 of that Act or for adjustment of status to lawful 
     permanent resident.
       (b) Adjustment of Status.--If Jacqueline W. Coats enters 
     the United States before the filing deadline specified in 
     subsection (c), Jacqueline W. Coats shall be considered to 
     have entered and remained lawfully and shall be eligible for 
     adjustment of status under section 245 of the Immigration and 
     Nationality Act (8 U.S.C. 1255) as of the date of enactment 
     of this Act.
       (c) Deadline for Application and Payment of Fees.--
     Subsections (a) and (b) shall apply only if the application 
     for issuance of an immigrant visa or the application for 
     adjustment of status is filed with appropriate fees within 2 
     years after the date of enactment of this Act.
       (d) Reduction of Immigrant Visa Numbers.--Upon the granting 
     of an immigrant visa or permanent residence to Jacqueline W. 
     Coats, the Secretary of State shall instruct the proper 
     officer to reduce by 1, during the current or next following 
     fiscal year, the total number of immigrant visas that are 
     made available to natives of the country of birth of 
     Jacqueline W. Coats under section 203(a) of the Immigration 
     and Nationality Act or, if applicable, the total number of 
     immigrant visas that are made available to natives of the 
     country of birth of Jacqueline W. Coats under section 202(e) 
     of that Act.
                                 ______
                                 
      By Mr. KOHL (for himself and Mr. Schumer):
  S. 3810. A bill to prevent tobacco smuggling, to ensure the 
collection of all tobacco taxes, and for other purposes; to the 
Committee on the Judiciary.
  Mr. KOHL. Mr. President, I rise today with Senator Schumer to 
introduce the Prevent All Cigarette Trafficking, PACT, Act of 2006. As 
the problem of cigarette trafficking continues to worsen, we must 
provide law enforcement officials with the tools they need to crack 
down on cigarette trafficking. The PACT Act closes loopholes in current 
tobacco trafficking laws, enhances penalties for violations, and 
provides law enforcement with new tools to combat the innovative new 
methods being used by cigarette traffickers to distribute their 
products. Each day we delay passage of this important legislation, 
terrorists and criminals raise more money, states lose significant 
amounts of tax revenue, and kids have easy access to tobacco products 
over the Internet.
  The cost to Americans is not merely financial. Tobacco smuggling also 
poses a significant threat to innocent people around the world. It has 
developed into a popular, and highly profitable, means of generating 
revenue for criminal and terrorist organizations. Hezbollah, for 
example, earned $1.5 million between 1996 and 2000 by engaging in 
tobacco trafficking in the United States. Al-Qaida and Hamas have also 
generated significant revenue from the sale of counterfeit cigarettes. 
That money is often raised right here in the United States, and it is 
then funneled back to these international terrorist groups. Cutting off 
financial support to terrorist groups is an integral part of the 
protecting this country against future attacks. We can no longer 
continue to let terrorist organizations exploit weaknesses in our 
tobacco laws to generate significant amounts of money. The cost of 
doing nothing is too great.
  This is not a minor problem. Cigarette smuggling is a multibillion 
dollar a year phenomenon, and it is getting worse. In 1998, the Bureau 
of Alcohol, Tobacco, Firearms and Explosives, BATFE, had six active 
tobacco smuggling investigations. In 2005, the that number swelled to 
452.
  The number of cases alone, however, does not sufficiently put this 
problem into perspective. The amount of money involved is truly 
astonishing. Cigarette trafficking, including the illegal sale of 
tobacco products over the Internet, costs States billions of dollars in 
lost tax revenue each year. It is estimated that Federal tax losses to 
Internet cigarette sales will reach $1.4 billion this year. As lost 
tobacco tax revenue lines the pockets of criminals and terrorist 
groups, states are being forced to raise college tuition and restrict 
access to other public programs. Tobacco smuggling may provide some 
with cheap access to cigarettes, but those cheap cigarettes are coming 
at a significant cost to the rest of us.

[[Page 16987]]

  According to the Government Accountability Office, GAO, each year, 
cigarette trafficking investigations are growing more and more complex, 
and take longer to resolve. More people are selling cigarettes 
illegally, and they are getting better at it. As these cases get 
tougher to solve, we owe it to law enforcement officials to do our part 
to lend a helping hand. The PACT Act enhances BATFE's authority to 
enter premises to investigate and enforce cigarette trafficking laws, 
and increasing penalties for violations. Unless these existing laws are 
strengthened, traffickers will continue to operate with near impunity.
  Just as important, though, we must provide law enforcement with new 
enforcement tools tools that enable them to combat the cigarette 
smugglers of the 21st century. The Internet represents one of those new 
obstacles to enforcement. Illegal tobacco vendors around the world 
evade detection by conducting transactions over the Internet, and then 
employing the services of common carriers and the U.S. Postal Service 
to deliver their illegal products around the country. Just a few years 
ago, there were less than 100 vendors selling cigarettes online. Today, 
approximately 500 vendors sell illegal tobacco products over the 
Internet.
  Without new and innovative enforcement methods, law enforcement will 
not be able to effectively address the growing challenges facing them 
today. The PACT Act sets out to do just that by cutting off the 
delivery. A significant part of this problem involves the shipment of 
contraband cigarettes through the United States Postal Service, USPS. 
This bill would cut off access to the USPS by making tobacco products 
non-mailable. We would treat cigarettes just like we treat alcohol, 
making it illegal to ship them through the US mails and cutting off a 
large portion of the delivery system.
  It also employs a novel approach, one being used in some of our 
States today, to combat illegal sales of tobacco over the Internet. 
Specifically, it will allow the Attorney General, in collaboration with 
State and local law enforcement, to create a list of companies that are 
illegally selling tobacco products. That list will then be distributed 
to legitimate businesses whose services are indispensable to illegal 
internet vendors--common carriers. Once a common carrier knows which 
customers are breaking the law, this bill will ensure that they take 
appropriate action to prevent their companies from being exploited by 
terrorists and other criminals.
  It is important to point out that this bill has been carefully 
negotiated with the common carriers, including UPS, to ensure that it 
does not place any unreasonable burdens on these businesses. Many 
changes were made to the bill that was introduced in the last Congress 
to ensure that the legislation was written to conform to the 
technological capabilities of these companies. In light of these 
changes, there is no question that private carriers will be able to 
fully comply with this bill without interrupting their existing 
delivery practices and procedures.
  In addition, the legislation makes clear that we are not asking for 
perfection. For example, carriers will not be held liable for the 
actions of their employees if they have effective policies and 
procedures in place to ensure compliance. The key word here is 
``effective.'' These policies must be much more than mere words. We are 
not asking common carriers to ensure that every single pack of 
cigarettes is stopped before it moves through their delivery system, 
but we do expect a vigorous effort to ensure that they and their 
employees do the very best they can to stop doing business with people 
they know to be using their services to violate State and Federal laws. 
That is not too much to ask.
  In addition to these important law enforcement needs, it is important 
to mention another aspect of this legislation that is equally 
important. One of the primary ways children get access to cigarettes 
today is on the internet and through the mails. The PACT Act now 
contains a strong age verification section that will ensure that online 
vendors are not selling cigarettes to our children. This provision 
would prohibit the sale of tobacco products to children, and it would 
also require sellers to use a method of shipment that requires a 
signature and photo ID check upon delivery. Most States already have 
similar laws on the books, and this would simply make sure that we have 
a national standard to ensure that the Internet is not being used to 
evade similar ID checks we require at our grocery and convenience 
stores.
  The recognition that this is a significant problem, along with the 
commonsense approach taken in the PACT Act to combat it, has brought 
together a coalition of strange bedfellows. The legislation has not 
just garnered the support of the law enforcement community, including 
the National Association of Attorneys General, and public health 
advocates, such as the Campaign for Tobacco Free Kids. It also has the 
strong support of tobacco companies like Altria. These groups, who 
sometimes find themselves on opposite sides of these issues, all agree 
that this is an issue begging to be addressed. They all recognize the 
urgent need to provide our law enforcement officials with the tools 
they need to combat a very serious threat to our security and protect 
public health.
  I urge my colleagues to support this important legislation, and I ask 
unanimous consent that the text of the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3810

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

     SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.

       (a) Short Title.--This Act may be cited as the ``Prevent 
     All Cigarette Trafficking Act of 2006'' or ``PACT Act''.
       (b) Findings.--Congress finds that--
       (1) the sale of illegal cigarettes and smokeless tobacco 
     products significantly reduces Federal, State, and local 
     government revenues, with Internet sales alone accounting for 
     billions of dollars of lost Federal, State, and local tobacco 
     tax revenue each year;
       (2) Hezbollah, Hamas, al Qaeda, and other terrorist 
     organizations have profited from trafficking in illegal 
     cigarettes or counterfeit cigarette tax stamps;
       (3) terrorist involvement in illicit cigarette trafficking 
     will continue to grow because of the large profits such 
     organizations can earn;
       (4) the sale of illegal cigarettes and smokeless tobacco 
     over the Internet, and through mail, fax, or phone orders, 
     make it cheaper and easier for children to obtain tobacco 
     products;
       (5) the majority of Internet and other remote sales of 
     cigarettes and smokeless tobacco are being made without 
     adequate precautions to protect against sales to children, 
     without the payment of applicable taxes, and without 
     complying with the nominal registration and reporting 
     requirements in existing Federal law;
       (6) unfair competition from illegal sales of cigarettes and 
     smokeless tobacco is taking billions of dollars of sales away 
     from law-abiding retailers throughout the United States;
       (7) with rising State and local tobacco tax rates, the 
     incentives for the illegal sale of cigarettes and smokeless 
     tobacco have increased;
       (8) the number of active tobacco investigations being 
     conducted by the Bureau of Alcohol, Tobacco, Firearms and 
     Explosives rose to 452 in 2005;
       (9) the number of Internet vendors in the United States and 
     in foreign countries that sell cigarettes and smokeless 
     tobacco to buyers in the United States has increased from 
     only about 40 in 2000 to more than 500 in 2005; and
       (10) the intrastate sale of illegal cigarettes and 
     smokeless tobacco over the Internet has a substantial effect 
     on interstate commerce.
       (c) Purposes.--It is the purpose of this Act to--
       (1) require Internet and other remote sellers of cigarettes 
     and smokeless tobacco to comply with the same laws that apply 
     to law-abiding tobacco retailers;
       (2) create strong disincentives to illegal smuggling of 
     tobacco products;
       (3) provide government enforcement officials with more 
     effective enforcement tools to combat tobacco smuggling;
       (4) make it more difficult for cigarette and smokeless 
     tobacco traffickers to engage in and profit from their 
     illegal activities;
       (5) increase collections of Federal, State, and local 
     excise taxes on cigarettes and smokeless tobacco; and
       (6) prevent and reduce youth access to inexpensive 
     cigarettes and smokeless tobacco through illegal Internet or 
     contraband sales.

[[Page 16988]]



     SEC. 2. COLLECTION OF STATE CIGARETTE AND SMOKELESS TOBACCO 
                   TAXES.

       (a) Definitions.--The Act of October 19, 1949 (15 U.S.C. 
     375 et seq.; commonly referred to as the ``Jenkins Act'') 
     (referred to in this Act as the ``Jenkins Act''), is amended 
     by striking the first section and inserting the following:

     ``SECTION 1. DEFINITIONS.

       ``As used in this Act, the following definitions apply:
       ``(1) Attorney general.--The term `attorney general', with 
     respect to a State, means the attorney general or other chief 
     law enforcement officer of the State, or the designee of that 
     officer.
       ``(2) Cigarette.--
       ``(A) In general.--For purposes of this Act, the term 
     `cigarette'--
       ``(i) shall have the same meaning given that term in 
     section 2341 of title 18, United States Code; and
       ``(ii) shall include `roll-your-own tobacco' (as that term 
     is defined in section 5702 of title 26, United States Code).
       ``(B) Exception.--For purposes of this Act, the term 
     `cigarette' does not include a `cigar,' as that term is 
     defined in section 5702 of title 26, United States Code.
       ``(3) Common carrier.--The term `common carrier' means any 
     person (other than a local messenger service or the United 
     States Postal Service) that holds itself out to the general 
     public as a provider for hire of the transportation by water, 
     land, or air of merchandise, whether or not the person 
     actually operates the vessel, vehicle, or aircraft by which 
     the transportation is provided, between a port or place and a 
     port or place in the United States.
       ``(4) Consumer.--The term `consumer' means any person that 
     purchases cigarettes or smokeless tobacco, but does not 
     include any person lawfully operating as a manufacturer, 
     distributor, wholesaler, or retailer of cigarettes or 
     smokeless tobacco.
       ``(5) Delivery sale.--The term `delivery sale' means any 
     sale of cigarettes or smokeless tobacco to a consumer if--
       ``(A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       ``(B) the cigarettes or smokeless tobacco are delivered by 
     use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains possession of the cigarettes or 
     smokeless tobacco.
       ``(6) Delivery seller.--The term `delivery seller' means a 
     person who makes a delivery sale.
       ``(7) Indian country.--The term `Indian country' has the 
     meaning given that term in section 1151 of title 18, United 
     States Code, except that within the State of Alaska that term 
     applies only to the Metlakatla Indian Community, Annette 
     Island Reserve.
       ``(8) Indian tribe.--The term `Indian tribe', `tribe', or 
     `tribal' refers to an Indian tribes as defined in section 
     4(e) of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450b(e)) or as listed pursuant to 
     section 104 of the Federally Recognized Indian Tribe List Act 
     of 1994 (25 U.S.C. 479a-1).
       ``(9) Interstate commerce.--The term `interstate commerce' 
     means commerce between a State and any place outside the 
     State, commerce between a State and any Indian country in the 
     State, or commerce between points in the same State but 
     through any place outside the State or through any Indian 
     country.
       ``(10) Person.--The term `person' means an individual, 
     corporation, company, association, firm, partnership, 
     society, State government, local government, Indian tribal 
     government, governmental organization of such government, or 
     joint stock company.
       ``(11) State.--The term `State' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, or any territory or possession 
     of the United States.
       ``(12) Smokeless tobacco.--The term `smokeless tobacco' 
     means any finely cut, ground, powdered, or leaf tobacco, or 
     other product containing tobacco, that is intended to be 
     placed in the oral or nasal cavity or otherwise consumed 
     without being combusted.
       ``(13) Tobacco tax administrator.--The term `tobacco tax 
     administrator' means the State, local, or tribal official 
     duly authorized to collect the tobacco tax or administer the 
     tax law of a State, locality, or tribe, respectively.
       ``(14) Transfers for profit.--The term `transfers for 
     profit' means any transfer for profit or other disposition 
     for profit, including any transfer or disposition by an agent 
     to his principal in connection with which the agent receives 
     anything of value.
       ``(15) Use.--The term `use', in addition to its ordinary 
     meaning, means the consumption, storage, handling, or 
     disposal of cigarettes or smokeless tobacco.''.
       (b) Reports to State Tobacco Tax Administrators.--Section 2 
     of the Jenkins Act (15 U.S.C. 376) is amended--
       (1) by striking ``cigarettes'' each place it appears and 
     inserting ``cigarettes or smokeless tobacco'';
       (2) in subsection (a)--
       (A) in the matter preceding paragraph (1)--
       (i) by inserting ``Contents.--''after ``(a)''
       (ii) by striking ``or transfers'' and inserting ``, 
     transfers, or ships'';
       (iii) by inserting ``, locality, or Indian country of an 
     Indian tribe'' after ``a State'';
       (iv) by striking ``to other than a distributor licensed by 
     or located in such State,''; and
       (v) by striking ``or transfer and shipment'' and inserting 
     ``, transfer, or shipment'';
       (B) in paragraph (1)--
       (i) by striking ``with the tobacco tax administrator of the 
     State'' and inserting ``with the Attorney General of the 
     United States and with the tobacco tax administrators of the 
     State and place''; and
       (ii) by striking ``; and'' and inserting the following: ``, 
     as well as telephone numbers for each place of business, a 
     principal electronic mail address, any website addresses, and 
     the name, address, and telephone number of an agent in the 
     State authorized to accept service on behalf of such 
     person;'';
       (C) in paragraph (2), by striking ``and the quantity 
     thereof.'' and inserting ``the quantity thereof, and the 
     name, address, and phone number of the person delivering the 
     shipment to the recipient on behalf of the delivery seller, 
     with all invoice or memoranda information relating to 
     specific customers to be organized by city or town and by zip 
     code; and''; and
       (D) by adding at the end the following:
       ``(3) with respect to each memorandum or invoice filed with 
     a State under paragraph (2), also file copies of such 
     memorandum or invoice with the tobacco tax administrators and 
     chief law enforcement officers of the local governments and 
     Indian tribes operating within the borders of the State that 
     apply their own local or tribal taxes on cigarettes or 
     smokeless tobacco.'';
       (3) in subsection (b)--
       (A) by inserting ``Presumptive Evidence.--'' after ``(b)'';
       (B) by striking ``(1) that'' and inserting ``that''; and
       (C) by striking ``, and (2)'' and all that follows and 
     inserting a period; and
       (4) by adding at the end the following:
       ``(c) Use of Information.--A tobacco tax administrator or 
     chief law enforcement officer who receives a memorandum or 
     invoice under paragraph (2) or (3) of subsection (a) shall 
     use such memorandum or invoice solely for the purposes of the 
     enforcement of this Act and the collection of any taxes owed 
     on related sales of cigarettes and smokeless tobacco, and 
     shall keep confidential any personal information in such 
     memorandum or invoice not otherwise required for such 
     purposes.''.
       (c) Requirements for Delivery Sales.--The Jenkins Act is 
     amended by inserting after section 2 the following:

     ``SEC. 2A. DELIVERY SALES.

       ``(a) In General.--With respect to delivery sales into a 
     specific State and place, each delivery seller shall comply 
     with--
       ``(1) the shipping requirements set forth in subsection 
     (b);
       ``(2) the recordkeeping requirements set forth in 
     subsection (c);
       ``(3) all State, local, tribal, and other laws generally 
     applicable to sales of cigarettes or smokeless tobacco as if 
     such delivery sales occurred entirely within the specific 
     State and place, including laws imposing--
       ``(A) excise taxes;
       ``(B) licensing and tax-stamping requirements;
       ``(C) restrictions on sales to minors; and
       ``(D) other payment obligations or legal requirements 
     relating to the sale, distribution, or delivery of cigarettes 
     or smokeless tobacco; and
       ``(4) the tax collection requirements set forth in 
     subsection (d).
       ``(b) Shipping and Packaging.--
       ``(1) Required statement.--For any shipping package 
     containing cigarettes or smokeless tobacco, the delivery 
     seller shall include on the bill of lading, if any, and on 
     the outside of the shipping package, on the same surface as 
     the delivery address, a clear and conspicuous statement 
     providing as follows: `CIGARETTES/SMOKELESS TOBACCO: FEDERAL 
     LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND 
     COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING 
     OBLIGATIONS'.
       ``(2) Failure to label.--Any shipping package described in 
     paragraph (1) that is not labeled in accordance with that 
     paragraph shall be treated as nondeliverable matter by a 
     common carrier, other delivery service, or the United States 
     Postal Service if the common carrier, other delivery service, 
     or the United States Postal Service, as the case may be, 
     knows or should know the package contains cigarettes or 
     smokeless tobacco. Nothing in this paragraph shall require 
     the common carrier, other delivery service, or the United 
     States Postal Service to open any package to determine its 
     contents.
       ``(3) Weight restriction.--A delivery seller shall not 
     sell, offer for sale, deliver, or cause to be delivered in 
     any single sale or single delivery any cigarettes or 
     smokeless tobacco weighing more than 10 pounds.
       ``(4) Age verification.--Notwithstanding any other 
     provision of law, a delivery seller

[[Page 16989]]

     who mails or ships cigarettes or smokeless tobacco in 
     connection with a delivery sale--
       ``(A) shall not sell, deliver, or cause to be delivered any 
     tobacco products to a person under the minimum age required 
     for the legal sale or purchase of tobacco products, as 
     determined by either State or local law at the place of 
     delivery; and
       ``(B) shall use a method of mailing or shipping that 
     requires--
       ``(i) the purchaser placing the delivery sale order, or an 
     adult who is at least the minimum age required for the legal 
     sale or purchase of tobacco products, as determined by either 
     State or local law at the place of delivery, to sign to 
     accept delivery of the shipping container at the delivery 
     address; and
       ``(ii) the person who signs to accept delivery of the 
     shipping container to provide proof, in the form of a valid, 
     government-issued identification bearing a photograph of the 
     individual, that the person is at least the minimum age 
     required for the legal sale or purchase of tobacco products, 
     as determined by either State or local law at the place of 
     delivery.
       ``(c) Records.--
       ``(1) In general.--Each delivery seller shall keep a record 
     of any delivery sale, including all of the information 
     described in section 2(a)(2), organized by the State, and 
     within such State, by the city or town and by zip code, into 
     which such delivery sale is so made.
       ``(2) Record retention.--Records of a delivery sale shall 
     be kept as described in paragraph (1) in the year in which 
     the delivery sale is made and for the next 4 years.
       ``(3) Access for officials.--Records kept under paragraph 
     (1) shall be made available to tobacco tax administrators of 
     the States, to local governments and Indian tribes that apply 
     their own local or tribal taxes on cigarettes or smokeless 
     tobacco, to the attorneys general of the States, to the chief 
     law enforcement officers of such local governments and Indian 
     tribes, and to the Attorney General of the United States in 
     order to ensure the compliance of persons making delivery 
     sales with the requirements of this Act.
       ``(d) Delivery.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     delivery seller may sell or deliver to any consumer, or 
     tender to any common carrier or other delivery service, any 
     cigarettes or smokeless tobacco pursuant to a delivery sale 
     unless, in advance of the sale, delivery, or tender--
       ``(A) any cigarette or smokeless tobacco excise tax that is 
     imposed by the State in which the cigarettes or smokeless 
     tobacco are to be delivered has been paid to the State;
       ``(B) any cigarette or smokeless tobacco excise tax that is 
     imposed by the local government of the place in which the 
     cigarettes or smokeless tobacco are to be delivered has been 
     paid to the local government; and
       ``(C) any required stamps or other indicia that such excise 
     tax has been paid are properly affixed or applied to the 
     cigarettes or smokeless tobacco.
       ``(2) Exception.--Paragraph (1) does not apply to a 
     delivery sale of smokeless tobacco if the law of the State or 
     local government of the place where the smokeless tobacco is 
     to be delivered requires or otherwise provides that delivery 
     sellers collect the excise tax from the consumer and remit 
     the excise tax to the State or local government, and the 
     delivery seller complies with the requirement.
       ``(e) List of Unregistered or Noncompliant Delivery 
     Sellers.--
       ``(1) In general.--
       ``(A) Initial list.--Not later than 90 days after this 
     subsection goes into effect under section 10 of the Prevent 
     All Cigarette Trafficking Act of 2006, the Attorney General 
     of the United States shall compile a list of delivery sellers 
     of cigarettes or smokeless tobacco that have not registered 
     with the Attorney General, pursuant to section 2(a) or that 
     are otherwise not in compliance with this Act, and--
       ``(i) distribute the list to--

       ``(I) the attorney general and tax administrator of every 
     State;
       ``(II) common carriers and other persons that deliver small 
     packages to consumers in interstate commerce, including the 
     United States Postal Service; and
       ``(III) at the discretion of the Attorney General of the 
     United States, to any other persons; and

       ``(ii) publicize and make the list available to any other 
     person engaged in the business of interstate deliveries or 
     who delivers cigarettes or smokeless tobacco in or into any 
     State.
       ``(B) List contents.--To the extent known, the Attorney 
     General of the United States shall include, for each delivery 
     seller on the list described in subparagraph (A)--
       ``(i) all names the delivery seller uses in the transaction 
     of its business or on packages delivered to customers;
       ``(ii) all addresses from which the delivery seller does 
     business or ships cigarettes or smokeless tobacco;
       ``(iii) the website addresses, primary e-mail address, and 
     phone number of the delivery seller; and
       ``(iv) any other information that the Attorney General 
     determines would facilitate compliance with this subsection 
     by recipients of the list.
       ``(C) Updating.--The Attorney General of the United States 
     shall update and distribute the list at least once every 4 
     months, and may distribute the list and any updates by 
     regular mail, electronic mail, or any other reasonable means, 
     or by providing recipients with access to the list through a 
     nonpublic website that the Attorney General of the United 
     States regularly updates.
       ``(D) State, local, or tribal additions.--The Attorney 
     General of the United States shall include in the list under 
     subparagraph (A) any noncomplying delivery sellers identified 
     by any State, local, or tribal government under paragraph 
     (5), and shall distribute the list to the attorney general or 
     chief law enforcement official and the tax administrator of 
     any government submitting any such information and to any 
     common carriers or other persons who deliver small packages 
     to consumers identified by any government pursuant to 
     paragraph (5).
       ``(E) Confidentiality.--The list distributed pursuant to 
     subparagraph (A) shall be confidential, and any person 
     receiving the list shall maintain the confidentiality of the 
     list but may deliver the list, for enforcement purposes, to 
     any government official or to any common carrier or other 
     person that delivers tobacco products or small packages to 
     consumers. Nothing in this section shall prohibit a common 
     carrier, the United States Postal Service, or any other 
     person receiving the list from discussing with the listed 
     delivery sellers the delivery sellers' inclusion on the list 
     and the resulting effects on any services requested by such 
     listed delivery seller.
       ``(2) Prohibition on delivery.--
       ``(A) In general.--Commencing on the date that is 60 days 
     after the date of the initial distribution or availability of 
     the list under paragraph (1)(A), no person who receives the 
     list under paragraph (1), and no person who delivers 
     cigarettes or smokeless tobacco to consumers, shall knowingly 
     complete, cause to be completed, or complete its portion of a 
     delivery of any package for any person whose name and address 
     are on the list, unless--
       ``(i) the person making the delivery knows or believes in 
     good faith that the item does not include cigarettes or 
     smokeless tobacco;
       ``(ii) the delivery is made to a person lawfully engaged in 
     the business of manufacturing, distributing, or selling 
     cigarettes or smokeless tobacco; or
       ``(iii) the package being delivered weighs more than 100 
     pounds and the person making the delivery does not know or 
     have reasonable cause to believe that the package contains 
     cigarettes or smokeless tobacco.
       ``(B) Implementation of updates.--Commencing on the date 
     that is 30 days after the date of the distribution or 
     availability of any updates or corrections to the list under 
     paragraph (1), all recipients and all common carriers or 
     other persons that deliver cigarettes or smokeless tobacco to 
     consumers shall be subject to subparagraph (A) in regard to 
     such corrections or updates.
       ``(3) Shipments from persons on list.--
       ``(A) In general.--In the event that a common carrier or 
     other delivery service delays or interrupts the delivery of a 
     package it has in its possession because it determines or has 
     reason to believe that the person ordering the delivery is on 
     a list distributed under paragraph (1)--
       ``(i) the person ordering the delivery shall be obligated 
     to pay--

       ``(I) the common carrier or other delivery service as if 
     the delivery of the package had been timely completed; and
       ``(II) if the package is not deliverable, any reasonable 
     additional fee or charge levied by the common carrier or 
     other delivery service to cover its extra costs and 
     inconvenience and to serve as a disincentive against such 
     noncomplying delivery orders; and

       ``(ii) if the package is determined not to be deliverable, 
     the common carrier or other delivery service shall, in its 
     discretion, either provide the package and its contents to a 
     Federal, State, or local law enforcement agency or destroy 
     the package and its contents.
       ``(B) Records.--A common carrier or other delivery service 
     shall maintain, for a period of 5 years, any records kept in 
     the ordinary course of business relating to any deliveries 
     interrupted pursuant to this paragraph and provide that 
     information, upon request, to the Attorney General of the 
     United States or to the attorney general or chief law 
     enforcement official or tax administrator of any State, 
     local, or tribal government.
       ``(C) Confidentiality.--Any person receiving records under 
     subparagraph (B) shall use such records solely for the 
     purposes of the enforcement of this Act and the collection of 
     any taxes owed on related sales of cigarettes and smokeless 
     tobacco, and the person receiving records under subparagraph 
     (B) shall keep confidential any personal information in such 
     records not otherwise required for such purposes.
       ``(4) Preemption.--
       ``(A) In general.--No State, local, or tribal government, 
     nor any political authority of two or more State, local, or 
     tribal governments, may enact or enforce any law or 
     regulation relating to delivery sales that restricts 
     deliveries of cigarettes or smokeless tobacco to consumers by 
     common carriers or other delivery services on behalf of 
     delivery sellers by--

[[Page 16990]]

       ``(i) requiring that the common carrier or other delivery 
     service verify the age or identity of the consumer accepting 
     the delivery by requiring the person who signs to accept 
     delivery of the shipping container to provide proof, in the 
     form of a valid, government-issued identification bearing a 
     photograph of the individual, that such person is at least 
     the minimum age required for the legal sale or purchase of 
     tobacco products, as determined by either State or local law 
     at the place of delivery;
       ``(ii) requiring that the common carrier or other delivery 
     service obtain a signature from the consumer accepting the 
     delivery;
       ``(iii) requiring that the common carrier or other delivery 
     service verify that all applicable taxes have been paid;
       ``(iv) requiring that packages delivered by the common 
     carrier or other delivery service contain any particular 
     labels, notice, or markings; or
       ``(v) prohibiting common carriers or other delivery 
     services from making deliveries on the basis of whether the 
     delivery seller is or is not identified on any list of 
     delivery sellers maintained and distributed by any entity 
     other than the Federal Government.
     Nothing in this paragraph may be construed to preempt or 
     supersede State laws prohibiting the delivery sale, or the 
     shipment or delivery pursuant to a delivery sale, of 
     cigarettes or smokeless tobacco to individual consumers.
       ``(B) Relationship to other laws.--Nothing in this 
     paragraph shall be construed to prohibit, expand, restrict, 
     or otherwise amend or modify--
       ``(i) section 14501(c)(1) or 41713(b)(4) of title 49, 
     United States Code;
       ``(ii) any other restrictions in Federal law on the ability 
     of State, local, or tribal governments to regulate common 
     carriers; or
       ``(iii) any provision of State, local, or tribal law 
     regulating common carriers that falls within the provisions 
     of chapter 49 of the United States Code, sections 14501(c)(2) 
     or 41713(b)(4)(B).
       ``(5) State, local, and tribal additions.--
       ``(A) In general.--Any State, local, or tribal government 
     shall provide the Attorney General of the United States 
     with--
       ``(i) all known names, addresses, website addresses, and 
     other primary contact information of any delivery seller that 
     offers for sale or makes sales of cigarettes or smokeless 
     tobacco in or into the State, locality, or tribal land but 
     has failed to register with or make reports to the respective 
     tax administrator, as required by this Act, or that has been 
     found in a legal proceeding to have otherwise failed to 
     comply with this Act; and
       ``(ii) a list of common carriers and other persons who make 
     deliveries of cigarettes or smokeless tobacco in or into the 
     State, locality, or tribal lands.
       ``(B) Updates.--Any government providing a list to the 
     Attorney General of the United States under subparagraph (A) 
     shall also provide updates and corrections every 4 months 
     until such time as such government notifies the Attorney 
     General of the United States in writing that such government 
     no longer desires to submit such information to supplement 
     the list maintained and distributed by the Attorney General 
     of the United States under paragraph (1).
       ``(C) Removal after withdrawal.--Upon receiving written 
     notice that a government no longer desires to submit 
     information under subparagraph (A), the Attorney General of 
     the United States shall remove from the list under paragraph 
     (1) any persons that are on the list solely because of such 
     government's prior submissions of its list of noncomplying 
     delivery sellers of cigarettes or smokeless tobacco or its 
     subsequent updates and corrections.
       ``(6) Deadline to incorporate additions.--The Attorney 
     General of the United States shall--
       ``(A) include any delivery seller identified and submitted 
     by a State, local, or tribal government under paragraph (5) 
     in any list or update that is distributed or made available 
     under paragraph (1) on or after the date that is 30 days 
     after the date on which the information is received by the 
     Attorney General of the United States; and
       ``(B) distribute any such list or update to any common 
     carrier or other person who makes deliveries of cigarettes or 
     smokeless tobacco that has been identified and submitted by 
     another government, pursuant to paragraph (5).
       ``(7) Notice to delivery sellers.--Not later than 14 days 
     prior to including any delivery seller on the initial list 
     distributed or made available under paragraph (1), or on any 
     subsequent list or update for the first time, the Attorney 
     General of the United States shall make a reasonable attempt 
     to send notice to the delivery seller by letter, electronic 
     mail, or other means that the delivery seller is being placed 
     on such list or update, with that notice including the text 
     of this Act.
       ``(8) Limitations.--
       ``(A) In general.--Any common carrier or other person 
     making a delivery subject to this subsection shall not be 
     required or otherwise obligated to--
       ``(i) determine whether any list distributed or made 
     available under paragraph (1) is complete, accurate, or up-
     to-date;
       ``(ii) determine whether a person ordering a delivery is in 
     compliance with this Act; or
       ``(iii) open or inspect, pursuant to this Act, any package 
     being delivered to determine its contents.
       ``(B) Alternate names.--Any common carrier or other person 
     making a delivery subject to this subsection shall not be 
     required or otherwise obligated to make any inquiries or 
     otherwise determine whether a person ordering a delivery is a 
     delivery seller on the list under paragraph (1) who is using 
     a different name or address in order to evade the related 
     delivery restrictions, but shall not knowingly deliver any 
     packages to consumers for any such delivery seller who the 
     common carrier or other delivery service knows is a delivery 
     seller who is on the list under paragraph (1) but is using a 
     different name or address to evade the delivery restrictions 
     of paragraph (2).
       ``(C) Penalties.--Any common carrier or person in the 
     business of delivering packages on behalf of other persons 
     shall not be subject to any penalty under section 14101(a) of 
     title 49, United States Code, or any other provision of law 
     for--
       ``(i) not making any specific delivery, or any deliveries 
     at all, on behalf of any person on the list under paragraph 
     (1);
       ``(ii) not, as a matter of regular practice and procedure, 
     making any deliveries, or any deliveries in certain States, 
     of any cigarettes or smokeless tobacco for any person or for 
     any person not in the business of manufacturing, 
     distributing, or selling cigarettes or smokeless tobacco; or
       ``(iii) delaying or not making a delivery for any person 
     because of reasonable efforts to comply with this Act.
       ``(D) Other limits.--Section 2 and subsections (a), (b), 
     (c), and (d) of this section shall not be interpreted to 
     impose any responsibilities, requirements, or liability on 
     common carriers.
       ``(f) Presumption.--For purposes of this Act, a delivery 
     sale shall be deemed to have occurred in the State and place 
     where the buyer obtains personal possession of the cigarettes 
     or smokeless tobacco, and a delivery pursuant to a delivery 
     sale is deemed to have been initiated or ordered by the 
     delivery seller.''.
       (d) Penalties.--The Jenkins Act is amended by striking 
     section 3 and inserting the following:

     ``SEC. 3. PENALTIES.

       ``(a) Criminal Penalties.--
       ``(1) In general.--Except as provided in paragraph (2), 
     whoever violates any provision of this Act shall be guilty of 
     a felony and shall be imprisoned not more than 3 years, fined 
     under title 18, United States Code, or both.
       ``(2) Exceptions.--
       ``(A) Governments.--Paragraph (1) shall not apply to a 
     State, local, or tribal government.
       ``(B) Delivery violations.--A common carrier or independent 
     delivery service, or employee of a common carrier or 
     independent delivery service, shall be subject to criminal 
     penalties under paragraph (1) for a violation of section 
     2A(e) only if the violation is committed intentionally for 
     the purpose of--
       ``(i) obtaining the business of delivery sellers known to 
     the common carrier or independent delivery service not to be 
     in compliance with this Act; or
       ``(ii) assisting a delivery seller to violate or otherwise 
     evade compliance with section 2A.
       ``(b) Civil Penalties.--
       ``(1) In general.--Except as provided in paragraph (3), 
     whoever violates any provision of this Act shall be subject 
     to a civil penalty in an amount not to exceed--
       ``(A) in the case of a delivery seller, the greater of--
       ``(i) $5,000 in the case of the first violation, or $10,000 
     for any other violation; or
       ``(ii) for any violation, 2 percent of the gross sales of 
     cigarettes or smokeless tobacco of such person during the 1-
     year period ending on the date of the violation.
       ``(B) in the case of a common carrier or other delivery 
     service, $2,500 in the case of a first violation, or $5,000 
     for any violation within 1 year of a prior violation.
       ``(2) Relation to other penalties.--A civil penalty under 
     paragraph (1) for a violation of this Act shall be imposed in 
     addition to any criminal penalty under subsection (a) and any 
     other damages, equitable relief, or injunctive relief awarded 
     by the court, including, but not limited to, the payment of 
     any unpaid taxes to the appropriate Federal, State, local, or 
     tribal governments.
       ``(3) Exceptions.--
       ``(A) Delivery violations.--An employee of a common carrier 
     or independent delivery service shall be subject to civil 
     penalties under paragraph (1) for a violation of section 
     2A(e) only if the violation is committed intentionally for 
     the purpose of--
       ``(i) obtaining the business of delivery sellers known to 
     the common carrier or independent delivery service not to be 
     in compliance with this Act; or
       ``(ii) assisting a delivery seller to violate or otherwise 
     evade compliance with section 2A.
       ``(B) Other limitations.--No common carrier or independent 
     delivery service shall be subject to civil penalties under 
     paragraph (1) for a violation of section 2A(e) if--

[[Page 16991]]

       ``(i) the common carrier or independent delivery service 
     has implemented and enforces effective policies and practices 
     for complying with that section; or
       ``(ii) an employee of the common carrier or independent 
     delivery service who physically receives and processes 
     orders, picks up packages, processes packages, or makes 
     deliveries, takes actions that are outside the scope of 
     employment of the employee in the course of the violation, or 
     that violate the implemented and enforced policies of the 
     common carrier or independent delivery service described in 
     clause (i).''.
       (e) Enforcement.--The Jenkins Act is amended by striking 
     section 4 and inserting the following:

     ``SEC. 4. ENFORCEMENT.

       ``(a) In General.--The United States district courts shall 
     have jurisdiction to prevent and restrain violations of this 
     Act and to provide other appropriate injunctive or equitable 
     relief, including money damages, for such violations.
       ``(b) Authority of the Attorney General.--The Attorney 
     General of the United States shall administer and enforce the 
     provisions of this Act.
       ``(c) State, Local, and Tribal Enforcement.--
       ``(1) In general.--
       ``(A) Standing.--A State, through its attorney general (or 
     a designee thereof), or a local government or Indian tribe 
     that levies a tax subject to section 2A(a)(3), through its 
     chief law enforcement officer (or a designee thereof), may 
     bring an action in a United States district court to prevent 
     and restrain violations of this Act by any person (or by any 
     person controlling such person) or to obtain any other 
     appropriate relief from any person (or from any person 
     controlling such person) for violations of this Act, 
     including civil penalties, money damages, and injunctive or 
     other equitable relief.
       ``(B) Sovereign immunity.--Nothing in this Act shall be 
     deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian tribe 
     against any unconsented lawsuit under this Act, or otherwise 
     to restrict, expand, or modify any sovereign immunity of a 
     State or local government or Indian tribe.
       ``(2) Provision of information.--A State, through its 
     attorney general, or a local government or Indian tribe that 
     levies a tax subject to section 2A(a)(3), through its chief 
     law enforcement officer (or a designee thereof), may provide 
     evidence of a violation of this Act by any person not subject 
     to State, local, or tribal government enforcement actions for 
     violations of this Act to the Attorney General of the United 
     States or a United States attorney, who shall take 
     appropriate actions to enforce the provisions of this Act.
       ``(3) Use of penalties collected.--
       ``(A) In general.--There is established a separate account 
     in the Treasury known as the `PACT Anti-Trafficking Fund'. 
     Notwithstanding any other provision of law and subject to 
     subparagraph (B), an amount equal to 50 percent of any 
     criminal and civil penalties collected by the United States 
     Government in enforcing the provisions of this Act shall be 
     transferred into the PACT Anti-Trafficking Fund and shall be 
     available to the Attorney General of the United States for 
     purposes of enforcing the provisions of this Act and other 
     laws relating to contraband tobacco products.
       ``(B) Allocation of funds.--Of the amount available to the 
     Attorney General under subparagraph (A), not less than 50 
     percent shall be made available only to the agencies and 
     offices within the Department of Justice that were 
     responsible for the enforcement actions in which the 
     penalties concerned were imposed or for any underlying 
     investigations.
       ``(4) Nonexclusivity of remedy.--
       ``(A) In general.--The remedies available under this 
     section and section 3 are in addition to any other remedies 
     available under Federal, State, local, tribal, or other law.
       ``(B) State court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized State official to proceed in State 
     court, or take other enforcement actions, on the basis of an 
     alleged violation of State or other law.
       ``(C) Tribal court proceedings.--Nothing in this Act shall 
     be construed to expand, restrict, or otherwise modify any 
     right of an authorized Indian tribal government official to 
     proceed in tribal court, or take other enforcement actions, 
     on the basis of an alleged violation of tribal law.
       ``(D) Local government enforcement.--Nothing in this Act 
     shall be construed to expand, restrict, or otherwise modify 
     any right of an authorized local government official to 
     proceed in State court, or take other enforcement actions, on 
     the basis of an alleged violation of local or other law.
       ``(d) Persons Dealing in Tobacco Products.--Any person who 
     holds a permit under section 5712 of the Internal Revenue 
     Code of 1986 (regarding permitting of manufacturers and 
     importers of tobacco products and export warehouse 
     proprietors) may bring an action in a United States district 
     court to prevent and restrain violations of this Act by any 
     person (or by any person controlling such person) other than 
     a State, local, or tribal government.
       ``(e) Notice.--
       ``(1) Persons dealing in tobacco products.--Any person who 
     commences a civil action under subsection (d) shall inform 
     the Attorney General of the United States of the action.
       ``(2) State, local, and tribal actions.--It is the sense of 
     Congress that the attorney general of any State, or chief law 
     enforcement officer of any locality or tribe, that commences 
     a civil action under this section should inform the Attorney 
     General of the United States of the action.
       ``(f) Public Notice.--
       ``(1) In general.--The Attorney General of the United 
     States shall make available to the public, by posting such 
     information on the Internet and by other appropriate means, 
     information regarding all enforcement actions undertaken by 
     the Attorney General or United States attorneys, or reported 
     to the Attorney General, under this section, including 
     information regarding the resolution of such actions and how 
     the Attorney General and the United States attorney have 
     responded to referrals of evidence of violations pursuant to 
     paragraph (2).
       ``(2) Reports to congress.--The Attorney General shall 
     submit to Congress each year a report containing the 
     information described in paragraph (1).''.
       (f) Conforming and Clerical Amendments.--The section 
     heading for chapter 10A of title 15, United States Code, is 
     amended to read as follows: ``REMOTE SALES OF CIGARETTES AND 
     SMOKELESS TOBACCO''.

     SEC. 3. TREATMENT OF CIGARETTES AND SMOKELESS TOBACCO AS 
                   NONMAILABLE MATTER.

       Section 1716 of title 18, United States Code, is amended--
       (1) by redesignating subsections (j) and (k) as subsections 
     (k) and (l), respectively; and
       (2) by inserting after subsection (i) the following:
       ``(j) Tobacco Products.--
       ``(1) Prohibition.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), all cigarettes (as that term is defined in section 
     1(2) of the Act of October 19, 1949 (15 U.S.C. 375; commonly 
     referred to as the `Jenkins Act')) and smokeless tobacco (as 
     that term is defined in section 1(12) of that Act), are 
     nonmailable and shall not be deposited in or carried through 
     the mails. The United States Postal Service shall not accept 
     for delivery or transmit through the mails any package that 
     it knows or has reasonable cause to believe contains any 
     cigarettes or smokeless tobacco made nonmailable by this 
     subsection.
       ``(B) Reasonable cause to believe.--For purposes of this 
     section, notification to the United States Postal Service by 
     the Attorney General, a United States attorney, or a State 
     Attorney General that an individual or entity is primarily 
     engaged in the business of transmitting cigarettes or 
     smokeless tobacco made nonmailable by this section shall 
     constitute reasonable cause to believe that any packages 
     presented to the United States Postal Service by such 
     individual or entity contain nonmailable cigarettes or 
     smokeless tobacco.
       ``(C) Cigars.--Subparagraph (A) shall not apply to cigars 
     (as that term is defined in section 5702(a) of the Internal 
     Revenue Code of 1986).
       ``(D) Geographic exception.--Subparagraph (A) shall not 
     apply to mailings within or into any State that is not 
     contiguous with at least 1 other State of the United States. 
     For purposes of this paragraph, `State' means any of the 50 
     States or the District of Columbia.
       ``(2) Packaging exceptions inapplicable.--Subsection (b) 
     shall not apply to any tobacco product made nonmailable by 
     this subsection.
       ``(3) Seizure and forfeiture.--Any cigarettes or smokeless 
     tobacco made nonmailable by this subsection that are 
     deposited in the mails shall be subject to seizure and 
     forfeiture, and any tobacco products so seized and forfeited 
     shall either be destroyed or retained by Government officials 
     for the detection or prosecution of crimes or related 
     investigations and then destroyed.
       ``(4) Additional penalties.--In addition to any other fines 
     and penalties imposed by this chapter for violations of this 
     section, any person violating this subsection shall be 
     subject to an additional penalty in the amount of 10 times 
     the retail value of the nonmailable cigarettes or smokeless 
     tobacco, including all Federal, State, and local taxes.
       ``(5) Use of penalties.--There is established a separate 
     account in the Treasury known as the `PACT Postal Service 
     Fund'. Notwithstanding any other provision of law, an amount 
     equal to 50 percent of any criminal and civil fines or 
     monetary penalties collected by the United States Government 
     in enforcing the provisions of this subsection shall be 
     transferred into the PACT Postal Service Fund and shall be 
     available to the Postmaster General for the purpose of 
     enforcing the provisions of this subsection.''.

     SEC. 4. COMPLIANCE WITH MODEL STATUTE OR QUALIFYING STATUTE.

       (a) In General.--A Tobacco Product Manufacturer or importer 
     may not sell in, deliver to, or place for delivery sale, or 
     cause to be sold in, delivered to, or placed for delivery 
     sale in a State that is a party to the Master Settlement 
     Agreement, any cigarette manufactured by a Tobacco Product 
     Manufacturer

[[Page 16992]]

     that is not in full compliance with the terms of the Model 
     Statute or Qualifying Statute enacted by such State requiring 
     funds to be placed into a qualified escrow account under 
     specified conditions, or any regulations promulgated pursuant 
     to such statute.
       (b) Jurisdiction To Prevent and Restrain Violations.--
       (1) In general.--The United States district courts shall 
     have jurisdiction to prevent and restrain violations of 
     subsection (a) in accordance with this subsection.
       (2) Initiation of action.--A State, through its attorney 
     general, may bring an action in the United States district 
     courts to prevent and restrain violations of subsection (a) 
     by any person (or by any person controlling such person).
       (3) Attorney fees.--In any action under paragraph (2), a 
     State, through its attorney general, shall be entitled to 
     reasonable attorney fees from a person found to have 
     willfully and knowingly violated subsection (a).
       (4) Nonexclusivity of remedies.--The remedy available under 
     paragraph (2) is in addition to any other remedies available 
     under Federal, State, or other law. No provision of this Act 
     or any other Federal law shall be held or construed to 
     prohibit or preempt the Master Settlement Agreement, the 
     Model Statute (as defined in the Master Settlement 
     Agreement), any legislation amending or complementary to the 
     Model Statute in effect as of June 1, 2006, or any 
     legislation substantially similar to such existing, amending, 
     or complementary legislation hereinafter enacted.
       (5) Other enforcement actions.--Nothing in this subsection 
     shall be construed to prohibit an authorized State official 
     from proceeding in State court or taking other enforcement 
     actions on the basis of an alleged violation of State or 
     other law.
       (6) Authority of the attorney general.--The Attorney 
     General of the United States may administer and enforce 
     subsection (a).
       (c) Definitions.--In this section the following definitions 
     apply:
       (1) Delivery sale.--The term ``delivery sale'' means any 
     sale of cigarettes or smokeless tobacco to a consumer if--
       (A) the consumer submits the order for such sale by means 
     of a telephone or other method of voice transmission, the 
     mails, or the Internet or other online service, or the seller 
     is otherwise not in the physical presence of the buyer when 
     the request for purchase or order is made; or
       (B) the cigarettes or smokeless tobacco are delivered by 
     use of a common carrier, private delivery service, or the 
     mails, or the seller is not in the physical presence of the 
     buyer when the buyer obtains possession of the cigarettes or 
     smokeless tobacco.
       (2) Importer.--The term ``importer'' means each of the 
     following:
       (A) Shipping or consigning.--Any person in the United 
     States to whom non-tax-paid tobacco products manufactured in 
     a foreign country, Puerto Rico, the Virgin Islands, or a 
     possession of the United States are shipped or consigned.
       (B) Manufacturing warehouses.--Any person who removes 
     cigars or cigarettes for sale or consumption in the United 
     States from a customs-bonded manufacturing warehouse.
       (C) Unlawful importing.--Any person who smuggles or 
     otherwise unlawfully brings tobacco products into the United 
     States.
       (3) Master settlement agreement.--The term ``Master 
     Settlement Agreement'' means the agreement executed November 
     23, 1998, between the attorneys general of 46 States, the 
     District of Columbia, the Commonwealth of Puerto Rico, and 4 
     territories of the United States and certain tobacco 
     manufacturers.
       (4) Model statute; qualifying statute.--The terms ``Model 
     Statute'' and ``Qualifying Statute'' means a statute as 
     defined in section IX(d)(2)(e) of the Master Settlement 
     Agreement.
       (5) Tobacco product manufacturer.--The term ``Tobacco 
     Product Manufacturer'' has the meaning given that term in 
     section II(uu) of the Master Settlement Agreement.

     SEC. 5. UNDERCOVER CRIMINAL INVESTIGATIONS OF THE BUREAU OF 
                   ALCOHOL, TOBACCO, FIREARMS AND EXPLOSIVES.

       (a) Appropriations Available.--
       (1) In general.--Commencing as of the date of the enactment 
     of this Act and without fiscal year limitation, the 
     authorities in section 102(b) of the Department of Justice 
     and Related Agencies Appropriations Act, 1993 (title I of 
     Public Law 102-395; 106 Stat. 1838) shall be available to the 
     Bureau of Alcohol, Tobacco, Firearms and Explosives for 
     undercover investigative operations of the Bureau which are 
     necessary for the detection and prosecution of crimes against 
     the United States.
       (2) Conforming rule.--For purposes of the exercise by the 
     Bureau of Alcohol, Tobacco, Firearms and Explosives of the 
     authorities referenced in paragraph (1), a reference in 
     section 102(b) of the Department of Justice and Related 
     Agencies Appropriations Act, 1993 (title I of Public Law 102-
     395; 106 Stat. 1838) to the Federal Bureau of Investigation 
     shall be deemed to be a reference to the Bureau of Alcohol, 
     Tobacco, Firearms and Explosives, and a reference to the 
     Director of the Federal Bureau of Investigation shall be 
     deemed to be a reference to the Director of the Bureau of 
     Alcohol, Tobacco, Firearms and Explosives.
       (b) Limitations in Appropriations Acts.--The exercise of 
     the authorities referred to in subsection (a)(1) by the 
     Bureau of Alcohol, Tobacco, Firearms and Explosives shall be 
     subject to the provisions of appropriations Acts.

     SEC. 6. INSPECTION BY BUREAU OF ALCOHOL, TOBACCO, FIREARMS 
                   AND EXPLOSIVES OF RECORDS OF CERTAIN CIGARETTE 
                   AND SMOKELESS TOBACCO SELLERS.

       (a) In General.--Any officer of the Bureau of Alcohol, 
     Tobacco, Firearms and Explosives may, during normal business 
     hours, enter the premises of any person described in 
     subsection (b) for the purposes of inspecting--
       (1) any records or information required to be maintained by 
     such person under the provisions of law referred to in 
     subsection (d); or
       (2) any cigarettes or smokeless tobacco kept or stored by 
     such person at such premises.
       (b) Covered Persons.--Subsection (a) applies to any person 
     who engages in a delivery sale, and who ships, sells, 
     distributes, or receives any quantity in excess of 10,000 
     cigarettes, or any quantity in excess of 500 single-unit 
     consumer-sized cans or packages of smokeless tobacco, within 
     a single month.
       (c) Relief.--
       (1) In general.--The district courts of the United States 
     shall have the authority in a civil action under this 
     subsection to compel inspections authorized by subsection 
     (a).
       (2) Violations.--Whoever violates subsection (a) or an 
     order issued pursuant to paragraph (1) shall be subject to a 
     civil penalty in an amount not to exceed $10,000 for each 
     violation.
       (d) Covered Provisions of Law.--The provisions of law 
     referred to in this subsection are--
       (1) the Act of October 19, 1949 (15 U.S.C. 375; commonly 
     referred to as the ``Jenkins Act'');
       (2) chapter 114 of title 18, United States Code; and
       (3) this Act.
       (e) Delivery Sale Defined.--In this section, the term 
     ``delivery sale'' has the meaning given that term in 2343(e) 
     of title 18, United States Code, as amended by section 
     4(d)(4).

     SEC. 7. COMPLIANCE WITH TARIFF ACT OF 1930.

       (a) Inapplicability of Exemptions From Requirements for 
     Entry of Certain Cigarettes.--Section 802(b)(1) of the Tariff 
     Act of 1930 (19 U.S.C. 1681a(b)(1)) is amended by adding at 
     the end the following: ``This paragraph shall not apply to 
     any cigarettes sold in connection with a delivery sale (as 
     that term is defined in section 1(6) of the Act of October 
     19, 1949 (commonly referred to as the `Jenkins Act')).''.
       (b) State and Tribal Access to Customs Certifications.--
     Section 802 of the Tariff Act of 1930 (19 U.S.C. 1681a) is 
     amended by adding at the end the following:
       ``(d) State and Tribal Access to Customs Certifications.--A 
     State, through its attorney general, and an Indian tribe (as 
     that term is defined in section 4(e) of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 
     450b(e)), through its chief law enforcement officer, shall be 
     entitled to obtain copies of any certification required 
     pursuant to subsection (c) directly--
       ``(1) upon request to the agency of the United States 
     responsible for collecting such certification; or
       ``(2) upon request to the importer, manufacturer, or 
     authorized official of such importer or manufacturer.''.
       (c) Enforcement Provisions.--Section 803 of the Tariff Act 
     of 1930 (19 U.S.C. 1681b) is amended--
       (1) in subsection (b)--
       (A) in the first sentence--
       (i) by inserting ``any State of'' before ``the United 
     States'' the first and second places it appears; and
       (ii) by inserting before the period the following: ``, to 
     any State in which such tobacco product, cigarette papers, or 
     tube was imported, or to the Indian tribe of any Indian 
     country (as that term is defined in section 1151 of title 18, 
     United States Code) in which such tobacco product, cigarette 
     papers, or tube was imported''; and
       (B) in the second sentence, by inserting ``, or to any 
     State or Indian tribe,'' after ``the United States''; and
       (2) by adding at the end the following:
       ``(c) Actions by States and Others.--
       ``(1) Persons dealing in tobacco products.--Any person who 
     holds a permit under section 5712 of the Internal Revenue 
     Code of 1986 (regarding permitting of manufacturers and 
     importers of tobacco products and export warehouse 
     proprietors) may bring an action in the United States 
     district courts to prevent and restrain violations of this 
     title by any person (or by any person controlling such 
     person), other than a State, local, or tribal government.
       ``(2) State, local, and tribal governments.--A State, 
     through its attorney general, or a local government or tribe 
     through its chief law enforcement officer (or a designee 
     thereof), may bring a civil action under this title to 
     prevent and restrain violations of this title by any person 
     (or by any person controlling such person) or to obtain any 
     other appropriate relief for violations of

[[Page 16993]]

     this title by any person (or from any person controlling such 
     person), including civil penalties, money damages, and 
     injunctive or other equitable relief.
       ``(3) Construction generally.--
       ``(A) In general.--Nothing in this subsection shall be 
     deemed to abrogate or constitute a waiver of any sovereign 
     immunity of a State or local government or Indian tribe 
     against any unconsented lawsuit under this title or to 
     otherwise restrict, expand, or modify any sovereign immunity 
     of a State, local government, or Indian tribe.
       ``(B) Construction with other relief.--The remedies 
     available under this subsection are in addition to any other 
     remedies available under Federal, State, local, tribal, or 
     other law.
       ``(4) Construction with forfeiture provisions.--Nothing in 
     this subsection shall be construed to require a State or 
     Indian tribe to first bring an action under to paragraph (1) 
     when pursuing relief under subsection (b).
       ``(d) Construction With Other Authorities.--Nothing in this 
     title shall be construed to expand, restrict, or otherwise 
     modify the right of--
       ``(1) an authorized State official from proceeding in State 
     court, or taking other enforcement actions, on the basis of 
     alleged violation of State or other law; or
       ``(2) an authorized Indian tribal government official from 
     proceeding in tribal court, or taking other enforcement 
     actions, on the basis of alleged violation of tribal law.''.
       (d) Inclusion of Smokeless Tobacco.--
       (1) In general.--Sections 802 and 803(a) of the Tariff Act 
     of 1930 (19 U.S.C. 1202 et seq.) are amended by inserting 
     ``or smokeless tobacco products'' after ``cigarettes'' each 
     place it appears.
       (2) Conforming amendments.--
       (A) Requirements for entry.--Section 802 of the Tariff Act 
     of 1930 (19 U.S.C. 1681a) is amended--
       (i) in the heading, by inserting ``AND SMOKELESS TOBACCO'' 
     after ``CIGARETTES'';
       (ii) in subsection (a)--

       (I) in paragraph (1), by inserting ``or section 4 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4403), respectively'' after ``section 7 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1335a)'';
       (II) in paragraph (2), by inserting ``or section 3 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4402), respectively,'' after ``section 4 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1333)''; and
       (III) in paragraph (3), by inserting ``or section 3(d) of 
     the Comprehensive Smokeless Tobacco Health Education Act of 
     1986 (15 U.S.C. 4402(d)), respectively,'' after ``section 
     4(c) of the Federal Cigarette Labeling and Advertising Act 
     (15 U.S.C. 1333(c))'';

       (iii) in subsection (b)--

       (I) in the heading of paragraph (1), by inserting ``or 
     smokeless tobacco'' after ``cigarettes''; and
       (II) in the heading of paragraphs (2) and (3), by inserting 
     ``or smokeless tobacco'' after ``Cigarettes''; and

       (iv) in subsection (c)--

       (I) in the heading, by inserting ``or Smokeless Tobacco'' 
     after ``Cigarette'';
       (II) in paragraph (1), by inserting ``or section 4 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4403), respectively'' after ``section 7 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1335a)'';
       (III) in paragraph (2)(A), ``or section 3 of the 
     Comprehensive Smokeless Tobacco Health Education Act of 1986 
     (15 U.S.C. 4402), respectively,'' after ``section 4 of the 
     Federal Cigarette Labeling and Advertising Act (15 U.S.C. 
     1333)''; and
       (IV) in paragraph (2)(B), by inserting ``or section 3(d) of 
     the Comprehensive Smokeless Tobacco Health Education Act of 
     1986 (15 U.S.C. 4402(d)), respectively'' after ``section 4(c) 
     of the Federal Cigarette Labeling and Advertising Act (15 
     U.S.C. 1333(c))''.

       (B) Enforcement.--Section 803(b) of the Tariff Act of 1930 
     (19 U.S.C. 1681b(b)) is amended by inserting ``, or any 
     smokeless tobacco product,'' after ``or tube'' the first 
     place it appears.
       (C) Title heading.--The heading of title VIII of the Tariff 
     Act of 1930 (19 U.S.C. 1681 et seq.) is amended by inserting 
     ``AND SMOKELESS TOBACCO'' after ``CIGARETTES''.

     SEC. 8. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 
                   MATTERS.

       (a) In General.--Nothing in this Act or the amendments made 
     by this Act is intended nor shall be construed to affect, 
     amend, or modify--
       (1) any agreements, compacts, or other intergovernmental 
     arrangements between any State or local government and any 
     government of an Indian tribe (as that term is defined in 
     section 4(e) of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450b(e)) relating to the collection 
     of taxes on cigarettes or smokeless tobacco sold in Indian 
     country (as that term is defined in section 1151 of title 18, 
     United States Code);
       (2) any State laws that authorize or otherwise pertain to 
     any such intergovernmental arrangements or create special 
     rules or procedures for the collection of State, local, or 
     tribal taxes on cigarettes or smokeless tobacco sold in 
     Indian country;
       (3) any limitations under existing Federal law, including 
     Federal common law and treaties, on State, local, and tribal 
     tax and regulatory authority with respect to the sale, use, 
     or distribution of cigarettes and smokeless tobacco by or to 
     Indian tribes or tribal members or in Indian country;
       (4) any existing Federal law, including Federal common law 
     and treaties, regarding State jurisdiction, or lack thereof, 
     over any tribe, tribal members, or tribal reservations; and
       (5) any existing State or local government authority to 
     bring enforcement actions against persons located in Indian 
     country.
       (b) Coordination of Law Enforcement.--Nothing in this Act 
     or the amendments made by this Act shall be construed to 
     inhibit or otherwise affect any coordinated law enforcement 
     effort by 1 or more States or other jurisdictions, including 
     Indian tribes, through interstate compact or otherwise, 
     that--
       (1) provides for the administration of tobacco product laws 
     or laws pertaining to interstate sales or other sales of 
     tobacco products;
       (2) provides for the seizure of tobacco products or other 
     property related to a violation of such laws; or
       (3) establishes cooperative programs for the administration 
     of such laws.
       (c) Treatment of State and Local Governments.--Nothing in 
     this Act or the amendments made by this Act is intended, and 
     shall not be construed to, authorize, deputize, or commission 
     States or local governments as instrumentalities of the 
     United States.
       (d) Enforcement Within Indian Country.--Nothing in this Act 
     or the amendments made by this Act is intended to prohibit, 
     limit, or restrict enforcement by the Attorney General of the 
     United States of the provisions herein within Indian country.
       (e) Ambiguity.--Any ambiguity between the language of this 
     section or its application and any other provision of this 
     Act shall be resolved in favor of this section.

     SEC. 9. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     Act shall take effect on the date that is 90 days after the 
     date of enactment of this Act.
       (b) BATFE Authority.--
       (1) In general.--Sections 6 and 7 shall take effect on the 
     date of enactment of this Act.
       (2) Definition.--For purposes of section 7, the definition 
     of delivery sale in section 2343(e)(1) of title 18, United 
     States Code, as amended by section 4(d)(4) of this Act, shall 
     take effect on the date of enactment of this Act.

     SEC. 10. SEPARABILITY.

       If any provision of this Act or the application thereof to 
     any person or circumstance is held invalid, the remainder of 
     the Act and the application of it to any other person or 
     circumstance shall not be affected thereby.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Bingaman, and Mr. Biden):
  S. 3811. A bill to require the payment of compensation to members of 
the Armed Forces and civilian employees of the United States who 
performed slave labor for Japanese industries during World War II, or 
the surviving spouses of such members, and for other purposes; to the 
Committee on Armed Services.
  Mr. HATCH. Mr. President, it is my privilege today to introduce 
legislation that attempts to right wrongs and help those who have 
suffered.
  I can think of few Americans who have suffered more than those brave 
World War II veterans who were subjected to slave labor conditions by 
Japanese industries during that difficult conflict. This legislation 
would provide long overdue compensation to our brave veterans who were 
forced into slave labor by our enemies.
  Some might ask: why don't these veterans seek a remedy from the 
courts? The answer is that they have. Unfortunately, due to decisions 
that were made during the Cold War, our government relinquished the 
right of these veterans to successfully seek redress of their 
grievances on this matter in our nation's courts.
  Regrettably, the Japanese Government has also declined to provide 
compensation.
  Today, many of these American POWs are now in their eighties and 
nineties. Every day, more and more of these veterans pass away without 
ever realizing that their country truly cares for them and wants to 
right the wrongs of the past. If those who remain are to receive 
compensation, they must receive it now or this injustice will never be 
righted.
  Remember, many of these men are the survivors of the Bataan Death 
March, which occurred in April of 1942

[[Page 16994]]

when the 70,000 Allied troops that comprised the defense of Bataan 
peninsula were ordered to surrender. Corregidor would fall a month 
later, but for the soldiers of Bataan the infamous Death March from the 
peninsula to holding camps throughout the Philippines was about to 
begin. During this march of 85 miles approximately 10,000 Allied forces 
were killed.
  American POWs in the Pacific theater are also the survivors of the 
``Hell Ships'' where servicemembers were placed in cargo ships destined 
for Japanese industrial sites. These ships were usually incredibly 
overcrowded and American POWs were subject to the horrific sanitary and 
living conditions.
  After all this, when American servicemembers arrived at their 
destination, the majority were treated as slave labor, they faced 
fierce corporal punishment for minor infractions, and unnecessary 
starvation and cruel work environments.
  It is important to note that this bill, which I am honored to say is 
cosponsored by Senator Bingaman and Senator Biden, is not to embarrass 
or to ridicule the people of Japan; far from it. For over 60 years, 
Japan has been one of our great allies. As the ranking member on the 
Senate Intelligence Committee, I well know the invaluable support and 
assistance that Japan has rendered in the global war on terrorism, 
including committing hundreds of ground troops to assist in the 
development of Iraq's infrastructure. I know that all Americans are 
grateful for this assistance.
  Mr. President, it is time to do the right thing and provide these 
veterans with the minimal level of compensation they deserve. I believe 
that this limited compensation is a debt of honor that we should not 
withhold.
                                 ______
                                 
      By Mr. ISAKSON (for himself and Mr. Reed):
  S. 3812. A bill to require the Food and Drug Administration to 
conduct consumer testing to determine the appropriateness of the 
current labeling requirements for indoor tanning devices and determine 
whether such requirements provide sufficient information to consumers 
regarding the risks that the use of such devices pose for the 
development of irreversible damage to the skin, including skin cancer, 
and for other purposes; to the Committee on Health, Education, Labor, 
and Pensions.
  Mr. REED. Mr. President, I rise today, along with my colleague, 
Senator Isakson, to introduce the Tanning Accountability and 
Notification--TAN--Act of 2006. A House counterpart measure was 
introduced by Representatives Maloney and Brown-Waite in February.
  Close to a million people will be diagnosed with skin cancer this 
year. Approximately 1 in 5 Americans will develop skin cancer in their 
lifetime, and these numbers are on the rise.
  There are many factors that contribute to these startling figures. In 
recent years efforts have been undertaken by various organizations to 
better inform the public about the risk of sun exposure and ways to 
decrease the chance of developing skin cancer. One area, however, where 
better information is sorely needed is on the use of indoor tanning 
salons.
  Every day approximately 1 million people visit a tanning salon. It is 
a practice particularly popular among teens, the group that seems most 
at risk from the effects of indoor tanning. The American Academy of 
Dermatology, the Food and Drug Administration, FDA, the National 
Institutes of Health, NIH, the Centers for Disease Control and 
Prevention, CDC, and the World Health Organization, WHO, all discourage 
the use of indoor tanning equipment.
  This message and the current information about the risks of indoor 
tanning I fear are not being adequately passed on to consumers. The FDA 
has not updated its warnings on tanning beds since 1979. Regular users 
of indoor tanning beds deserve to be fully informed.
  The TAN Act calls upon the FDA to revisit the current label on indoor 
tanning beds and determine through a process of public hearings and 
consumer testing what kind of labeling requirements would convey 
important information on the risks of indoor tanning.
  This legislation is not about introducing new regulations but 
ensuring that the current FDA regulations remain effective in 
communicating accurate, current, and clear information to consumers of 
indoor tanning salons.
  I look forward to working with my colleagues towards passage of this 
important, bipartisan legislation. Mr. President, I ask unanimous 
consent that the text of the bill be printed in the Record.
                                 ______
                                 
      By Mr. SMITH (for himself, Mr. Bingaman, and Ms. Murkowski):
  S. 3813. A bill to permit individuals who are employees of a grantee 
that is receiving funds under section 330 of the Public Health Service 
Act to enroll in health insurance coverage provided under the Federal 
Employees Health Benefits Program; to the Committee on Homeland 
Security and Governmental Affairs.
  Mr. SMITH. Mr. President, today I am introducing the Community Health 
Center Employee Health Coverage Act, a bill that will help provide 
community health centers, CHCs, better access to more affordable health 
insurance for their employees. I am pleased to have my colleagues 
Senators Bingaman and Murkowski join me as original cosponsors on this 
important proposal.
  CHCs form the backbone of the Nation's health care safety net. They 
provide essential medical services to some of our most vulnerable 
citizens, including the uninsured and Medicaid and Medicare 
beneficiaries. In my home State of Oregon, health centers provide over 
130 points of access, where upwards of 180,000 individuals receive care 
each year. Approximately 41 percent of those served are uninsured and 
36 percent are on Medicaid, and most all reside in either a rural or 
economically depressed area. Clearly, CHCs have an important role in 
ensuring that those who otherwise might be unable to afford health 
coverage have access to the care they need.
  CHCs also serve their patients in a very efficient manner. Studies 
have shown that care provided Medicaid patients at CHCs costs 30 
percent less than care provided in other settings. This is mainly due 
to a lower number of specialty referrals and fewer overall hospital 
admissions. CHCs effectively demonstrate how focusing on primary and 
preventive care can help keep individuals healthier, which ultimately 
enhances their lives and saves the broader health care system money. 
Above and beyond the efficiencies CHCs have achieved in service 
delivery, patients report overwhelming satisfaction for the treatment 
they are provided. Health care providers across the spectrum would be 
well-served by emulating CHCs' example of delivering affordable, high-
quality health care in an efficient manner.
  Given the enormous value CHCs have to the U.S. health care system, I 
believe Congress should do all it can to support their mission. I 
commend President Bush's commitment to increasing funding for health 
center expansion in recent years. I am pleased the administration's 
request for $180 million in new funding in fiscal year 2007 was 
included in the Senate's version of the budget resolution. As the 
appropriations process continues to move forward, I hope that those 
much-needed funds are ultimately approved by Congress.
  The bill I am filing today will compliment the increased funding CHCs 
have received in recent years. Just like businesses across the nation, 
health centers are coping with the rising cost of providing health 
benefits to their employees. Premiums for private health insurance grew 
by 9.5 percent in 2005--the fifth consecutive year of increases over 9 
percent. Because CHCs operate on very limited budgets, it has become 
more and more difficult for them to absorb these increased costs while 
continuing to provide affordable health care to their patients.
  It is important to note that CHCs rely upon the Federal Government 
for more than half of their operating revenues. Each year, health 
centers receive 26 percent of their funding from direct

[[Page 16995]]

Federal grants and another 36 percent from the Medicaid Program. 
Because CHCs are predominantly a Federal enterprise, I believe it makes 
sense for them to be able to reap many of the same benefits of other 
Federal entities. That is why the bill I am filing today would allow 
CHCs to purchase more affordable health insurance coverage for their 
employees through the Federal Employee Health Benefits Program, FEHBP.
  Allowing federally funded entities to purchase health coverage 
through FEHBP is not unprecedented. Employees of Gallaudet University 
and certain U.S. Department of Agriculture grantees already are able to 
participate in FEHBP as if they were directly employed by the Federal 
Government. Considering that CHC providers are already deemed ``Federal 
employees'' for the purpose of receiving medical liability protection 
through the Federal Government, it is a logical next step to allow them 
to purchase health coverage through FEHBP. In doing so, we will be able 
to provide CHCs much needed security in knowing that their employees 
will have steady access to affordable health insurance.
  I believe that in the long run, CHCs will be able to achieve a great 
deal of savings by purchasing health coverage for their employees 
through FEHBP. Premiums for policies purchased through FEHBP 
consistently grow at a much slower rate than other commercial policies. 
Every dollar CHCs save in employee benefit costs can be redirected into 
medical care for the vulnerable populations they serve. Access to FEHBP 
coverage also may help some CHCs provide health benefits to their 
employees for the first time. This could help recruit much needed 
medical personnel in underserved and rural communities. I am hopeful 
health centers in rural parts of my State will be able to attract the 
physicians they so desperately need by offering them FEHBP coverage.
  There is wide support for CHCs in the Senate, as evidenced by the 
introduction of two other CHC-related measures this week. Senator 
Bingaman and I also are filing the Strengthen the Safety Net Act that 
will allocate unspent Medicaid disproportionate share hospital funds to 
CHCs and other community-based health care providers. And, I am joining 
a bipartisan group of my colleagues in introducing the CHC 
Reauthorization Act to ensure that CHCs can continue providing health 
care to some of our most vulnerable citizens for years to come. I hope 
the Senate's leadership will move this package of three bills quickly 
through the process, as a sign of appreciation for the important role 
CHCs play in the U.S. health care system.
  Mr. BINGAMAN. Mr. President, I am pleased to be an original coauthor 
of the Community Health Center Employee Health Coverage Act of 2006 
with Senators Smith and Murkowski. I ask for unanimous consent that a 
fact sheet with respect to the legislation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Fact Sheet

       Problem: Like many small businesses, health centers have 
     seen their health insurance premiums sky-rocket. Although 
     they delivered comprehensive primary and preventive care to 
     more than 15 million people in 2004, more than 6 million of 
     whom had no health insurance coverage, these rising costs 
     will have detrimental impacts on health centers as they are 
     forced to channel federal grant dollars (which are intended 
     for the uninsured and underinsured) to pay for the increasing 
     insurance expenditures. If this continues, health centers may 
     eventually be forced to either reduce the coverage of their 
     own employees or reduce the availability of health care in 
     their already underserved communities.
       Fortunately, employees of health centers are generally 
     healthy individuals and largely do not have chronic diseases 
     or high medical bills. The irony here is that at the same 
     time that health center employees are providing quality care 
     to the uninsured and very poor, they are often unable to 
     afford health insurance themselves. Furthermore, health 
     centers have cited affordable health care as a key concern in 
     recruiting and retaining quality employees and clinical 
     staff.
       Solution: This bipartisan legislation, introduced by 
     Senators Smith, Bingaman, and Murkowski, would reduce health 
     centers' rising health insurance costs and also improve 
     coverage in many cases and therefore save taxpayer grant 
     money that would otherwise be used to pay health insurance 
     premiums. The bill would enable health centers to use scarce 
     funds to continue providing care in their communities. In 
     addition, extending coverage under FEHBP to health centers 
     would allow health centers to continue to offer health 
     insurance to their employees so they too don't join the ranks 
     of the uninsured.
       This bill would not set a precedent. The law currently 
     provides for Federal Employees Health Benefit Program (FEHBP) 
     coverage for other individuals who are not federal employees 
     but do receive federal grant funds for their operations, such 
     as Gallaudet University or USDA grant recipients comprised of 
     local farmers. Currently FEHBP covers over nine million 
     federal employees, while Heath Centers employ nearly 100,000 
     people across the country.
       This would be a logical extension of the health centers' 
     Federal Tort Claims Act (FTCA) legislation, where health 
     center staffers are deemed as federal employees for medical 
     malpractice coverage purposes. This bill would extend the 
     same mechanism for health insurance purposes.
       Benefit: This bill will aid in the continuation of 
     providing quality health care to those who need it most. It 
     would also provide relief to community health centers in the 
     form of lower premiums and better coverage for their 
     employees by deeming them as federal employees for purposes 
     of the Federal Employee Health Benefit Program (FEHBP). There 
     should be no federal cost for this bill as health centers 
     will pay the health care premiums for their employees but at 
     a less expensive cost.
                                 ______
                                 
      By Mr. SMITH (for himself and Mrs. Lincoln):
  S. 3815. A bill to improve the quality of, and access to, long-term 
care; to the Committee on Finance.
  Mr. SMITH. Mr. President, I rise today to introduce the Long-Term 
Care Quality and Modernization Act of 2006. I am pleased to be joined 
by my colleague, Senator Blanche Lincoln of Arkansas.
  As chairman of the Senate Special Committee on Aging, I am committed 
to improving the financing and delivery of long-term care. The Centers 
for Medicare and Medicaid Services estimate that national spending for 
long-term care was almost $160 billion in 2002, representing about 12 
percent of all personal health care expenditures. While those numbers 
are already staggering, we also know that the need for long-term care 
is expected to grow significantly in coming decades. Almost two-thirds 
of people receiving long-term care are over age 65, with this number 
expected to double by 2030.
  I know that providing quality long-term care services for America's 
frail, elderly, and disabled is the priority of nursing homes and 
assisted-living facilities. I applaud their work but recognize we must 
do more to improve care and contain costs. When you consider that 8 of 
10 nursing home residents rely on Medicare and Medicaid for their long-
term care needs, it is apparent that Congress has a responsibility to 
improve these programs so they are sustainable for years to come.
  That is why I am introducing the Long-Term Care Quality and 
Modernization Act of 2006 with Senator Lincoln. This bill will address 
several problems nursing homes are experiencing with payments, 
regulations, workforce shortages, taxes, and disaster preparedness 
funding. The issue of long-term care expenditures need not be an 
insurmountable task. It will require action and cooperation by public 
officials and private providers as we work to find ways to help 
Americans become better prepared for their long-term care needs.
  However, we cannot do it alone. Individuals must take responsibility 
and begin planning for their long-term care needs. With our national 
savings rate in steady decline, I fear the American middle class is 
woefully unprepared to meet the coming challenges of their long-term 
care. As we move forward in our effort to help individuals stay 
financially stable in their later years, we must encourage them to 
purchase long-term care insurance and save for long-term care services. 
Included in the bill I am introducing today is the Long-Term Care Trust 
Account Act of 2006. My legislation will create a new type of savings 
vehicle for the purpose of preparing for the costs associated with 
long-term care services and purchasing long-term care insurance. An 
individual who establishes a long-term care trust account can 
contribute up to

[[Page 16996]]

$5,000 per year to their account and receive a refundable 10 percent 
tax credit on that contribution. Interest accrued on these accounts 
will be tax free, and funds can be withdrawn for the purchase of long-
term care insurance or to pay for long-term care services. The bill 
will also allow an individual to make contributions to another person's 
long-term care trust account. This will help many people in our country 
who want to help their parents or a loved one prepare for their health 
care needs.
  It is my hope that this legislation will help all Americans save for 
their long-term care needs. I urge my colleagues on both sides of the 
aisle to support this important bill.
                                 ______
                                 
      By Ms. COLLINS:
  S. 3816. A bill to prohibit the shipment of tobacco products in the 
mail, and for other purposes; to the Committee on Homeland Security and 
Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today to introduce legislation 
that will help crack down on illegal sales of tobacco to underaged 
young people by banning the shipment of cigarettes and other tobacco 
products through the U.S. mail. Not only does the delivery of 
cigarettes and other tobacco products through the mail create 
opportunities for tax evasion, but it also creates an easy means 
through which children and young people can obtain these potentially 
deadly products.
  Tobacco remains the No. 1 preventable cause of death in the United 
States today, accounting for more than 400,000 deaths a year and 
billions of dollars in health care costs. Moreover, tobacco addiction 
is a ``teen-onset'' disease: Ninety percent of all smokers start before 
they are 21. If we are to put an end to this tragic, yet preventable, 
epidemic, we must accelerate our efforts not only to help more smokers 
to quit, but also to discourage young people from ever lighting up in 
the first place.
  Internet sales of tobacco are growing and growing fast. 
Unfortunately, effective safeguards against illegal sales to young 
people are virtually nonexistent on the more than 400 Web sites selling 
tobacco, making it easier and cheaper for kids to buy cigarettes.
  A 2002 American Journal of Public Health study found that 20 percent 
of cigarette-selling Web sites do not say anything about sales to 
minors being prohibited. More than half require only that the buyer say 
they are of legal age. Another 15 percent require only that the buyer 
type in their date of birth, and only 7 percent require any driver's 
license information.
  It is no wonder that Internet ``stings'' conducted by attorneys 
general in at least 15 States have found that children as young as 9 
years old are able to purchase cigarettes easily. One study in The 
Journal of the American Medical Association reported that kids as young 
as 11 were successful more than 90 percent of the time in purchasing 
cigarettes over the Internet. Moreover, since Internet cigarette 
vendors typically require a two-carton minimum purchase, many high 
school and middle school buyers of Internet tobacco also end up serving 
as suppliers of cigarettes to other kids.
  In an effort to combat this problem, all of the major credit card 
companies have taken steps to ensure that their systems are not used to 
process payments for illegal cigarette sales. Moreover, all of the 
major commercial carriers--UPS, DHL and FedEx--have agreed to put a 
stop to the mail order sale and delivery of tobacco products. This 
leaves our U.S. Postal Service as the sole remaining courier for the 
delivery of tobacco products to minors. I believe that it is time for 
us to close this final delivery gap so that cigarettes and other 
tobacco products are not so easily accessible to our Nation's children.
  The Postal Code already makes it illegal to mail alcoholic beverages 
and guns. The legislation I am introducing today will amend title 39 of 
the United States Code to add cigarettes and smokeless tobacco to the 
list of restricted, nonmailable matter. Any person found guilty of 
mailing such a product would be liable for a civil penalty of up to 
$5,000 or 10 times the estimated retail value of the tobacco products, 
including all Federal, State, and local taxes, whichever is highest, 
for a first violation. Civil penalties of up to $100,000 would be 
imposed for a second or each subsequent violation.
  Mr. President, the U.S. Postal Service should not be the delivery 
agent for illegal cigarette traffickers. The legislation I am 
introducing today will close a loophole that has allowed Internet and 
mail order companies to circumvent the law, and I urge my colleagues to 
support this reform.
                                 ______
                                 
      By Mr. HATCH (for himself and Mr. Leahy):
  S. 3818. A bill to amend title 35, United States Code, to provide for 
patent reform; to the Committee on the Judiciary.
  Mr. HATCH. Mr. President, I rise today to introduce with Senator 
Leahy the Patent Reform Act of 2006.
  This bill addresses many of the issues and problems that my 
colleague, Senator Leahy, and I have identified through a series of 
hearings and discussions with stakeholders. We also had the benefit of 
knowing the priorities identified by Chairman Lamar Smith and Ranking 
Democratic Member Berman, who have introduced an analogous bill in the 
House.
  I would like to thank the Senator Leahy for all of his hard work and 
assistance in developing this bill and for his willingness to reach a 
compromise on those issues where our policy views conflicted.
  This bill is not perfect, and is not the bill that either I or my 
esteemed cosponsor would have introduced independently, but I believe 
that it fairly reflects a compromise between my priorities and the 
priorities of Senator Leahy.
  We have also attempted to achieve some balance between the priorities 
identified by the various industries and stakeholders that we consulted 
while formulating our policy views in this area.
  I am sure that further refinements will be made to this bill during 
the legislative process, so I would encourage those who are either 
pleased or displeased by any of the aspects of the bill to continue 
working with us to resolve any outstanding issues.
  This bill addresses many of the problems with the substantive, 
procedural, and administrative aspects of the patent system, which 
governs how entities here in the United States apply for, receive, and 
eventually make use of patents covering everything from computer chips 
to pharmaceuticals to medical devices to--I am told--at least one 
variety of crustless peanut butter and jelly sandwich.
  As the Founding Fathers made clear in Article 1, section 8 of the 
Constitution, Congress is charged with ``promot[ing] the Progress of 
Science and useful Arts, by securing for limited Times to Authors and 
Inventors the exclusive Right to their respective Writings and 
Discoveries.''
  There is a growing consensus among those who use the patent system 
that significant reform is needed.
  While there appears to be a high degree of consensus on some issues 
relating to patent reform--such as the advisability of creating a new 
post-grant review process, there are significant disagreements about 
other changes to the patent system and about how best to streamline 
patent litigation.
  By all accounts, patent litigation has become a significant problem 
in some industries. There are a number of factors in patent law that 
drive up the cost and uncertainty of litigation in ways that are 
unjustified. However, some of the principal problems and costs 
associated with patent litigation are not uniform across industrial 
sectors. This has led to substantial and sometimes vociferous 
disagreements about the nature of the underlying problems and, thus, 
what the appropriate solutions might be. We have done our best to 
resolve these disagreements based on our judgment about what is likely 
to preserve a balance between patent holders and alleged infringers in 
these actions.
  There is also substantial consensus regarding a number of basic, 
structural changes to the patent system. The most significant of these 
involves moving from our current first-to-invent

[[Page 16997]]

system to something approximating a first-to-file rule in determining 
which of two conflicting inventors has the right to obtain a patent.
  While there is general agreement regarding some of the changes 
necessary to move toward a first-to-file system, there are some 
disagreements that remain unresolved by the current language of this 
bill. Although we have done our best to preserve many of the principles 
defining what constitutes ``prior art'' under current law, patent 
experts continue to disagree over whether we have achieved this goal.
  Additionally, shortly before introduction, a concern emerged that we 
had not adequately preserved the changes enacted by the Cooperative 
Research and Technology Enhancement Act--CREATE Act, P.L. 108-453--
involving some types of double patenting. Since Senator Leahy and I 
were original cosponsors of that law, I can assure you that we will be 
receptive to concerns in this regard and try to fix them.
  With that preface, I would like to discuss several of the more 
significant changes made to the current patent system by this bill.
  Sections 1 and 2 of the bill contain the short title, table of 
contents, and other similar provisions. Sections 3 and 4 contain 
amendments to implement the first-to-file rule and other changes to the 
manner in which patent applications are filed with the Patent and 
Trademark Office and the process governing the examination of 
applications. Much of this language is similar to language in previous 
bills. However, as I have mentioned, several significant issues remain 
unresolved, and we will continue to work with stakeholders and other 
members to ensure an appropriate resolution.
  Section 5 changes the remedies available to plaintiffs in patent 
infringement suits, as well as the available defenses to patent 
infringement. The two most substantial changes involve limitations on 
the availability of enhanced damages upon a showing of ``willful'' 
infringement by a plaintiff and a parallel limitation on the 
availability of unenforceability under the doctrine of ``inequitable 
conduct.'' Willfulness and inequitable conduct were two of the three 
major subjective elements that were identified in a major report on the 
current patent system by the National Research Council of the National 
Academy of Sciences. The report, entitled ``A Patent System for the 
21st Century,'' recommended limiting both willfulness and the 
inequitable conduct defense to streamline patent litigation. We were 
unable to reach agreement on repealing the ``best mode'' requirement, 
which was the third subjective element identified both in the report 
and by various stakeholders, but I am hopeful that we will continue to 
work toward a mutually-acceptable compromise on that issue.
  Section 5 also contains a provision expanding ``prior user rights.'' 
These prior user rights are, in reality, a defense to infringement 
liability for those making or preparing to make commercial use of an 
invention prior to a patent being issued. Prior to a patent's issuance, 
such a user often has no way of knowing that he is--or will be--
infringing a patent. In some cases, the user has independently invented 
the subject matter in question, in which case it would be inequitable 
to subject him or her to infringement liability. Currently, the prior 
user defense is available only with respect to method patents. The bill 
expands the prior user defense to all categories of patents and makes 
related changes to this defense.
  Additionally, Section 5 contains two of the more controversial 
provisions in the bill. The first is a rough codification of an 
``apportionment'' rule for calculation of damages. There is an 
existing, uncodified rule for such apportionment that exists in case 
law. However, codifying the rule will increase its clarity and mandate 
its application in all appropriate cases.
  The second controversial provision in this section is a mandatory fee 
shifting provision. The language of this provision requires courts to 
award attorneys' fees to a prevailing party in cases where the non-
prevailing party's legal position was not substantially justified. This 
language is similar to the test used in the Equal Access to Justice 
Act. This provision is intended to discourage litigation in those cases 
where a plaintiff's or defendant's case is so weak as to be objectively 
unreasonable.
  Finally, this section also contains a repeal of Section 271(f) of 
Title 35. Under current law, either a foreign or domestic patent holder 
may be able to obtain damages based on foreign uses of domestically-
manufactured components of an infringing article. In essence, current 
law provides for the extraterritorial application of domestic law in a 
manner that benefits foreign manufacturers and patentees in some 
situations.
  Section 6 contains procedures for instituting a new type of post-
grant review preceding that will allow the validity of a patent to be 
challenged in an administrative proceeding conducted by the Patent and 
Trademark Office rather than in court litigation.
  Under current law, there are narrow reexamination procedures by which 
the PTO may reconsider a patent's validity at the request of an 
interested party. However, current reexamination proceedings are very 
limited and do not allow for a full consideration of a patent's 
validity. As a result, even when reexamination is available, potential 
litigants generally wait to challenge a patent's validity until an 
infringement suit has been brought despite the higher costs and 
prolonged uncertainty of doing so.
  I believe that by adopting a more robust post-grant review proceeding 
we are providing a more efficient means of challenging a patent's 
validity in an administrative proceeding. This is necessary to address 
systemic problems in our patent system, making post-grant review an 
essential component of any meaningful reform legislation. While there 
appears to be substantial agreement regarding the need for a more 
meaningful post-issuance review, there are strong disagreements over 
its specific attributes and scope.
  During hearings conducted in the Subcommittee on Intellectual 
Property and during meetings with stakeholders, we encountered widely 
disparate proposals and suggestions regarding post-grant review from 
stakeholders, academics, and lawmakers. At one end of the spectrum are 
proposals that would create a low-cost, streamlined proceeding by 
simply expanding the current inter partes reexamination. At the other 
end of the spectrum are those that would like to see the creation of 
specialized patent courts that would partially supplant Federal court 
litigation. With this bill, we have introduced a proposal that falls 
somewhere in between these two extremes.
  This bill institutes a robust post-grant opposition system. The new 
procedures for post-grant cancellation proceedings create a new system 
for challenging the validity of problematic or suspect patents, which 
will allow those who are concerned about infringing such a patent to 
test its validity in an administrative proceeding instead of waiting to 
assert invalidity as a defense in an infringement action. The new 
procedures are tiered in such a way as to encourage challenges to occur 
within the first year after a patent's issuance. After the one-year 
``first window,'' challenges may still be brought by those who are able 
to demonstrate a substantial economic stake in the outcome of the 
proceeding. To deter piecemeal litigation, if a party institutes a 
proceeding after the first year, any challenge to patentability 
available to that party with respect to the patent must be either 
raised or waived. Thus, a challenger who participates in a proceeding 
outside the first year is estopped from raising any grounds relating to 
patentability that were or could have been raised in the previous 
challenge.
  In addition to the new post-grant review proceedings, language in 
section 9 of this bill makes substantial improvements to the existing 
inter partes reexamination proceeding that are based on recommendations 
from the PTO and stakeholders. The most significant change to the 
reexamination proceedings is the modification of the estoppel effect of 
such proceedings. Currently, participants in an inter partes 
reexamination are barred from subsequently raising any grounds they

[[Page 16998]]

``raised or could have raised.'' Thus, parties who wish to challenge a 
patent more than a year after its issuance will have the option of 
bringing a narrow challenge that will not subject them to full estoppel 
as an alternative to bringing a full post-grant opposition proceeding 
or reserving their arguments for court. This approach provides a range 
of alternatives to legitimate challengers, while still providing 
balanced protections against harassing or abusive litigation for the 
patentee.
  Section 8 would amend the current statutory provision that determines 
the appropriate venue for patent litigation. The intent of the venue 
language is to serve as a starting point for discussions as to what 
restrictions--if any--are appropriate on the venue in which patent 
cases may be brought. Section 8 also contains a provision allowing for 
interlocutory appeals of decisions involving the claim construction of 
a patent. Again, this language is intended to generate discussion about 
the current interplay between the Federal district and appellate 
courts. As both academics and the patent bar have noted, the resolution 
of the legal questions involving claim construction appear to be taking 
up a greater and greater portion of the docket of the Federal circuit 
court of appeals.
  Given the high percentage of reversals on claims construction issues, 
some experts believe that an interlocutory appeal of Markman decisions 
might allow parties to resolve disputes as to claim construction more 
decisively prior to proceeding to a full trial. Alternatively, other 
experts believe that a return to the treatment of claims construction 
as a mixed question of law and fact might induce more deferential 
review by the appellate court. Still others have suggested that 
increased expertise among the district court judges trying patent cases 
might result in a lower reversal rate. In that regard, I should note 
that Congressman Issa has a bill authorizing a pilot project that 
appears to be a promising approach to increasing the expertise of 
Federal judges who handle patent cases, and I am considering 
introducing a similar bill here in the Senate. While I am not wedded to 
any particular approach or combination of approaches, I believe this is 
an issue that should receive serious attention and consideration by 
Congress.
  Section 9 of the bill includes additional statutory changes that 
either implement or complement provisions found elsewhere in the bill. 
It also includes expanded authority for the PTO to conduct substantive 
rulemaking, as well as the changes to the inter partes reexamination 
procedures that I mentioned previously.
  Section 10 includes a generic effective date provision. Obviously, I 
will need to modify the effective dates of the various provisions in 
the bill once we have been able to assess the difficulty of 
implementing various provisions in this bill.
  In closing, I would like to thank my cosponsor, the senior Senator 
from Vermont, for all the work he has put into this bill and to 
compliment his intellectual property counsel, Susan Davies, for her 
efforts as well. I am committed to moving this legislation forward and 
hope that my colleagues will join me in my efforts to refine and enact 
this important bill.
  Mr. LEAHY. Mr. President, the Senate is about to adjourn for its 
August recess--4 weeks when we get to reconnect with our constituents, 
catch up on the concerns of our home States, and study our legislative 
plans with a depth and attention that we cannot devote during the 
hectic days we are in session. Some of us may even spend a little time 
with our families and friends. As I have done in years past, I will be 
in Vermont. The choice between spending August in Washington, DC, or 
Middlesex, VT, has always been an easy one for me.
  When the Senate is in session, our obligations are many and varied, 
as important as they are diverse. We hold hearings, and then we pursue 
followup questions. We try to engage in oversight, though that has not 
been a particularly fruitful exercise with this current administration. 
We investigate issues, and then we endeavor to craft solutions. We vote 
and we caucus and we deliberate.
  It is not always a process that yields results, but today I can 
report it has. I am pleased to join with the chairman of the 
Intellectual Property Subcommittee today in introducing a bipartisan 
bill on patent reform. The bill is the result of almost 2 years of hard 
work on hard issues. We held several hearings, had innumerable meetings 
with a universe of interested participants in the patent system, and 
received input from a number of voices in debate about patent reform. 
We delved deeply into the myriad problems plaguing our patent system, 
especially those that hinder the issuance of high-quality patents.
  In introducing this bill together, we take a productive step toward 
updating the most outdated aspects of the patent code and attempt to 
bolster the Patent and Trademark Office in its administrative review of 
patents throughout the process. We are striving to place incentives on 
the parties with the most information to assist the PTO by sharing that 
information. We place our patent system in line with much of the rest 
of the world, by moving from a ``first-to-invent'' system to a ``first-
to-file.''
  Congress needs to address the urgent needs for revision and renewal 
in our patent system, and we must harness the impressive intellectual 
power and varied experiences of all the players in the patent community 
as we finalize our new laws. I believe that, while introducing this 
bill today is not the end of the process--and indeed, in many respects, 
it is truly the beginning--it is a significant accomplishment that we 
have come together to set down a comprehensive approach to overhauling 
our patent system. If the United States is to preserve its position at 
the forefront of innovation, as the global leader in intellectual 
property and technology, then we need to move forward, and this bill is 
our first step. We must improve and enhance the quality of our patent 
system and the patents it produces.
  This legislation is not an option but a necessity. Senator Hatch and 
I have made genuine progress on this complex issue. We agreed on many 
salutary changes, but it can be no surprise that we differed on some 
aspects of the effort as well. Recognizing the critical importance of 
compromise, of offering a bill to the interested public to study and 
improve, and of taking a clear first step down the path to genuine 
reform, we both made concessions. This is not the bill I would have 
introduced if I were the sole author, and I expect Senator Hatch would 
say the same. I appreciate the concessions that Senator Hatch made. I 
have tried to be both reasonable and accommodating in honoring my 
commitment to him--a commitment that he requested specifically--to 
introduce a bill before the August recess.
  In particular, I am concerned about how some of the changes proposed 
would affect the generic pharmaceutical industry, especially the 
provision that would limit the ``inequitable conduct'' defense to only 
those cases in which a patentee's willful deception of the PTO results 
in an invalid patent claim. While I think we should expect the highest 
caliber of behavior by those who are seeking patents--which are, after 
all, often highly profitable government monopolies--surely we can at 
least insist on an absence of affirmative deceit. I hope and expect 
that we can continue the discussion on this issue as the year 
progresses.
  I also want to ensure the delicate balance we have struck in the 
post-grant review process and make certain that the procedure is both 
efficient and effective at thwarting some strategic behavior in patent 
litigation and at promoting a healthier body of existing patents. Fee-
shifting, even in a limited set of cases, likewise raises concerns that 
should have a more public airing.
  I respect the necessity for considering and balancing a number of 
different concerns as we draft comprehensive and complicated 
legislation. I will never sacrifice the quality of the laws we produce 
to expediency, but I recognize the utility of such compromises when, as 
with this bill, introduction is a first step in a larger and longer 
discussion.

[[Page 16999]]

  I am extremely pleased that Senator Hatch and I have come together to 
tackle these important and urgent issues. Many hours of hard work were 
spent by both of our offices to develop legislative language so that we 
can, today, jointly introduce a bill to move the debate forward. The 
bill is a remarkable achievement and a substantial step toward real 
reform. I look forward to continuing to work with Senator Hatch, other 
members of the Senate Judiciary Committee, and the affected parties on 
these matters.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Smith, Mrs. Lincoln, Mr. Pryor, 
        and Mr. Akaka):
  S. 3819. A bill to amend title XIX of the Social Security Act to 
provide for redistribution and extended availability of unexpended 
medicaid DSH allotments, and for other purposes; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce legislation 
with Senators Smith, Lincoln, Pryor, and Akaka entitled the 
``Strengthening the Safety Net Act of 2006.'' This legislation is 
important to the continued survival of many of our Nation's safety net 
hospitals that provide critical health care access to our Nation's 46 
million uninsured citizens through the Medicaid disproportionate share 
hospital, or DSH, program.
  In recognition of the burden certain hospitals bear in providing a 
large share of health services to the low-income patients, including 
Medicaid and the uninsured, the Congress established the Medicaid DSH 
program in the mid-1980s to give additional funding to support such 
``disproportionate share'' hospitals. By providing financial relief to 
these hospitals, the Medicaid DSH program maintains hospital access for 
the poor. As the National Governors Association has said, ``Medicaid 
DSH's funds are an important part of statewide systems of health care 
access for the uninsured.''
  Mr. President, I ask unanimous consent for the text of the bill and 
the text of the fact sheet on the legislation be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3819

       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 ``Strengthening the Safety Net 
     Act of 2006''.

     SEC. 2. REDISTRIBUTION AND EXTENDED AVAILABILITY OF 
                   UNEXPENDED MEDICAID DSH ALLOTMENTS.

       Section 1923(f) of the Social Security Act (42 U.S.C. 
     1396r-4(f)) is amended--
       (1) in paragraph (3)(A), by striking ``paragraph (5)'' and 
     inserting ``paragraphs (5) and (7)'';
       (2) by redesignating paragraph (7) as paragraph (8); and
       (3) by inserting after paragraph (6), the following new 
     paragraph:
       ``(7) Redistribution and extended availability of 
     unexpended allotments.--
       ``(A) Establishment of redistribution pool.--
       ``(i) In general.--Subject to clauses (ii) and (iii), the 
     Secretary shall establish, as of October 1 of fiscal year 
     2007, and of each fiscal year thereafter, the following 
     redistribution pool:

       ``(I) In the case of fiscal year 2007, a $150,000,000 
     redistribution pool from the total amount of the unexpended 
     State DSH allotments for fiscal year 2004.
       ``(II) In the case of fiscal year 2008, a $250,000,000 
     redistribution pool from the total amount of the unexpended 
     State DSH allotments for fiscal year 2005.
       ``(III) In the case of fiscal year 2009 and each succeeding 
     fiscal year thereafter, a $400,000,000 redistribution pool 
     from the total amount of the unexpended State DSH allotments 
     for the third preceding fiscal year.

       ``(ii) Unexpended state dsh allotments.--If a State claims 
     Federal financial participation for a payment adjustment made 
     under this section for a fiscal year from which a 
     redistribution pool of unexpended State DSH allotments has 
     already been created under clause (i), then, for purposes of 
     this paragraph, the total amount of unexpended State DSH 
     allotments in the fiscal year following the State claim for 
     such Federal financial participation, shall be reduced by the 
     Federal financial participation related to such claim.
       ``(iii) Reduction in amounts available.--If the total 
     amount of the unexpended State DSH allotments for a fiscal 
     year (taking into account any adjustment to such amount 
     required under clause (ii)) is less than the amount necessary 
     to provide, for such fiscal year, the redistribution pool 
     described in clause (i) and the amounts to be made available 
     for grants under section 3(g) of the Strengthening the Safety 
     Net Act of 2006 for such fiscal year, the Secretary shall 
     reduce the amounts that are to be available for the 
     redistribution pool under this paragraph and grants under 
     such section, respectively, to such total amount.
       ``(B) Redistribution.--
       ``(i) In general.--Not later than October 1, 2006, and 
     October 1 of each year thereafter, the Secretary shall allot 
     the redistribution pool established for that fiscal year 
     among eligible States.
       ``(ii) Priority.--In making allotments under clause (i), 
     the Secretary shall give priority--

       ``(I) first to eligible States described in paragraph 
     (5)(B) (without regard to the requirement that total 
     expenditures under the State plan for disproportionate share 
     hospital adjustments for fiscal year 2000 is greater than 0); 
     and
       ``(II) then to eligible States whose State DSH allotment 
     per medicaid enrollee and uninsured individual for the third 
     preceding fiscal year is below the national average DSH 
     allotment per medicaid enrollee and uninsured individual for 
     that fiscal year.

       ``(C) Expenditure rules.--An amount allotted to a State 
     from the redistribution pool established for a fiscal year--
       ``(i) shall not be included in the determination of the 
     State's DSH allotment for any fiscal year under this section;
       ``(ii) notwithstanding any other provision of law, shall 
     remain available for expenditure by the State through the end 
     of the second fiscal year after the fiscal year in which the 
     allotment from the redistribution pool is made for 
     expenditures incurred in any of such fiscal years; and
       ``(iii) shall only be used to make payment adjustments to 
     disproportionate share hospitals in accordance with the 
     requirements of this section.
       ``(D) Definitions.--In this paragraph:
       ``(i) Eligible state.--The term `eligible State' means, 
     with respect to the fiscal year from which a redistribution 
     pool is established under subparagraph (A)(i), a State that 
     has expended at least 90 percent of the State DSH allotment 
     for that fiscal year by the end of the succeeding fiscal 
     year.
       ``(ii) State dsh allotment per medicaid enrollee and 
     uninsured individual.--The term `State DSH allotment per 
     medicaid enrollee and uninsured individual' means the amount 
     equal to the State DSH allotment for a fiscal year divided by 
     the sum of the number of individuals who received medical 
     assistance under the State program under this title for that 
     fiscal year and the number of State residents with no health 
     insurance coverage for that fiscal year, as determined by the 
     Bureau of the Census.
       ``(iii) National average dsh allotment per medicaid 
     enrollee and uninsured individual.--The term `national 
     average DSH allotment per medicaid enrollee and uninsured 
     individual' means the amount equal to the total amount of 
     State DSH allotments for a fiscal year divided by the sum of 
     the total number of individuals who received medical 
     assistance under a State program under this title for that 
     fiscal year and the total number of residents with respect to 
     all States who did not have health insurance coverage for 
     that fiscal year, as determined by the Bureau of the 
     Census.''.

     SEC. 3. HEALTH SERVICES FOR THE UNINSURED.

       (a) Demonstration Grants To Health Access Networks.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     award demonstration grants to health access networks.
       (2) Application.--Each applying health access network shall 
     submit a plan that meets the requirements of subsection (c) 
     for the purpose of improving access, quality, and continuity 
     of care for uninsured individuals through better coordination 
     of care by the network.
       (3) Authority to limit number of grants.--The number of 
     demonstration grants awarded under this section shall be 
     limited, in the discretion of the Secretary, so that grants 
     are sufficient to permit grantees to provide patient care 
     services to no fewer than the number of uninsured individuals 
     specified by each network in its grant application.
       (b) Definition of Health Access Network.--
       (1) In general.--In this section, the term ``health access 
     network'' means a collection of safety net providers, 
     including hospitals, community health centers, public health 
     departments, physicians, safety net health plans, or other 
     recognized safety net providers organized for the purpose of 
     restructuring and improving the access, quality, and 
     continuity of care to the uninsured and underinsured, that 
     offers patients access to all levels of care, including 
     primary, outpatient, specialty, certain ancillary services, 
     and acute inpatient care, within a community or across a 
     broad spectrum of providers across a service region or State.
       (2) Inclusion of section 330 networks and plans.--The term 
     ``health access network'' includes networks and plans that 
     meet the requirements for funding under section 330(e)(1)(C) 
     of the Public Health Service Act (42 U.S.C. 254b(e)(1)(C)).

[[Page 17000]]

       (3) Inclusion of integrated health care systems.--
       (A) In general.--Such term also includes an integrated 
     health care system (including a pediatric system).
       (B) Definition of integrated health care system.--For 
     purposes of this section, an integrated health care system 
     (including a pediatric system) is a health care provider that 
     is organized to provide care in a coordinated fashion and 
     assures access to a full range of primary, specialty, and 
     hospital care, to uninsured and under-insured individuals, as 
     appropriate.
       (c) Plan Requirements.--
       (1) In general.--A health access network that desires a 
     grant under this section shall submit a plan to the Secretary 
     that details how the network intends to--
       (A) manage costs associated with the provision of health 
     care services to uninsured and underinsured individuals 
     served by the health access network;
       (B) improve access to, and the availability of, health care 
     services provided to uninsured and underinsured individuals 
     served by the health access network;
       (C) enhance the quality and coordination of health care 
     services provided to uninsured and underinsured individuals 
     served by the health access network;
       (D) improve the health status of uninsured and underinsured 
     individuals served by the health access network; and
       (E) reduce health disparities in the population of 
     uninsured and underinsured individuals served by the health 
     access network.
       (2) Identification of measurable goals.--The health access 
     network shall--
       (A) identify in the plan measurable performance targets for 
     at least 3 of the goals described in paragraph (1); and
       (B) agree that a portion of the payment of grant funds for 
     patient care services after the first year for which such 
     payment is made shall be contingent upon the health access 
     network demonstrating success in achieving such targets.
       (d) Use of Funds.--A health access network that receives 
     funds under this section shall expend--
       (1) an amount equal to not less than 90 percent of such 
     funds for direct patient care services; and
       (2) an amount equal to not more than 10 percent of such 
     funds for the network's operation and development for the 
     purpose of improving the efficiency and effectiveness of the 
     business and clinical operations of providers within the 
     health access network, including through the integration of 
     management information systems (including development and 
     implementation of electronic medical records) and financial, 
     administrative, or clinical functions across providers.
       (e) Rule of Construction Regarding Direct Patient Care 
     Services.--With respect to health access networks described 
     in subsection (b)(2), the term ``direct patient care 
     services'' shall be construed to mean the provision or 
     purchase of services, such as specialty medical care and 
     diagnostic services, that are not available or are 
     insufficiently available through the network's providers. In 
     purchasing such services for uninsured and underinsured 
     individuals, networks shall, to the maximum extent feasible, 
     endeavor to purchase such services from safety net providers.
       (f) Supplement, not supplant.--Funds paid to a health 
     access network under a grant made under this section shall 
     supplement and not supplant, other Federal or State payments 
     that are made to the health access network to support the 
     provision of health care services to low-income or uninsured 
     patients.
       (g) Funding.--
       (1) Transfer of portion of unexpended dsh allotments.--
     Notwithstanding any other provision of law, as of October 1 
     of fiscal year 2007, and each fiscal year thereafter, amounts 
     described in paragraph (2) are hereby transferred from the 
     total amount of the unexpended State DSH allotments under 
     section 1923 of the Social Security Act (42 U.S.C. 1396r-4) 
     and made available for grants under this section.
       (2) Amounts made available for grants.--The amounts to be 
     made available under this section for each fiscal year 
     beginning with fiscal year 2007 are equal to the 
     redistribution pool amounts determined for each fiscal year 
     under section 1923(f)(7)(A)(i) of the Social Security Act (42 
     U.S.C. 1396r-4(f)(7)(A)(i)) (as amended by section 2(3) of 
     the Strengthening the Safety Net Act of 2006).

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

                Strengthening the Safety Net Act of 2006

       This legislation, introduced by Senators Bingaman, Smith, 
     Lincoln, Pryor, and Akaka, would redistribute unused federal 
     Medicaid Disproportionate Share Hospital (DSH) funds to 
     strengthen and augment the nation's health care safety net. 
     Half of the redistributed funds would be used to increase the 
     availability of DSH funds to states currently receiving low 
     or less than average DSH allotments and the other half would 
     be used to fund integrated ``health access networks'' of 
     community health centers, public hospitals, and other safety 
     net providers. These networks would be required to provide 
     high quality primary, outpatient, inpatient and specialty 
     care to uninsured and other medically vulnerable populations.
       In 2007, the bill would redistribute $300 million in 
     unexpended funds; in 2008, $500 million; and in 2009 and 
     thereafter $800 million. These levels would be prorated 
     downward if there are insufficient unexpended funds to meet 
     the statutory amounts. This legislation will:
       Keep funds allocated to the safety net with the safety net; 
     Provide money to test implementation of high quality 
     integrated networks of safety net providers; and, Allow 
     networks of community health centers to purchase specialty 
     care services.


                               Background

       Congress created the Medicaid DSH requirement in 1981 to 
     ensure that state Medicaid programs provide adequate payments 
     to hospitals whose patient populations are disproportionately 
     composed of low income Medicaid and uninsured patients. 
     Medicaid DSH payments have evolved into one of the most 
     important sources of financing for the nation's safety net. 
     Each year, each individual state is allocated a DSH 
     allotment. The allotments vary considerably from state to 
     state and a state's ability to draw-down its DSH allotment 
     varies depending on its financial resources. Each year, some 
     states do not utilize their entire DSH allotment.
       In part, this legislation would permit a redistribution of 
     unused DSH funds to states that have lower DSH allotments. 
     Two categories of states would be prioritized to receive 
     redistributed DSH money to supplement their existing DSH 
     allotment: (1) low DSH states (i.e. states that are 
     designated by the MMA as a low DSH state due to DSH 
     expenditures being less than 3 percent of total Medicaid 
     expenditures in fiscal year 2000) and (2) states whose DSH 
     allotment per Medicaid enrollee and uninsured individual is 
     below the national average. Only states that have spent at 
     least 90 percent of their DSH allotment would be eligible for 
     the redistribution.
       Redistributed DSH dollars also would fund ``Health Access 
     Network'' demonstration projects designed to improve access, 
     quality, and continuity of care for uninsured individuals 
     through better coordination of care. To obtain funding under 
     this legislation, health access networks would be required to 
     submit a plan to the Secretary of the Department of Health 
     and Human Services that details how the network plans to:
       Reduce costs associated with the provision of health care 
     services to uninsured individuals; Improve access to, and the 
     availability of, health care services provided to individuals 
     served by the health access network; Enhance the quality and 
     coordination of health care services provided to such 
     individuals; Improve the health status of communities served 
     by the health access network; and, Reduce health disparities 
     in such communities.
       Health access networks would be required to identify 
     measurable performance targets and demonstrate progress in 
     order to qualify for future year funding. Grantees would have 
     to spend 90 percent of awarded funds for direct patient care 
     services.
                                 ______
                                 
      By Mr. DURBIN:
  S. 3820. A bill to expand broadband access for rural Americans; to 
the Committee on Commerce, Science, and Transportation.
  Mr. DURBIN. Mr. President, I rise to introduce a bill entitled 
Broadband for Rural America Act of 2006.
  There is no question that broadband is an essential component of our 
lives, both at work and at home. Broadband access is becoming a vital 
service, much like water, sewer, gas, and electricity are essential 
resources for our daily living. Our homes and businesses need 
affordable and easy access to an always-on, high speed and high 
capacity Internet connection, much like our homes and businesses need 
the traditional utility services.
  Additionally, people who work outside the confines of an office 
building need broadband access on the go. Often, it is not enough to 
have only a cell phone to remain in touch with your boss, coworker, 
client, or supplier. In today's global economy, we need easy methods to 
transfer a vast quantity of data, fast and reliably, even if we are not 
near a landline phone, fax, or computer terminal.
  Yet for so many Americans today, broadband access is still a foreign 
concept. The digital divide remains a reality. Rural broadband 
deployment continues to lag behind urban deployment, and the 
differential continues to grow, even as broadband usage has grown 
significantly in our Nation.
  When I travel to small or rural towns in downstate Illinois and 
elsewhere, I meet people who tell me that they cannot wait to have 
broadband, but that there is no service available where they

[[Page 17001]]

live. I am certain that all of my colleagues in the Senate can identify 
with situations like this, where they have met constituents who are 
eager to jump onto the Information Superhighway, yet there is no on-
ramp.
  According to a 2004 report issued by the U.S. Department of Commerce, 
only about 25 percent of rural households that use the Internet have 
broadband access, compared to over 40 percent of the same households in 
urban areas. Similarly, the U.S. Department of Agriculture's 2005 
report found that farm households have home access to broadband at 
almost half the level of all U.S. households nationwide.
  The Pew Internet and American Life Project found similar results. In 
its 2006 report, Pew found that only 18 percent of rural adults 
reported a home broadband connection in the year 2005, compared to 31 
percent of urban adults.
  All these different studies issued by various authorities point to a 
consistent conclusion: Americans living in urban areas are almost twice 
as likely to have home broadband access as do their rural counterparts.
  Contrary to popular belief, however, rural households use computers 
and information technology in ways that are very similar to their urban 
counterparts. Thus, it appears that the main obstacle to improving 
rural broadband adoption is not differences in the users themselves, 
but in the availability and price of broadband service.
  It is clear that citizens in small towns and rural areas simply do 
not have the same options that people in cities and urban areas do. 
And, in some of the rural areas where broadband is available, these 
customers often pay more for inferior quality than customers in the 
more populated areas.
  As our rural residents are falling behind city dwellers, so too, is 
our Nation falling behind the rest of the developed world.
  The Organization for Economic Cooperation and Development found that, 
in 2004, America ranked 12th among developed nations in broadband 
access per 100 inhabitants. However, the same study had found that in 
2001, we ranked 4th in the developed world. So, this means that in just 
3 short years, we lost our competitive edge to 8 countries.
  Broadband is critical to community and economic development, as it 
encourages investment, creates jobs, improves productivity, fosters 
innovation, and increases consumer benefits in every corner of our 
Nation.
  A 2003 study by Criterion Economics found that adoption of current 
generation broadband would increase the gross domestic product by 
$179.7 billion, while sustaining an additional 61,000 jobs per year 
over the next 19 years. The study also projected 1.2 million jobs could 
be created if next generation broadband technology were rapidly 
deployed.
  In early 2004, President Bush called for universal and affordable 
access to broadband by the year 2007, because it will enhance our 
Nation's economic competitiveness and help improve education and health 
care for all Americans. Kevin Martin, the chairman of the Federal 
Communications Commission, has said he is committed to expanding the 
number of broadband users in our country so that we can improve our 
rank in the world.
  I agree with both President Bush and Chairman Martin. The 
administration, the FCC, Congress, and the States can all contribute to 
closing the digital divide, ensuring that rural Americans are not left 
behind in the 21st century's digital economy.
  We need to work together to address this critical shortfall in our 
Nation's infrastructure. We need a seamless national network of 
broadband providers that will serve everyone in America.
  Whether it is through telephone wire, cable, fiber, satellite, 
wireless, powerline, or any other medium, we need every existing and 
future broadband service provider to step up to the national challenge.
  That is why I am introducing a bill that will encourage rapid 
deployment of high quality and affordable high speed broadband service, 
especially in the rural areas that desperately need this technology.
  The Broadband for Rural America Act of 2006 includes five major 
provisions. Each provision is designed to eliminate obstacles that 
hinder broadband deployment in rural America today.
  First, my bill creates a new Federal program specifically targeted to 
assist people who are doing the necessary work at the earliest stages 
to bring broadband to their communities.
  These are future customers who are weary of waiting for 
telecommunications and cable companies to eventually reach their 
corners of the State. These are individuals, businesses, and co-ops who 
want to create a demand pool to entice new or existing carriers to 
quickly expand broadband service to areas where they work and live.
  We have several groups like this in my home State of Illinois. They 
cannot wait any longer, so they have taken the initiative to work for 
access to affordable high quality broadband service.
  Many of these groups and individuals work in collaboration with like-
minded community leaders, businesspeople, engineers, and other experts 
to learn all they can about their region. They are the local experts on 
the unique geographic, economic, and lifestyle needs of their market. 
They can conduct the mapping and surveying work, to find out where 
there are services and gaps in their neighborhoods, and what technology 
is best suited to serve their region.
  And, if they discover that no existing provider wants to expand 
service to where they are, based on the company's internal cost-benefit 
analysis, these groups are willing to start a communications service of 
their own, using technology they can afford, to provide broadband for 
and by themselves. These good people do not want to be left out of the 
new economy. They need our help.
  Yet, currently, there is no readily accessible source of funding from 
the Federal Government for these groups that are undertaking the 
critical early stage groundwork. If they were already communications 
service providers, they could look for funding through other programs, 
including the USDA's Rural Utilities Service Program, the universal 
service fund, or the Small Business Administration. They could also go 
to the financial markets to seek venture capital and operating funds 
from established private sector investors.
  But as startup groups trying hard to serve their local or rural 
community's needs, they have few places to turn to for financial 
assistance.
  My bill creates a new Office of Broadband Access within the FCC that 
would administer a trust fund from which Federal grants can be issued 
to these startup groups. Under my bill, eligible entities include 
nonprofits, academic institutions, local governments, and commercial 
companies that will work to identify broadband access needs in unserved 
areas of the country.
  The types of projects to be funded through this new program will 
include feasibility studies, mapping, economic analysis, and other 
activities undertaken to determine the reasons for the current lack of 
service and the scale, scope, and type of broadband services most 
suitable for the particular unserved area.
  To further assist with these startup projects, my bill requires the 
FCC to collect more useful information from current broadband service 
providers to ascertain where and how broadband service is available, 
and to report to Congress on the areas that are unserved.
  This reporting requirement is a bipartisan idea that Senator Bill 
Nelson and Senator Jim DeMint recently presented before the Senate 
Commerce Committee. I am happy to work with them to further encourage 
the FCC to collect more useful data on the state of broadband 
deployment.
  Finally, the revenues to fund this trust fund will be derived from 
direct appropriations of $10 million per year for 5 years, plus 1 
percent of proceeds from all auction sales of spectrum conducted by the 
FCC, which are to be set aside for this unique purpose. I believe this 
should generate enough revenues to sustain this trust fund for the next 
5 years, which is the critical time for Federal assistance.

[[Page 17002]]

  When Congress created the Rural Utilities Service Broadband Loan and 
Loan Guarantee Program in the 2002 farm bill, we charged the U.S. 
Department of Agriculture with providing much needed funds to bring 
broadband to rural America. The bill authorized $100 million for fiscal 
years 2002 to 2007 to provide below market-rate loans and loan 
guarantees for the construction and improvement of facilities and 
equipment to provide broadband service.
  While this loan program has had some successes over the past 4 years, 
it has also faced serious internal and external criticism.
  For example, in September 2005, USDA's inspector general issued an 
internal audit report pointing out major problems with the program. 
Among other concerns, the report alleges that, in decisions that were 
inconsistent with provisions of authorizing statute, USDA has funded 
entities in suburban--not rural--areas, and in places that are already 
receiving broadband service.
  The internal report also accuses the agency of mismanaging the 
program, leading to irregularities and even fraud in the decisionmaking 
and approval processes for applications.
  To add more controversy to this program, in May of this year, USDA 
was sued by the cable industry for allegedly failing to follow the 
statutory mandates that created the broadband loan program.
  Striking a tone similar to the inspector general's internal audit 
report, the lawsuit alleges among other issues that USDA has diverted 
Federal funds to suburban areas and has failed to ensure that unserved 
communities receive first priority.
  I support the USDA's rural broadband loan program, and I want to see 
the program grow and continue to fund worthy projects. But I also 
believe that these recent internal and external developments merit 
serious consideration. So, in the spirit of working with the USDA to 
reform the problematic areas, my bill reforms and extends the life of 
the loan program for another 5 years, to expire in 2012, not 2007.
  The bill goes to the heart of the concerns raised by the critics of 
the program. It amends the definition of an eligible rural community to 
exclude any area located within 10 miles of any city with a population 
of over 25,000. This should prevent the program from funding urban or 
suburban areas that may be technically considered rural under some 
definitions, but are in reality, located adjacent to areas that already 
receive broadband service.
  Additionally, my bill prevents any rural area from being funded where 
a majority of its residential customers already have access to 
broadband service offered at a price per megabit of speed comparable to 
the nearest urban area. Under this definition, any area where rural 
residents are already enjoying affordable high speed broadband service 
should not be allowed to receive additional Federal funds.
  These funds should be saved for the truly needy communities.
  My bill also provides language to authorize in statute a rural 
broadband grant program to be administered by the USDA, together with 
its rural broadband loan and loan guarantee program.
  While the USDA has created its own grant programs to fund certain 
broadband providers, a formal grant program was never authorized by 
Congress. By authorizing it, Congress will have more oversight and 
impose accountability, while keeping the grant program funded at an 
operational level for many years to come.
  Finally, although USDA's inspector general has recommended several 
reform measures, I believe we should force the agency to implement 
these changes in order to improve the loan and grant programs. 
Therefore, my bill requires the USDA to undertake a comprehensive and 
transparent rulemaking process in response to the recent internal 
audit.
  The FCC has been looking to make more spectrum available for 
innovative unlicensed wireless uses, including wireless broadband. This 
new ``unlicensed'' spectrum holds tremendous potential for allowing 
wireless broadband to be deployed in rural areas. This would be 
especially helpful in large rural geographic regions where it would be 
cost prohibitive to build out a broadband infrastructure with wires, 
cable, or fiber.
  Some of this spectrum would come from space made newly available when 
traditional analog over-the-air TV broadcasters transition to digital 
transmission by 2009. Other spectrum may be found in narrow gaps 
between currently existing licensed users that could be utilized by 
smaller and localized products, such as garage openers, cordless 
phones, wireless baby monitors, and of course, broadband.
  While I support making more spectrum available to new users, I 
believe we need to do so with clear safeguards in place so that new 
wireless users will not cause undue interference problems with existing 
broadcasters, public safety officials, and others that use wireless 
products such as microphones.
  My bill requires the FCC to complete a rulemaking process to make new 
spectrum available for wireless broadband services in rural areas as 
soon as practicable. The bill specifically requires the FCC to ensure 
that new unlicensed wireless users provide engineering testing results 
to prevent harmful interference problems.
  The FCC also has been planning an auction sale of spectrum in the 700 
MHz band, which is ideal for wireless broadband use. I support this 
auction, and I encourage the FCC to conduct it as soon as possible, so 
that new service providers can enter the wireless broadband market to 
fill in the gaps in service that wireline providers cannot or will not 
meet.
  However, we have learned from previous FCC auctions that the true 
value of spectrum depends on who uses it and for what purposes. We also 
have learned that different carriers will bid in different auctions, 
depending on the size of the blocks of airwaves available for purchase. 
Large national wireless carriers will choose to bid on large geographic 
markets, while smaller or local carriers will bid on smaller market 
sizes.
  For the 700 MHz band, I agree with a bipartisan idea that Senator 
Olympia Snowe and Senator Byron Dorgan proposed in the Senate Commerce 
Committee. In our view, it makes the most sense to configure the plan 
for this band to designate up to 12 MHz of paired recovered analog 
spectrum to be auctioned for smaller geographic licenses.
  This will maximize the participation of small, regional, and rural 
service providers, because these are the most likely entities to 
provide wireless broadband service in rural areas.
  My bill therefore requires the FCC to evaluate its auction plans and 
to divide some of the frequency allocations into smaller area licenses 
so that regional and rural wireless companies can compete in the 
bidding process.
  I look forward to working with Senators Snowe and Dorgan to ensure 
that the FCC maximizes the value of these public airwaves for the 
benefit of all Americans, especially those living in rural areas.
  As with many States, my State of Illinois has struggled over the past 
few years with ways to bring universal and affordable broadband to 
every corner of our State. Many leaders in our State and local 
governments have studied various proposals, and have sought the 
guidance of experts in the private sector.
  Additionally, telecommunications and cable companies that provide the 
vast majority of broadband service in the nation today are generally 
regulated at the state and local levels. Therefore, in our effort to 
develop a national broadband policy, I think it makes sense for 
Congress to learn from the varied experiences gained in many states 
that have tried innovative solutions to encourage or mandate broadband 
services in their regions.
  My bill establishes a task force consisting of experts in Federal, 
State, and local governments, trade associations, public interest 
organizations, academic institutions, and other relevant areas, to 
study best practices for rapid deployment of broadband services in 
States, particularly those with large unserved rural areas.

[[Page 17003]]

  The bill requires the task force, within 6 months, to provide to 
Congress and to each governor a report detailing a comprehensive list 
of specific measures adopted by State or local governments that have 
helped provide incentives for communications carriers to deploy 
broadband services in areas that lacked such services.
  For too long, we have been talking about the need to bring universal 
and affordable broadband to every corner of our Nation. Yet progress 
has been too slow. It is time to reengage our national, state, and 
local policy leaders to focus our attention, and work with the private 
sector toward achieving this goal.
  I urge my colleagues to join me in supporting Broadband for Rural 
America Act of 2006.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3820

       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 ``Broadband for Rural America 
     Act of 2006''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) High speed broadband communications is no longer a 
     luxury. It has become a vital service for all Americans, much 
     like water, sewer, gas, and electricity are essential 
     resources for our daily lives.
       (2) Broadband infrastructure is critical to community and 
     economic development, by encouraging investment, creating 
     jobs, improving productivity, fostering innovation, and 
     increasing consumer benefits.
       (3) Despite the ongoing efforts by traditional 
     communications carriers to expand broadband services, the 
     rate of deployment in America is still far from ideal. Recent 
     reports indicate that America continues to trail other 
     leading industrialized countries, per capita, in the 
     availability and use of broadband communications.
       (4) As our Nation falls behind the developed world in 
     broadband access, so, too, are rural residents falling behind 
     city and urban residents. In small towns and rural America, 
     broadband service remains largely non existent. In places 
     where it is available, rural broadband customers often pay 
     more for inferior quality than customers in cities and urban 
     areas.
       (5) A national policy is needed to accelerate the 
     deployment of broadband services so that, no matter where 
     they live, every American can have access to affordable and 
     high-quality broadband service as soon as possible.

     SEC. 3. PURPOSE.

       The purposes of this Act are to encourage the rapid 
     deployment of high quality and affordable high speed 
     broadband service to every corner of our Nation by--
       (1) establishing a new source of funding for entities that 
     work to identify unserved regions of the Nation and to 
     address the lack of broadband service in those areas;
       (2) reforming the rural broadband loan program to ensure 
     that Federal funds are provided only to qualified entities 
     that will serve truly rural and unserved regions of the 
     Nation, while providing statutory authority and Federal 
     funding for the rural broadband grant program;
       (3) making more unlicensed spectrum available for 
     innovative wireless broadband uses that will not cause 
     harmful interference and degradation of service to other 
     wireless services;
       (4) encouraging rural, regional, and smaller wireless 
     carriers to enter the wireless broadband market by 
     reconfiguring the size of spectrum auctions into smaller 
     market sizes; and
       (5) studying policies and programs adopted by State and 
     local governments that have worked to provide incentives for 
     rapid broadband deployment.

     SEC. 4. BROADBAND ACCESS TRUST FUND AND OFFICE OF BROADBAND 
                   ACCESS.

       (a) Establishment.--
       (1) Fund established.--There is established in the Treasury 
     of the United States the Broadband Access Trust Fund.
       (2) Office established.--
       (A) In general.--There is established within the Federal 
     Communications Commission the Office of Broadband Access.
       (B) Duties.--The Office of Broadband Access shall 
     coordinate the use of all resources within the Fund, as such 
     resources relate to the expansion of broadband technology 
     into rural or unserved areas.
       (3) Deposits.--The Fund shall consist of--
       (A) the amounts appropriated pursuant to subsection (f); 
     and
       (B) 1 percent of the proceeds of any auction for any bands 
     of frequencies conducted pursuant to section 309(j) of the 
     Communications Act of 1934 (47 U.S.C. 309(j)).
       (4) Fund availability.--
       (A) Appropriation.--There are appropriated from the Fund 
     such sums as are authorized by the board to be disbursed for 
     grants under this section.
       (B) Reversion of unused funds.--Any grant proceeds that 
     remain unexpended at the end of the grant period, as 
     determined under subsection (c)(3), shall revert to and be 
     deposited in the Fund.
       (b) Board of Directors.--
       (1) Establishment.--The Fund shall be administered by the 
     Office of Broadband Access, in consultation with a board of 
     directors comprised of 5 members, appointed by the Chairman 
     of the Federal Communications Commission, with experience in 
     1 or more of the following fields:
       (A) Grant and investment management.
       (B) Advanced communications technology.
       (C) Rural communications services.
       (D) Community-based economic development.
       (2) Functions.--The board shall--
       (A) establish reasonable and prudent criteria for the 
     selection of grant recipients under this section;
       (B) determine the amount of grants awarded to such 
     recipients; and
       (C) review the use of grant funds by such recipients.
       (3) Compensation prohibited; expenses provided.--The 
     members of the board shall serve without compensation, but 
     may, from appropriated funds available for the administrative 
     expenses of the Federal Communications Commission, receive 
     travel expenses, including per diem in lieu of subsistence, 
     in accordance with applicable provisions under subchapter I 
     of chapter 57 of title 5, United States Code.
       (c) Purpose and Activities of the Fund.--
       (1) Grant purposes.--In order to achieve the objectives and 
     carry out the purposes of this section, the Office of 
     Broadband Access is authorized to make grants, from amounts 
     deposited pursuant to subsection (a)(2) and from the interest 
     or other income derived from the Fund--
       (A) to study the lack of affordable broadband 
     communications services in particular unserved regions of the 
     nation, particularly in rural areas; and
       (B) to take steps toward providing such services to such 
     regions.
       (2) Grant preference.--In making grants from the Fund, the 
     Office of Broadband Access shall give preference to eligible 
     individuals or entities that are proposing rural or 
     community-based partnerships to encourage economic 
     development in unserved regions of the nation, particularly 
     in rural areas.
       (3) Grant availability.--Grants from the Fund shall be made 
     available on a single or multi-year basis to facilitate long 
     term planning.
       (d) Eligible Entities.--
       (1) In general.--The following organizations and entities 
     are eligible to apply for funds under this section:
       (A) An agency or instrumentality of a State or local unit 
     of government (including an agency or instrumentality of a 
     territory or possession of the United States).
       (B) A nonprofit agency or organization that is exempt from 
     taxes under section 501(c)(3) of the Internal Revenue Code of 
     1986 (26 U.S.C. 501(c)(3)).
       (C) An institution of higher education.
       (D) Any legally organized incorporated organization or 
     other legal entity, including a cooperative, a private 
     corporation, or a limited liability company.
       (2) Preference.--
       (A) Nonlicensed entities.--In determining which legally 
     organized incorporated organizations or other legal entities 
     shall receive grants from the Fund, the Office of Broadband 
     Access shall give preference to those organizations and 
     entities that are not already licensed by the Federal 
     Communications Commission to provide voice, data, video, or 
     other communications or information services.
       (B) Secondary priority for already licensed entities.--The 
     Office of Broadband Access shall only award grants from the 
     Fund to those organizations and entities that are already 
     licensed by the Federal Communications Commission to provide 
     voice, data, video, or other communications or information 
     services only after all applications by nonlicensed 
     organizations described in subparagraph (A) have been 
     considered.
       (e) Permissible Uses of Funds.--Amounts made available by 
     grants from the Fund under this section may be used by 
     eligible entities for conducting feasibility studies, 
     mapping, economic analysis, and other activities done to 
     determine--
       (1) the reasons for the lack of affordable broadband 
     communications services in particular unserved regions of the 
     nation, particularly in rural areas; and
       (2) the scale, scope, and type of broadband services most 
     suitable for each particular unserved area.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Fund $10,000,000 for fiscal year 
     2007 and each of the 5 succeeding fiscal years.
       (g) Reports.--
       (1) By grant recipients.--Each grant recipient shall submit 
     to the Federal Communications Commission and the board a 
     report on the use of the funds provided by the grant.

[[Page 17004]]

       (2) By fcc.--
       (A) In general.--The Federal Communications Commission 
     shall annually submit to Congress a report on the operations 
     of the Fund and the grants made by the Fund.
       (B) Required content.--The report required under 
     subparagraph (A) shall include--
       (i) an identification of the grants made, the recipients 
     thereof, and the planned uses of the amounts made available;
       (ii) a financial report on the operations and condition of 
     the Fund; and
       (iii) a description of the results of the use of funds 
     provided by grants under this section, including the status 
     of broadband availability in the regions covered by such 
     grants.
       (C) Information required.--
       (i) In general.--The Federal Communications Commission 
     shall revise FCC Form 477 reporting requirements not later 
     than 180 days after the date of enactment of this Act to 
     require broadband service providers to report the following 
     information:

       (I) Identification of location where the provider provides 
     broadband service to customers, identified by zip code plus 4 
     digit location (referred to in this subparagraph as ``service 
     area'').
       (II) Percentage of residential households and businesses in 
     each service area that are offered broadband service by the 
     provider, and the percentage of such residential households 
     and businesses that subscribe to each service plan offered.
       (III) The average price per megabit of download speed and 
     upload speed in each service area.
       (IV) Identification by service area of the provider's 
     broadband service's actual average throughput, and contention 
     ratio of the number of users sharing the same line.

       (ii) Exception.--The Federal Communications Commission may 
     exempt a broadband service provider from the requirements of 
     this subparagraph if the Federal Communications Commission 
     determines that a provider's compliance with the reporting 
     requirements is cost prohibitive, as defined by the Federal 
     Communications Commission.
       (D) Report.--The Federal Communications Commission shall 
     provide to Congress on an annual basis a report, using 
     available Census Bureau data, containing the following 
     information for each service area that is not served by any 
     broadband service provider;
       (i) Population.
       (ii) Population density.
       (iii) Average per capita income.
       (h) Regulations.--The Federal Communications Commission may 
     prescribe such regulations as may be necessary and 
     appropriate to carry out this section.
       (i) Definitions.--As used in this section--
       (1) the term ``the Fund'' means the Broadband Access Trust 
     Fund established pursuant to subsection (a); and
       (2) the term ``the board'' means the board of directors 
     established pursuant to subsection (b).

     SEC. 5. USDA BROADBAND PROGRAM REFORMS.

       (a) Reauthorization.--Section 601(k) of the Rural 
     Electrification Act of 1936 (7 U.S.C. 950bb(k)) is amended by 
     striking ``2007'' and inserting ``2012''.
       (b) Clarification of Eligible Rural Community.--Section 
     601(b)(2) of the Rural Electrification Act of 1936 (7 U.S.C. 
     950bb(b)(2)) is amended to read as follows:
       ``(2) Eligible rural community.--The term `eligible rural 
     community' means any area of the United States that is not--
       ``(A) included within the boundaries of any incorporated 
     city, village, borough, or town with a population in excess 
     of 25,000 inhabitants;
       ``(B) located within 10 miles of any such city, village, 
     borough, or town; and
       ``(C) an area where a majority of its residential customers 
     have access to broadband service offered at a price per 
     megabit of download speed and upload speed comparable to the 
     nearest urban area.''.
       (c) Additional Requirements for Eligible Entities.--Section 
     601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) 
     is amended--
       (1) in subsection (c)--
       (A) in paragraph (1), by striking ``(1) In general.--''; 
     and
       (B) by striking paragraph (2); and
       (2) in subsection (d)(1)--
       (A) in subparagraph (A), by striking ``; and'' and 
     inserting a semicolon;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(C) demonstrate that any loan or loan guarantee obtained 
     under this section will be used only to furnish, improve, or 
     extend broadband service to those eligible rural 
     communities.''.
       (d) Community Connect Grant Program.--Title VI of the Rural 
     Electrification Act of 1936 (7 U.S.C. 950bb et seq.) is 
     amended by adding at the end the following:

     ``SEC. 602. COMMUNITY CONNECT GRANT PROGRAM.

       ``(a) Purposes.--The purposes of this section are--
       ``(1) to provide financial assistance in the form of grants 
     to eligible applicants that will provide, on a community-
     oriented connectivity basis, broadband service that fosters 
     economic growth and delivers enhanced educational, health 
     care, and public safety services; and
       ``(2) to ensure the deployment of broadband service to 
     extremely rural, lower-income communities on a community-
     oriented connectivity basis.
       ``(b) Grants Authorized.--
       ``(1) In general.--The Secretary may award a grant to any 
     eligible applicant to provide broadband services in 
     accordance with the provisions of this section.
       ``(2) Award basis.--The Secretary shall award grants under 
     this section on a competitive basis.
       ``(c) Eligible Applicant.--To be eligible to obtain a grant 
     under this section, an applicant shall--
       ``(1) be--
       ``(A) legally organized as an incorporated organization;
       ``(B) an Indian tribe or tribal organization, as defined in 
     subsections (b) and (c) of section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b(b) 
     and (c));
       ``(C) a State or local unit of government;
       ``(D) an institution of higher education; or
       ``(E) any other legal entity, including a cooperative, a 
     private corporation, or a limited liability company organized 
     on a for-profit or not-for-profit basis;
       ``(2) have the legal capacity and authority to--
       ``(A) own and operate the broadband facilities proposed in 
     its application;
       ``(B) enter into contracts; and
       ``(C) otherwise comply with applicable Federal statutes and 
     regulations; and
       ``(3) develop a project that--
       ``(A) serves an eligible rural community;
       ``(B) deploys basic broadband service, free of all charges 
     for at least 2 years, to all critical community facilities 
     located within a proposed service area;
       ``(C) offers basic broadband service to residential and 
     business customers within a proposed service area; and
       ``(D) provides--
       ``(i) a community center with at least 10 computer access 
     points within a proposed service area; and
       ``(ii) broadband service to such centers free of charge for 
     at least 2 years.
       ``(d) Application.--
       ``(1) Submission.--Each applicant seeking a grant under 
     this section shall submit an application containing--
       ``(A) any information or documentation required under 
     section 1739.15 of title 7, Code of Federal Regulations; and
       ``(B) such other information or documentation that the 
     Secretary may require.
       ``(2) Review and scoring of applications.--The Secretary 
     shall review and score any applications received under this 
     section using the same methods, and in the same manner, as 
     described in sections 1739.16 and 1739.17 of title 7, Code of 
     Federal Regulations.
       ``(e) Use of Funds.--A grant awarded to an eligible 
     applicant pursuant to this section may be used to--
       ``(1) construct, acquire, or lease facilities, including 
     spectrum, to deploy broadband service to all participating 
     critical community facilities and all required facilities 
     needed to offer such service to residential and business 
     customers located within a proposed service area;
       ``(2) improve, expand, construct, or acquire a community 
     center that furnishes free access to broadband service, 
     provided that such community center is open and accessible to 
     area residents before, during, and after normal working hours 
     and on Saturday or Sunday;
       ``(3) purchase any end user equipment needed to carry out 
     the project of the applicant described in subsection (c)(3);
       ``(4) pay the operating expenses incurred in providing--
       ``(A) broadband service to critical community facilities 
     for the first 2 years of operation; and
       ``(B) training and instruction on how to use such services; 
     and
       ``(5) purchase any land, building, or building construction 
     needed to carry out the project of the applicant described in 
     subsection (c)(3).
       ``(f) Matching Requirement.--
       ``(1) In general.--Each eligible applicant shall contribute 
     not less than 15 percent of the grant amount requested in any 
     application.
       ``(2) Form.--The matching contribution described in 
     paragraph (1) may be in the following form:
       ``(A) Cash for eligible grant purposes.
       ``(B) In-kind contributions for purposes that could have 
     been financed with grant funds under this section. In-kind 
     contributions shall be new or non-depreciated assets with 
     established monetary values. Manufacturers' or service 
     providers' discounts shall not be considered a matching 
     contribution.
       ``(C) The rental value of space provided within an existing 
     community center, provided that such space is provided free 
     of charge to such applicant, for the first 2 years of 
     operation.
       ``(D) Salary expenses incurred for any individual operating 
     the community center, for the first 2 years of operation.
       ``(E) Expenses incurred in operating a community center, 
     for the first 2 years of operation.

[[Page 17005]]

       ``(3) Prior costs.--Costs incurred by an applicant, or by 
     others on behalf of an applicant, for facilities, installed 
     equipment, or other services rendered prior to submission of 
     a completed application shall not be considered an acceptable 
     use of grant funds under subsection (e) or a matching 
     contribution.
       ``(4) Rental values.--Rental values of space provided, as 
     described in paragraph (1)(C), shall be substantiated by 
     rental agreements documenting the cost of space of a similar 
     size in a similar location.
       ``(5) Reasonableness review.--Rental values, salaries, and 
     other expenses incurred in operating a community center shall 
     be subject to review by the Secretary for reasonableness in 
     relation to the scope of the applicant's project described in 
     subsection (c)(3).
       ``(6) Other assistance.--Any financial assistance from any 
     other Federal source shall not be considered a matching 
     contribution under this section unless there is a Federal 
     statutory exception specifically authorizing the Federal 
     financial assistance to be considered as such.
       ``(g) Other Requirements.--Each applicant shall comply with 
     the reporting, oversight, and auditing requirements described 
     in sections 1739.19 and 1739.20 of title 7, Code of Federal 
     Regulations.
       ``(h) Definitions.--As used in this section:
       ``(1) Basic broadband service.--The term `basic broadband 
     service' means the broadband service level provided by an 
     applicant at the lowest rate or service package level for 
     residential or business customers, as appropriate, provided 
     that such service meets the requirements of this section.
       ``(2) Broadband service.--The term `broadband service' 
     means providing an information-rate equivalent to at least 
     200 kilobits/second in the consumer's connection to the 
     network, both from the provider to the consumer (downstream) 
     and from the consumer to the provider (upstream).
       ``(3) Community center.--The term `community center'--
       ``(A) means a public building, or a section of a public 
     building with at least 10 computer access points, that is 
     used for the purposes of providing free access to or 
     instruction in the use of broadband service, and is of the 
     appropriate size to accommodate this purpose; and
       ``(B) may include schools, libraries, or a city hall.
       ``(4) Computer access point.--The term `computer access 
     point' means a computer terminal with access to basic 
     broadband service.
       ``(5) Critical community facilities.--The term `critical 
     community facilities' means any public school or education 
     center, public library, public medical clinic, public 
     hospital, community college, public university, or any law 
     enforcement, fire, or ambulance station in a proposed service 
     area.
       ``(6) End user equipment.--The term `end user equipment' 
     means computer hardware and software, audio or video 
     equipment, computer network components, telecommunications 
     terminal equipment, inside wiring, interactive video 
     equipment, or other facilities required for the provision and 
     use of broadband service.
       ``(7) Rural area.--The term `rural area' means any area of 
     the United States that is not--
       ``(A) included within the boundaries of any incorporated or 
     unincorporated city, village, borough, or town with a 
     population in excess of 25,000 inhabitants; and
       ``(B) located within 10 miles of any such city, village, 
     borough, or town.
       ``(8) Secretary.--The term `Secretary' means the Secretary 
     of Agriculture.
       ``(9) Service area.--The term `service area' means a single 
     community, and may include the unincorporated areas or 
     locally recognized communities, not recognized in the most 
     recent decennial census performed by the Bureau of the 
     Census, located outside and contiguous to the boundaries of 
     such community, in which the applicant proposes to provide 
     broadband service.
       ``(10) Spectrum.--The term `spectrum' means a defined band 
     of frequencies that will accommodate broadband service.''.

     SEC. 6. USDA RULEMAKING.

       The Secretary of Agriculture shall initiate and complete a 
     rulemaking to--
       (1) consider and adopt, as necessary in the discretion of 
     the Secretary, the recommendations set forth in audit report 
     09601-4-Te, issued in September 2005, entitled ``Rural 
     Utilities Service Broadband Grant and Loan Programs'' by the 
     Inspector General of the United States Department of 
     Agriculture; and
       (2) review and propose recommendations as to how to best 
     coordinate the application process of the broadband loan and 
     loan guarantee program under section 601 of the Rural 
     Electrification Act of 1936 and the Community Connect Grant 
     program under section 602 of such Act, as added by section 2 
     of this Act.

     SEC. 7. UNLICENSED DEVICES FOR RURAL WIRELESS BROADBAND.

       (a) Completion of Order.--Not later than 18 months after 
     date of enactment of this Act, the Federal Communications 
     Commission shall issue a final order in the matter of 
     Unlicensed Operation in TV Broadcast Bands, ET Docket No. 04-
     186.
       (b) Conditions.--In completing the final order described in 
     subsection (a), the Federal Communications Commission shall--
       (1) permit certified unlicensed devices to use, in non-
     exclusive terms, unassigned, non-licensed television 
     broadcast channels between 54 MHz and 698 MHz in rural areas;
       (2) protect incumbent certified low power auxiliary 
     stations from harmful interference by requiring certification 
     of unlicensed devices prior to permitting such devices to 
     access or use unassigned, non-licensed television broadcast 
     channels between 54 MHz and 698 MHz in rural areas, and 
     including in the certification proof of successful completion 
     of laboratory and field testing by an independent laboratory 
     demonstrating that unlicensed devices do not cause harmful 
     interference to incumbent certified low power auxiliary 
     stations;
       (3) protect incumbent certified low power auxiliary 
     stations from harmful interference by prohibiting certified 
     unlicensed devices from operating on any television broadcast 
     channel between 54 MHz and 698 MHz in rural areas already in 
     use by an incumbent certified low power auxiliary station; 
     and
       (4) consider additional ways to protect incumbent certified 
     low power auxiliary stations from harmful interference, such 
     as reserving certain television broadcast channels for 
     exclusive use by incumbent certified low power auxiliary 
     stations.
       (c) Definitions.--As used in this section:
       (1) Certified unlicensed device.--The term ``certified 
     unlicensed device'' means any unlicensed device certified 
     under subsection (b)(2)(D) operating in a fixed location, 
     whose primary purpose is to provide broadband service to 
     rural areas.
       (2) Incumbent certified low power auxiliary station.--The 
     term ``incumbent certified low power auxiliary station'' 
     means any certified low power wireless microphone, personal 
     wireless monitor, or other audio auxiliary equipment 
     operating on television broadcast channels between 54 MHz and 
     698 MHz, used for entertainment, religious, news-gathering, 
     governmental, business, or personal consumer purposes to 
     provide real-time, high-quality audio transmissions over 
     distances of approximately 100 meters.
       (3) Rural area.--The term ``rural area'' means any rural 
     service area or rural statistical area, as defined by the 
     Federal Communications Commission.

     SEC. 8. SPECTRUM AUCTION FOR RURAL WIRELESS BROADBAND.

       Not later than February 1, 2007, the Federal Communications 
     Commission shall initiate a proceeding--
       (1) to reevaluate and reconfigure its band plans for the 
     upper 700 MHz band (currently designated Auction 31) and for 
     the unauctioned portions of the lower 700 MHz band (currently 
     designated as Channel Blocks A, B, and E) so as to designate 
     up to 12 MHz of paired recovered analog spectrum (as defined 
     in section 309(j)(15)(C)(vi) of the Communications Act of 
     1934 (47 U.S.C. 309(j)(15)(C)(vi))); and
       (2) to reconfigure its band plans to include spectrum to be 
     licensed for small geographic license areas, taking into 
     consideration the desire to promote infrastructure build-out 
     and service to rural and insular areas and the competitive 
     benefits, unique characteristics, and special needs of rural, 
     regional, and smaller wireless carriers.

     SEC. 9. PUBLIC-PRIVATE TASK FORCE ON BROADBAND INITIATIVES.

       (a) Establishment.--There is established a task force to be 
     known as the ``Rural Broadband Access Task Force'' (referred 
     to in this section as the ``Task Force'').
       (b) Membership.--
       (1) In general.--The Task Force established under this 
     section shall be composed of 11 members, of whom--
       (A) 3 shall be appointed by the President;
       (B) 2 shall be appointed by the Majority Leader of the 
     Senate;
       (C) 2 shall be appointed by the minority Leader of the 
     Senate;
       (D) 2 shall be appointed by the Speaker of the House of 
     Representatives; and
       (E) 2 shall be appointed by the minority Leader of the 
     House of Representatives.
       (2) Qualifications.--The membership of the Task Force 
     established under this section shall include--
       (A) at least 6 members of whom--
       (i) all shall be recognized experts in the field of 
     communications;
       (ii) 2 shall be employees of the Federal Government;
       (iii) 2 shall be employees of State governments; and
       (iv) 2 shall be employees of local governments;
       (B) at least 1 member who shall be a representative of a 
     consumer or public interest organization;
       (C) at least 1 member who shall be a representative of 
     interested trade associations;
       (D) at least 1 member who shall be a representative of 
     interested academic institutions; and
       (E) at least 2 members all of whom shall be especially 
     qualified to serve on the Task Force by virtue of their 
     education, training, or experience, particularly in the field 
     of rural communications access issues.
       (3) Chairperson.--Each year, the Task Force shall elect a 
     Chairperson from among its members.

[[Page 17006]]

       (4) Vice chair.--Each year, the Task Force shall elect a 
     Vice Chair from among its members.
       (c) Duties.--The Task Force shall--
       (1) conduct a comprehensive survey of legislative, 
     regulatory, or administrative policies or programs adopted by 
     States to encourage rapid deployment of broadband services;
       (2) study policies or programs that have been successful in 
     providing incentives for communications carriers to deploy or 
     expand services in areas that lacked such services before the 
     introduction of such incentives; and
       (3) study traditional incentives, such as tax credits or 
     financial subsidies, as well as innovative efforts, including 
     public and private partnership programs and best practices 
     that have worked well in encouraging communications carriers 
     to deploy or expand services in areas that lacked such 
     services, particularly in those States with large unserved 
     rural areas.
       (d) Report.--Not later than 6 months after all the members 
     of the Task Force have been appointed under subsection (b), 
     the Task Force shall submit a report to Congress and to the 
     governor of each State detailing a comprehensive list of 
     policies and programs adopted by States that have succeeded 
     in providing incentives for communications carriers to deploy 
     or expand services in areas that lacked such services before 
     the introduction of such incentives.
       (e) Working Groups.--
       (1) In general.--The Task Force may establish such working 
     groups as the Task Force determines necessary in order to 
     assist the Task Force in carrying out this subsection.
       (2) Membership.--Any working group established under 
     paragraph (1) may include such members as the Task Force 
     determines necessary, including individuals who were not 
     appointed as a member of the Task Force under subsection (b).
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section.
                                 ______
                                 
      By Ms. COLLINS (for herself, Mrs. Feinstein, Mr. Cornyn, Ms. 
        Mikulski, Mr. Leahy, and Mr. Lieberman):
  S. 3821. A bill to authorize certain athletes to be admitted 
temporarily into the United States to compete or perform in an athletic 
league, competition, or performance; to the Committee on the Judiciary.
  Ms. COLLINS. Mr. President, I rise to introduce the Creating 
Opportunities for Minor League Professionals, Entertainers and Teams 
through legal Entry--COMPETE--Act. This bill will level the playing 
field for minor league sports teams that depend on getting the best 
athletic talent. I thank Senators Feinstein, Cornyn, Lieberman, 
Mikulski, and Leahy for joining me in introducing this measure.
  The core problem we address is that under current law, minor league 
players who have to use the H-2B visa category face severe visa 
shortages, while major league players qualify automatically for 
plentiful P-1 visas.
  The H-2B visas are intended for use by industries facing seasonal 
demands for labor, such as the hospitality and logging industries. 
However, this type of visa is also used by many talented, highly 
competitive foreign athletes who are recruited by U.S. teams.
  A chronic H-2B visa shortage over the last few years has posed 
challenges for all industries using the H-2B visa category. In recent 
fiscal years, including 2006, the 66,000 visa cap was met early in the 
year. While we were successful last year in crafting a temporary, 2-
year fix for the H-2B shortage, this fix will expire at the end of the 
current fiscal year.
  However, solving this problem goes beyond fixing the H-2B visa cap. 
Minor league players simply do not belong in the same visa category as 
seasonal workers. There is no rational basis for automatically 
qualifying major league players for P-1 visas, which are granted to 
talented athletes, artists, and entertainers, while denying them to 
minor league players. My amendment would remedy this unfair situation.
  The problem of requiring minor league athletes to use the H-2B visa 
category has posed a particular challenge to those of us in Maine who 
enjoy cheering on our sports teams. The MAINEiacs, a Canadian junior 
hockey league team that plays its games in Lewiston, ME, has faced 
tremendous difficulties obtaining the H-2B visas necessary for the 
majority of its players to come to the United States to play in the 
team's first home games.
  Last year, due to uncertainty surrounding the availability of H-2B 
visas at the end of the fiscal year, the team had to reschedule its 
season home opener and cancel several early season games. This forced 
the team to schedule make-up games for those normally played in 
September. The problems created by the visa situation creates an 
unnecessary hardship for this team, in addition to threatening the 
revenue the team generates for the city of Lewiston and businesses in 
the surrounding area.
  The Portland Sea Dogs, a Double-A baseball team affiliated with the 
Boston Red Sox, is another of the many teams that relies on H-2B visas 
to bring some of its most skilled players to the United States. 
Thousands of fans come each year to see this team, and others like it 
across the country, play one of America's favorite sports. Due to the 
shortage of H-2B visas, however, Major League Baseball reports that, in 
2004 and early 2005, more than 350 talented young, foreign baseball 
players were prevented from coming to the United States to play for 
minor league teams. These teams have been a traditional proving ground 
for athletes hoping to make it to the major leagues and players often 
move from these teams to major league rosters.
  Including these highly skilled athletes in the H-2B visa category 
seems particularly unusual when you consider that major league athletes 
are permitted to use an entirely different nonimmigrant visa category--
the P-1 visa. This visa is available to athletes who are deemed by the 
Citizenship and Immigration Services to perform at an ``internationally 
recognized level of performance.'' Arguably, any foreign athlete whose 
achievements have earned him a contract with an American team would 
meet this definition.
  CIS, however, has interpreted this category to exclude minor and 
amateur league athletes. Instead, the P-1 visa is typically reserved 
for only those athletes who have already been promoted to major league 
sports. Unfortunately, this creates something of a catch-22 for minor 
league athletes--if an H-2B visa shortage means that promising athletes 
are unable to hone their skills and prove themselves in the minor 
leagues, they are far less likely to earn the major league contract 
required for a P-1 visa.
  A simple, commonsense solution would be to expand the P-1 visa 
category to include minor league and certain amateur-level athletes who 
have demonstrated a significant likelihood of graduating to the major 
leagues. Major League Baseball strongly supports the expansion of the 
P-1 visa category to include professional minor league baseball 
players. In correspondence to me, the league has pointed out that 
making P-1 visas available to this group of athletes, teams would be 
able to make player development decisions based on the talent of its 
players, without being constrained by visa quotas. The P-1 category, 
the league believes, is appropriate for minor league players because 
these are the players that major league clubs have selected as some of 
the best baseball prospects in the world.
  There is no question that Americans are passionate about sports. We 
have high expectations for our teams and demand only the best from our 
athletes. By expanding the P-1 visa category, we will make it possible 
for athletes to be selected based on fair competition in talent and 
skill, rather the artificial limits of visa availability. In addition, 
we would reduce some pressure on the H-2B visa category making more of 
those visas available to the industries that need them.
  Mr. President, the inequity of our current policy is clear. Let us 
take this simple step toward a more rational visa policy.
  Mrs. FEINSTEIN. Mr. President, I am introducing today the COMPETE Act 
of 2006, along with Senators Collins and Cornyn.
  This is a bill which amends the Immigration and Nationality Act to 
allow certain minor league athletes and ice skaters to be admitted 
temporarily into the United States to compete or perform in an athletic 
league, competition or performance under the same

[[Page 17007]]

non-immigrant visa category as professional athletes.
  The purpose of this legislation is to level the playing field for 
minor league sports teams that depend on getting the best athletic 
talent, regardless of where in the world that talent is discovered.
  Under current law, minor league players and ice skaters who use the 
H-2B temporary visa category face severe visa shortages, while major 
league players qualify for uncapped P-1 temporary visas.
  This unfair discrepancy in the law needs to be remedied, and the bill 
we are introducing today provides a commonsense solution because it 
allows minor league athletes--whether in baseball, basketball, hockey, 
or ice skating--who will perform competitively in the United States to 
apply for a P-1 temporary visa as opposed to an H-2B visa.
  By way of background, The H-2B temporary visa category allows U.S. 
employers in industries with seasonal or intermittent needs to augment 
their existing labor force with temporary workers or augment their 
labor force when necessary due to a one-time occurrence which 
necessitates a temporary increase in workers.
  Typically, H-2B workers fill labor needs in occupational areas such 
as construction, health care, landscaping, lumber, manufacturing, food 
service and processing, and resort and hospitality services.
  Additionally, and perhaps what people do not know, is that not only 
is the H-2B visa category used by loggers, lifeguards, crab pickers, 
amusement park employees, hotel and restaurant employees, but it is 
also used by many talented, highly competitive foreign athletes who are 
recruited by U.S. teams and theatrical ice skating productions.
  A chronic H-28 visa shortage over the last 3 years has posed 
challenges for all industries using the H-2B visa category. In fiscal 
years 2004, 2005, and 2006, the 66,000 visa cap has been reached, 
leaving American teams and the athletes they are recruiting out in the 
cold.
  The COMPETE Act is a solution that not only helps professional 
American teams, but it also relieves the stress on the H-2B visa 
program added by a misclassified group.
  The reality is that minor league athletes do not belong in the same 
visa category as seasonal workers. There is no reason major league 
athletes can't and shouldn't qualify for P-1 visas, which are granted 
to talented athletes, artists, and entertainers. The COMPETE Act would 
remedy this unfair situation.
  What follows are some examples of how classifying minor leaguers and 
ice skaters as H-2B workers harms American sports and how it would be 
better that they be reclassified as other athletes for temporary P-1 
visas.
  Disney on Ice has seven domestic tours per year, bringing 
approximately $400,000 to each of the 150 to 170 U.S. cities in which 
it stops. There are not enough U.S. skaters to fill the roles each 
production requires, thus the organization relies on foreign skaters to 
supplement its cast. As the cap on H-28 visas has been consistently 
reached before the commencement of their training period--(August in 
Florida--and subsequent touring seasons--September through February or 
March--they are often short of ice skaters for their productions.
  Major League Baseball was unable to bring 350 baseball players to the 
United States in the 2004 and 2005 seasons as a result of the H-28 visa 
cap having been met. Promotions of promising young players to the U.S. 
Minor League affiliates could not be made. Due to the unavailability of 
visas, signings of Canadian players drafted in baseball's June first-
year player draft have declined by 80 percent. Furthermore, clubs who 
have already signed talented non-U.S. citizens have been prevented from 
bringing these players to the United States given that the H-2B cap has 
been reached in past years.
  National Hockey League recruits from independent minor league teams, 
such as the American Hockey League, Central Hockey League, and the East 
Coast Hockey League, for foreign players to fill its ranks. Most minor 
hockey league teams' rosters are filled with a majority of foreign 
national professional athletes. This is evident by the number of slots 
that are requested each year by the minor leagues on their temporary 
labor certification applications filed with the Labor Department. For 
instance, the AHL requests approximately 21 player slots out of a 
roster of approximately 26 players; the other leagues are similarly 
situated where the number of requests for slots on temporary labor 
certifications is usually in the ballpark of 80 percent of the roster.
  Further, hockey leagues usually have a few if not more clubs that are 
located in Canada. Of course these players do not need H-2Bs to play 
for a Canadian team, but in the event that they are traded during the 
season to a U.S. team, the acquiring team would have to file an H-2B. 
This frequently presents problems when the numbers have been exhausted 
as the trade becomes dependent upon the availability of a visa number 
and not the professional needs of the team. In addition, players are 
signed throughout the season; this can also prevent teams from signing 
players if the numbers have been exhausted. This is particularly true 
at the end of the season--usually March or April 1--when the numbers 
have been exhausted and the need to sign players for playoffs and 
finals increases.
  National Basketball Association created a developmental league in 
2001. The NBA Development League, or D-League, has functioned both as a 
feeder system for the NBA, whose teams annually call up players to fill 
out NBA rosters beginning in January and, commencing with the 2005-06 
season, as a place where inexperienced NBA Players, within their first 
two seasons, may be assigned to get additional playing time. The D-
League, currently comprised of 12 teams across the country, signs and 
recruits the best basketball athletes from around the world who are not 
playing in the NBA. On average, international players comprise 
approximately 10 percent of active D-League rosters, which currently 
stand at 10 players per team. The H-2B cap has prevented the D-League 
from being able to sign a significant number of qualified international 
players during each of the past two seasons.
  So a simple, commonsense solution would be to expand the P-1 visa 
category to include minor league and certain amateur-level athletes who 
have demonstrated a significant likelihood of graduating to the major 
leagues. This is what the COMPETE Act would do.
  Major League Baseball, the National Basketball Association, the 
National Hockey League, and Feld Entertainment, which owns Disney on 
Ice, all support the expansion of the P-1 visa category to include 
minor league players and ice skaters.
  Americans love their sports teams and want to see the highest caliber 
athletes competing or performing. By expanding the P-1 visa category, 
we will make it possible for athletes to be selected based on talent 
and skill rather than visa availability.
  In addition, we would reduce some pressure on the H-28 visa category 
making more of those visas available to the industries that need them.
  I am pleased to be joined by Senators Collins and Cornyn, as well as 
Mikulski, Leahy, and Lieberman, in introducing the COMPETE Act of 2006.
                                 ______
                                 
      By Mr. OBAMA:
  S. 3822. A bill to improve access to and appropriate utilization of 
valid, reliable and accurate molecular genetic tests by all populations 
thus helping to secure the promise of personalized medicine for all 
Americans; to the Committee on Finance.
  Mr. OBAMA. Mr. President, I rise today to introduce the Genomics and 
Personalized Medicine Act of 2006. This bill will expand and accelerate 
scientific advancement in the field of genomics, which is already 
beginning to change the paradigm of medical practice as we know it and 
will have profound implications for health and health care in this 
Nation.
  Almost 150 years ago, Gregor Mendel made history when he established 
the

[[Page 17008]]

Laws of Heredity, which detailed his early knowledge about the 
fundamentals of inheritance. As has happened so many times throughout 
history, Mr. Mendel's fellow scientists didn't fully understand, 
support or necessarily agree with his hypotheses on genes, specifically 
how they are transmitted from one generation to the next, and how they 
help to define who we are. But he persevered--growing, observing and 
experimenting on 10,000 pea plants for almost a decade--and we know now 
that his ideas were right.
  I mention Mr. Mendel not just because he was an early pioneer in the 
field of genetics, and is considered by many to be the father of 
genetics, but also because he had vision, intellectual curiosity, 
courage to think independently and question the status quo, and of 
course tenacity, all of which ultimately opened the door to a 
scientific revolution.
  Since that time, our knowledge about genetics has dramatically 
increased. We have unlocked many of the mysteries about DNA and RNA, 
their structure and function, and how their code is translated into the 
proteins that make up the tissues and organs of the human body. 
Researchers have also made discoveries about DNA replication, and 
genetic recombination and regulation, just to name a few, and have 
developed the necessary technologies to do all of this work.
  This knowledge isn't just sitting in books on the shelf. We have used 
these research findings to pinpoint the causes of many diseases, such 
as sickle cell anemia, cystic fibrosis, and chronic myelogenous 
leukemia. Moreover, scientists have used genetic information to develop 
several treatments and therapies.
  We have made so many achievements and come a long way in our 
understanding and application of genetics knowledge. And yet we are 
just beginning to realize the full potential of this science to predict 
the onset of disease, diagnose earlier, and develop therapies that can 
treat or cure Americans from so many afflictions.
  Just 3 years ago, scientists at the National Institutes of Health and 
the Department of Energy reached another major landmark, with the 
completion of the sequencing of the entire human genome, described by 
many as the Holy Grail of biology.
  The completion of the Human Genome Project, HGP, has paved the way 
for a more sophisticated understanding of disease causation. HGP has 
expanded focus from the science of genetics, which refers to study of 
single genes, to genomics, which describes the study of all the genes 
in an individual, as well as the interactions of those genes with each 
other and with that person's environment.
  We know that all human beings are 99.9 percent identical in genetic 
makeup, but differences in the remaining 0.1 percent hold important 
clues about the causes of disease and response to drugs. Simply put, 
the study of genomics will help us learn why some people get sick and 
others do not and will allow us to use this information to better 
prevent and treat disease.
  The relatively new field of genomics is the key to the practice of 
personalized medicine. Personalized medicine is the use of genomic and 
molecular data to better target the delivery of health care, facilitate 
the discovery and clinical testing of new products, and help determine 
a patient's predisposition to a particular disease or condition. 
Personalized medicine represents a revolutionary and exciting change in 
the fundamental approach and practice of medicine
  Pharmacogenomics--the study of how genes affect a person's response 
to drugs--is a critical component of personalized medicine. Even so-
called blockbuster drugs are typically effective in only 40 to 60 
percent of patients who take them. Other studies have found that up to 
15 percent of hospitalized patients experience a serious adverse drug 
reaction, resulting in more than 100,000 deaths each year. 
Pharmacogenomics has the potential to dramatically increase the 
effectiveness and safety of drugs, both of which are major health care 
concerns.
  We have a few examples already of how pharmacogenomics research has 
helped to save lives. For example, the chemotherapy Purinethol is a 
lifesaver for kids with leukemia, but in 11 percent of cases, patients 
suffer severe, sometimes fatal, side effects. In the 1990s, researchers 
identified the gene variant that prevents affected patients from 
properly breaking down Purinethol, allowing doctors to screen patients 
and adjust dosages for safer use of the drug.
  Herceptin is a breast cancer drug that initially failed in clinical 
trials. However, researchers discovered that 1 in 4 breast cancers have 
too many copies of a certain gene that helps cells grow, divide, and 
repair themselves. Extra copies of this gene cause uncontrolled and 
rapid tumor growth. As it turns out, Herceptin is an effective drug for 
patients with this type of cancer, with significantly improved survival 
for affected women.
  Our Federal agencies have shown leadership in this area, as have many 
of our private sector partners. I have introduced the Genomics and 
Personalized Medicine Act today to support their efforts and to 
encourage them to do even more and do it faster. Realizing the promise 
of personalized medicine will require: continued Federal leadership and 
agency collaboration; expansion and acceleration of genomics research; 
a capable genomics workforce; incentives to encourage development of 
genomic tests and therapies; and greater attention to the quality of 
genetic tests, direct-to-consumer advertising, and use of personal 
genomic information.
  The Genomics and Personalized Medicine Act of 2006 will address each 
of these issues. The bill requires the Secretary of Health and Human 
Services to establish the Genomics and Personalized Medicine 
Interagency Working Group to expand and accelerate genomics research, 
and application of findings from such research, through enhanced 
communication, collaboration and integration of relevant activities.
  Genetic and genomics research will be expanded to increase the 
collection of data that will advance both fields. The Secretary will 
also develop a plan for a national biobanking research initiative and a 
national distributed database, and provide support for local biobanking 
initiatives.
  This bill requests that the Administrator of the Health Resources and 
Services Administration support efforts to recruit and retain health 
professionals in the genomics workforce through educational and 
research opportunities, financial incentives, and modernization of 
training programs. In addition, the Secretary will promote initiatives 
to increase the integration of genetics and genomics into all aspects 
of medical and public health practice, with specific focus on training 
and guideline development for providers without expertise or experience 
in the field of genomics.
  A financial incentive is included to encourage the development of 
companion diagnostic tests. Specifically, this Act provides a 100-
percent tax credit for research and development costs associated with 
companion diagnostic tests. This bill also requests the National 
Academies of Science to formally study this issue in order to provide 
expert guidance about the level of incentives and potential approaches 
to really move this area forward.
  The safety, efficacy, and availability of information about genetic 
tests, including pharmacogenetic and pharmacogenomics tests, is another 
focus of this bill. The Secretary will contract with the Institute of 
Medicine to conduct a study and make recommendations regarding Federal 
oversight and regulation of genetic tests. After this study is 
complete, the Secretary will develop a decision matrix to help 
determine which types of tests require review and the level of review 
needed for such tests as well as the responsible agency. The Secretary 
will also establish a specialty area for molecular and biochemical 
genetics tests at CMS and direct a review the practice of direct-to-
consumer marketing.
  Last but not least, the bill includes a sense of the Senate regarding 
genetic nondiscrimination and privacy. The

[[Page 17009]]

Genetic Information Nondiscrimination Act of 2005, which passed the 
Senate with a vote of 98 to 0 in February of 2005, contained a number 
of important provisions to protect the use of personal genetic 
information and prevent discrimination based on such information. This 
section reaffirms the importance and the necessity of that act for the 
responsible advancement of personalized medicine.
  Mr. President, we stand at this new frontier of personalized 
medicine, and like Gregor Mendel, we must explore and test the 
hypotheses and innovations in the area of genomics that can protect and 
promote our health. Genomics holds unparalleled promise for public 
health and for medicine, and the Genomics and Personalized Medicine Act 
of 2006 will help us to fulfill this promise. I urge my colleagues to 
support me in passing this critical legislation.
                                 ______
                                 
      By Mr. DeWINE:
  S. 3823. A bill to amend the Americans with Disabilities Act of 1990 
and the Age Discrimination in Employment Act of 1967 to provide a means 
to combat discrimination on the basis of age or disability, by 
conditioning a State's receipt or use of Federal financial assistance 
on the State's waiver of immunity from suit for violations under such 
acts; to the Committee on Health, Education, Labor, and Pensions.
  Mr. DeWINE. Mr. President, I am pleased to introduce the Civil Rights 
Restoration Act of 2006. Today, there is a serious loophole in our 
Nation's civil rights laws. If you are the victim of age or disability 
discrimination and you work in the private sector, you can sue your 
employer in Federal court for money damages. If, however, you work for 
one of the States, you cannot sue in Federal court for money damages 
under either the Age Discrimination in Employment Act, ADEA, or the 
Americans with Disabilities Act, ADA.
  This loophole is not the result of anything that we have done in 
Congress. In fact, when we passed the ADEA and the ADA, we clearly 
provided that the States, just like private entities, cannot 
discriminate on the basis of age or disability. And, we said that if 
they do, they can be sued for money damages in Federal court. In our 
view, the right of an individual to be free from discrimination on the 
basis of age or disability did not depend on where one works.
  Instead, this loophole was created by the Supreme Court. In several 
recent decisions, the Supreme Court has reinterpreted the 11th 
amendment to the Constitution and severely limited Congress's power to 
subject States to lawsuits under section 5 of the 14th amendment. In 
Kimel v. Florida Board of Regents, 528 U.S. 62, 2000, for instance, the 
Court held that Congress lacks the power to subject States to suit for 
money damages under the ADEA. In Board of Trustees of the University of 
Alabama v. Garrett, 531 U.S. 356, 2001, the Court again held that 
Congress lacked the power to subject States to suit for money damages, 
this time under title I of the ADA.
  Although individuals can still sue the States for injunctive relief, 
the Supreme Court's restriction on suits for money damages has taken 
away an essential tool for the victims of discrimination. As one 
witness explained during hearings on the ADA, ``civil rights laws 
depend heavily on private enforcement.'' ``[D]amages are essential to 
provide private citizens a meaningful opportunity to vindicate their 
rights. Attempts to weaken the remedies available under the ADA are 
attacks on the ADA itself, and their success would make the ADA an 
empty promise of equality.''
  Unfortunately, by restricting the ability of individuals to sue for 
money damages, the Garrett and Kimel decisions have severely limited 
the ``promise of equality'' guaranteed by the ADA and the ADEA. 
Lawsuits for money damages are the primary means for private 
individuals to obtain redress for discrimination. They promote 
deterrence and provide an important way for the Federal Government to 
enforce antidiscrimination laws. By eliminating the ability of State 
employees to sue their employers for such damages, the Supreme Court's 
decisions in Kimel and Garrett have made enforcement of these civil 
rights laws more difficult.
  In addition, the Garrett and Kimel decisions have created a legal 
regime that gives State employees fewer rights than other employees 
covered by the ADA and the ADEA. At present, employees of local 
governments and employees in the private sector are entitled to sue in 
Federal court for money damages for violations of the ADA or the ADEA. 
For the more than 2,500,000 individuals who work for the States, 
however, such relief is no longer available.
  Finally, the Garrett and Kimel decisions themselves are hardly a 
model of clarity. In fact, several scholars have said that they find 
them to be inconsistent with prior case law, at odds with the clear 
language of the Constitution, disrespectful of Congress's role in our 
system of government, and insensitive to the plight of those who are 
the victims of discrimination.
  In my opinion, Chairman Specter of the Judiciary Committee put it 
well when he referred to these cases as ``inexplicable decisions.'' 
During the confirmation hearing for Chief Justice Roberts, Chairman 
Specter said that the test that emerges from these Supreme Court 
decisions ``has no grounding in the Constitution, no grounding in the 
Federalist Papers, no grounding in the history of the country, [and] 
comes out of thin air[.]''
  I happen to agree with him. In my view, Garrett and Kimel were 
wrongly decided. And, they should be overturned.
  My bill will do just that. The Civil Rights Restoration Act of 2006 
would provide that any State that receives Federal financial assistance 
must allow plaintiffs the ability to sue the State for money damages in 
Federal court if that State violates the terms of the ADEA or the ADA. 
Of course, those plaintiffs must meet all the other requirements to 
bring such a suit. My bill does not otherwise change the substance of 
the ADA or ADEA, and it does not guarantee an outcome. It merely gives 
the victims of discrimination access to federal courts so that they may 
seek the relief to which they are otherwise entitled. In other words, 
it will give the victims of age and disability discrimination the same 
rights that we intended to give them when we first passed the ADEA and 
the ADA.
  This is a simple bill with a simple purpose: it closes a loophole 
created by the Supreme Court; it re-establishes the original intent of 
the ADA and the ADEA; and it restores to the victims of discrimination 
the rights to which they have long been entitled. I am proud to 
introduce the Civil Rights Restoration Act of 2006, and I ask my 
colleagues to support it.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3823

       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 ``Civil Rights Restoration Act 
     of 2006''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) For over 30 years, Congress has outlawed employment 
     discrimination by State employers. In 1974, in the face of 
     pervasive age discrimination by State and other employers, 
     Congress amended the Age Discrimination in Employment Act of 
     1967 (29 U.S.C. 621 et seq.) (referred to in this Act as the 
     ``ADEA'') to outlaw age discrimination by such employers. In 
     1990, Congress passed the Americans with Disabilities Act of 
     1990 (42 U.S.C. 12101 et seq.) (referred to in this Act as 
     the ``ADA'') to provide a ``clear and comprehensive national 
     mandate'', as described in section 2(b)(1) of that Act (42 
     U.S.C. 12101(b)(1)), to eliminate discrimination against 
     individuals with disabilities, even when that discrimination 
     came at the hands of States, including State employers.
       (2)(A) Many years have passed since the enactment of those 
     laws, but discrimination on the basis of age or disability 
     remains a serious problem in the United States.
       (B) Discrimination has invidious effects on its victims, 
     the workforce, the economy as a whole, and government 
     revenues. Discrimination on the basis of age or disability--

[[Page 17010]]

       (i) increases the risk of unemployment among older workers 
     or individuals with disabilities, who may, as a result of the 
     discrimination, be forced to depend on government programs;
       (ii) adversely affects the morale and productivity of the 
     workforce;
       (iii) perpetuates unwarranted stereotypes about the 
     abilities of older workers or individuals with disabilities, 
     thus reducing the effectiveness of government programs 
     promoting nondiscrimination and integration; and
       (iv) prevents the best use of both public and private 
     resources.
       (3) Since the passage of the ADA and the ADEA, private 
     civil suits by the victims of discrimination have been an 
     essential tool in combating illegal discrimination. As one 
     witness explained during hearings on the legislation that 
     became the ADA, ``civil rights laws depend heavily on private 
     enforcement''. ``[D]amages are essential to provide private 
     citizens a meaningful opportunity to vindicate their rights. 
     Attempts to weaken the remedies available under the ADA are 
     attacks on the ADA itself, and their success would make the 
     ADA an empty promise of equality.''. Field Hearing on 
     Americans with Disabilities Act, Before the Subcommittee on 
     Select Education of the House Committee on Education and 
     Labor, 101st Cong. 68 (1989) (statement of Mr. Howard Wolf).
       (4) In recent years, however, the Supreme Court has created 
     a serious loophole in the ADA and the ADEA, weakening their 
     ``promise of equality''. In Kimel v. Florida Board of 
     Regents, 528 U.S. 62 (2000), for instance, the Supreme Court 
     held that Congress lacked the power to subject States to suit 
     for money damages under the ADEA. In Board of Trustees of the 
     University of Alabama v. Garrett, 531 U.S. 356 (2001), the 
     Court again held that Congress lacked the power to subject 
     States to suit for money damages, this time under title I of 
     the ADA (42 U.S.C. 12111 et seq.).
       (5) As a result of those decisions, State employees who are 
     victimized by discrimination on the basis of age or 
     disability cannot sue in Federal court for money damages to 
     vindicate their Federal rights. Those decisions have, in 
     turn, had 2 unfortunate consequences.
       (6) First, they have undermined the enforcement of the ADA 
     and the ADEA. Lawsuits for money damages are the primary 
     means for private individuals to obtain redress for 
     discrimination. In addition, lawsuits for money damages 
     promote deterrence and provide an important way for the 
     Federal Government to enforce antidiscrimination laws. By 
     eliminating the ability for State employees to sue their 
     employers for such damages, the Supreme Court's Kimel and 
     Garrett decisions have made enforcement of these civil rights 
     laws more difficult.
       (7) Second, they have created a legal regime that gives 
     State employees fewer rights than other employees covered by 
     the ADA and the ADEA. At present, employees of local 
     governments and employees in the private sector are entitled 
     to sue in Federal court for money damages for violations of 
     the ADA or the ADEA. For the more than 2,500,000 individuals 
     who work for the States, however, such relief is no longer 
     available.
       (8) Although most States have laws in effect that bar 
     discrimination on the basis of age or disability, those laws 
     are insufficient to provide redress for those individuals who 
     are subjected to discrimination by State employers or 
     agencies.
       (9) A few States apply the doctrine of sovereign immunity 
     to completely bar State employees from suing in State court 
     for age discrimination. In several States, it is still 
     unclear whether State law claims can proceed in State court 
     for age discrimination or whether those claims are barred by 
     sovereign immunity. Finally, there are many States that 
     severely limit or restrict the kinds of remedies or monetary 
     relief available to State employees who bring suits for 
     discrimination on the basis of age.
       (10) The same problems exist with State laws regarding 
     disability discrimination. In fact, one recent analysis has 
     shown that there are significant gaps in the coverage and 
     remedies available under State laws outlawing discrimination.
       (11) Thus, while State laws are important in trying to stem 
     discrimination on the basis of age or disability, they are 
     currently inadequate to close the loophole created by the 
     Kimel and Garrett decisions.
       (12) In the years since the Kimel and Garrett decisions, 
     many States have also challenged the constitutionality of 
     title II of the ADA (42 U.S.C. 12131 et seq.). These 
     challenges have forced individuals with disabilities into 
     extensive litigation about sovereign immunity when they seek 
     redress for disability discrimination in such fundamental 
     areas as access to the courts, access to community-based 
     services, access to State-sponsored health insurance, access 
     to public transportation, access to handicapped parking, 
     access to mental health services, and access to public 
     education. The Supreme Court has issued several decisions 
     that invite even more litigation. In Tennessee v. Lane, for 
     instance, the Court held that, under the particular facts of 
     that case, a plaintiff could sue the State for money damages 
     under title II of the ADA, even though the Court, in the 
     Garrett case, had barred a claim for such damages under title 
     I of that Act (42 U.S.C. 12111 et seq.) Tennessee v. Lane, 
     541 U.S. 509 (2004).
       (13) After the Lane decision, some claims against States 
     are permitted to proceed under the ADA, while others are not. 
     This has made it extremely difficult for the victims of 
     discrimination, States, and Congress to determine precisely 
     when States are subject to suit under the ADA and when they 
     are not. The confusion has spawned a significant amount of 
     litigation in the lower Federal courts. This jurisprudence 
     has even caused the Chairman of the Committee on the 
     Judiciary of the Senate, Senator Arlen Specter, to condemn 
     the Court's recent decisions as ``inexplicable''.
       (14) The Constitution provides Congress with the power to 
     enact legislation--
       (A) to clarify that, despite the Supreme Court's decisions 
     in the Kimel and Garrett cases, the States are subject to 
     suit just like other entities when the States violate the ADA 
     and the ADEA; and
       (B) to end the confusion created by the Court's decision in 
     the Lane case.
       (15) Under section 8 of article I of the Constitution, 
     ``The Congress shall have power to lay and collect taxes, 
     duties, imposts and excises, to pay the debts and provide for 
     the common defense and general welfare of the United 
     States''.
       (16) Congress' power under this language, known as the 
     Spending Clause, is well-established. Under this Clause, 
     Congress has the power to require the States to abide by 
     certain conditions in exchange for receiving Federal 
     financial assistance. This authority has been recognized by 
     the Supreme Court repeatedly through the years and reaffirmed 
     recently. United States v. Butler, 297 U.S. 1 (1936) 
     (declaring that Congress may exert authority through its 
     spending power); South Dakota v. Dole, 483 U.S. 203 (1987) 
     (upholding condition requiring the establishment of a 
     drinking age of 21 years in exchange for the receipt of 
     Federal highway dollars). In fact, the Supreme Court has 
     specifically held that Congress may require a State, as a 
     condition of receiving Federal financial assistance, to waive 
     its immunity from suit for violations of Federal law. College 
     Savings Bank v. Florida Prepaid Postsecondary Education 
     Expense Board, 527 U.S. 666 (1999).
       (17) Congress has previously used its spending power to 
     require States to waive their immunity from suit in exchange 
     for receiving Federal financial assistance. For instance, the 
     provisions of section 1003 of the Rehabilitation Act 
     Amendments of 1986 (42 U.S.C. 2000d-7) provide that a State 
     shall not be immune from suit under the 11th amendment for 
     violations of section 504 of the Rehabilitation Act of 1973 
     (29 U.S.C. 794), title IX of the Education Amendments of 1972 
     (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 
     (42 U.S.C. 6101 et seq.), and title VI of the Civil Rights 
     Act of 1964 (42 U.S.C. 2000d et seq.). At least one court, 
     however, has suggested that those provisions do not apply to 
     the ADA or the ADEA. Brown v. Washington Metro Area Transit 
     Authority, No. DKC 2005-0052, 2005 U.S. Dist. LEXIS 16881 (D. 
     Md. 2005).
       (18) By requiring States to waive their immunity from suit 
     under the ADA and the ADEA in exchange for receiving Federal 
     assistance, the Federal government can ensure that Federal 
     dollars are not ``frittered away'' on unlawful 
     discrimination. Such a conditional waiver will help Congress 
     ``protect the integrity of the vast sums of money distributed 
     through Federal programs''. Sabri v. United States, 541 U.S. 
     600 (2004). ``Simple justice requires that public funds, to 
     which all taxpayers . . . contribute, not be spent in any 
     fashion which encourages, entrenches, subsidizes, or results 
     in . . . discrimination''. Lau v. Nichols, 414 U.S. 563 
     (1974). This simple principle applies whether the 
     discrimination is based on race, as in the Lau case, or age, 
     or disability, as in Barbour v. Washington Metro Area Transit 
     Authority, 374 F.3d 1161 (D.C. Cir. 2004).
       (19) Such a conditional waiver does not coerce a State in 
     any way. The Supreme Court has recognized that a State's 
     voluntary waiver of its 11th amendment right is 
     constitutional. College Savings Bank v. Florida Prepaid 
     Postsecondary Education Expense Board, 527 U.S. 666 (1999) 
     (citing Clark v. Barnard, 108 U.S. 436 (1883)). The Court has 
     explicitly recognized that a State's acceptance of Federal 
     funds constitutes a knowing agreement to a congressionally-
     imposed condition on the funds. Thus, while Congress may not 
     compel States to waive their immunity granted under the 11th 
     amendment, a voluntary State waiver condition is wholly 
     permissible. Alden v. Maine, 527 U.S. 706 (1999).
       (20) The Kimel and Garrett decisions frustrate the ability 
     of the ADA and the ADEA to protect individual rights and 
     remedy violations of Federal law. In the wake of those 
     decisions, and in recognition that State laws may be 
     insufficient to protect against discrimination on the basis 
     of age or disability, it is essential to require that States 
     waive their immunity from suit under the ADA and the ADEA for 
     those programs or activities receiving Federal financial 
     assistance.

     SEC. 3. PURPOSES.

       The purposes of this Act are--

[[Page 17011]]

       (1) to provide to any State employee or person aggrieved by 
     any program or activity that receives Federal financial 
     assistance the right to sue the State for money damages for 
     any violation of the ADA or the ADEA; and
       (2) to provide that a State's receipt or use of Federal 
     financial assistance for any program or activity of a State 
     shall constitute a waiver of sovereign immunity, under the 
     11th amendment to the Constitution or otherwise, to a suit 
     brought by any employee or person aggrieved by that program 
     or activity for any violation of the ADA or the ADEA.

     SEC. 4. ABROGATION OF STATE SOVEREIGN IMMUNITY.

       (a) Age Discrimination in Employment Act of 1967.--Section 
     7 of the Age Discrimination in Employment Act of 1967 (29 
     U.S.C. 626) is amended by adding at the end the following:
       ``(g) Waiver of Sovereign Immunity.--
       ``(1) Waiver.--A State's receipt or use of Federal 
     financial assistance for any program or activity of a State 
     shall constitute a waiver of sovereign immunity, under the 
     11th amendment to the Constitution or otherwise, to a suit 
     brought by any employee or person aggrieved by that program 
     or activity for equitable, legal, or other relief authorized 
     by or through this Act.
       ``(2) Abrogation for constitutional violation.--In addition 
     to the abrogation of sovereign immunity already accomplished 
     by this Act, a State's sovereign immunity, under the 11th 
     amendment to the Constitution or otherwise, is abrogated for 
     any suit brought by any employee or person for equitable, 
     legal, or other relief authorized by or through this Act, for 
     conduct that violates the 14th amendment (including the 
     constitutional rights incorporated in the 14th amendment) and 
     that also violates this Act.
       ``(3) Definitions.--In this subsection:
       ``(A) Program or activity.--
       ``(i) In general.--The term `program or activity' has the 
     meaning given the term in section 309 of the Age 
     Discrimination Act of 1975 (42 U.S.C. 6107).
       ``(ii) Operations included.--The term includes any 
     operation carried out, funded, or arranged by an entity 
     described in clause (i) or (ii) of section 309(4)(A) of such 
     Act (42 U.S.C. 6107(4)(A)) that receives Federal financial 
     assistance, even if the entity does not use the Federal 
     financial assistance for the operation.
       ``(B) Recipient.--A State shall be considered to receive 
     Federal financial assistance for a program or activity if the 
     program or activity--
       ``(i) receives the assistance from an intermediary; and
       ``(ii) is the intended recipient under the statutory 
     provision through which the intermediary receives the 
     assistance.
       ``(C) Construction.--Nothing in this paragraph shall be 
     construed to suggest that, for purposes of this subsection or 
     title III of such Act--
       ``(i) the term `program or activity' would not include the 
     operation described in subparagraph (A)(ii), in the absence 
     of this paragraph; or
       ``(ii) a State described in subparagraph (B) would not be 
     considered to receive Federal financial assistance for a 
     program or activity, in the absence of this paragraph.''.
       (b) Title I of the Americans With Disabilities Act of 
     1990.--Section 107 of the Americans with Disabilities Act of 
     1990 (42 U.S.C. 12117) is amended by adding at the end the 
     following:
       ``(c) Waiver of Sovereign Immunity.--
       ``(1) Waiver.--A State's receipt or use of Federal 
     financial assistance for any program or activity of a State 
     shall constitute a waiver of sovereign immunity, under the 
     11th amendment to the Constitution or otherwise, to a suit 
     brought by any employee or person alleging a violation of 
     this title (including regulations promulgated under section 
     106) or section 503, or otherwise aggrieved, by that program 
     or activity for equitable, legal, or other relief authorized 
     by or through this Act or section 1977A of the Revised 
     Statutes (42 U.S.C. 1981a).
       ``(2) Abrogation for constitutional violation.--In addition 
     to the abrogation of sovereign immunity already accomplished 
     by section 502, a State's sovereign immunity, under the 11th 
     amendment to the Constitution or otherwise, is abrogated for 
     any suit brought by any employee or person for equitable, 
     legal, or other relief authorized by or through this Act or 
     section 1977A of the Revised Statutes (42 U.S.C. 1981a), for 
     conduct that violates the 14th amendment (including the 
     constitutional rights incorporated in the 14th amendment) and 
     that also violates this title (including regulations 
     promulgated under section 106) or section 503.
       ``(3) Definitions.--In this subsection:
       ``(A) Program or activity.--
       ``(i) In general.--The term `program or activity' has the 
     meaning given the term in section 504(b) of the 
     Rehabilitation Act of 1973 (29 U.S.C. 794(b)).
       ``(ii) Operations included.--The term includes any 
     operation carried out, funded, or arranged by an entity 
     described in subparagraph (A) or (B) of section 504(b)(1) of 
     such Act (29 U.S.C. 794(b)(1)) that receives Federal 
     financial assistance, even if the entity does not use the 
     Federal financial assistance for the operation.
       ``(B) Recipient.--A State shall be considered to receive 
     Federal financial assistance for a program or activity if the 
     program or activity--
       ``(i) receives the assistance from an intermediary; and
       ``(ii) is the intended recipient under the statutory 
     provision through which the intermediary receives the 
     assistance.
       ``(C) Construction.--Nothing in this paragraph shall be 
     construed to suggest that, for purposes of this subsection or 
     such section 504--
       ``(i) the term `program or activity' would not include the 
     operation described in subparagraph (A)(ii), in the absence 
     of this paragraph; or
       ``(ii) a State described in subparagraph (B) would not be 
     considered to receive Federal financial assistance for a 
     program or activity, in the absence of this paragraph.''.
       (c) Title II of the Americans With Disabilities Act of 
     1990.--Section 203 of the Americans with Disabilities Act of 
     1990 (42 U.S.C. 12133) is amended--
       (1) by inserting ``(a) In General.--'' before ``The''; and
       (2) by adding at the end the following:
       ``(b) Waiver of Sovereign Immunity.--
       ``(1) Waiver.--A State's receipt or use of Federal 
     financial assistance for any program or activity of a State 
     shall constitute a waiver of sovereign immunity, under the 
     11th amendment to the Constitution or otherwise, to a suit 
     brought by any employee or person alleging a violation of 
     this title (including regulations promulgated under section 
     204, 229, or 244) or section 503, or otherwise aggrieved, by 
     that program or activity for equitable, legal, or other 
     relief authorized by or through this Act.
       ``(2) Abrogation for constitutional violation.--In addition 
     to the abrogation of sovereign immunity already accomplished 
     by section 502, a State's sovereign immunity, under the 11th 
     amendment to the Constitution or otherwise, is abrogated for 
     any suit brought by any employee or person for equitable, 
     legal, or other relief authorized by or through this Act, for 
     conduct that violates the 14th amendment (including the 
     constitutional rights incorporated in the 14th amendment) and 
     that also violates this title (including regulations 
     promulgated under section 204, 229, or 244) or section 503.
       ``(3) Definitions.--In this subsection:
       ``(A) Program or activity.--
       ``(i) In general.--The term `program or activity' has the 
     meaning given the term in section 504(b) of the 
     Rehabilitation Act of 1973 (29 U.S.C. 794(b)).
       ``(ii) Operations included.--The term includes any 
     operation carried out, funded, or arranged by an entity 
     described in subparagraph (A) or (B) of section 504(b)(1) of 
     such Act (29 U.S.C. 794(b)(1)) that receives Federal 
     financial assistance, even if the entity does not use the 
     Federal financial assistance for the operation.
       ``(B) Recipient.--A State shall be considered to receive 
     Federal financial assistance for a program or activity if the 
     program or activity--
       ``(i) receives the assistance from an intermediary; and
       ``(ii) is the intended recipient under the statutory 
     provision through which the intermediary receives the 
     assistance.
       ``(C) Construction.--Nothing in this paragraph shall be 
     construed to suggest that, for purposes of this subsection or 
     such section 504--
       ``(i) the term `program or activity' would not include the 
     operation described in subparagraph (A)(ii), in the absence 
     of this paragraph; or
       ``(ii) a State described in subparagraph (B) would not be 
     considered to receive Federal financial assistance for a 
     program or activity, in the absence of this paragraph.''.

     SEC. 5. EFFECTIVE DATE.

       (a) Age Discrimination in Employment Act of 1967.--
       (1) In general.--With respect to a particular program or 
     activity, paragraphs (1) and (3) of section 7(g) of the Age 
     Discrimination in Employment Act of 1967 (29 U.S.C. 626(g)) 
     apply to conduct occurring on or after the day, after the 
     date of enactment of this Act, on which a State first 
     receives or uses Federal financial assistance for that 
     program or activity. Section 7(g)(2) of the Age 
     Discrimination in Employment Act of 1967 (29 U.S.C. 
     626(g)(2)) applies to all civil actions pending on that date 
     of enactment or filed thereafter.
       (2) Program or activity; receives federal financial 
     assistance.--The definition and rule specified in 
     subparagraphs (A) and (B) of section 7(g)(3) of such Act (29 
     U.S.C. 626(g)(2)) shall apply for purposes of this 
     subsection.
       (b) Americans With Disabilities Act of 1990.--
       (1) In general.--With respect to a particular program or 
     activity, paragraphs (1) and (3) of section 107(c) and 
     paragraphs (1) and (3) of section 203(b) of the Americans 
     with Disabilities Act of 1990 (42 U.S.C. 12117(c), 12133(b)) 
     apply to conduct occurring on or after the day, after the 
     date of enactment of this Act, on which a State first 
     receives or uses Federal financial assistance for that 
     program or activity. Sections 107(c)(2) and 203(b)(2) of the 
     Americans with Disabilities Act of 1990 (42 U.S.C. 
     12117(c)(2), 12133(b)(2)) apply to all civil actions pending 
     on that date of enactment or filed thereafter.

[[Page 17012]]

       (2) Program or activity; receives federal financial 
     assistance.--The definition and rule specified in 
     subparagraphs (A) and (B) of section 107(c)(3) of such Act 
     (42 U.S.C. 12117(c)(3)) shall apply for purposes of this 
     subsection.
                                 ______
                                 
      By Mr. BURNS (for himself, Mr. Frist, Mr. DeWine, Mr. Allard, Mr. 
        Coleman, Mr. Smith, and Mr. Allen):
  S. 3825. A bill to end the flow of methamphetamine and precursor 
chemicals coming across the border of the United States; to the 
Committee on the Judiciary.
  Mr. BURNS. Mr. President, I rise today because, despite the heroic 
efforts of law enforcement agencies in Montana and elsewhere around the 
country, the use of methamphetamine continues to rise. In the Senate, 
we have passed legislation to fund efforts to go after domestic 
production of meth--from provisions of the USA PATRIOT Act, which 
restricted the sale of pseudoephedrine, to funds for the cleanup of 
meth labs. While law enforcement officials report that these efforts 
are in fact reducing the production of meth within our borders, they 
also tell me that foreign-produced meth is being imported to fill the 
supply void.
  For this reason, I have introduced the ``Methamphetamine Trafficking 
Prevention Act of 2006'' in order to bring additional Federal resources 
to bear on this problem. I want to thank my colleagues, Senate Majority 
Leader Frist, Senator DeWine, Senator Allard, Senator Coleman, Senator 
Allen and Senator Smith for joining me in sponsoring this legislation. 
The United States shares around 4,000 miles of border with Canada and 
almost 2,000 miles with Mexico. Controlling what comes across these 
borders must be a top priority for national security.
  A report recently released by the President's Office of National Drug 
Control Policy, the Department of Justice, and the Department of Health 
and Human Services had this to say:

       The most urgent priority of the Federal Government toward 
     reducing the supply of methamphetamine in the Untied States 
     will be to tighten the international market for chemical 
     precursors, such as pseudoephedrine and ephedrine, used to 
     produce the drug. Most of the methamphetamine used in 
     America--probably between 75 and 85 percent--is made with 
     chemical precursors that are diverted at some point from the 
     international stream of commerce . . . Although domestic 
     enforcement continues to be a priority, the impact of State 
     laws controlling retail access to precursors, together with 
     Federal, State, and local enforcement efforts, has had a 
     significant impact on the domestic production of 
     methamphetamine. As a result, a larger proportion of the 
     methamphetamine consumed in the United States is now coming 
     across the border as a final product . . .

  Meth trafficking has quickly adapted to increased domestic efforts to 
stem production and the need for an international solution is clear.
  This legislation will provide an additional $15 million for the 
Department of Justice's Meth Hot Spots Program for the creation of 
``Border Technology Grants'' to support technology used to detect meth 
and substances used to make meth on the border through aerial 
surveillance and to find meth labs around the border with hyperspectral 
sensors. Another $5 million will be provided to the Drug Enforcement 
Agency for trace chemical detectors to be used on U.S. borders. These 
sensors will also assist in locating explosive devices.
  The international nature of meth trafficking makes Federal action 
necessary, but the United States cannot act alone. This legislation 
will also coordinate Federal drug enforcement efforts with foreign 
counterparts in order to devise a strategy to fight meth production 
across national borders. Officials from the U.S. Trade Representative 
will discuss meth trafficking with trading partners in multi- and bi-
lateral negotiations in order to curb the shipment of this dangerous 
substance.
  The impacts of the meth crisis are felt nationwide. In Montana, I 
have seen first-hand the consequences of meth addiction on individuals, 
their families, and communities. Nowhere are these problems more 
serious than on Indian Reservations. In Montana, there are several 
reservations on or near the Canadian border. While Montana's law 
enforcement has done a good job shutting down meth labs in Montana, the 
flow of meth from Canada and Mexico has more than replaced domestic 
meth production. This bill would require the Department of Justice to 
report to Congress the problems faced on these reservations with 
respect to meth abuse and trafficking.
  It is time to take the response to this crisis to a new--
international--level and I encourage my colleagues to support these 
efforts.
                                 ______
                                 
      By Mr. MENENDEZ:
  S. 3826. A bill to amend the Internal Revenue Code of 1986 to exclude 
from gross income military pay received by a member of a reserve 
component of the Armed Forces of the United States who is called to 
active duty; to the Committee on Finance.
  Mr. MENENDEZ. Mr. President, over the past few decades, our country 
has seen a major shift in the way that our Reserve component has been 
used. Traditionally, National guardsmen and reservists have 
supplemented our active-duty troops at times of a major war or 
conflict. But as America faces ever-increasing military challenges, we 
see these forces now replacing active duty troops in operations around 
the world.
  Since September 11, a large number of our Reserve component has been 
called to active duty, and it is expected to remain that way for the 
foreseeable future. Our Nation not only relies on the National Guard 
during times of war, but during crises and disasters within our 
borders. In my home State of New Jersey, we have witnessed the critical 
role the Guard plays in supporting our first responders and assisting 
with domestic emergencies. The Guard immediately responded to the 9/11 
attacks, provided relief in the aftermath of the hurricanes on the gulf 
coast, and aided New Jerseyans after the flooding in our State.
  As our Nation continues to rely on the efforts of National Guard 
members and reservists, it is imperative that we provide them and their 
families the support they need at home. Unfortunately, many married 
Guard members and reservists on active duty lose their income from 
their civilian jobs when they are activated. It is unconscionable that 
we would make these soldiers choose between their duty to our country 
and the financial security of their families.
  That is why I am introducing the Citizen Soldier Relief Act, which 
would exempt from taxation incomes earned by members of the Reserve 
component that are called to duty outside the traditional 1 weekend per 
month and 2 weeks per year. My bill would address a current void that 
exists in tax relief for our National Guard members and reservists who 
serve in noncombat-related capacities.
  By providing tax relief for these hard-working men and women, we can 
show them that our Nation appreciates their service and their 
sacrifice. I ask my colleagues to support this important legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3826

       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 ``Citizen Soldier Relief Act 
     of 2006''.

     SEC. 2. EXCLUSION FROM GROSS INCOME FOR MILITARY PAY RECEIVED 
                   BY A MEMBER OF A RESERVE COMPONENT OF THE ARMED 
                   FORCES OF THE UNITED STATES CALLED TO ACTIVE 
                   DUTY.

       (a) In General.--Section 112 of the Internal Revenue Code 
     of 1986 (relating to certain combat zone compensation of 
     members of the Armed Services) is amended by adding at the 
     end the following new subsection:
       ``(e) Reserve Components Called to Active Duty.--In the 
     case of an individual--
       ``(1) who is called or ordered to active duty in the Armed 
     Forces of the United States for a period in excess of 180 
     days or for an indefinite period, and
       ``(2) at the time so called or ordered is a member of a 
     reserve component of the Armed Forces of the United States,
     gross income shall not include military pay (as defined in 
     section 101(21) of title 37, United States Code) received by 
     such individual on account of such active duty service.''.

[[Page 17013]]

       (b) Conforming Amendments.--
       (1) The heading for section 112 of such Code is amended by 
     inserting before the period 
     ``; PAY OF MEMBERS OF RESERVE COMPONENTS OF SUCH ARMED FORCES 
     CALLED TO ACTIVE DUTY''.
       (2) The item relating to section 112 in the table of 
     sections for part III of subchapter B of chapter 1 of such 
     Code is amended by inserting before the period ``; pay of 
     members of reserve components of such Armed Forces called to 
     active duty''.
       (3) Section 3401(a)(1) of such Code is amended by inserting 
     ``; pay of members of reserve components of such Armed Forces 
     called to active duty'' after ``United States''.
       (c) 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. INHOFE:
  S. 3828. A bill to amend title 4, United States Code, to declare 
English as the official language of the Government of the United 
States, and for other purposes; to the Committee on Homeland Security 
and Governmental Affairs.
  Mr. INHOFE. Mr. President, there are many things we take for granted 
that have made our Nation prosperous. The Founding Fathers spent their 
lives seeking to create a United States of America that could survive 
against the great powers of England, France, and Spain.
  These men knew that America had at least one advantage over the 
European powers: size. President Jefferson's Louisiana Purchase of 1803 
effectively doubled the size of the United States and provided a means 
by which America's inland farmers would have a guaranteed way to ship 
their products to market.
  Even today, the comparison remains striking when you ask, ``How far 
will one gallon of fuel move one ton of freight?''
  One gallon of fuel can move a ton of freight 59 miles by truck and 
386 miles by rail. That same gallon of fuel will move a ton of freight 
by water 522 miles.
  One of the main reasons for the economy of waterborne shipping lies 
in something physics students know as friction and we pilots know as 
drag.
  The more that friction or drag increase, the more that fuel economy 
decreases. There is a lot of friction between a road and a truck. There 
is far less between a ship and a river.
  This simple rule led me to lead the fight for the Water Resources 
Development Act a few days ago. As one of the most fiscally 
conservative Members of this body, I have long argued that the two most 
important functions of the Federal Government are to provide for 
national defense and public infrastructure.
  Efficiency and economics require the Government to not only plan but 
to construct and maintain public infrastructure. Investments in real 
public infrastructure, like waterways and barge canals, create 
economies of scale that have made the American economy a wonder of the 
world.
  My determination to stand up in this Chamber at every opportunity on 
behalf of national defense and public infrastructure is a large part of 
the reason I am introducing legislation today to make English America's 
official language.
  A common means of communication has created one giant market for 
goods and labor from Maine to California. A resident of Tulsa can seek 
work in New Hampshire, Oregon, or Georgia without having to learn a 
second language. A company based in Oklahoma City can readily sell its 
products from Portland, ME, to Los Angeles, CA.
  In Europe, by contrast, a resident of Berlin cannot look for work in 
Paris or Warsaw without surmounting considerable language barriers. A 
German company cannot easily sell its products in Madrid, again, in 
part because of the language barrier.
  The European Union is an effort to create a United States-like common 
market in Western Europe, among other things. Europeans are spending 
billions of euros to try to replicate what we Americans have enjoyed 
for free these past 230 years.
  There are too many signs that we are allowing this great advantage of 
an American nation united by a common language to slip through our 
fingers.
  President Bill Clinton created the most radical language policy 6 
years ago when he signed Executive Order--E.O.--13166 on August 11, 
2000.
  E.O. 13166 declared that all recipients of Federal funds had to be 
ready to provide all services in any language anyone wished to speak at 
any time.
  E.O. 13166 means that while Canada has only two official languages 
and the United Nations just six, the United States now has over 200 
official languages.
  Efforts to repeal E.O. 13166 have run aground because of a 
fundamental misunderstanding of what repeal would mean.
  After the debate on my official English amendment, S.A. 4064, to the 
Senate immigration bill, S. 2611, E.J. Dionne, Jr., told readers of the 
May 23 Washington Post that he was still going to pray over his 
children in French. I have only one word to say to Mr. Dionne: relax.
  Neither my earlier amendment to the immigration legislation nor the 
legislation I am introducing today will have any impact whatsoever on 
the prayers of the Dionne family or, for that matter, a dinner table 
chat in Spanish or a family discussion in Navajo.
  Official English laws are not directed at the language people 
themselves choose to speak but, rather, in what language the Government 
speaks to the American people.
  My bill basically recognizes the practical reality of the role of 
English as our national language. It states explicitly that English is 
our national language and provides English a status in law it has not 
before held.
  Making English the official language will clarify that there is no 
entitlement to receive Federal documents and services in languages 
other than English. My legislation declares that any rights of a 
person, as well as services or materials in languages other than 
English, must be authorized or provided by law. It recognizes the 
decades of unbroken court opinions that civil rights laws protecting 
against national origin and discrimination do not create rights to 
Government services and materials in languages other than English.
  If passed, my bill will also repeal all bilingual, or foreign-
language, ballot mandates. There is a reason bilingual ballots make so 
many of my constituents upset. Gathering together at the polling place 
is one of the few remaining civic rituals we perform as Americans.
  I can remember going along with my mother on election day; the 
American flag behind the table where voters signed in and were verified 
as eligible; the sound of the ``thunk'' of the levers on the voting 
machine. I remember thinking even then that voting was a privilege to 
be approached seriously.
  In all too many places these days, the local polling place resembles 
nothing more than a branch of the Mexican consulate or an outpost of 
the United Nations--signs in two, three, or even more languages; people 
yelling at weary poll workers because a Cantonese speaker was summoned 
to translate for a speaker of Mandarin Chinese.
  My constituents ask me all the time how people are supposed to cast 
an informed vote if they cannot follow the debates, which are in 
English, and read the campaign literature, also in English. Bilingual 
ballots strike many of my constituents as an invitation to all kinds of 
voting fraud.
  Of course, when the Government attempts to please everyone by 
translating important documents into multiple languages, mistakes are 
inevitable.
  To mention just one example out of many, in 1993, the Chinese ballot 
in New York City had the Chinese characters for the word ``no'' as a 
translation of the English word ``yes.'' One can only imagine the 
confusion that ensued.
  Official English is popular, even among Hispanics. As I said before 
during the debate on my amendment, if you look at some of the recent 
polling data, such as the Zogby poll in 2006, it found 84 percent of 
Americans, including 77 percent of Hispanics, believed that English 
should be the national language of government operations. A poll of 91 
percent of foreign-born

[[Page 17014]]

Latino immigrants agreed that learning English is essential to succeed 
in the United States, according to a 2002 Kaiser Family Foundation 
survey.
  I wish to conclude by saying that I think it would be a tremendous 
demonstration of good faith by the White House to support my 
legislation. America has plenty of language problems already.
  If the Senate version of the President's immigration proposals should 
become law, every guest worker and ever recipient of amnesty would 
arrive on our shores as a little bundle of linguistic entitlements. 
Local government offices and public schools will be simply overwhelmed 
by the costly language mandates each of these individuals and their 
families will trigger.
  A nation certain of its language and culture can continue to be a 
welcoming nation to legal immigrants. A nation with uncontrolled 
borders and no convictions about what it expects immigrants to do once 
they arrive will soon become a nation in name only.
  Mr. President, my legislation is good for America and good for 
everyone in America. I urge its speedy passage by my colleagues.
                                 ______
                                 
      By Mr. DOMENICI (for himself and Mr. Bingaman):
  S. 3832. A bill to direct the Secretary of the Interior to establish 
criteria to transfer title to reclamation facilities, and for other 
purposes; to the Committee on Energy and Natural Resources.
  Mr. DOMENICI. Mr. President, since its inception in 1902, the Bureau 
of Reclamation has constructed numerous facilities which have supplied 
much of the water and power necessary to populate the Western United 
States. The National Research Council of the National Academy of 
Sciences estimates that Reclamation currently owns 673 facilities that 
are part of 178 major projects. When many of these facilities were 
constructed, there were few local communities and utilities capable of 
assuming title to the facilities. However, this is no longer the case. 
Many project beneficiaries are both willing and able to receive title 
to Reclamation facilities.
  The growth of the environmental movement during the 1970s, explosive 
population growth in the West, Indian water rights claims, and 
urbanization transformed Reclamation from an agency that plans, 
designs, and constructs large projects into one that manages existing 
Reclamation facilities and allocates water resources in accordance with 
applicable law. Correspondingly, appropriations for Reclamation have 
decreased over the past 40 years. As chairman of the Energy and Water 
Development Appropriations Subcommittee, I have become increasingly 
concerned that Reclamation lacks adequate resources to fulfill its 
current mission, particularly in light of increasing nonreimbursable 
expenditures required for operations, maintenance, and rehabilitation 
of Reclamation facilities. For this reason, we need to investigate 
opportunities, including title transfers, to make more money available 
to Reclamation.
  Reclamation project beneficiaries frequently claim that Reclamation 
services passed on to customers are far more expensive than comparable 
services in the private sector and that Reclamation ownership of these 
facilities imposes an unnecessary administrative burden on project 
beneficiaries. For these reasons, many project beneficiaries who have 
fulfilled their construction repayment obligations would like to pursue 
the transfer of title to Reclamation facilities and land. In addition 
to benefiting project beneficiaries, transfer of title to Reclamation 
facilities also divests the Federal Government of the liability, 
operation, maintenance, management, and regulation associated with 
these facilities. In its framework for transfer of title to Reclamation 
facilities, Reclamation acknowledged its commitment to a Federal 
Government that ``works better and costs less.'' I believe that 
pursuing title transfers on a widespread basis is consistent with this 
policy.
  While Reclamation currently has an administrative process for 
determining which uncomplicated transfers should be pursued by 
Congress, it is my belief that the process is not as aggressive or 
comprehensive as it should be. The bill I introduce today would direct 
the Secretary of the Interior to promulgate criteria for the transfer 
of title to Reclamation facilities and lands, including multipurpose 
and multibeneficiary projects. The bill also directs the Secretary of 
the Interior to undertake a study to identify which Reclamation 
facilities may be appropriate for transfer. Consistent with current 
policy, Congress would evaluate which of these facilities should be 
transferred.
  I realize that title transfer may not be appropriate for every 
Reclamation facility. However, I believe that there are a great number 
of instances in which title transfer would benefit the United States 
and Reclamation customers.
  I thank Senator Bingaman, ranking member of the Energy and Natural 
Resources Committee, for being an original cosponsor of this 
legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was orderd to be 
printed in the Record, as follows:

                                S. 3832

       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 ``Reclamation Facility Title 
     Transfer Act of 2006''.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Indian tribe.--The term ``Indian tribe'' means an 
     Indian tribe, band, Nation, or other organized group or 
     community that is recognized as eligible for the special 
     programs and services provided by the United States to 
     Indians because of their status as Indians.
       (2) Project beneficiary.--The term ``project beneficiary'' 
     means 1 or more contractors or other persons or entities that 
     receive a direct benefit under 1 or more of the authorized 
     purposes for a reclamation facility.
       (3) Reclamation facility.--
       (A) In general.--The term ``reclamation facility'' means 
     any single-purpose or multipurpose structure, reservoir, 
     impoundment, ditch, canal, pumping station, or other facility 
     for the storage, diversion, distribution, or conveyance of 
     water--
       (i) that is--

       (I) authorized by Federal reclamation law; and
       (II) constructed by the United States under that law;

       (ii) for which the United States holds title; and
       (iii) for which any non-Federal construction repayment 
     obligations, as applicable, have been fulfilled.
       (B) Inclusions.--The term ``reclamation facility'' includes 
     any land that is appurtenant to, and any administrative 
     buildings associated with, a reclamation facility.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Commissioner of 
     Reclamation.
       (5) Stakeholder.--The term ``stakeholder'' means--
       (A) a project beneficiary; and
       (B) any person that--
       (i) receives an indirect benefit from a reclamation 
     facility; or
       (ii) may be particularly affected by any transfer of title 
     to a reclamation facility.

     SEC. 3. TITLE TRANSFER.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall establish criteria 
     for the transfer of title to reclamation facilities from the 
     United States to project beneficiaries or an entity approved 
     by project beneficiaries.
       (b) Inclusions.--The criteria established under subsection 
     (a) shall include--
       (1) criteria requiring that--
       (A) project beneficiaries (or an entity approved by the 
     project beneficiaries) be willing to have title to a 
     reclamation facility transferred to the project 
     beneficiaries;
       (B) if the project beneficiaries have not yet assumed 
     operations, maintenance, and rehabilitation of the applicable 
     reclamation facility, the project beneficiaries be capable of 
     assuming operations, maintenance, and rehabilitation of the 
     reclamation facility;
       (C) if there are multiple project beneficiaries, there is 
     an agreement among multiple project beneficiaries relating to 
     the transfer of title to a reclamation facility; and
       (D) project beneficiaries be willing to assume any 
     liability associated with the reclamation facility for which 
     title is proposed to be transferred;
       (2) criteria requiring an assessment by the Secretary of--
       (A) any effects that the transfer of title would have on 
     the ability of the Federal Government to carry out the trust 
     responsibility of the Federal Government with respect to any 
     Indian tribe;

[[Page 17015]]

       (B) the cost savings to the United States if title to a 
     reclamation facility is transferred;
       (C) the interest of the project beneficiaries in owning the 
     reclamation facility;
       (D) any environmental considerations associated with the 
     transfer of title to a reclamation facility;
       (E) whether stakeholders will be adversely impacted by the 
     transfer;
       (F) the ability of project beneficiaries to meet financial 
     obligations associated with a reclamation facility, 
     including--
       (i) transactional costs; and
       (ii) costs associated with meeting the compliance 
     requirements of the National Environmental Policy Act of 1969 
     (42 U.S.C. 4321 et seq.);
       (G) any legal considerations associated with the transfer 
     of title to a reclamation facility, including any Federal, 
     State, tribal, and local laws, international treaties, and 
     interstate compacts that apply to the transfer of title of a 
     reclamation facility to project beneficiaries; and
       (H) the willingness and ability of project beneficiaries to 
     fulfill any legal obligations associated with receiving title 
     to a reclamation facility, including compliance with any 
     Federal, State, tribal, and local laws, international 
     treaties, and interstate compacts that apply to the transfer 
     of title of a reclamation facility to project beneficiaries;
       (3) procedures for--
       (A) soliciting stakeholder involvement in the transfer of 
     title to a reclamation facility; and
       (B) involving appropriate Federal, State, and local 
     entities in evaluating and carrying out the transfer of title 
     to a reclamation facility;
       (4) the requirement that the Secretary prepare a 
     comprehensive list of any items that need to be accomplished 
     before the transfer of title to a reclamation facility;
       (5) procedures to allow the Secretary to address real 
     property and cultural and historic preservation issues in a 
     more efficient manner; and
       (6) any other criteria that the Secretary determines to be 
     appropriate.
       (c) Use of Existing Criteria.--For purposes of establishing 
     the criteria under subsection (a), the Secretary shall, to 
     the maximum extent practicable and consistent with this Act, 
     incorporate any applicable criteria that are in existence on 
     the date of enactment of this Act, including the criteria for 
     the transfer of title to uncomplicated projects described in 
     the Bureau of Reclamation document entitled ``Framework for 
     the Transfer of Title: Bureau of Reclamation Projects'' and 
     dated August 7, 1995.

     SEC. 4. REPORT.

       Not later than 2 years after the date of enactment of this 
     Act, the Secretary shall submit to the Committee on Energy 
     and Natural Resources of the Senate and the Committee on 
     Resources of the House of Representatives a report that 
     includes any recommendations of the Secretary with respect to 
     which reclamation facilities may be appropriate for transfer 
     in accordance with the criteria established under section 
     3(a).

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to carry out this 
     Act $2,000,000 for the period of fiscal years 2007 through 
     2010.

     SEC. 6. TERMINATION OF AUTHORITY.

       The authority of the Secretary to carry out this Act 
     terminates on the date that is 5 years after the date of 
     enactment of this Act.
                                 ______
                                 
      By Mr. KERRY:
  S. 3833. A bill to authorize support for the Armed Forces Support 
Foundation in assisting members of the National Guard and Reserve and 
former members of the Armed Forces in securing employment in the 
private sector, and for other purposes; to the Committee on Armed 
Services.
  Mr. KERRY. Mr. President, today I am introducing the Armed Forces 
Employment Support Act, AFESA, which will help members of our Armed 
Forces transition to employment after their military service. My 
legislation will help the Armed Forces Support Foundation, AFSF, a 
nonprofit organization that helps military veterans and members of the 
National Guard and Reserve find jobs in the private sector, create new 
programs that help veterans obtain jobs after their service to the 
Nation.
  This legislation is necessary to address disproportionate 
unemployment rates for young veterans, the cost to the Government to 
provide unemployment insurance, and skilled labor shortages in key 
industries. For instance, the unemployment rate for veterans aged 22 to 
26 is three times the national average. The Government has spent $87 
million on unemployment benefits for recently discharged veterans and 
lost an estimated $50 million in tax revenue. Further, a study 
sponsored by the Federal Mediation and Conciliation concluded the 
biggest problem facing the transportation industry is the shortage of 
skilled labor. The transportation industry will benefit from this 
legislation given that many veterans have experience in transportation 
from their military service.
  Specifically, AFESA authorizes $10 million annually through fiscal 
year 2011 for the National Guard to make grants to AFSF to help it 
pursue agreements to hire veterans with businesses in industries 
ranging from transportation to domestic security.
  AFSF is modeled on a successful veterans employment transition 
program, Helmets to Hardhats, which has helped more than 150,000 
veterans find jobs in the construction industry and has referred 40,000 
veterans into apprenticeship programs. Helmets to Hardhats evaluates 
each veteran it works with to identify that veteran's experiences. It 
then takes that information and targets various business within the 
construction industry that has positions that require similar skills. 
The agreements it enters into guarantee a long-term partnership that 
benefit both parties. Helmets to Hardhats has also entered into an 
agreement with the National Guard to assist with recruiting efforts. In 
2005, it helped recruit 396 men and women into the National Guard, 
which is estimated to have saved the military $3.7 million in 
recruiting costs.
  The success of Helmets to Hardhats has been noted in the media, by 
the National Guard, the Department of Labor, 17 State Governors, 
senators, congressmen, and others as an innovative organization that 
has shown results and truly benefitted the veteran community and the 
construction industry. AFSF will build upon the success of Helmets to 
Hardhats by facilitating employment in multiple industries with 
positions that are applicable to skills veterans acquired in the 
military.
  I can think of few causes more important that helping those who have 
risked their lives defending our country find good jobs and realize the 
American dream. Unfortunately, many veterans of the war in Iraq and 
other theaters are finding it difficult to find a job when they return 
from service. For instance, at 15.6 percent, the unemployment rate for 
20- to 24-year-old veterans is nearly twice that of nonveterans. This 
is an unacceptable fact that this legislation will help ameliorate. 
Indeed, I am confident that the success of Helmets to Hardhats in the 
construction industry will be replicated many times over by AFSF.
  Mr. President, this legislation is based on the premise that no one 
who has served our country in uniform should be left behind when they 
return to civilian life. AFSF's mission is a worthwhile and important 
cause that deserves the Government's support. I know that it will help 
our veterans, and I hope my colleagues will support it.
                                 ______
                                 
      By Mr. SESSIONS (for himself and Mrs. Feinstein).
  S. 3834. A bill to amend the Controlled Substances Act to address 
online pharmacies; to the Committee on the Judiciary.

  Mr. SESSIONS. Mr. President, after working together with Senator 
Feinstein, I am pleased to introduce the Online Pharmacy Consumer 
Protection Act of 2006. I have worked to take the lead in protecting 
consumers specifically as it relates to the sale and distribution of 
controlled substances and prescription drugs over the Internet and 
holding liable those who do so via unregistered online pharmacies. I 
commend Senator Feinstein for her leadership on this issue and look 
forward to working with her to pass this important piece of 
legislation.
  This bill would prohibit the distribution of controlled substances 
and prescription drugs by means of the Internet without a valid 
prescription and provides for the legitimate online distribution of 
those drugs in certain circumstances. Two weeks ago, Attorney General 
Gonzalez testified that sale and distribution of ``controlled 
pharmaceuticals on the Internet is of great concern,'' since it ``gives 
drug abusers the ability to circumvent the law, as well as sound 
medical practice.'' This bill would go a long way in addressing

[[Page 17016]]

the concerns expressed by Attorney General Gonzalez by reigning in a 
practice that has gone unregulated for far too long.
  Recently, there has been an explosion in the number of online 
pharmacies that provide prescription drugs--both controlled and 
noncontrolled substances--to users without valid prescriptions. Most 
illegal drug abuse involving prescription drugs is associated with 
Internet purchases, where users are given a prescription without ever 
seeing a doctor. The most prominent abuse occurs with regard to 
controlled substances such as hydrocodone, Valium, Xanax, OxyContin, 
and Vicodin. A 2002 study reported that nearly 15 million adults 
admitted to abusing prescription drugs, with 2.4 million new abusers in 
2001 alone. Currently, there is no way to police this illegal activity.
  The ease with which consumers may purchase controlled substances and 
other prescription drugs from online pharmacies without a prescription 
is shocking. Often consumers can obtain a prescription from physicians 
employed by the online pharmacy by simply filling out a brief 
questionnaire on the pharmacy's Web site. Most online pharmacies have 
no way to verify that the consumer ordering the prescription is 
actually who they claim to be or that the medical condition the 
consumer describes actually exists. Thus, drug addicts and minor 
children can easily order controlled substances and prescription drugs 
over the Internet simply by providing false identities or describing 
nonexistent medical conditions.
  In 2001, Ryan Haight, a California high school honors student and 
athlete, died from an overdose of the painkiller hydrocodone that he 
purchased from an online pharmacy. The doctor prescribing hydrocodone 
had never met or personally examined Ryan. Ryan simply filled out the 
pharmacy's online questionnaire and described himself as a 25-year-old 
male suffering from chronic back pain. Ryan's death could have been 
avoided.
  I believe that Congress is in the best position to help prevent 
teenagers from purchasing controlled substances and prescription drugs 
from online rouge pharmacies. I also believe that Congress has the 
ability to help prevent adult prescription drug abuse by making it 
harder to purchase these drugs online without a valid prescription.
  The Online Pharmacy Consumer Protection Act would provide criminal 
penalties for those who knowingly or intentionally--unlawfully--
dispense controlled substances and prescription drugs over the 
Internet; give State attorneys general a civil cause of action against 
anyone who violates the act if they have reason to believe that the 
violation affects the interests of their State's residents; and allow 
the Federal Government to take possession of any tangible or intangible 
property used illegally by online pharmacies.
  The Online Pharmacy Consumer Protection Act would also require online 
pharmacies to file an additional registration statement with the 
Attorney General and meet additional registration requirements 
promulgated by him/her; report to the Attorney General any controlled 
substances or prescription drugs dispensed over the Internet, and 
comply with licensing and disclosure requirements.
  The Online Pharmacy Consumer Protection Act of 2006 takes a 
substantial step toward plugging a loophole in our drug laws by 
regulating the practice of distributing controlled substances and 
prescription drugs via the Internet. By holding unregistered online 
pharmacies accountable for their activity, we are ensuring that those 
who seek to purchase prescription drugs by using the Internet are 
protected from those engaged in reprehensible business practices.
  Mr. President, once again I thank Senator Feinstein for her 
leadership in addressing this serious issue. I commend this bill to my 
colleagues for study, and I urge them to support this important 
legislation.
  Mrs. FEINSTEIN. Mr. President, I am pleased to join with Senator 
Sessions to introduce the Online Pharmacy Consumer Protection Act. Our 
legislation protects the safety of consumers who wish to purchase 
prescription drugs over the Internet, while holding accountable those 
who operate unregistered pharmacies.
  Just a few weeks ago, Attorney General Alberto Gonzales appeared 
before the Senate Judiciary Committee for a DOJ Oversight hearing. In 
discussing the Department's priorities, he singled out how ``the 
purchase of . . . controlled pharmaceuticals on the Internet is of 
great concern.'' He noted how the Internet's wide accessibility and 
anonymity ``give drug abusers the ability to circumvent the law, as 
well as sound medical practice, a[s] they dispense potentially 
dangerous controlled pharmaceuticals.'' With ``no identifying... 
information on these Web sites, it is very difficult for law 
enforcement to track any of the individuals behind them.''
  I believe this bill will address many of these problems that the 
Attorney General has identified.
  To understand how many of these Internet pharmacy Web sites exist, 
just visit any Internet search engine. Type in the name of any 
controlled substance or prescription drug. Several Web sites will 
appear, offering to sell you these drugs without a prescription and 
without a medical examination. Some of these Web sites simply ask 
patients to send copies of medical records, with no verification of 
their validity.
  Patients use these pharmacies to obtain addictive drugs, like Vicodin 
and Oxycontin. They can receive prescription medications like Viagra 
without a doctor performing a physical exam to ensure that an 
underlying health condition will not cause a dangerous side effect.
  At the same time, receiving medications from a legitimate, licensed 
Internet pharmacy is one of the new conveniences ushered in by the 
Internet age. This bill preserves the ability of well-run pharmacies 
and well-intentioned patients to access prescription drugs and 
controlled substances by means of the Internet.
  This legislation imposes basic, commonsense requirements on an 
industry that presents both promise and peril.
  First, this bill establishes disclosure standards for Internet 
pharmacies.
  Second, this bill prohibits an Internet pharmacy from dispensing or 
selling a prescription drug or controlled substance without an in-
person examination by a physician.
  Third, it allows a State attorney general to bring a civil action in 
Federal district court to enjoin a pharmacy operating in violation of 
the law and to enforce compliance with the provisions of this law.
  The disclosure requirements contained in this bill will allow 
patients to differentiate between shady offshore pharmacies, and 
legitimate licensed ones. Under this legislation, pharmacies must 
clearly disclose the name and address of the pharmacy, contact 
information for the pharmacist-in-charge, and a list of States in which 
the pharmacy is licensed to operate. They must also clearly post a 
statement that they comply with the requirements in this legislation.
  The bill states pharmacies can dispense to patients only if they have 
a valid prescription from a practitioner who has performed an in-person 
examination. This requirement will ensure that doctors can verify the 
health status of a patient and ensure that the drug he or she will 
receive from the pharmacy is medically appropriate.
  This legislation recognizes that in the case of an emergency, a 
patient may not always be able to see his or her typical physician. For 
that reason, it allows a doctor to designate a covering practitioner to 
write a valid prescription if he or she is not available.
  Finally, this bill contains real penalties to hold accountable those 
who continue to operate pharmacies in violation of these requirements.
  First, for Internet sales of prescription drugs and controlled 
substances, the bill makes clear that such activities are subject to 
the current Federal laws against illegal distributions and the same 
penalties applicable to hand-to-hand sales.
  Second, the bill increases the penalties for illegal distributions of 
controlled substances categorized by the DEA as schedule III, IV and V 
substances, with new penalties if death or

[[Page 17017]]

serious bodily injury results and longer periods of supervised release 
available after convictions.
  The bill also allows a State's attorney general to file a Federal 
motion to stop these pharmacies from operating illegally, no matter 
where the entity is headquartered. Previously, this type of enforcement 
would require a filing in every State.
  I urge my colleagues to join me in supporting this legislation.
                                 ______
                                 
      By Mr. CORNYN (for himself, Mr. Chambliss, Mr. Allen, Mr. Kyl, 
        Mr. Sessions, Mr. Graham, Mr. Inhofe, and Mr. Santorum):
  S. 3835. A bill to provide adequate penalties for crimes committed 
against United States judges and Federal law enforcement officers, to 
provide appropriate security for judges and law enforcement officers, 
and for other purposes; to the Committee on the Judiciary.
  Mr. CORNYN. Mr. President, I rise today to speak in favor of the 
Court and Law Enforcement Protection Act of 2006. This bill is designed 
to address the critical issue of judicial and law enforcement security.
  Police officers place their lives on the line every time they put on 
their uniforms and report for duty. Likewise, the dedicated men and 
women who work in America's courthouses--from the judges to the court 
reporters--preside each day over difficult, contentious and at times 
very emotional legal disputes. And these public servants, like our 
police, are placed in hams way by the nature of their jobs. These 
individuals fulfill essential roles that keep our democracy running 
smoothly, and I have the greatest respect for them.
  Unfortunately, violence directed at public servants is on the rise. 
From escalating violence against police officers to courthouse 
attacks--including in my home State of Texas--these despicable actions 
threaten the administration of justice. This Congress has the power--
and now must exercise it--to ensure that certain and swift punishment 
awaits those who engage in these unconscionable acts of violence.
  The administration of justice--indeed, the health of American 
democracy--depends on our ability to attract dedicated public servants, 
including police officers and judges. And so we must do all that we can 
to provide adequate security to these dedicated men and women who are 
too often targeted for violence or harassment simply because of the 
position they hold.
  As a former State attorney general, I had the responsibility of 
defending sentences on appeal of certain defendants who had been found 
guilty of violence. So I am acutely aware of the devastating effects 
criminal acts of violence have on the victims and their families. And 
because I also used to be a judge I am fortunate to have a number of 
close, personal friends who serve in law enforcement and on the bench. 
I personally know judges and their families who have been victims of 
violence, and I have grieved with those families. I am outraged that 
these cowardly and despicable acts continue to occur.
  Police officers in this Nation are sworn to protect and to serve 
their fellow citizens. They selflessly respond to dangerous situations 
and often must diffuse highly emotional circumstances. And judges, for 
their part, are impartial umpires of the law. We know that they cannot 
help but disappoint people in their line of work because, in 
litigation, there is normally a winning side and a losing one. But 
judges, witnesses, courthouse personnel and law enforcement must not 
face threats and violence for doing nothing more than simply carrying 
out their duties.
  The protection of the men and women who compose our judicial system 
and serve the public in law enforcement are essential to the proper 
administration of justice in our country. This bill takes steps toward 
providing additional protections to these dedicated public servants.
  First, it increases the punishments, including providing mandatory 
minimums, against those who retaliate against judges, police officers, 
or their family members, on account of the performance of their duties. 
A high-ranking law enforcement official recently told me that detention 
equals deterrence. What he meant was that those who know that they will 
face significant incarceration think twice about committing criminal 
acts. I agree with him, and we should carry out that idea in this 
legislation.
  Importantly, this bill curbs frivolous lawsuits against police 
officers and streamlines the appellate process for those murderers who 
receive the death penalty for murdering a judge or a police officer.
  It is good policy to place reasonable limits on lawsuits involving 
police officers by limiting claims to actual damages--unless the 
defendant purposefully inflicted serious bodily injury on the 
plaintiff, in which case the plaintiff may seek an additional $250,000 
in damages. And returning the attorney's fees provisions in these cases 
to the traditional attorney's fees responsibility by requiring each 
party to bear this burden is likewise good policy.
  Placing time constraints on habeas corpus petitions, including the 
time to file the petitions, the time to hold an evidentiary hearing on 
the petition, and the time to rule on a petition when the murder of a 
police officer is involved, is also good policy. This will eliminate 
extensive and unnecessary delays for the families of victims that occur 
when those who have victimized their loved ones find ways to delay the 
imposition of justice.
  Finally, this bill makes technical fixes to the law enforcement 
concealed carry legislation passed in the 108th Congress. Some 
technical barriers prevent retired officers from carrying a firearm to 
defend themselves and their loved ones. These technical corrections 
will facilitate the full implementation of that provision as Congress 
originally intended.
  Mr. President, the Court and Law Enforcement Protection Act of 2006 
is an important piece of legislation. It targets those people who would 
stand in the way of the proper, fair, and efficient administration of 
justice. The men and women of law enforcement and the judiciary work 
hard to carry out the duties entrusted to them by their State and the 
Federal Constitution, and they deserve our support. This bill is a 
significant step In providing them that much needed support. I look 
forward to working with my colleagues on this issue and encourage their 
support of this bill.
                                 ______
                                 

    Mr. AKAKA (for himself, Mr. Inouye, Mr. Byrd, Mr. Stevens, Mr. 
  Jeffords, Ms. Murkowski, Mr. Kerry, Mr. Cochran, Mr. Lieberman, Mr. 
Dodd, Mr. Rockefeller, Mr. Kennedy, Mr. Lott, Mr. Biden, Mrs. Clinton, 
Mr. Reid, Mr. Dorgan, Mr. Reed, Mrs. Feinstein, Mr. Conrad, Mrs. Dole, 
                    Mr. Domenici, and Mr. Roberts):

  S. 3837. A bill to authorize the establishment of the Henry Kuualoha 
Giugni Kupuna Memorial Archives at the University of Hawaii; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. AKAKA. Mr. President, I rise with my dear friend, the Senior 
Senator from Hawaii, Dan Inouye, and several of our colleagues from 
both sides of the aisle, to introduce a bill to pay tribute to one of 
this body's most loyal servants. The Henry Kuualoha Giugni Kupuna 
Memorial Archives bill honors Henry K. Giugni, our former Sergeant-at-
Arms of the U.S. Senate, through the establishment of a Native Hawaiian 
cultural and historical digital archives. These archives will enable 
the sharing and perpetuation of the unique culture, collective memory, 
and history of the people Henry K. Giugni so dearly loved.
  As many of my colleagues are aware, Henry K. Giugni was a man full of 
life and loyalty who served our country with distinction. He enlisted 
in the U.S. Army at the age of 16 after the attack on Pearl Harbor. 
During World War II he served in combat at the battle of Guadalcanal. 
Following World War II, he continued to serve the State of Hawaii and 
our nation by working as a police officer and firefighter. After nearly 
a decade of service with Senator Inouye in the Hawaii territorial 
legislature, he came to Washington, DC, as the senior senator's Senior 
Executive Assistant and then Chief of Staff for

[[Page 17018]]

more than 20 years. Mr. Giugni was appointed Sergeant-at-Arms of the 
United States Senate in 1987.
  Henry K. Giugni also sought to tear down barriers in society. In 1965 
it was Mr. Giugni who represented Senator Inouye's office, thus the 
people of Hawaii, in the famous 1965 Selma to Montgomery civil rights 
march led by Dr. Martin Luther King, Jr. As Senator Inouye's Chief of 
Staff, Mr. Giugni served as a vital link between the Senator's office 
and minority groups. In 1987 he was the first person of color and the 
first Native Hawaiian to be appointed Sergeant-at-Arms of the United 
States Senate. In this influential position, he sought out capable 
minorities and women for promotion to ensure that our workforce 
reflects America. He appointed the first minority, an African American, 
to lead the Service Department, and was the first to assign women to 
the Capitol Police plainclothes unit. Being particularly concerned 
about people with disabilities, Henry K. Giugni enacted a major 
expansion of the Special Services Office, which now conducts tours of 
the U.S. Capitol for the blind, deaf, and wheelchair-bound, and 
publishes Senate maps and documents in Braille.
  In his capacity as Sergeant-at-Arms, Mr. Giugni was the chief law 
enforcement officer of the U.S. Senate and an able manager of a 
majority of the Senate's support services. He oversaw a budget of 
nearly $120 million and approximately 2,000 employees. As Sergeant-at-
Arms, Mr. Giugni had the opportunity to preside over the inauguration 
of President George H.W. Bush as well as escort numerous dignitaries, 
including Nelson Mandela, Margaret Thatcher, and Vaclav Havel when they 
visited the U.S. Capitol.
  Establishing the Henry Kuualoha Giugni Memorial Archives would be a 
poignant and appropriate way to honor our loyal friend, colleague, and 
fellow American. Please allow me to explain. In Henry's passing there 
is a fitting analogy that can be made for the need of establishing 
these archives. Henry lived a life full of rich experiences and along 
the way he accumulated a wealth of wisdom. His memory and spirit live 
on but it is essential to perpetuate his wisdom and experiences so that 
what he learned and accomplished will not be lost to future 
generations. This is the primary impetus behind creating these 
archives. For various reasons there is a dearth of physical archives, 
museums, or libraries that are devoted to preserving and perpetuating 
the history, culture, achievements and collective narratives of 
indigenous peoples, including Native Hawaiians. As one generation 
passes, a wealth of traditional knowledge may be lost forever. 
Establishing these archives to perpetuate the traditional knowledge of 
indigenous peoples such as Henry will ensure that future generations of 
people have access to that knowledge and, in some sense, are able to 
learn from the original sources themselves.
  The development of the Internet in managing knowledge in electronic 
format has enabled the most pervasive storing and sharing of 
information the world has ever seen. An electronic, digital archives 
would facilitate the sharing, preservation and perpetuation of the 
unique Native Hawaiian culture, language, tradition and history. These 
archives will be a source of enduring knowledge, accessible to all, and 
will contribute to the cultural, social and economic advancement of 
Native Hawaiians and the State of Hawaii. It will help to ensure that 
the children of today and tomorrow will not be deprived of the rich 
culture, history and collective knowledge of Native Hawaiians. These 
archives will help to guarantee that the experiences, wisdom and 
knowledge of kupuna, or grandfathers and grandmothers such as Henry K. 
Giugni, will not be lost to future generations.
  The first section of the Henry Kuualoha Giugni Memorial Archives bill 
authorizes a grant awarded to the University of Hawaii's Academy for 
Creative Media for the establishment, maintenance and update of the 
archives which are to be located at the University of Hawaii. These 
funds shall be used to enable a statewide archival effort which will 
include the acquisition of a secure, web-accessible repository that 
will house significant Native Hawaiian historical and cultural 
information. This information may include oral histories, collective 
narratives, photographs, video files, journals, creative works and even 
documentation of practices and customs such as hula and music. The 
funds will enable this important effort by assisting in the purchasing 
of equipment, hiring of personnel, creating space for the collection 
and transfer of media, housing the archives, and creating this in-depth 
database.
  The second section of this bill authorizes the use of these grant 
funds for several different educational activities, many of which are 
intended to magnify the effect and resourcefulness of these archives 
and benefit the student populations who will likely access the archives 
the most. This includes the development of educational materials from 
the content of the archives that can be used in educating indigenous 
students such as Native Hawaiians, Alaska Natives, and Native American 
Indians. These materials are meant to enhance the education of all 
students, even students from non-native backgrounds. This also includes 
developing outreach initiatives to introduce the archives to elementary 
and secondary schools as well as enabling schools to access the 
archives through obtaining computer equipment.
  Grant funds can also be used to enable access to a college education 
to students who otherwise cannot independently afford such an education 
through scholarship awards. Additionally, funds can be used to address 
the problem of cultural incongruence in teaching, an issue that impedes 
effective learning in our Nation's classrooms. Such a lack of 
congruence exists in a wide range of situations, from rural and 
underserved communities in remote areas to well-populated urban 
centers, from my state of Hawaii to areas on the Eastern seaboard. The 
dynamic I am describing exists along lines of race and ethnicity, 
socioeconomic strata, age, and many other vectors, which can muddy the 
effective transmission of knowledge. Many of us, especially those from 
rural, indigenous, or ethnic minority backgrounds including Henry 
Giugni, have experienced this problem as we have worked our way through 
the education system. This bill also seeks to improve student 
achievement by addressing cultural incongruence between teachers and 
the student population by providing professional development training 
to teachers to enable them to teach in a culturally congruent way.
  Finally, as financial illiteracy is a growing problem especially 
among college age youth who are exposed to a variety of financial 
products, funds can be used to increase the economic and financial 
literacy of college students through the propagation of proven best 
practices that have resulted in positive behavioral change in regards 
to improved debt and credit management and economic decision making. 
Such activities can help to ensure that students stay in school, 
graduate in a better financial position, and remain disciplined in 
effectively managing their finances throughout their working and 
retirement years.
  Henry K. Giugni served amongst us with distinction and honor. I am 
very grateful to have known him. I encourage all of my colleagues to 
perpetuate his memory by supporting the Henry Kuualoha Giugni Memorial 
Archives bill. These archives are the most fitting way we can honor and 
remember our friend and dear public servant, Henry Kuualoha Giugni.
  Mr. INOUYE. Mr. President, I rise in support of the Henry Kuualoha 
Giugni Kupuna Memorial Archives Bill.
  Henry Giugni was my dear friend. He was an important part of my life 
for nearly half a century. He tirelessly and proudly served the people 
of Hawaii as my chief of staff. After leaving my office, he eagerly and 
enthusiastically dedicated himself to serving the Senate and the 
citizens of the United States as the Senate's 30th Sergeant-at-Arms.
  In the days following his passing on November 3, 2005, I was deeply 
touched by the hundreds of people who reached out to me, and shared, 
through conversations and letters, their memories of Henry. The stories 
were poignant.

[[Page 17019]]

They were filled with love and affection for a bear of a man who--while 
he could be gruff and outrageous at times--could never camouflage his 
gentle soul and his willingness to help others, especially those who 
were less fortunate or who were just beginning their careers. The 
shared memories of Henry revealed that he enriched lives, served as an 
inspiration, and gave hope.
  Similarly, this bill, which bears Henry's name, will not only honor 
him, but more importantly will serve the people of Hawaii, especially 
the descendants of the islands' first settlers. It will also help 
Hawaii's unique native traditions and culture to flourish. By 
establishing a digital memorial archive at the University of Hawaii's 
Academy for Creative Media, this bill will enrich the lives of the 
people of Hawaii and those who live beyond Hawaii's shores. The digital 
archive will be a 21st-century way of inspiring and giving hope by 
preserving the invaluable lessons and insights from the collective 
memory and history of Native Hawaiians.
  During the years that Henry was a young boy attending school, the 
history of Native Hawaiians and Hawaii was rarely--if ever--taught in 
Hawaii. It was only relatively recently that Hawaiian history became an 
essential part of the curriculum of Hawaii's schools. Henry was proud 
that he was part-Hawaiian, and he was proud that someone like him, from 
humble beginnings, could find success in Washington, in an environment 
vastly different from his roots in Hawaii. While he became an 
acquaintance of presidents and kings, his heart was always with the 
native people of Hawaii, who are still struggling for their moment in 
the sun.
  In addition to creating a digital archive and preserving the 
traditions and culture of Native Hawaiians, this legislation will 
support initiatives to develop Web-based media projects from the 
archive to create educational materials that can be used to enhance the 
education of indigenous students. It also can serve to inspire higher 
educational achievement by indigenous students by sharing with them the 
stories and histories of accomplished individuals with indigenous 
backgrounds, such as Henry.
  So although Henry is no longer with us, his mentoring and sharing 
spirit will live on through the digital archive created by this bill. 
Through the archive, Henry will always be the embodiment of the 
kupuna--the respected elder who has much wisdom and insight to share.
  My colleagues, please join me in supporting the Henry Kuualoha Giugni 
Kupuna Memorial Archives Bill.
                                 ______
                                 
      By Mr. HATCH (for himself and Mrs. Lincoln):
  S. 3838. A bill to amend the Internal Revenue Code of 1986 to provide 
for S corporation reform, and for other purposes; to the Committee on 
Finance.
  Mr. HATCH. Mr. President, on behalf of myself and my friend and 
colleague, Senator Lincoln, I rise today to introduce the S Corporation 
Reform Act of 2006.
  The bill we are introducing today is a continuation of a bipartisan 
effort that began in the Senate over a decade ago when former Senators 
Pryor and Danforth, me and six other Senators, introduced the S 
Corporation Reform Act of 1993. We recognized then, as we do today, 
that S corporations are a vital and growing part of our economy and 
that our tax law should reflect the importance of these entities and 
provide tax rules that allow S corporations to grow and compete with a 
minimum of complexity and a maximum of flexibility.
  According to the latest figures available from the Small Business 
Administration, there were approximately 3.1 million S corporations in 
the United States in 2002 with a total of $3.9 trillion in revenue. 
There were about a half million S corporations in 1980, so the growth 
of these entities has been striking. Surprisingly, the growth of S 
corporations has continued even after the advent of the Limited 
Liability Company, LLC, which offers many of the same benefits, but 
more flexibility, as S corporations. In fact, S corporations now 
outnumber both C corporations and partnerships. These are predominantly 
small businesses in the retail and service sectors. In my home State of 
Utah, over half the corporations have elected subchapter S treatment.
  Subchapter S of the Internal Revenue Code was enacted in 1958 to help 
remove tax considerations from small business owners' decisions to 
incorporate. This elective tax treatment has been helpful to millions 
of small businesses over the years, particularly to those just starting 
out. Subchapter S provides entrepreneurs the advantage of corporate 
protection from liability along with the single level of tax enjoyed by 
partnerships and limited liability companies.
  However, Subchapter S in its current state contains a variety of 
limitations, restrictions, and pitfalls for the unwary. Even though 
some very important improvements have been made over the years, 
including many first introduced in the 1993 S Corporation Reform Act I 
mentioned earlier, more needs to be done to bring the tax treatment of 
these important businesses into the 21st century. The two biggest 
constraints that small businesses face are difficulties in getting 
access to capital and the tax burden. The bill we are introducing today 
addresses both of these vital issues.
  Small businesses create two-thirds of all new jobs in the economy and 
account for roughly half of the overall employment in the country. 
Throughout the 1990s small businesses accounted for sixty to eighty 
percent of all new jobs. They are especially important in industries 
where technological innovation is important. According to the 
Congressional Research Service, small firms account for nearly forty 
percent of all scientists, engineers, and computer specialists working 
in the private sector.
  During the most recent downturn of 2001-2002, when the state of Utah 
lost jobs, small businesses actually created jobs and helped soften the 
blow for many Utahns. Today, as our economy is booming, small 
businesses continue to generate the bulk of new jobs.
  In rural America, the role of small enterprises is even more 
important. Small businesses account for 90 percent of all rural 
establishments. In 1998, small companies employed 60 percent of rural 
workers and provided half of rural payrolls.
  Perhaps the biggest challenge facing many American businesses, but 
especially smaller ones, is attracting adequate capital. Unfortunately, 
subchapter S is currently a hindrance, rather than a help, for many 
corporations facing this challenge. For example, current law allows for 
only one class of stock for S corporations. Further, S corporations are 
not currently allowed to issue convertible debt, nor are they allowed 
to have a nonresident alien as a shareholder.
  Several of the provisions of the S Corporation Reform Act of 2006 are 
designed to alleviate these restrictions on S corporations and help 
them attract capital. With these changes, S corporations will be more 
competitive with other small enterprises doing business as partnerships 
or limited liability companies that do not face such barriers.
  Even though electing subchapter S currently offers significant tax 
relief to a small corporation by eliminating the corporate level of 
taxation, S corporations still face some significant tax burdens and a 
myriad of potential pitfalls and tax traps for the unwary. Some of 
these impediments exist in the requirements of elective S corporation 
status, and others are in the rules governing the day-to-day operations 
of the entities. In either case, these provisions can stifle growth and 
impede job creation.
  Most of the provisions in our bill aim to eliminate these barriers 
and make it easier for companies to elect subchapter S and to operate 
in this status once the election is made.
  The Small Business Job Protection Act of 1996 made many important 
changes to subchapter S. One of the most significant was to allow, for 
the first time, small banks to elect to be S corporations. This opened 
the door for many small community banks to become more competitive with 
other financial institutions operating in towns

[[Page 17020]]

and neighborhoods throughout the country. The availability of 
Subchapter S has been a positive development in increasing the 
profitability and competitiveness of many community banks. Some 2,300 
banks have chosen to be S corporations, representing 25 percent of all 
banks. However, some of the operating rules under subchapter S remain 
unduly inflexible, complex, and harsh on banks.
  The bill we introduce today attempts to address many of these 
challenges by clarifying and relaxing some of the operational rules 
that apply to S corporations. These changes are designed to make it 
significantly easier for community banks to take advantage of the 
benefits of subchapter S. In my opinion, businesses should be allowed 
to focus on meeting their customers' needs and maximizing their 
shareholders' profits, and not preoccupied with conforming to Byzantine 
government rules.
  While the corporate structure of an S corporation would not generally 
make sense for larger companies, the tax structure applied to S 
corporations is quite sensible and can serve as a model for other 
companies. Economists hail the single level of taxation of profits in 
the S corporation law as a much more efficient approach, and something 
that would be desirable for all enterprises.
  The S Corporation Reform Act of 2006 enjoys the support of a broad 
range of associations and trade groups, many of which have worked with 
us in crafting the bill.
  I urge my colleagues to take a close look at this bill, and to 
support it. Thousands of small and growing businesses in every state 
will benefit from the improvements included in the bill. Its enactment 
will lead to an increased ability of these enterprises to attract 
capital and create new jobs.
  I ask unanimous consent that the text of the bill and section-by-
section explanation of the bill be printed in the Record.
  There being no objection, the text was ordered to be printed in the 
Record, as follows:

                                S. 3838

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

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

       (a) Short Title.--This Act may be cited as the ``S 
     Corporation Reform Act of 2006''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; reference; table of contents.

           TITLE I--ELIGIBLE SHAREHOLDERS OF AN S CORPORATION

Sec. 101. Nonresident aliens allowed to be shareholders.
Sec. 102. Expansion of S corporation eligible shareholders to include 
              IRAS.

 TITLE II--QUALIFICATION AND ELIGIBILITY REQUIREMENTS OF S CORPORATIONS

Sec. 201. Issuance of preferred stock permitted.
Sec. 202. Safe harbor expanded to include convertible debt.
Sec. 203. Repeal of excessive passive investment income as a 
              termination event.
Sec. 204. Modifications to passive income rules.
Sec. 205. Adjustment to basis of s corporation stock for certain 
              charitable contributions.

           TITLE III--TREATMENT OF S CORPORATION SHAREHOLDERS

Sec. 301. Treatment of losses to shareholders.
Sec. 302. Deductibility of interest expense incurred by an electing 
              small business trust to acquire S corporation stock.
Sec. 303. Back to back loans as indebtedness.

       TITLE IV--EXPANSION OF S CORPORATION ELIGIBILITY FOR BANKS

Sec. 401. Treatment of qualifying director shares.
Sec. 402. Recapture of bad debt reserves.

              TITLE V--QUALIFIED SUBCHAPTER S SUBSIDIARIES

Sec. 501. Treatment of the sale of interest in a qualified subchapter S 
              subsidiary.

                    TITLE VI--ADDITIONAL PROVISIONS

Sec. 601. Elimination of all earnings and profits attributable to pre-
              1983 years.
Sec. 602. Repeal of LIFO recapture tax.
Sec. 603. Expansion of post-termination transition period.
Sec. 604. Reduction in tax rate on excess net passive income.
Sec. 605. Increase in cap on qualified small issue bonds.
Sec. 606. Special rules of application.

           TITLE I--ELIGIBLE SHAREHOLDERS OF AN S CORPORATION

     SEC. 101. NONRESIDENT ALIENS ALLOWED TO BE SHAREHOLDERS.

       (a) Nonresident Aliens Allowed to Be Shareholders.--
       (1) In general.--Paragraph (1) of section 1361(b) (defining 
     small business corporation) is amended--
       (A) by adding ``and'' at the end of subparagraph (B),
       (B) by striking subparagraph (C), and
       (C) by redesignating subparagraph (D) as subparagraph (C).
       (2) Conforming amendments.--
       (A) Paragraph (4) and (5)(A) of section 1361(c) (relating 
     to special rules for applying subsection (b)) are each 
     amended by striking ``subsection (b)(1)(D)'' and inserting 
     ``subsection (b)(1)(C)''.
       (B) Clause (i) of section 280G(b)(5)(A) (relating to 
     general rule for exemption for small business corporations, 
     etc.) is amended by striking ``but without regard to 
     paragraph (1)(C) thereof''.
       (b) Nonresident Alien Shareholder Treated as Engaged in 
     Trade or Business Within United States.--
       (1) In general.--Section 875 is amended--
       (A) by striking ``and'' at the end of paragraph (1),
       (B) by striking the period at the end of paragraph (2) and 
     inserting ``, and'', and
       (C) by adding at the end the following new paragraph:
       ``(3) a nonresident alien individual shall be considered as 
     being engaged in a trade or business within the United States 
     if the S corporation of which such individual is a 
     shareholder is so engaged.''.
       (2) Pro rata share of s corporation income.--The last 
     sentence of section 1441(b) (relating to income items) is 
     amended to read as follows: ``In the case of a nonresident 
     alien individual who is a member of a domestic partnership or 
     a shareholder of an S corporation, the items of income 
     referred to in subsection (a) shall be treated as referring 
     to items specified in this subsection included in his 
     distributive share of the income of such partnership or in 
     his pro rata share of the income of such S corporation.''.
       (3) Application of withholding tax on nonresident alien 
     shareholders.--Section 1446 (relating to withholding tax on 
     foreign partners' share of effectively connected income) is 
     amended by redesignating subsection (f) as subsection (g) and 
     by inserting after subsection (e) the following new 
     subsection:
       ``(f) S Corporation Treated as Partnership, etc.--For 
     purposes of this section--
       ``(1) an S corporation shall be treated as a partnership,
       ``(2) the shareholders of such corporation shall be treated 
     as partners of such partnership,
       ``(3) any reference to section 704 shall be treated as a 
     reference to section 1366, and
       ``(4) no withholding tax under subsection (a) shall be 
     required in the case of any income realized by such 
     corporation and allocable to a shareholder which is an 
     electing small business trust (as defined in section 
     1361(e)).''.
       (4) Conforming amendments.--
       (A) The heading of section 875 is amended to read as 
     follows:

     ``SEC. 875. PARTNERSHIPS; BENEFICIARIES OF ESTATES AND 
                   TRUSTS; S CORPORATIONS.''.

       (B) The heading of section 1446 is amended to read as 
     follows:

     ``SEC. 1446. WITHHOLDING TAX ON FOREIGN PARTNERS' AND S 
                   CORPORATION SHAREHOLDERS' SHARE OF EFFECTIVELY 
                   CONNECTED INCOME.''.

       (5) Clerical amendments.--
       (A) The item relating to section 875 in the table of 
     sections for subpart A of part II of subchapter N of chapter 
     1 is amended to read as follows:

``Sec. 875. Partnerships; beneficiaries of estates and trusts; S 
              corporations.''.
       (B) The item relating to section 1446 in the table of 
     sections for subchapter A of chapter 3 is amended to read as 
     follows:

``Sec. 1446 Withholding tax on foreign partners' and S corporation 
              shareholders' share of effectively connected income.''.
       (C) Permanent establishment of partners and s corporation 
     shareholders.--Section 894 (relating to income affected by 
     treaty) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Permanent Establishment of Partners and S Corporation 
     Shareholders.--If a partnership or S corporation has a 
     permanent establishment in the United States

[[Page 17021]]

     (within the meaning of a treaty to which the United States is 
     a party) at any time during a taxable year of such entity, a 
     nonresident alien individual or foreign corporation which is 
     a partner in such partnership, or a nonresident alien 
     individual who is a shareholder in such S corporation, shall 
     be treated as having a permanent establishment in the United 
     States for purposes of such treaty.''.
       (c) Application of Other Withholding Tax Rules on 
     Nonresident Alien Shareholders.--
       (1) Section 1441.--Section 1441 (relating to withholding of 
     tax on nonresident aliens) is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following new subsection:
       ``(g) S Corporation Treated as Partnership, etc.--For 
     purposes of this section--
       ``(1) an S corporation shall be treated as a partnership,
       ``(2) the shareholders of such corporation shall be treated 
     as partners of such partnership, and
       ``(3) no deduction or withholding under subsection (a) 
     shall be required in the case of any item of income realized 
     by such corporation and allocable to a shareholder which is 
     an electing small business trust (as defined in section 
     1361(e)).''.
       (2) Section 1445.--Section 1445(e) (relating to special 
     rules relating to distributions, etc., by corporations, 
     partnerships, trusts, or estates) is amended by redesignating 
     paragraph (6) as paragraph (7) and by inserting after 
     paragraph (5) the following new paragraph:
       ``(6) S corporation treated as partnership, etc.--For 
     purposes of this section--
       ``(A) an S corporation shall be treated as a partnership, 
     and
       ``(B) the shareholders of such corporation shall be treated 
     as partners of such partnership, and
       ``(C) no deduction or withholding under subsection (a) 
     shall be required in the case of any gain realized by such 
     corporation and allocable to a shareholder which is an 
     electing small business trust (as defined in section 
     1361(e)).''.
       (d) Additional Conforming Amendments.--
       (1) Section 1361(c)(2)(A)(i) is amended by striking ``who 
     is a citizen or resident of the United States''.
       (2) Section 1361(d)(3)(B) is amended by striking ``who is a 
     citizen or resident of the United States''.
       (3) Section 1361(e)(2) is amended by inserting ``(including 
     a nonresident alien)'' after ``person'' the first place it 
     appears.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 102. EXPANSION OF S CORPORATION ELIGIBLE SHAREHOLDERS TO 
                   INCLUDE IRAS.

       (a) In General.--Clause (vi) of section 1361(c)(2)(A) 
     (relating to certain trusts permitted as shareholders) is 
     amended to read as follows:
       ``(vi) A trust which constitutes an individual retirement 
     account under section 408(a), including one designated as a 
     Roth IRA under section 408A.''.
       (b) Sale of Stock in IRA Relating to S Corporation Election 
     Exempt From Prohibited Transaction Rules.--Paragraph (16) of 
     section 4975(d) (relating to exemptions) is amended to read 
     as follows:
       ``(16) a sale of stock held by a trust which constitutes an 
     individual retirement account under section 408(a) to the 
     individual for whose benefit such account is established if
       ``(A) such sale is pursuant to an election under section 
     1362(a) by the issuer of such stock,
       ``(B) such sale is for fair market value at the time of 
     sale (as established by an independent appraiser) and the 
     terms of the sale are otherwise at least as favorable to such 
     trust as the terms that would apply on a sale to an unrelated 
     party,
       ``(C) such trust does not pay any commissions, costs, or 
     other expenses in connection with the sale, and
       ``(D) the stock is sold in a single transaction for cash 
     not later than 120 days after the S corporation election is 
     made.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

 TITLE II--QUALIFICATION AND ELIGIBILITY REQUIREMENTS OF S CORPORATIONS

     SEC. 201. ISSUANCE OF PREFERRED STOCK PERMITTED.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Treatment of Qualified Preferred Stock.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) qualified preferred stock shall not be treated as a 
     second class of stock, and
       ``(B) no person shall be treated as a shareholder of the 
     corporation by reason of holding qualified preferred stock.
       ``(2) Qualified preferred stock defined.--For purposes of 
     this subsection, the term `qualified preferred stock' means 
     stock which meets the requirements of subparagraphs (A), (B), 
     and (C) of section 1504(a)(4). Stock shall not fail to be 
     treated as qualified preferred stock merely because it is 
     convertible into other stock.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to qualified preferred stock shall be includible as 
     ordinary income of the holder and deductible to the 
     corporation as an expense in computing taxable income under 
     section 1363(b) in the year such distribution is received.''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 1361(b) is amended by 
     inserting ``, except as provided in subsection (f),'' before 
     ``which does not''.
       (2) Subsection (a) of section 1366 is amended by adding at 
     the end the following new paragraph:
       ``(3) Allocation with respect to qualified preferred 
     stock.--The holders of qualified preferred stock (as defined 
     in section 1361(f)) shall not, with respect to such stock, be 
     allocated any of the items described in paragraph (1).''.
       (3) So much of clause (ii) of section 354(a)(2)(C) as 
     precedes subclause (II) is amended to read as follows:
       ``(ii) Recapitalization of family-owned corporations and s 
     corporations.--

       ``(I) In general.--Clause (i) shall not apply in the case 
     of a recapitalization under section 368(a)(I)(E) of a family-
     owned corporation or S corporation.''.

       (4) Subsection (a) of section 1373 is amended by striking 
     ``and'' at the end of paragraph (1), by striking the period 
     at the end of paragraph (2) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(3) no amount of an expense deductible under this 
     subchapter by reason of section 1361(f)(3) shall be 
     apportioned or allocated to such income.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 202. SAFE HARBOR EXPANDED TO INCLUDE CONVERTIBLE DEBT.

       (a) In General.--Subparagraph (B) of section 1361(c)(5) 
     (defining straight debt) is amended by striking clauses (ii) 
     and (iii) and inserting the following new clauses:
       ``(ii) in any case in which the terms of such promise 
     include a provision under which the obligation to pay may be 
     converted (directly or indirectly) into stock of the 
     corporation, such terms, taken as a whole, are substantially 
     the same as the terms which could have been obtained on the 
     effective date of the promise from a person which is not a 
     related person (within the meaning of section 465(b)(3)(C)) 
     to the S corporation or its shareholders, and
       ``(iii) the creditor is--

       ``(I) an individual,
       ``(II) an estate,
       ``(III) a trust described in paragraph (2),
       ``(IV) an exempt organization described in paragraph (6), 
     or
       ``(V) a person which is actively and regularly engaged in 
     the business of lending money.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 203. REPEAL OF EXCESSIVE PASSIVE INVESTMENT INCOME AS A 
                   TERMINATION EVENT.

       (a) In General.--Section 1362(d) (relating to termination) 
     is amended by striking paragraph (3).
       (b) Conforming Amendments.--
       (1) Section 1362(f)(1) is amended by striking ``or (3)''.
       (2) Clause (i) of section 1042(c)(4)(A) is amended by 
     striking ``section 1362(d)(3)(C)'' and inserting ``section 
     1375(b)(3)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 204. MODIFICATIONS TO PASSIVE INCOME RULES.

       (a) Increased Limit.--
       (1) In general.--Subsection (a)(2) of section 1375 
     (relating to tax imposed when passive investment income of 
     corporation having accumulated earnings and profits exceeds 
     25 percent of gross receipts) is amended by striking ``25 
     percent'' and inserting ``60 percent''.
       (2) Conforming amendments.--
       (A) Subparagraph (J) of section 26(b)(2) is amended by 
     striking ``25 percent'' and inserting ``60 percent''.
       (B) Clause (i) of section 1375(b)(1)(A) is amended by 
     striking ``25 percent'' and inserting ``60 percent''.
       (C) The heading for section 1375 is amended by striking 
     ``25 PERCENT'' and inserting ``60 PERCENT''.
       (D) The table of sections for part III of subchapter S of 
     chapter 1 is amended by striking ``25 percent'' in the item 
     relating to section 1375 and inserting ``60 percent''.
       (b) Repeal of Passive Income Capital Gain Category.--
       (1) In general.--Subsection (b) of section 1375 (relating 
     to tax imposed when passive investment income of corporation 
     having accumulated earnings and profits exceeds 60 percent of 
     gross receipts), as amended by subsection (a), is amended by 
     striking paragraphs (3) and (4) and inserting the following 
     new paragraph:
       ``(3) Passive investment income defined.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the term `passive investment income' means gross 
     receipts derived from royalties, rents, dividends, interest, 
     and annuities.

[[Page 17022]]

       ``(B) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(C) Treatment of certain lending or finance companies.--
     If the S corporation meets the requirements of section 
     542(c)(6) for the taxable year, the term `passive investment 
     income' shall not include gross receipts for the taxable year 
     which are derived directly from the active and regular 
     conduct of a lending or finance business (as defined in 
     section 542(d)(1)).
       ``(D) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(E) Coordination with section 1374.--The amount of 
     passive investment income shall be determined by not taking 
     into account any recognized built-in gain or loss of the S 
     corporation for any taxable year in the recognition period. 
     Terms used in the preceding sentence shall have the same 
     respective meaning as when used in section 1374.''.
       (2) Conforming amendments.--Section 1375(d) is amended by 
     striking ``subchapter C'' both places it appears and 
     inserting ``accumulated''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 205. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR 
                   CERTAIN CHARITABLE CONTRIBUTIONS.

       (a) In General.--Paragraph (1) of section 1367(a) (relating 
     to adjustments to basis of stock of shareholders, etc.) is 
     amended by striking ``and'' at the end of subparagraph (B), 
     by striking the period at the end of subparagraph (C) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(D) the excess of the amount of the shareholder's 
     proportionate share of any charitable contribution made by 
     the S corporation over the shareholder's proportionate share 
     of the adjusted basis of the property contributed.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

           TITLE III--TREATMENT OF S CORPORATION SHAREHOLDERS

     SEC. 301. TREATMENT OF LOSSES TO SHAREHOLDERS.

       (a) Liquidations.--Section 331 (relating to gain or loss to 
     shareholders in corporate liquidations) is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Loss on Liquidations of S Corporation.--
       ``(1) In general.--The portion of any net loss recognized 
     by a shareholder of an S corporation (as defined in section 
     1361(a)(1))--
       ``(A) on amounts received by such shareholder in a 
     distribution in complete liquidation of such S corporation, 
     or
       ``(B) on an installment obligation received by such 
     shareholder with respect to a sale or exchange by the 
     corporation during the 12-month period beginning on the date 
     a plan of complete liquidation is adopted if the liquidation 
     is completed during such 12-month period, which does not 
     exceed the ordinary income basis of stock of such S 
     corporation in the hands of such shareholder shall not be 
     treated as a loss from the sale or exchange of a capital 
     asset but shall be treated as an ordinary loss.
       ``(2) Ordinary income basis.--For purposes of this 
     subsection, the ordinary income basis of stock of an S 
     corporation in the hands of a shareholder of such S 
     corporation shall be an amount equal to the portion of such 
     shareholder's basis in such stock which is equal to the 
     aggregate increases in such basis under section 1367(a)(1) 
     resulting from such shareholder's pro rata share of ordinary 
     income of such S corporation attributable to the complete 
     liquidation.''.
       (b) Suspended Passive Activity Losses.--Paragraph (3) of 
     section 1371(b) is amended to read as follows:
       ``(3) Treatment of s year as elapsed year; passive 
     losses.--Nothing in paragraphs (1) and (2) shall prevent 
     treating a taxable year for which a corporation is an S 
     corporation as a taxable year for purposes of determining the 
     number of taxable years to which an item may be carried back 
     or carried forward nor prevent the allowance of a passive 
     activity loss deduction to the extent provided by section 
     469(g).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 302. DEDUCTIBILITY OF INTEREST EXPENSE INCURRED BY AN 
                   ELECTING SMALL BUSINESS TRUST TO ACQUIRE S 
                   CORPORATION STOCK.

       (a) In General.--Subparagraph (C) of section 641(c)(2) 
     (relating to modifications) is amended by inserting after 
     clause (iii) the following new clause:
       ``(iv) Any interest expense incurred to acquire stock in an 
     S corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 303. BACK TO BACK LOANS AS INDEBTEDNESS.

       (a) In General.--Section 1366(d) (relating to special rules 
     for losses and deductions) is amended by adding at the end 
     the following new paragraph:
       ``(4) Loans included in indebtedness of an s corporation.--
     For purposes of subsection (d), the indebtedness of an S 
     corporation to the shareholder shall include any loans made 
     or acquired (by purchase, gift, or distribution from another 
     person) by a shareholder to the S corporation, regardless of 
     whether the funds loaned by the shareholder to the S 
     corporation were obtained by the shareholder by means of a 
     recourse loan from another person (whether related or 
     unrelated to the shareholder).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

       TITLE IV--EXPANSION OF S CORPORATION ELIGIBILITY FOR BANKS

     SEC. 401. TREATMENT OF QUALIFYING DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation), as 
     amended by section 201(a), is amended by adding at the end 
     the following new subsection:
       ``(g) Treatment of Qualifying Director Shares.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) qualifying director shares shall not be treated as a 
     second class of stock, and
       ``(B) no person shall be treated as a shareholder of the 
     corporation by reason of holding qualifying director shares.
       ``(2) Qualifying director shares defined.--For purposes of 
     this subsection, the term `qualifying director shares' means 
     any shares of stock in a bank (as defined in section 581) or 
     in a bank holding company registered as such with the Federal 
     Reserve System--
       ``(A) which are held by an individual solely by reason of 
     status as a director of such bank or company or its 
     controlled subsidiary; and
       ``(B) which are subject to an agreement pursuant to which 
     the holder is required to dispose of the shares of stock upon 
     termination of the holder's status as a director at the same 
     price as the individual acquired such shares of stock.
       ``(3) Distributions.--A distribution (not in part or full 
     payment in exchange for stock) made by the corporation with 
     respect to qualifying director shares shall be includible as 
     ordinary income of the holder and deductible to the 
     corporation as an expense in computing taxable income under 
     section 1363(b) in the year such distribution is received.''.
       (b) Conforming Amendments.--
       (1) Section 1361(b)(1), as amended by section 201(b), is 
     amended by striking ``subsection (f)'' and inserting 
     ``subsections (f) and (g)''.
       (2) Section 1366(a), as amended by section 201(b), is 
     amended by adding at the end the following new paragraph:
       ``(4) Allocation with respect to qualifying director 
     shares.--The holders of qualifying director shares (as 
     defined in section 1361(g)) shall not, with respect to such 
     shares of stock, be allocated any of the items described in 
     paragraph (1).''.
       (3) Section 1373(a), as amended by section 201(b), is 
     amended by striking ``and'' at the end of paragraph (2), by 
     striking the period at the end of paragraph (3) and inserting 
     ``, and'', and adding at the end the following new paragraph:
       ``(4) no amount of an expense deductible under this 
     subchapter by reason of section 1361(g)(3) shall be 
     apportioned or allocated to such income.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 402. RECAPTURE OF BAD DEBT RESERVES.

       Notwithstanding section 481 of the Internal Revenue Code of 
     1986, with respect to any S corporation election made by any 
     bank in taxable years beginning after December 31, 1996, such 
     bank may recognize built-in gains from changing its 
     accounting method for recognizing bad debts from the reserve 
     method under section 585 or 593 of such Code to the charge-
     off method under section 166 of such Code either in the 
     taxable year ending with or beginning with such an election.

              TITLE V--QUALIFIED SUBCHAPTER S SUBSIDIARIES

     SEC. 501. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Section 1361(b)(3) (relating to treatment 
     of certain wholly owned subsidiaries) is amended by adding at 
     the end the following new subparagraph:
       ``(F) Special rule on termination.--The tax treatment of 
     the disposition of the stock of the qualified subchapter S 
     subsidiary shall be determined as if such disposition were--
       ``(i) a sale of the undivided interest in the subsidiary's 
     assets based on the percentage of the stock transferred, and
       ``(ii) followed by a deemed contribution by the S 
     corporation and the transferee in a section 351 
     transaction.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

[[Page 17023]]



                    TITLE VI--ADDITIONAL PROVISIONS

     SEC. 601. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS.

       (a) In General.--Subsection (a) of section 1311 of the 
     Small Business Job Protection Act of 1996 is amended to read 
     as follows:
       ``(a) In General.--If a corporation was an electing small 
     business corporation under subchapter S of chapter 1 of the 
     Internal Revenue Code of 1986 for any taxable year beginning 
     before January 1, 1983, the amount of such corporation's 
     accumulated earnings and profits (as of the beginning of any 
     taxable year beginning after December 31, 1982) shall be 
     reduced by an amount equal to the portion (if any) of such 
     accumulated earnings and profits which were accumulated in 
     any taxable year beginning before January 1, 1983, for which 
     such corporation was an electing small business corporation 
     under such subchapter S.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 602. REPEAL OF LIFO RECAPTURE TAX.

       (a) In General.--Section 1363 (relating to effect on 
     election on corporations) is amended by striking subsection 
     (d).
       (b) Effective Date.--The amendment made by this section 
     shall apply to elections made after the date of the enactment 
     of this Act.

     SEC. 603. EXPANSION OF POST-TERMINATION TRANSITION PERIOD.

       (a) In General.--Clause (ii) of section 1377(b)(1)(A) 
     (defining post-termination transition period) is amended to 
     read as follows:
       ``(ii) the date on which any refund or credit of any 
     overpayment of tax with respect to the return for such last 
     year as an S corporation is prevented by the operation of any 
     law or rule of law (including res judicata),''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to periods beginning after the date of the 
     enactment of this Act.

     SEC. 604. REDUCTION IN TAX RATE ON EXCESS NET PASSIVE INCOME.

       (a) In General.--Section 1375(a) (relating to tax imposed 
     when passive investment income of corporation having 
     accumulated earnings and profits exceeds 25 percent of gross 
     receipts) is amended by striking ``computed by multiplying 
     the excess net passive income by the highest rate of tax 
     specified in section 11(b)'' and inserting ``15 percent of 
     the excess net passive income''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 605. INCREASE IN CAP ON QUALIFIED SMALL ISSUE BONDS.

       (a) In General.--Section 144(a)(4)(A)(i) (relating to 
     general rule for $10,000,000 limit in certain cases) is 
     amended by striking ``$10,000,000'' and inserting 
     ``$10,000,000($30,000,000 in the case of any bank (as defined 
     in section 581) or any depository institution holding company 
     (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)) which is an S 
     corporation)''.
       (b) Adjustment of Cap for Inflation.--Section 144(a) 
     (relating to qualified small issue bond) is amended--
       (1) by redesignating paragraph (12) as paragraph (13); and
       (2) by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) Inflation adjustment.--
       ``(A) In general.--In the case of any calendar year after 
     2006, the $30,000,000 amount contained in paragraph (4)(A)(i) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2005' for `calendar year 1992' in subparagraph 
     (B) thereof.
       ``(B) Rounding.--Any increase under subparagraph (A) which 
     is not a multiple of $100,000 shall be rounded to the next 
     lowest multiple of $100,000.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) obligations issued after the date of the enactment of 
     this Act; and
       (2) capital expenditures made after such date with respect 
     to obligations issued on or before such date.

     SEC. 606. SPECIAL RULES OF APPLICATION.

       (a) Waiver of Limitations.--If refund or credit of any 
     overpayment of tax resulting from the application of any 
     amendment made by this Act is prevented at any time before 
     the close of the 1-year period beginning on the date of the 
     enactment of this Act by the operation of any law or rule of 
     law (including res judicata), such refund or credit may 
     nevertheless be made or allowed if claimed therefor is filed 
     before the close of such period.
       (b) Treatment of Certain Elections Under Prior Law.--For 
     purposes of section 1362(g) of the Internal Revenue Code of 
     1986 (relating to election after termination), any 
     termination or revocation under section 1362(d) of such Code 
     (as in effect on the day before enactment of this Act) shall 
     not be taken into account.

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

    S Corporation Reform Act of 2006--Section-by-Section Description

       The Subchapter S Modernization Act of 2006 includes the 
     following provisions to help improve capital formation 
     opportunities for small business, preserve family-owned 
     businesses, and eliminate unnecessary and unwarranted traps 
     for taxpayers:

           TITLE I--Eligible Shareholders of an S Corporation


       section 101. nonresident aliens allowed to be shareholders

       The Act would permit nonresident aliens to be S corporation 
     shareholders. To assure collection of the appropriate amount 
     of tax, the Act requires the S corporation to withhold and 
     pay a tax on effectively-connected income allocable to its 
     nonresident alien shareholders. The provision enhances an S 
     corporation's ability to expand into international markets 
     and expands an S corporation's access to capital.


   section 102. expansion of S corporation eligible shareholders to 
                              include iras

       The Act permits Individual Retirement Accounts (IRAs) to 
     hold stock in an S corporation. Currently this is permitted 
     only for S corporations that are banks.

 TITLE II--QUALIFICATION AND ELIGIBILITY REQUIREMENTS OF S CORPORATIONS


           section 201. issuance of preferred stock permitted

       The Act would permit S corporations to issue qualified 
     preferred stock (``QPS''). QPS generally would be stock that 
     (I) is not entitled to vote, (ii) is limited and preferred as 
     to dividends and does not participate in corporate growth to 
     any significant extent, and (iii) has redemption and 
     liquidation rights which do not exceed the issue price of 
     such stock (except for a reasonable redemption or liquidation 
     premium). Stock would not fail to be treated as QPS merely 
     because it is convertible into other stock. This provision 
     increases access to capital from investors who insist on 
     having a preferential return and facilitates family 
     succession by permitting the older generation of shareholders 
     to relinquish control of the corporation but maintain an 
     equity interest.


     section 202. safe harbor expanded to include convertible debt

       The Act permits S corporations to issue debt that may be 
     converted into stock of the corporation provided that the 
     terms of the debt are substantially the same as the terms 
     that could have been obtained from an unrelated party. The 
     Act also expands the current law safe-harbor debt provision 
     to permit nonresident alien individuals as creditors. The 
     provision facilitates the raising of investment capital.


    section 203. repeal of excessive passive investment income as a 
                           termination event

       The Act would repeal the rule that an S corporation would 
     lose its S corporation status if it has excess passive income 
     for three consecutive years. A corporate-level ``sting'' (or 
     double) tax would still apply, as modified in Sections 204 
     and 604 below, to excess passive income.


           section 204. modifications to passive income rules

       The Act would increase the threshold for taxing excess 
     passive income from 25 percent to 60 percent (consistent with 
     a Joint Tax Committee recommendation on simplification 
     measures). In addition, the Act removes gains from the sales 
     or exchanges of stock or securities from the definition of 
     passive investment income for purposes of the sting tax.


  section 205. adjustment to basis of S corporation stock for certain 
                        charitable contributions

       Current rules discourage charitable gifts of appreciated 
     property by S corporations. The Act would remedy this problem 
     by providing for an increase in the basis of shareholders' 
     stock in an amount equal to the excess of the value of the 
     contributed property over the basis of the property 
     contributed. This provision conforms the S corporation rules 
     to those applicable to charitable contributions by 
     partnerships.

           TITLE III--TREATMENT OF S CORPORATION SHAREHOLDERS


            section 301. treatment of losses to shareholders

       In the case of a liquidation of an S corporation, current 
     law can result in double taxation because of a mismatch of 
     ordinary income (realized at the corporate level and passed 
     through to the shareholder) and a capital loss (recognized at 
     the shareholder level on the liquidating distribution). 
     Although careful tax planning can avoid this result, many S 
     corporations do not have the benefit of sophisticated tax 
     advice. The Act eliminates this potential trap by providing 
     that any portion of any loss recognized by an S corporation 
     shareholder on amounts received by the shareholder in a 
     distribution in complete liquidation of the S corporation 
     would be treated as an ordinary loss to the extent of the 
     shareholder's basis in the S corporation stock.


section 302. deductibility of interest expense incurred by an electing 
       small business trust (esbt) to acquire s corporation stock

       The Act provides that interest expense incurred by an ESBT 
     to acquire S corporation

[[Page 17024]]

     stock is deductible by the S portion of the trust. Current 
     regulations provide that interest expense incurred by an ESBT 
     to acquire stock in an S corporation is allocable to the S 
     portion of the trust, but is not deductible. This result is 
     contrary to the treatment of other taxpayers, who are 
     entitled to deduct interest incurred to acquire an interest 
     in a pass through entity. Further, Congress never intended to 
     place ESBTs at a disadvantage relative to other taxpayers.


            section 303. back-to-back loans as indebtedness

       This provision would remove a significant trap for unwary 
     shareholders of unsophisticated S corporations. The amount of 
     a shareholder's pro rata share of corporate losses that may 
     be taken into account are currently limited to the sum of (1) 
     the basis in the stock, plus (2) the basis of any shareholder 
     loans to the S corporation. The debt must run directly to the 
     shareholder for the shareholder to receive basis for this 
     purpose; the creditor may not be a person related to the 
     shareholder. It is not uncommon for the shareholders of an S 
     corporation to own related entities. Often times, loans are 
     made among these related entities. Under current law, it is 
     extremely difficult for the shareholders of an S corporation 
     to restructure these loans in order to create basis in the S 
     corporation against which losses of the S corporation may be 
     claimed. The ability to create loan basis through the 
     restructuring of related party loans has been the subject of 
     numerous court cases and is an area of much uncertainty. The 
     Act will protect these taxpayers from an unfair and 
     unwarranted fate by providing that true indebtedness from an 
     S corporation to a shareholder (funds for which the 
     shareholder is truly obligated to either repay or for which 
     he/she experiences a true economic outlay) increases 
     shareholder debt basis, irrespective of the original source 
     of the funds to the corporation.

       TITLE IV--EXPANSION OF S CORPORATION ELIGIBILITY FOR BANKS


          section 401. treatment of qualifying director shares

       The Act clarifies that qualifying director shares of a bank 
     are not to be treated as a second class of stock. Instead, 
     the qualifying director shares are treated as a liability of 
     the bank and no gain or loss from the S corporation will be 
     allocated to these qualifying director shares. The provision 
     clarifies the law and removes a significant obstacle unique 
     among banks contemplating an S corporation election.


              section 402. recapture of bad debt reserves

       The Act permits bank S corporations to recapture up to 100 
     percent of their bad debt reserves on their first S 
     corporation tax return and/or their last C corporation income 
     tax return prior to the effective date of the S election. 
     Under current law, banks that convert to S corporation status 
     must change from the reserve method of accounting for bad 
     debts to the specific charge-off method. The differential 
     must often be ``recaptured'' into income and is treated as 
     built-in gain subject to tax at both the shareholder and the 
     corporate level. The Act allows banks to accelerate the 
     recapture of bad debt reserves to their last C corporation 
     tax year. The corporate level tax would still be paid on the 
     recapture income, but the recapture would no longer trigger a 
     tax for the bank's shareholders.

              TITLE V--QUALIFIED SUBCHAPTER S SUBSIDIARIES


     section 501. treatment of the sale of interest in a qualified 
                     subchapter s subsidiary (qsub)

       The Act treats the disposition of QSub stock as a sale of 
     the undivided interest in the QSub's assets based on the 
     underlying percentage of stock transferred followed by a 
     deemed contribution by the S corporation and the acquiring 
     party in a nontaxable transaction. Under current law, an S 
     corporation may be required to recognize 100 percent of the 
     gain inherent in a QSub's assets if it sells as little as 21 
     percent of the QSub's stock. IRS regulations suggest this 
     result can be avoided by merging the QSub into a single 
     member LLC prior to the sale, then selling an interest in the 
     LLC (as opposed to stock in the QSub). The Act achieves this 
     result without any unnecessary merger and thus removes a trap 
     for the unwary.

                    TITLE VI--ADDITIONAL PROVISIONS


 section 601. elimination of all earnings and profits attributable to 
                             pre-1983 years

       The Small Business Job Protection Act of 1996 eliminated 
     certain pre-1983 earnings and profits of S corporations that 
     had S corporation status for their first tax year beginning 
     after December 31, 1996. The provision should apply to all S 
     corporations with pre-1983 S earnings and profits without 
     regard to when they elect S status. There seems to be no 
     policy reason why the elimination was restricted to 
     corporations with an S election in effect for their first 
     taxable year beginning after December 31, 1996.


           section 602. the repeal of the lifo recapture tax

       Often the most significant hurdle faced by a corporation 
     desiring to elect S corporation status is the LIFO recapture 
     tax. In many cases, this tax makes it cost-prohibitive for a 
     corporation to elect S status. The LIFO recapture tax was 
     enacted in 1987 in response to concerns that a taxpayer using 
     the LIFO method of accounting, upon conversion to S 
     corporation status, could avoid a corporate-level tax on LIFO 
     layers because the S corporation would only be subject to a 
     corporate-level tax on LIFO layers for the first 10 years 
     after conversion instead of indefinitely, as in the case of a 
     C corporation.
       These concerns are unfounded. Most corporations, whether S 
     or C, hold base LIFO layers far longer than the 10-year 
     recognition period (often holding them indefinitely). There 
     is no data to suggest that S corporations deplete such layers 
     any faster than their C corporation counterparts (for 
     example, in year 11 of the S election). Accordingly, the 
     making of an S election should not be grounds for a tax on 
     base LIFO layers. The Act would repeal this unwarranted 
     government windfall and properly put S corporations on par 
     with C corporations, which rarely pay tax on the old LIFO 
     layers.


      section 603. expansion of post-termination transition period

       The Act expands the post-termination transition period 
     (PTTP) to include the filing of an amended return for an S 
     year. The granting of the 120-day PTTP should be based on the 
     recognition that legitimate changes to an original return can 
     be made in several ways including through audit or through 
     the filing of a taxpayer-initiated amended return.


    section 604. reduction in tax rate on excess net passive income

       The Act would bring the punitive nature of the tax on 
     excess passive income closer in form and substance to the 
     personal holding company (PHC) rules by reducing the tax rate 
     on passive investment income to 15 percent as was recently 
     done for PHCs by Section 302(e) of the Jobs and Growth Tax 
     Relief Reconciliation Act of 2003.


      section 605. increase in cap on qualified small issue bonds

       The act would change the maximum size of a bond issuance 
     that would qualify as a ``small issue'' for S corporation 
     banks to $10 million, and $30 million. It also indexes this 
     number for inflation.


       section 606. reduced recognition period for built-in gains

       The effective recognition period for built-in gains of S 
     corporations is reduced from ten years to seven years.


               section 607. special rules of application

       If a refund or tax credit resulting from the application of 
     this act is prevented in the first year of its enactment, it 
     may still be taken as long as it is claimed within the year.
                                 ______
                                 
      By Mr. DODD:
  S. 3839. A bill to amend title II of the Social Security Act to 
provide that the eligibility requirement for disability insurance 
benefits under which an individual must have 20 quarters of Social 
Security coverage in the 40 quarters preceding a disability shall not 
be applicable in the case of a disabled individual suffering from a 
covered terminal disease; to the Committee on Finance.
  Mr. DODD. Mr. President, I ask unanimous consent that the text of the 
bill, the Claire Collier Social Security Disability Insurance Fairness 
Act, be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3839

       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 ``Claire Collier Social 
     Security Disability Insurance Fairness Act''.

     SEC. 2. EXCEPTION FROM 20/40 REQUIREMENT FOR DISABILITY 
                   INSURANCE BENEFITS FOR INDIVIDUALS SUFFERING 
                   FROM A COVERED TERMINAL DISEASE.

       (a) Exception From Recent Work Requirement.--
       (1) In general.--Section 223(c)(1) of the Social Security 
     Act (42 U.S.C. 423(c)(1)) is amended in the flush matter 
     following subparagraph (B)(iii) by inserting ``or suffering 
     from a covered terminal disease'' after ``216(i)(1))''.
       (2) Conforming amendment.--Section 216(i)(3) of such Act 
     (42 U.S.C. 416(i)(3)) is amended in the flush matter 
     following subparagraph (B)(iii) by inserting ``or suffering 
     from a covered terminal disease'' after ``paragraph (1))''.
       (b) Definition of Covered Terminal Disease.--Not later than 
     60 days after the date of enactment of this Act, the 
     Commissioner of Social Security shall issue a proposed rule 
     defining the term ``covered terminal disease'' for purposes 
     of sections 216(i)(3) and 223(c)(1) of the Social Security 
     Act (as amended by subsection (a)) that shall include (but 
     not be limited to) those diseases

[[Page 17025]]

     that are incurable, progressive, and terminal, including 
     neurodegenerative and neurological diseases that are likely 
     to cause death within a 5-year period of onset.
       (c) Interim Final and Final Rules.--
       (1) Interim final rule.--Not later than 90 days after the 
     date of enactment of this Act, the Commissioner of Social 
     Security shall issue an interim final rule defining the term 
     ``covered terminal disease'' in accordance with the 
     requirements of subsection (b) and shall provide for a period 
     of public comments on such rule.
       (2) Final rule.--Not later than 6 months after the date of 
     enactment of this Act, the Commissioner of Social Security 
     shall issue a final rule defining the term ``covered terminal 
     disease'' in accordance with the requirements of subsection 
     (b) and consideration of any public comments received during 
     the period required under paragraph (1).
       (d) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of enactment of this Act and 
     shall apply to any applications for disability insurance 
     benefits under title II of the Social Security Act that are 
     pending or filed on or after that date.

                          ____________________