[Congressional Record (Bound Edition), Volume 152 (2006), Part 7]
[Senate]
[Pages 8808-8814]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BUNNING:
  S. 2884. A bill to facilitate and expedit direct refunds to coal 
producers and exporters of the excise tax unconstitutionally imposed on 
coal exported from the United States; to the Committee on Finance.
  Mr. BUNNING. Mr. President, today I rise to introduce legislation 
that will ensure fair tax treatment for domestic coal producers and 
coal exporters to help them receive the coal excise tax refunds due to 
them from an unconstitutional tax they paid.
  For years the Federal Government collected the coal excise tax on 
coal exports from coal producers and coal exporters. In 1998, the 
Federal Courts declared the coal excise tax unconstitutional when 
applied to exported coal.
  Although those that export coal are entitled to the refunds of the 
unconstitutional coal excise tax on exported coal, they face serious 
and significant obstacles to obtaining refunds of the tax with the 
Internal Revenue Service and the courts.
  This legislation will end unnecessary litigation on this issue and 
simplify the IRS process that U.S. coal producers and exporters use to 
obtain refunds of the coal excise tax they paid. It also will ensure 
that the producer or exporter that actually exported the coal, and thus 
is entitled to the refund, receives that refund.
  I urge my colleagues to join me in support of this legislation.
                                 ______
                                 
      Mr. GRASSLEY (for himself and Mr. Baucus):
  S. 2913. A bill to amend the Internal Revenue Code of 1986 to clarify 
the employment tax treatment and reporting of wages paid by 
professional employer organizations; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, today, Senator Baucus and I are 
introducing legislation that will update and

[[Page 8809]]

clarify the tax rules for business clients and that use professional 
employer organizations, PEOs. This legislation will improve the 
efficiency of small businesses by eliminating any uncertainty about the 
ability of qualifying PEOs to assume liability for paying wages and 
collecting and remitting Federal employment taxes.
  Business owners are overwhelmed with the challenges of meeting 
Federal and State employment and tax responsibilities. Many businesses, 
particularly small to mid-sized businesses are turning to professional 
employer organizations for assistance with these employment 
obligations. A PEO works with its business clients to provide 
comprehensive employment services. The PEO assumes responsibility for 
the management of human resources, employee benefits, payroll, and 
workers' compensation, allowing their business clients to focus on 
their core competencies to maintain and grow their bottom line. In 
short, this legislation is about improving the efficiency of America's 
small businesses.
  Businesses today need help with the increasingly complex employment 
related matters. The most important of these matters is the payment of 
wages and the collection and remitting of employment taxes. 
Increasingly, businesses are turning to PEOs to assume these 
responsibilities. Our legislation will eliminate any ambiguity about a 
PEO's ability to assume employment tax responsibility while providing 
important safeguards for the PEO's small business clients.
  Tbe Small Business Efficiency Act will permit PEOs that are certified 
by the IRS, CPEO, to collect and remit Federal employment taxes of 
their business clients' employees. The certification process is 
voluntary and was designed with significant input from all 
stakeholders, including the Department of the Treasury and the IRS. To 
be certified by the IRS, the CPEO would have to meet financial and 
other standards and maintain ongoing certification by the IRS. The CPEO 
would be required to assume full and sole responsibility for the 
collection of Federal employment taxes.
  In addition to the many benefits for business clients, the government 
benefits from improved employment regulatory compliance and tax 
administration The IRS has stated that CPEOs would facilitate tax 
administration by reducing the number of returns it processes and by 
reducing errors in calculating and paying employment taxes. This is a 
win-win situation. The PEO arrangement not only reduces the 
governmental burden of collecting employment tax and unemployment 
compensation obligations, it also assures consistent compliance with 
complex tax laws and timely and expedited payment of taxes. This is 
clearly an improvement for PEOs, the business clients of PEOs, and the 
Federal Government.
  The Small Business Efficiency Act will substantially simplify 
employment tax obligations for businesses that use PEOs. The 
legislation will provide clarity for PEOs, their business clients, and 
the IRS regarding the rights of a PEO to assist business client with 
employment tax responsibilities while significantly improving tax 
administration. I ask unanimous consent that the text of the bill and a 
section-by-section description of the bill be printed in the 
Congressional Record and I look forward to working with my colleagues 
to address this issue in a timely manner.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2913

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Efficiency 
     Act of 2006''.

     SEC. 2. NO INFERENCE.

       Nothing contained in this Act or the amendments made by 
     this Act shall be construed to create any inference with 
     respect to the determination of who is an employee or 
     employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by section 3), or
       (2) for purposes of any other provision of law.

     SEC. 3. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 of the Internal Revenue 
     Code of 1986 (relating to general provisions relating to 
     employment taxes) is amended by adding at the end the 
     following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) the exemptions and exclusions which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a) and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability With Respect to Work Site Employees.--
       ``(1) General rules.--Solely for purposes of its liability 
     for the taxes, and other obligations, imposed by this 
     subtitle--
       ``(A) the certified professional employer organization 
     shall be treated as the employer of any individual (other 
     than a work site employee or a person described in subsection 
     (e)) who is performing services covered by a contract meeting 
     the requirements of section 7705(e)(2), but only with respect 
     to remuneration remitted by such organization to such 
     individual, and
       ``(B) the exemptions and exclusions which would (but for 
     subparagraph (A)) apply shall apply with respect to such 
     taxes imposed on such remuneration.
       ``(d) Special Rule for Related Party.--Subsection (a) shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.
       ``(e) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business (including a partner in a partnership that 
     is a customer) is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 of such Code (relating to definitions) is amended 
     by adding at the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who applies to be treated as a certified professional 
     employer organization for purposes of section 3511 and who 
     has been certified by the Secretary as meeting the 
     requirements of subsection (b).
       ``(b) Certification.--A person meets the requirements of 
     this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) represents that it will satisfy the bond and 
     independent financial review requirements of subsections (c) 
     on an ongoing basis,
       ``(3) represents that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(4) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(5) agrees to verify the continuing accuracy of 
     representations and information which was previously provided 
     on such periodic basis as the Secretary may prescribe, and
       ``(6) agrees to notify the Secretary in writing of any 
     change that materially affects the continuing accuracy of any 
     representation or information which was previously made or 
     provided.
       ``(c) Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--

[[Page 8810]]

       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent audit date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant as to whether the certified 
     professional employer organization's financial statements are 
     presented fairly in accordance with generally accepted 
     accounting principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Audit date.--For purposes of paragraph (3)(A), the 
     audit date shall be six months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to the 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     the individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the certified professional 
     employer organization to provide, without regard to the 
     receipt or adequacy of payment from the customer for such 
     services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to the individual, 
     and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 45B of such Code (relating to credit for 
     portion of employer social security taxes paid with respect 
     to employees with cash tips) is amended by adding at the end 
     the following new subsection:
       ``(e) Certified Professional Employer Organizations.--For 
     purposes of this section, in the case of a certified 
     professional employer organization which is treated under 
     section 3511 as the employer of a work site employee who is a 
     tipped employee--
       ``(1) the credit determined under this section shall not 
     apply to such organization but to the customer of such 
     organization with respect to which the work site employee 
     performs services, and
       ``(2) the customer shall take into account any remuneration 
     and taxes remitted by the certified professional employer 
     organization.''.
       (2) Section 3302 of such Code is amended by adding at the 
     end the following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a client of 
     such organization, makes a payment to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such payment.''.
       (3) Section 3303(a) of such Code is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) a certified professional employer organization (as 
     defined in section 7705) is permitted to collect and remit, 
     in accordance with paragraphs (1), (2), and (3), 
     contributions during the taxable year to the State 
     unemployment fund with respect to a work site employee.'', 
     and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (4) Section 6053(c) of such Code (relating to reporting of 
     tips) is amended by adding at the end the following new 
     paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this section, in the case 
     of a certified professional employer organization that is 
     treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 of such Code is 
     amended by adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations.''.

       (2) The table of sections for chapter 79 of such Code is 
     amended by inserting after the item relating to section 7704 
     the following new item:

``Sec. 7705. Certified professional employer organizations.''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this Act with respect 
     to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 of such Code 
     (relating to Internal Revenue Service user fees) is amended 
     by adding at the end the following new paragraph:

[[Page 8811]]

       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this Act shall take 
     effect on the January 1st of the first calendar year 
     beginning more than 12 months after the date of the enactment 
     of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986 not 
     later than 6 months before the effective date determined 
     under paragraph (1).
                                  ____


                   The Small Business Efficiency Act


                     Section-By-Section Description

       Section 1. Short Title: The Small Business Efficiency Act.
       Section 2. No Inference Language: The legislation is 
     narrowly drafted to provide expressly that except for the 
     payment of employment taxes as provided in the bill, there is 
     no inference regarding the determination of who is a common 
     law employer under Federal tax laws or who is an employer 
     under other provisions of the law.
       Section 3. Certified Organizations: Creates a voluntary 
     certification program for Professional Employer Organizations 
     (CPEOs) by establishing basic requirements which must be met 
     in order to be certified by the Internal Revenue Service 
     (IRS).
       Section 3(a) describes the responsibility of the CPEO with 
     respect to the covered workers performing services at its 
     business client's worksite, with the CPEO being treated as 
     the employer of those covered workers for employment tax 
     purposes. This section provides that after certification, a 
     CPEO assume the responsibility and liability for payment of 
     wages and collection of Federal employment taxes for covered 
     workers. This section also provides that a CPEO and its 
     clients will be treated as ``successor'' employers for 
     employment tax purposes with no additional taxes owed simply 
     because a client engages or disengages a CPEO. Finally, the 
     section imposes rules that prevent abuse.
       Section 3(b) describes certification requirements which a 
     PEO must demonstrate to the IRS by written application. As 
     established by the Secretary of the Treasury, these could 
     include requirements with respect to tax status, background, 
     experience, business location, and annual financial audits, 
     as well as verification of the continuing accuracy of 
     representations and information on a periodic basis. In 
     addition, this section requires CPEOs to obtain financial 
     reviews from independent CPAs and to post a bond for the 
     payment of employment taxes. A worksite employee is a worker 
     who performs services at the CPEO's business client worksite 
     if the worker and at least 85% of the individuals working at 
     the worksite are covered by a written service contract that 
     provides the CPEO will (1) assume responsibility for payment, 
     reporting and withholding of wages, employment taxes and 
     employee benefits, without regard to the adequacy of payment 
     by the client business. The service contract would also be 
     required to expressly provide that the CPEO assumes shared 
     responsibility with the business client for firing the worker 
     or hiring or recruiting any new worker and for maintaining 
     employee records.
       Section 3(c) provides conforming amendments with respect to 
     certain credits and reporting rules.
       Section 3(d) makes certain clerical amendments.
       Section 3(e) creates regulatory authority to develop 
     appropriate reporting and recordkeeping rules.
       Section 3(f) authorizes the creation of a CPEO 
     certification user fee not to exceed $500.
       Section 3(g) provides that the provisions of the Act will 
     take effect on January 1 of the first calendar year beginning 
     more than 12 months after the date of enactment. This section 
     further requires the Secretary of the Treasury to establish 
     the certification program not later than 6 months following 
     the effective date.
                                 ______
                                 
      By Mr. BIDEN:
  S. 2915. A bill to amend title 10, United States Code, to improve 
screening for colorectal cancer for TRICARE beneficiaries over the age 
of 50; to the Committee on Armed Services.
  Mr. BIDEN. Mr. President, today I am pleased to introduce a simple 
bill that would give military dependents and retirees the same choices 
for colon cancer screening that every Medicare beneficiary and every 
Federal employee enjoys. This legislation requires Tricare to abandon 
its overly restrictive and outdated policy of limiting coverage of 
screening colonoscopy to a small group of high-risk individuals. By 
contrast, for several years both Medicare and the Federal Employees 
Health Benefits Program have paid for screening colonoscopy to detect 
cancer in average-risk people, and my bill simply applies this same 
standard to the Tricare program.
  Why is this bill so important? Colon cancer is highly curable when 
detected and treated early but extremely lethal when it reaches an 
advanced stage. Early detection and prompt treatment are the keys to 
surviving colon cancer. Among those whose colon cancer has been cured 
by modern diagnostic and treatment methods are President Reagan, 
Supreme Court Justice Ginsburg, and our colleague Senator Burns, to 
name just a few.
  Why is access to colonoscopy so critical? At present, 
gastroenterologists overwhelmingly recommend colon-
oscopy as the preferred method to use for screening of colon cancer in 
average risk individuals over 50. Colonoscopy is more sensitive than 
other methods of screening in detecting colonic neoplasia, pre-
cancerous changes or full-blown cancers, at an early stage; colonoscopy 
is more reliable in finding colonic neoplasia in the upper \2/3\ of the 
colon; and colonoscopy permits biopsy and removal of abnormal tissue as 
soon as it is discovered, in a single procedure. In fact, medical 
specialists refer to colonoscopy as the ``gold standard'' for colon 
cancer screening.
  Since, 2001, the Medicare Program has permitted the use of 
colonoscopy to screen for colon cancer in ``average risk'' individuals, 
and the Federal Employees Health Benefits Program has used the same 
criteria since 2003. But the Tricare medical program for military 
beneficiaries clings to an outmoded policy that authorizes screening 
colonoscopy to detect colon cancer only for only a very narrowly 
defined group of ``high risk'' people, not the much broader group of 
``average risk'' individuals covered by the Medicare and FEHBP 
programs. By failing to keep up with modern medical practice, as well 
as with other federal health programs, Tricare seems to be 
inappropriately restricting access to a potentially lifesaving tool for 
early cancer detection. The resulting unnecessary delay in detection of 
colon cancer puts our military community at needless risk.
  To remedy this situation, my bill requires the Tricare program to use 
the same criteria as the Medicare program in paying for screening 
colonoscopy. My bill does not mandate that screening colonoscopy be 
used for colon cancer detection in Tricare beneficiaries; that decision 
is left to Tricare patients and their doctors. Rather, this legislation 
simply affords Tricare participants the same options that Federal 
employees and Medicare beneficiaries have enjoyed for some time.
  Frankly, I see no logical reason why those who have served our 
country in uniform for over 20 years, and the family members of those 
currently on active duty, should not have access to the same high-
quality medical choices offered to our senior citizens and to our 
Federal workers. The policy on colon cancer screening that has worked 
well for 42 million Medicare beneficiaries and 9 million FEHBP 
participants, a policy that is endorsed by most medical specialists, 
seems totally appropriate for the Tricare population. It is time to 
bring the Tricare program's colon cancer screening criteria into the 
21st century.
  Mr. President, I encourage my colleagues to join me in supporting 
this commonsense legislation.
                                 ______
                                 
      By Ms. SNOWE (for herself, Mr. Dorgan, Mr. Inouye, Mr. Wyden, Mr. 
        Leahy, Mrs. Boxer, Mr. Obama, and Mrs. Clinton):
  S. 2917. A bill to amend the Communications Act of 1934 to ensure net 
neutrality; to the Committee on Commerce, Science, and Transportation.

  Ms. SNOWE. Mr. President, I rise today to introduce legislation that 
will preserve the open, unrestricted nature of the Internet. I want to 
thank my colleagues, Senator Dorgan and Senator Inouye, with whom I 
have worked closely to draft this bill. I also want to acknowledge 
Senator Wyden, who has introduced similar net neutrality legislation, 
for his leadership on this issue.
  Having risen from its humble beginnings as an obscure tool for a few 
tech-savvy enthusiasts, the Internet now stands as the epicenter of 
commerce

[[Page 8812]]

today. An April 2006 Pew Internet study cites that 73 percent of adults 
in the U.S. now use the Internet, 45 percent of whom use it for making 
major financial decisions. Last year alone, over $1.7 trillion in 
transactions took place on the Internet, and today 725,000 small 
businesses use e-commerce giant eBay as a way to reach customers. 
Because anyone, anywhere, can communicate and transact business with 
virtually any corner of the globe with an Internet connection, the 
benefits of the Internet on small businesses--and on rural places like 
my home State of Maine--cannot be overstated.
  The Internet became a robust engine of economic development by 
enabling anyone with a good idea to connect to consumers and compete on 
a level playing field for consumers' business. Anyone can send an e-
mail or set up a Web site at little or no cost, and the marketplace has 
picked winners and losers, rather than an arbitrary gatekeeper.
  When users log onto the Internet, they take a lot of things for 
granted. They assume that they will be able to access whatever Web site 
they want, when they want to--and if they have a broadband connection, 
they expect this to happen at a high speed, regardless of what Web site 
they choose. They also assume that they can use any feature they like, 
anytime they choose--watching online videos, searching for information, 
making purchases, and sending e-mails and instant messages. They assume 
that they can attach devices to make their online experience better--
things such as Web cameras, game controllers, or extra hard drives. 
What they are assuming is called ``net neutrality,'' the principle at 
the core of the Internet's DNA. The idea is that the Internet should be 
open and free, restricted by no one.
  Unfortunately, all this may change very soon if Congress does not 
take action. In August 2005, the Federal Communications Commission 
issued an order removing virtually all regulation of Internet 
facilities that connect homes and businesses to the World Wide Web. 
Among the regulations lifted were the long-standing non-discrimination 
rules that required the owners of Internet facilities networks--in most 
cases cable and telephone companies--to allow delivery of all Internet 
content to the end user at the same speed, refraining from blocking any 
Web sites. These long-standing rules have enabled small businesses in 
Maine and across the country to have the same access to customers as 
giant corporations. Yet without the protections of the legislation we 
introduce today, those small businesses may be reduced to second-class 
citizen status on the Web.
  Telephone and cable companies supply broadband Internet service to 98 
percent of Internet subscribers in this country. Recently, executives 
from several of the largest of these firms publicly indicated their 
intention to charge fees to Web site operators before giving them 
access to their highspeed lines, and relegate those who do not pay up 
to the slower transmission lines. A Web site owned by a company who is 
a competitor could even be blocked entirely.
  Anyone who has sat frustrated at a computer screen waiting for a file 
to download knows what this means for the those Web site owners not 
willing to pay up: their sites and applications will run at a slower 
pace, thus turning away consumers. These Internet companies, e-mail 
services, and Web site owners will be relegated to the Information 
``Dirt Road''--the Information Superhighway will be reserved for those 
companies who are willing to pay the toll. Worst of all, consumers and 
businesses who rely on these Internet services will be completely 
powerless, since it is beyond their control as to which Web site owners 
are willing to pay the fees.
  The legislation we introduce today keeps the rules where they always 
have been, until last year. First, the bill bars network operators from 
blocking, degrading or impairing Internet traffic. Second, the bill 
ensures that network operators are not allowed to create a two-tiered 
Internet--an Internet that treats those who can afford to do business 
with large nationwide broadband providers more favorably than those who 
do not. Virtually everyone has called for more widespread deployment of 
broadband facilities: this bill ensures that those high-speed networks 
are available for all users of the Internet.
  This legislation already enjoys support from a broad spectrum of 
groups who care about Internet freedom, such as the Consumer's Union, 
the Parent's Television Council, the Gun Owners of America, the 
American Library Association, and the Christian Coalition. Altogether 
over 140 organizations have backed our efforts to prevent 
discrimination the Internet.
  If we allow companies to set up tollbooths along the Information 
Superhighway, we will fundamentally alter every Internet user's 
experience and stifle the entrepreneurship that flourishes on the 
world's last remaining frontier. Network operators should not have the 
power to decide which Web pages load faster, which content their 
customers can access, and whose data has the highest priority. Network 
operators already enjoy near-monopolistic privileges in many markets 
across the country. Should this market power now be extended to 
messaging services, streaming video, or online shopping, just to name a 
few?
  Consumers should decide which businesses succeed and which fail, not 
network providers. What has made the Internet such a remarkable success 
is the ability of consumers everywhere to use the connection they pay 
for to experience a world of their own choosing on their own terms. 
Earlier this month, the New York Times endorsed the legislation in an 
editorial when it called for ``a strong net neutrality bill that would 
prohibit broadband providers from creating a two-tiered Internet. 
Senators who care about the Internet and Internet users should get 
behind it.'' I hope my colleagues join me in supporting the Internet 
Freedom Preservation Act.
  Mr. DORGAN. Mr. President, today my colleague Senator Snowe and I are 
introducing the Internet Freedom Preservation Act.
  Internet freedom, known as net neutrality, is one of the most 
important issues facing us as the telecommunications landscape 
continues to change, and frankly, how this issue is resolved could 
determine whether our Nation continues to be a world leader in the area 
of innovation and technology.
  Consumers, businesses, and the very marketplace of ideas have 
benefited from the historically open nature of the Internet.
  From the largest of corporations to the person working alone in a 
garage, all have had the ability to offer their content, services, and 
applications over the Internet and to reach consumers, because of this 
open structure of the Internet and the existence of net neutrality 
nondiscrimination rules.
  I think it is important to point the wide variety of groups that have 
called for the preservation of strong net neutrality protections: 
groups as diverse as Consumers Union, AARP, Microsoft, Amazon, Gun 
Owners of America, and the National Religious Broadcasters, and over 
150 organizations or companies so far have weighed in on this important 
issue.
  The Internet, and the broadband network operators that bring the 
Internet to businesses and consumers, have enabled even the most rural 
town in my State of North Dakota to be connected to the rest of the 
world, and this connection has brought economic opportunities, and 
advances in health and education that could otherwise not have been 
possible.
  Now, however, the open nature of the Internet is at risk. It is at 
risk because of actions by the Federal Communications Commission, and 
because of the lack of competition in the broadband market.
  Non-discrimination rules that existed for years on broadband 
providers have been removed, leaving only the marketplace to act as a 
check. The problem is, however, that the broadband marketplace is 
highly concentrated--98 percent of consumers get their broadband from 
either cable modem or DSL, and up to 50 percent of consumers can only 
get their broadband from one broadband provider.

[[Page 8813]]

  Thus, the situation is not a marketplace of players on an equal 
footing. Broadband network operators have substantial market power and 
the incentive to use it. There have been public statements by some of 
their CEOs that have made clear that they intend to use that leverage 
to exact payments from content providers and to operate as gatekeepers.
  These broadband network operators have become more than just the pipe 
that carries content, services, and applications to a consumer; they 
now are in the business of these content, services and applications as 
well. Thus, they have the leverage, and the incentive to favor their 
own services over competition.
  Until now the Internet has been driven by consumers and innovators, 
which have in turn, encouraged broadband deployment.
  Consumers pay for their Internet connection, and expect that they can 
go anywhere they lawfully want to on the Internet.
  But without maintaining the longstanding nondiscrimination rules that 
have been in place for decades, the Internet could go from being driven 
by consumers and innovators to bring dictated by network operators.
  What will be the impact on the next great application or service over 
the Internet if the very first thing the next start-up has to do is 
work out an agreement with the broadband provider?
  What will be the impact on consumers if their choices are 
artificially limited by their broadband providers as to what VOIP or 
video service they can get?
  I agree that broadband network operators are investing millions of 
dollars in building the next generation of infrastructure, and I 
commend them for that. Under our bill they will still be able to be 
compensated for their investments, as they are now, by charging for 
their broadband connections.
  But they should not be able to put up additional tolls on the 
Internet, or erect barricades to competition that will change the 
nature of the Internet as we know it.
  Our bill will preserve the freedom and the openness of the Internet 
that we have come to take for granted, but that is now at risk.
  I ask my colleagues to support this legislation that I introduce 
today with Senator Snowe.
  Mr. INOUYE. Mr. President, I rise to today in support of the 
legislation introduced by my colleagues Senators Snowe and Dorgan to 
preserve a founding principle of communications law that is critical to 
the promotion of innovation and opportunity for all Americans. The 
preservation of the open, non-discriminatory architecture of the 
Internet is vital to the American economy and society. Over a 
relatively short timeframe, the Internet has become a robust engine for 
market innovation, economic growth, social discourse, and the free flow 
of ideas precisely because it has allowed consumer choice and control 
over the use of lawful content, applications and services. In turn, 
anyone with a good idea has been able to connect to consumers and 
compete on a level playing field for consumers' business. The 
marketplace has picked winners and losers, and not a central 
gatekeeper. This bedrock concept of connecting innovators and consumers 
without interference, known as ``net neutrality,'' has been a hallmark 
feature of the Internet and is a principle reason why America leads the 
world in online innovation.
  Regrettably, without this legislation that heritage may be at risk as 
traditional rules that have required communications operators to follow 
principles of non-discrimination no longer apply. In August 2005, the 
FCC refused to adopt meaningful and enforceable consumer safeguards at 
the time it classified DSL and cable modem as an information service. 
As a result, the bill that I have cosponsored with Senators Snowe and 
Dorgan is necessary to ensure that consumers and content companies have 
the ability to use the Internet without interference or gate-keeping by 
the network operators.
  This bill responds to recent FCC decisions by preserving the openness 
of the Internet and thereby encourages the continued development of 
innovative Internet technologies, services, and content that has fueled 
the American economy. Specifically, under the bill, consumers will have 
the ability to access the content of their choosing, and Internet 
businesses will have the ability to compete head-to-head with network 
providers on the basis of the merits of their offerings.
  As the father of the Internet, Vint Cerf, said to our Committee, the 
Internet is ``innovation without permission.'' The proposed legislation 
will ensure that the Internet indeed remains a platform that spawns 
innovation and economic development for the benefit of all Americans.
                                 ______
                                 
      By Mr. DODD (for himself and Mr. Lott):
  S. 2918. A bill to provide access to newspapers for blind or other 
persons with disabilities; to the Committee on rules and 
Administration.
  Mr. DODD. Mr. President, today I am introducing, along with the 
distinguished Chairman of the Rules Committee, legislation to ensure 
that the blind and those with disabilities continue to have free access 
to electronic editions of periodicals and newspapers. This service is 
an extension of the existing authorization for the Library of Congress 
to provide Braille books, recordings, sound reproduction equipment, 
musical scores, and other materials to the blind and physically 
disabled individuals.
  Currently, the National Federation of the Blind provides these 
services through its NFB-NEWSLINE program which has been funded by the 
Library of Congress through its Books for the Blind program. The NFB-
NEWSLINE program is a telephone-based electronic audio newspaper 
service serving our Nation's 1.3 million blind Americans by providing 
23 million minutes of on-demand service in response to 2,600 calls per 
day at an average cost of 2.7 cents per minute.
  Congress established the Books for the Blind program within the 
Library of Congress in 1931. The program is administered by the 
National Library Service for the Blind and Physically Handicapped, NLS, 
which continues to be the primary source of Braille and audio books and 
magazines for blind adults today. However, until development of the 
NFB-NEWSLINE program, it was not economically feasible for NLS to 
provide timely access to newspapers for the blind. Under current 
production methods, it would require several weeks for NLS to prepare 
and deliver a single copy of a daily newspaper.
  The NFB-NEWSLINE program, however, is designed for real time rapid 
distribution of the electronic text of newspapers. Under this program, 
the blind can access daily newspapers on the day of publication through 
telephone access to the digital text. The funding for this program has 
been provided by a public-private partnership between NFB-NEWSLINE, 
state sponsors, including public libraries, rehabilitation agencies, 
and several affiliates of NFB, and the Library of Congress. Newspaper 
and magazine content is contributed by many participating news 
organization and publishers.
  The bill Senator Lott and I are introducing today will ensure the 
continued Federal share of this partnership so that NFB-NEWSLINE can 
continue to serve as the multi-state provider of this service. 
Currently, NFB-NEWSLINE provides some level of service to all 50 
states, the District of Columbia and Puerto Rico by providing local 
dialing numbers for the blind and disabled to use to access newspapers 
and periodicals. The annual telecommunications costs for this service 
is approximately $750,000 which serves approximately 40 percent of the 
eligible readers.
  This bill will enable NFB-NEWSLINE to continue to serve existing 
readers with improved services while at the same time expanding 
services to more readers. The bill authorizes $750,000 for this service 
in fiscal year 2007 and such sums as are necessary in fiscal years 
2008-2011. This is a very efficient program that for a very small 
Federal investment will allow the blind and disabled to more fully 
participate in their communities through access to the daily news. With 
the current state of

[[Page 8814]]

technology, it is simply unacceptable that the blind and disabled do 
not have real time access to daily newspapers and periodicals.
  I commend NFB-NEWSLINE for developing this public-private partnership 
to serve the needs of the blind and disabled individuals and I pleased 
to introduce this legislation to ensure the continuation of this 
program.

                          ____________________