[Congressional Record (Bound Edition), Volume 153 (2007), Part 23]
[Senate]
[Pages 31886-31909]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DURBIN (for himself and Mr. Burr):
  S. 2376. A bill to establish a demonstration project to provide for 
patient-centered medical homes to improve the effectiveness and 
efficiency in providing medical assistance under the Medicaid program 
and child health assistance under the State Children's Health Insurance 
Program; to the Committee on Finance.
  Mr. DURBIN. Mr. President, we are all aware of the current healthcare 
crisis in our nation. Health care spending continues to rise at an 
unsustainable rate, constituting 16 percent of the Federal budget. 
Health care costs have increased 78 percent since 2001, more than 4 
times the pace of prices and wages.
  One reason for the rise in costs and spending is the increase in 
chronic disease. Heart disease, cancer, and diabetes are the leading 
causes of death and disability in the U.S. They also account for 70 
percent of all deaths in the U.S., or 1.7 million people each year. 
These diseases also make life harder for the 1 of 10 Americans who are 
living with them. The irony, of course, is that chronic diseases are 
both preventable and manageable.
  The quality of our healthcare has not changed substantially despite 
the fact that we live in the wealthiest country in the world with the 
best researchers and medical doctors at our fingertips. At a time when 
both health care costs and chronic illnesses are on the rise, we need a 
better way to provide care.
  Changing the delivery of care is a controversial topic, but it is a 
topic

[[Page 31887]]

that has gained more traction in recent months. Last week, the New York 
Times published an article titled, ``A Model for Health Care That Pays 
for Quality.'' The article described a new model for healthcare, and I 
quote here, ``to identify the best primary care doctors and to steer 
patients their way. Those doctors, in turn, would be paid for more 
services than are currently reimbursed under typical health plan 
payments for office visits. The idea is to encourage doctors to meet 
with patients for more than a few minutes during an office visit and to 
also compensate them, or nurse coordinators, for communicating with 
patients by phone and e-mail outside office hours.'' This is an 
approach to delivering care that national physician groups and patient 
advocacy organizations call the medical home.
  A medical home is something that those of us who have it take for 
granted. We see the same doctor, in the same setting, for extended 
periods of time. Our medical history is in one place, and even if we 
are seeing specialists or different doctors in the same practice, there 
is continuity in decisions about our health care. This is a medical 
home.
  But many people do not have this luxury. Think about people who move 
from place to place, whose home lives are less than stable, who don't 
have health insurance, whose medical care is sporadic. For these 
members of our community, each visit to a clinic or an emergency room 
means starting over again.
  So, everyone should have access to a medical home. A medical home is 
not only a place, but an approach to providing comprehensive primary 
care that respects, and responds to, individual patient preferences and 
needs and helps patients develop relationships with their providers.
  It sounds easy, but it requires some changes and creative thinking 
and, perhaps most importantly, it requires a commitment by local 
providers to work together. The medical home model makes sense for 
improving health care for everyone. It is a model of care that makes 
sense for stretching our limited Federal health care dollars.
  States like Illinois and North Carolina are already seeing progress 
with implementing the medical home model. Illinois Health Connect is a 
new program at the Illinois Department of Healthcare and Family 
Services that uses the medical home model to deliver primary and 
preventive care for children and adults covered through the All Kids 
program. This emphasis on coordinated and ongoing care is leading to 
better health outcomes, and it's saving money.
  Community Care of North Carolina launched a medical home model in 
1998, through nine physician-led networks. North Carolina started by 
creating medical homes for 250,000 Medicaid enrollees. Today, it is a 
State-wide program that has saved the state at least $60 million in 
Medicaid costs in 2003 and $120 million in 2004.
  Cost savings is not the only benefit. Several studies show that the 
medical home approach improves quality of care. Early analyses are 
finding that having regular access to a particular physician through 
the medical home is associated with earlier and more accurate 
diagnoses, fewer emergency room visits, fewer hospitalizations, lower 
costs, better care, and increased patient satisfaction. Many studies 
conclude that having both health insurance and a medical home leads to 
improved overall health for the entire population, which brings down 
the cost of care and reduces health care disparities.
  Today, I am proud to be joined by my colleague Senator Richard Burr 
of North Carolina to introduce the Medical Homes Act of 2007. This bill 
would make it easier for other states to implement a medical home 
model, much like Illinois and North Carolina have. Congress passed a 
medical home demonstration project for Medicare last year. The Medical 
Homes Act of 2007 would do this for Medicaid and SCHIP beneficiaries by 
making Federal funding available for a demonstration project in 8 
States to provide care through patient-centered medical homes.
  The approach we propose requires a per-member, per-month care 
management fee to help pay for participating doctors and provides 
initial start-up funding for participating States. The startup funds 
are used for the purchase of health information technology, primary 
care case managers, and other uses appropriate for the delivery of 
patient-centered care.
  If patients, provider, payers, and the government work together to 
create a system that values the patient more than payments and the 
health outcome of the patient more than the number of patients seen, we 
can really change the way primary care is provided. I urge my 
colleagues to support the Medical Homes Act of 2007 and help stabilize 
healthcare delivery for low-income and elderly Americans.
  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. 2376

       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 ``Medical Homes Act of 2007''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Medical homes provide patient-centered care, leading to 
     better health outcomes and greater patient satisfaction. A 
     growing body of research supports the need to involve 
     patients and their families in their own health care 
     decisions, to better inform them of their treatment options, 
     and to improve their access to information.
       (2) Medical homes help patients better manage chronic 
     diseases and maintain basic preventive care, resulting in 
     better health outcomes than those who lack medical homes. An 
     investigation of the Chronic Care Model discovered that the 
     medical home reduced the risk of cardiovascular disease in 
     diabetes patients, helped congestive heart failure patients 
     become more knowledgeable and stay on recommended therapy, 
     and increased the likelihood that asthma and diabetes 
     patients would receive appropriate therapy.
       (3) Medical homes also reduce disparities in access to 
     care. A survey conducted by the Commonwealth Fund found that 
     74 percent of adults with a medical home have reliable access 
     to the care they need, compared with only 52 percent of 
     adults with a regular provider that is not a medical home and 
     38 percent of adults without any regular source of care or 
     provider.
       (4) Medical homes reduce racial and ethnic differences in 
     access to medical care. Three-fourths of Caucasians, African 
     Americans, and Hispanics with medical homes report getting 
     care when they need it in a medical home.
       (5) Medical homes reduce duplicative health services and 
     inappropriate emergency room use. In 1998, North Carolina 
     launched the Community Care of North Carolina (CCNC) program, 
     which employs the medical home concept. Today CCNC includes 
     14 networks, that include all Federally qualified health 
     centers in the State, covering 740,000 recipients across the 
     entire State. An analysis conducted by Mercer Human Resources 
     Consulting Group found that CCNC resulted in $244,000,000 in 
     savings to the Medicaid program in 2004, with similar results 
     in 2005 and 2006.
       (6) Health information technology is a crucial foundation 
     for medical homes. While many doctor's offices use electronic 
     health records for billing or other administrative functions, 
     few practices utilize health information technology 
     systematically to measure and improve the quality of care 
     they provide. For example, electronic health records can 
     generate reports to ensure that all patients with chronic 
     conditions receive recommended tests and are on target to 
     meet their treatment goals. Computerized ordering systems, 
     particularly with decision-support tools, can prevent medical 
     and medication errors, while e-mail and interactive Internet 
     websites can facilitate communication between patients and 
     providers and patient education.

     SEC. 3. MEDICAID AND SCHIP DEMONSTRATION PROJECT TO SUPPORT 
                   PATIENT-CENTERED PRIMARY CARE.

       (a) Definitions.--In this section:
       (1) Care management model.--The term ``care management 
     model'' means a model that--
       (A) uses health information technology and other 
     innovations such as the chronic care model, to improve the 
     management and coordination of care provided to patients;
       (B) is centered on the relationship between a patient and 
     their personal primary care provider;
       (C) seeks guidance from--
       (i) a steering committee; and
       (ii) a medical management committee; and
       (D) has established, where practicable, effective referral 
     relationships between the

[[Page 31888]]

     primary care provider and the major medical specialties and 
     ancillary services in the region.
       (2) Health center.--The term ``health center'' has the 
     meaning given that term in section 330(a) of the Public 
     Health Service Act (42 U.S.C. 254b(a)).
       (3) Medicaid.--The term ``Medicaid'' means the program for 
     medical assistance established under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.).
       (4) Medical management committee.--The term ``medical 
     management committee'' means a group of local practitioners 
     that--
       (A) reviews evidence-based practice guidelines;
       (B) selects targeted diseases and care processes that 
     address health conditions of the community (as identified in 
     the National or State health assessment or as outlined in 
     ``Healthy People 2010'', or any subsequent similar report (as 
     determined by the Secretary));
       (C) defines programs to target diseases and care processes;
       (D) establishes standards and measures for patient-centered 
     medical homes, taking into account nationally-developed 
     standards and measures; and
       (E) makes the determination described in subparagraph 
     (A)(iii) of paragraph (5), taking into account the 
     considerations under subparagraph (B) of such paragraph.
       (5) Patient-centered medical home.--
       (A) In general.--The term ``patient-centered medical home'' 
     means a physician-directed practice or a health center that--
       (i) incorporates the attributes of the care management 
     model described in paragraph (1);
       (ii) voluntarily participates in an independent evaluation 
     process whereby primary care providers submit information to 
     the medical management committee of the relevant network;
       (iii) the medical management committee determines has the 
     capability to achieve improvements in the management and 
     coordination of care for targeted beneficiaries (as defined 
     by Statewide quality improvement standards and outcomes); and
       (iv) meets the requirements imposed on a covered entity for 
     purposes of applying part C of title XI of the Public Health 
     Service Act (42 U.S.C. 300b-1 et seq.) and all regulatory 
     provisions promulgated thereunder, including regulations 
     (relating to privacy) adopted pursuant to the authority of 
     the Secretary under section 264(c) of the Health Insurance 
     Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 
     note).
       (B) Considerations.--In making the determination under 
     subparagraph (A)(iii), the medical management committee shall 
     consider the following:
       (i) Access and communication with patients.--Whether the 
     practice or health center applies both standards for access 
     to care for and standards for communication with targeted 
     beneficiaries who receive care through the practice or health 
     center.
       (ii) Managing patient information and using information 
     management to support patient care.--Whether the practice or 
     health center has readily accessible, clinically useful 
     information on such beneficiaries that enables the practice 
     or health center to comprehensively and systematically treat 
     such beneficiaries.
       (iii) Managing and coordinating care according to 
     individual needs.--Whether the practice or health center--

       (I) maintains continuous relationships with such 
     beneficiaries by implementing evidence-based guidelines and 
     applying such guidelines to the identified needs of 
     individual beneficiaries over time and with the intensity 
     needed by such beneficiaries;
       (II) assists in the early identification of health care 
     needs;
       (III) provides ongoing primary care; and
       (IV) coordinates with a broad range of other specialty, 
     ancillary, and related services.

       (iv) Providing ongoing assistance and encouragement in 
     patient self-management.--Whether the practice or health 
     center--

       (I) collaborates with targeted beneficiaries who receive 
     care through the practice or health center to pursue their 
     goals for optimal achievable health;
       (II) assesses patient-specific barriers; and
       (III) conducts activities to support patient self-
     management.

       (v) Resources to manage care.--Whether the practice or 
     health center has in place the resources and processes 
     necessary to achieve improvements in the management and 
     coordination of care for targeted beneficiaries who receive 
     care through the practice or health center.
       (vi) Monitoring performance.--Whether the practice or 
     health center--

       (I) monitors its clinical process and performance 
     (including process and outcome measures) in meeting the 
     applicable standards under paragraph (4)(D); and
       (II) provides information in a form and manner specified by 
     the steering committee and medical management committee with 
     respect to such process and performance.

       (6) Personal primary care provider.--The term ``personal 
     primary care provider'' means--
       (A) a physician, nurse practitioner, or other qualified 
     health care provider (as determined by the Secretary), who--
       (i) practices in a patient-centered medical home; and
       (ii) has been trained to provide first contact, continuous, 
     and comprehensive care for the whole person, not limited to a 
     specific disease condition or organ system, including care 
     for all types of health conditions (such as acute care, 
     chronic care, and preventive services); or
       (B) a health center that--
       (i) is a patient-centered medical home; and
       (ii) has providers on staff that have received the training 
     described in subparagraph (A)(ii).
       (7) Primary care case management services; primary care 
     case manager.--The terms ``primary care case management 
     services'' and ``primary care case manager'' have the meaning 
     given those terms in section 1905(t) of the Social Security 
     Act (42 U.S.C. 1396d(t)).
       (8) Project.--The term ``project'' means the demonstration 
     project established under this section.
       (9) SCHIP.--The term ``SCHIP'' means the State Children's 
     Health Insurance Program established under title XXI of the 
     Social Security Act (42 U.S.C. 1396aa et seq.).
       (10) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (11) Steering committee.--The term ``steering committee'' 
     means a local management group comprised of collaborating 
     local health care practitioners or a local not-for-profit 
     network of health care practitioners--
       (A) that implements State-level initiatives;
       (B) that develops local improvement initiatives;
       (C) whose mission is to--
       (i) investigate questions related to community-based 
     practice; and
       (ii) improve the quality of primary care; and
       (D) whose membership--
       (i) represents the health care delivery system of the 
     community it serves; and
       (ii) includes physicians (with an emphasis on primary care 
     physicians) and 1 representative from each part of the 
     collaborative or network (such as a representative from a 
     health center, a representative from the health department, a 
     representative from social services, and a representative 
     from each public and private hospital in the collaborative or 
     the network).
       (12) Targeted beneficiary.--
       (A) In general.--The term ``targeted beneficiary'' means an 
     individual who is eligible for benefits under a State plan 
     under Medicaid or a State child health plan under SCHIP.
       (B) Participation in patient-centered medical home.--
     Individuals who are eligible for benefits under Medicaid or 
     SCHIP in a State selected to participate in the project shall 
     receive care through a patient-centered medical home when 
     available.
       (C) Ensuring choice.--In the case of such an individual who 
     receives care through a patient-centered medical home, the 
     individual shall receive guidance from their personal primary 
     care provider on appropriate referrals to other health care 
     professionals in the context of shared decisionmaking.
       (b) Establishment.--The Secretary shall establish a 
     demonstration project under Medicaid and SCHIP for the 
     implementation of a patient-centered medical home program 
     that meets the requirements of subsection (d) to improve the 
     effectiveness and efficiency in providing medical assistance 
     under Medicaid and child health assistance under SCHIP to an 
     estimated 500,000 to 1,000,000 targeted beneficiaries.
       (c) Project Design.--
       (1) Duration.--The project shall be conducted for a 3-year 
     period, beginning not later than October 1, 2009.
       (2) Sites.--
       (A) In general.--The project shall be conducted in 8 
     States--
       (i) four of which already provide medical assistance under 
     Medicaid for primary care case management services as of the 
     date of enactment of this Act; and
       (ii) four of which do not provide such medical assistance.
       (B) Application.--A State seeking to participate in the 
     project shall submit an application to the Secretary at such 
     time, in such manner, and containing such information as the 
     Secretary may require.
       (C) Selection.--In selecting States to participate in the 
     project, the Secretary shall ensure that urban, rural, and 
     underserved areas are served by the project.
       (3) Grants and payments.--
       (A) Development grants.--
       (i) First year development grants.--The Secretary shall 
     award development grants to States participating in the 
     project during the first year the project is conducted. 
     Grants awarded under this clause shall be used by a 
     participating State to--

       (I) assist with the development of steering committees, 
     medical management committees, and local networks of health 
     care providers; and
       (II) facilitate coordination with local communities to be 
     better prepared and positioned to understand and meet the 
     needs of the communities served by patient-centered medical 
     homes.

[[Page 31889]]

       (ii) Second year funding.--The Secretary shall award 
     additional grant funds to States that received a development 
     grant under clause (i) during the second year the project is 
     conducted if the Secretary determines such funds are 
     necessary to ensure continued participation in the project by 
     the State. Grant funds awarded under this clause shall be 
     used by a participating State to assist in making the 
     payments described in paragraph (B). To the extent a State 
     uses such grant funds for such purpose, no matching payment 
     may be made to the State for the payments made with such 
     funds under section 1903(a) or 2105(a) of the Social Security 
     Act (42 U.S.C. 1396b(a); 1397ee(a)).
       (B) Additional payments to personal primary care providers 
     and steering committees.--
       (i) Payments to personal primary care providers.--

       (I) In general.--Subject to subsection (d)(6)(B), a State 
     participating in the project shall pay a personal primary 
     care provider not less than $2.50 per month per targeted 
     beneficiary assigned to the personal primary care provider, 
     regardless of whether the provider saw the targeted 
     beneficiary that month.
       (II) Federal matching payment.--Subject to subparagraph 
     (A)(ii), amounts paid to a personal primary care provider 
     under subclause (I) shall be considered medical assistance or 
     child health assistance for purposes of section 1903(a) or 
     2105(a), respectively, of the Social Security Act (42 U.S.C. 
     1396b(a); 1397ee(a)).
       (III) Patient population.--In determining the amount of 
     payment to a personal primary care provider per month with 
     respect to targeted beneficiaries under this clause, a State 
     participating in the project shall take into account the care 
     needs of such targeted beneficiaries.

       (ii) Payments to steering committees.--

       (I) In general.--Subject to subsection (d)(6)(B), a State 
     participating in the project shall pay a steering committee 
     not less than $2.50 per targeted beneficiary per month.
       (II) Federal matching payment.--Subject to subparagraph 
     (A)(ii), amounts paid to a steering committee under subclause 
     (I) shall be considered medical assistance or child health 
     assistance for purposes of section 1903(a) or 2105(a), 
     respectively, of the Social Security Act (42 U.S.C. 1396b(a); 
     1397ee(a)).
       (III) Use of funds.--Amounts paid to a steering committee 
     under subclause (I) shall be used to purchase health 
     information technology, pay primary care case managers, 
     support network initiatives, and for such other uses as the 
     steering committee determines appropriate.

       (4) Technical assistance.--The Secretary shall make 
     available technical assistance to States, physician 
     practices, and health centers participating in the project 
     during the duration of the project.
       (5) Best practices information.--The Secretary shall 
     collect and make available to States participating in the 
     project information on best practices for patient-centered 
     medical homes.
       (d) Patient-Centered Medical Home Program.--
       (1) In general.--For purposes of this section, a patient-
     centered medical home program meets the requirements of this 
     subsection if, under such program, targeted beneficiaries 
     designate a personal primary care provider in a patient-
     centered medical home as their source of first contact, 
     comprehensive, and coordinated care for the whole person.
       (2) Elements.--
       (A) Mandatory elements.--
       (i) In general.--Such program shall include the following 
     elements:

       (I) A steering committee.
       (II) A medical management committee.
       (III) A network of physician practices and health centers 
     that have volunteered to participate as patient-centered 
     medical homes to provide high-quality care, focusing on 
     preventive care, at the appropriate time and place in a cost-
     effective manner.
       (IV) Hospitals and local public health departments that 
     will work in cooperation with the network of patient-centered 
     medical homes to coordinate and provide health care.
       (V) Primary care case managers to assist with care 
     coordination.
       (VI) Health information technology to facilitate the 
     provision and coordination of health care by network 
     participants.

       (ii) Multiple locations in the state.--In the case where a 
     State operates a patient-centered medical home program in 2 
     or more areas in the State, the program in each of those 
     areas shall include the elements described in clause (i).
       (B) Optional elements.--Such program may include a non-
     profit organization that--
       (i) includes a steering committee and a medical management 
     committee; and
       (ii) manages the payments to steering committees described 
     in subsection (c)(3)(B)(ii).
       (3) Goals.--Such program shall be designed--
       (A) to increase--
       (i) cost efficiencies of health care delivery;
       (ii) access to appropriate health care services, especially 
     wellness and prevention care, at times convenient for 
     patients;
       (iii) patient satisfaction;
       (iv) communication among primary care providers, hospitals, 
     and other health care providers;
       (v) school attendance; and
       (vi) the quality of health care services (as determined by 
     the relevant steering committee and medical management 
     committee, taking into account nationally-developed standards 
     and measures); and
       (B) to decrease--
       (i) inappropriate emergency room utilization, which can be 
     accomplished through initiatives, such as expanded hours of 
     care throughout the program network;
       (ii) avoidable hospitalizations; and
       (iii) duplication of health care services provided.
       (4) Payment.--Under the program, payment shall be provided 
     to personal primary care providers and steering committees 
     (in accordance with subsection (c)(3)(B)).
       (5) Notification.--The State shall notify individuals 
     enrolled in Medicaid or SCHIP about--
       (A) the patient-centered medical home program;
       (B) the providers participating in such program; and
       (C) the benefits of such program.
       (6) Treatment of states with a managed care contract.--
       (A) In general.--In the case where a State contracts with a 
     private entity to manage parts of the State Medicaid program, 
     the State shall--
       (i) ensure that the private entity follows the care 
     management model; and
       (ii) establish a medical management committee and a 
     steering committee in the community.
       (B) Adjustment of payment amounts.--The State may adjust 
     the amount of payments made under (c)(3)(B), taking into 
     consideration the management role carried out by the private 
     entity described in subparagraph (A) and the cost 
     effectiveness provided by such entity in certain areas, such 
     as health information technology.
       (e) Evaluation and Project Report.--
       (1) In general.--
       (A) Evaluation.--The Secretary, in consultation with 
     appropriate health care professional associations, shall 
     evaluate the project in order to determine the effectiveness 
     of patient-centered medical homes in terms of quality 
     improvement, patient and provider satisfaction, and the 
     improvement of health outcomes.
       (B) Project report.--Not later than 12 months after 
     completion of the project, the Secretary shall submit to 
     Congress a report on the project containing the results of 
     the evaluation conducted under subparagraph (A). Such report 
     shall include--
       (i) an assessment of the differences, if any, between the 
     quality of the care provided through the patient-centered 
     medical home program conducted under the project in the 
     States that provide medical assistance for primary care case 
     management services and those that do not;
       (ii) an assessment of quality improvements and clinical 
     outcomes as a result of such program;
       (iii) estimates of cost savings resulting from such 
     program; and
       (iv) recommendations for such legislation and 
     administrative action as the Secretary determines to be 
     appropriate.
       (2) Sense of the senate.--It is the sense of the Senate 
     that, during the next authorization of SCHIP, titles XIX and 
     XXI of the Social Security Act (42 U.S.C. 1396 et seq.; 
     1397aa et seq.) should be amended, based on the results of 
     the evaluation and report under paragraph (1), to establish a 
     patient-centered medical home program under such titles on a 
     permanent basis.
       (f) Waiver.--
       (1) In general.--Subject to paragraph (2), the Secretary 
     shall waive compliance with such requirements of titles XI, 
     XIX, and XXI of the Social Security Act (42 U.S.C. 1301 et 
     seq.; 1396 et seq.; 1397aa et seq.) to the extent and for the 
     period the Secretary finds necessary to conduct the project.
       (2) Limitation.--In no case shall the Secretary waive 
     compliance with the requirements of subsections (a)(10)(A), 
     (a)(15), and (bb) of section 1902 of the Social Security Act 
     (42 U.S.C. 1396a) under paragraph (1), to the extent that 
     such requirements require the provision of, and reimbursement 
     for services described in section 1905(a)(2)(C) of such Act 
     (42 U.S.C. 1396d(a)(2)(C)).
                                 ______
                                 
      By Mr. DURBIN (for himself and Mr. Obama):
  S. 2377. A bill to amend title 38, United States Code, to improve the 
quality of care provided to veterans in Department of Veterans Affairs 
medical facilities, to encourage highly qualified doctors to serve in 
hard-to-fill positions in such medical facilities, and for other 
purposes; to the Committee on Veterans' Affairs.
  Mr. DURBIN. Mr. President, today I am introducing legislation along 
with Senator Obama that will address some serious deficiencies we have 
found in the Veterans Administration's health care quality assurance 
efforts. Over the past several months, we have learned

[[Page 31890]]

of problems in the hiring practices and quality of care at the veterans 
hospital in Marion, IL. What we have learned suggests that there are 
flaws that could equally affect the hiring and quality assurance 
programs in other VA hospitals.
  The problems at Marion first came to light in August after the VA 
became aware that there had been an abnormal spike in deaths at the 
hospital the previous winter. A doctor was practicing at Marion even 
though a year earlier he had agreed to stop practicing medicine in 
Massachusetts. This fact came to light only after he had resigned from 
Marion because he was being sued for malpractice involving a case at 
Marion. It turned out that he had been involved in at least nine other 
cases at Marion in which the patient died, and he had been the subject 
of at least two malpractice settlements and a disciplinary action in 
Massachusetts before moving to Illinois.
  The VA initiated an investigation and has taken steps to protect the 
patients at Marion. All but the most simple outpatient surgeries have 
been suspended, one doctor has resigned, four others have had their 
privileges restricted, and four top staff members have been temporarily 
reassigned.
  The VA's Inspector General is conducting a thorough investigation and 
I am looking forward to considering his conclusions. But we know enough 
to take action now. And we must take action now because what happened 
at Marion may not be an isolated case. The same problems may exist at 
other VA hospitals as well.
  The legislation we are introducing has three main objectives. First, 
it would improve the process of vetting doctors applying to and working 
in the VA. Second, it would expand the quality control programs in the 
VA health care system. And third, it would create incentives to 
encourage high-quality doctors to practice at veterans hospitals.
  The VA's standards for evaluating employment applicants must be 
strengthened. When the doctor whose problematic service brought this 
issue to light was hired by the VA, he had two malpractice payments on 
his record, but he had only disclosed one to the VA. He was also under 
investigation by the Massachusetts medical board for gross incompetence 
in several cases that led to the deaths of patients. This was not 
disclosed to the VA.
  Our legislation will fix this problem. It will require all physician 
applicants to the VA, and all doctors practicing in the VA, to disclose 
any judgments, settlements, disciplinary actions, and open 
investigations involving them. In addition, each doctor would be 
required to make a written request to the State medical board of any 
State in which they have held a license, requesting that the board 
release this same information to the VA.
  Now, as a lawyer, I understand the caution that must be used when 
dealing with investigations that are not complete and judgments that 
are not final. But doctors and hospitals understand and work with 
confidential information all the time. VA officials with hiring 
authority will keep this information confidential and will be able to 
differentiate between a frivolous lawsuit and a case that should raise 
real concern. Before we entrust our Nation's veterans to a doctor, the 
VA should know all the pertinent information about that individual. 
Before the VA hires a physician, it should be required to examine this 
kind of information to make sure the physician should not be 
disqualified from employment in the VA.
  In addition, our bill requires doctors employed by the VA to be 
licensed in the state in which they practice.
  The bill's second objective is to improve the VA's quality assurance 
program. Our legislation would establish a quality assure officer at 
each VA medical facility, in each Veterans Integrated Service Network, 
VISN, region, and at the VA national headquarters. These officers would 
establish and carry out a quality assurance program at each VA medical 
facility.
  Over the year and a half that this doctor practiced at Marion, at 
least a few of the nurses had concerns about his skills and competence 
and raised those concerns with the hospital leadership. They were 
ignored. This is absolutely unacceptable.
  Concerns about the quality of care in a VA facility should never go 
unexamined. If local hospital officials will not listen, another avenue 
should be available for raising these concerns. Our legislation would 
allow employees to raise quality of care concerns to the local quality 
assurance officer and the regional quality assurance officer, ensuring 
that there is a place employees can go and know that their concerns 
will be considered.
  In addition, we would require that the quality assurance program at 
each hospital include a mechanism for the peer review of physicians in 
the hospital. At Marion, it appears that any kind of peer review 
program that might have been present was either dormant or ignored. As 
a result, early warning signs were missed that might have saved lives.
  Our measure would require that the quality assurance officers be 
licensed physicians, so that they will be qualified to monitor the 
performance of other doctors and ensure a fair but thorough peer review 
process is in place.
  Finally, our legislation includes provisions to encourage talented 
doctors to practice in the VA system. We would direct each VA hospital 
to seek to affiliate with a nearby medical school so that our hospitals 
will have the benefit of the fresh, young minds of medical students and 
the more experienced judgments Of medical school faculty. These 
affiliations would introduce young doctors to the work of the VA, which 
might lead them to consider a career there. We also would create loan 
forgiveness and tuition reimbursement programs to encourage doctors to 
commit to practice in VA hospitals.
  We also recognize that many experienced doctors might be willing to 
practice part-time in a VA hospital but would be unwilling to totally 
leave private practice. Our bill would instruct the VA to develop 
programs to increase the recruitment of experienced, quality doctors 
who might be willing to practice part-time in the VA health care 
system. It would also offer access to the federal employees health 
insurance program to doctors who are willing to practice at least five 
days per month in a VA medical facility.
  This bill addresses very real issues that directly affect the health 
of our veterans. The VA's investigation of what went wrong at Marion 
may lead us to additional legislative initiatives, but the steps we 
have outlined in this bill are steps that need to be taken now to 
protect veterans in VA hospitals throughout the country.
  This legislation has been endorsed by Veterans for America. I urge my 
colleagues to join in moving forward with this legislation to ensure 
that our veterans receive the quality of care they deserve.
  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. 2377

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans Health Care Quality 
     Improvement Act''.

     SEC. 2. STANDARDS FOR APPOINTMENT AND PRACTICE OF PHYSICIANS 
                   IN DEPARTMENT OF VETERANS AFFAIRS MEDICAL 
                   FACILITIES.

       (a) Standards.--
       (1) In general.--Subchapter I of chapter 74 of title 38, 
     United States Code, is amended by inserting after section 
     7402 the following new section:

     ``Sec. 7402A. Appointment and practice of physicians: 
       standards

       ``(a) In General.--The Secretary shall, acting 
     through the Under Secretary for Health, prescribe standards 
     to be met by individuals in order to qualify for appointment 
     in the Administration in the position of physician and to 
     practice as a physician in medical facilities of the 
     Administration. The standards shall incorporate the 
     requirements of this section.
       ``(b) Disclosure of Certain Information Before 
     Appointment.--Each individual seeking appointment in the 
     Administration in the position of physician shall do the 
     following:

[[Page 31891]]

       ``(1) Provide the Secretary a full and complete explanation 
     of the following:
       ``(A) Each lawsuit, civil action, or other claim (whether 
     open or closed) brought against the individual for medical 
     malpractice or negligence (other than a lawsuit, action, or 
     claim closed without any judgment against or payment by or on 
     behalf of the individual).
       ``(B) Each payment made by or on behalf of the individual 
     to settle any lawsuit, action, or claim covered by 
     subparagraph (A).
       ``(C) Each investigation or disciplinary action taken 
     against the individual relating to the individual's 
     performance as a physician.
       ``(2) Submit a written request and authorization to the 
     State licensing board of each State in which the individual 
     holds or has held a license to practice medicine to disclose 
     to the Secretary any information in the records of such State 
     on the following:
       ``(A) Each lawsuit, civil action, or other claim brought 
     against the individual for medical malpractice or negligence 
     covered by paragraph (1)(A) that occurred in such State.
       ``(B) Each payment made by or on behalf of the individual 
     to settle any lawsuit, action, or claim covered by 
     subparagraph (A).
       ``(C) Each medical malpractice judgment against the 
     individual by the courts or administrative agencies or bodies 
     of such State.
       ``(D) Each disciplinary action taken or under consideration 
     against the individual by an administrative agency or body of 
     such State.
       ``(E) Any change in the status of the license to practice 
     medicine issued the individual by such State, including any 
     voluntary or nondisciplinary surrendering of such license by 
     the individual.
       ``(F) Any open investigation of the individual by an 
     administrative agency or body of such State, or any 
     outstanding allegation against the individual before such an 
     administrative agency or body.
       ``(c) Disclosure of Certain Information Following 
     Appointment.--(1) Each individual appointed in the 
     Administration in the position of physician after the date of 
     the enactment of the Veterans Health Care Quality Improvement 
     Act shall, as a condition of service under the appointment, 
     disclose to the Secretary, not later than 30 days after the 
     occurrence of such event, the following:
       ``(A) A judgment against the individual for medical 
     malpractice or negligence.
       ``(B) A payment made by or on behalf of the individual to 
     settle any lawsuit, action, or claim disclosed under 
     paragraph (1) or (2) of subsection (b).
       ``(C) Any disposition of or material change in a matter 
     disclosed under paragraph (1) or (2) of subsection (b).
       ``(2) Each individual appointed in the Administration in 
     the position of physician as of the date of the enactment of 
     the Veterans Health Care Quality Improvement Act shall do the 
     following:
       ``(A) Not later than the end of the 60-day period beginning 
     on the date of the enactment of that Act and as a condition 
     of service under the appointment after the end of that 
     period, submit the request and authorization described in 
     subsection (b)(2).
       ``(B) Agree, as a condition of service under the 
     appointment, to disclose to the Secretary, not later than 30 
     days after the occurrence of such event, the following:
       ``(i) A judgment against the individual for medical 
     malpractice or negligence.
       ``(ii) A payment made by or on behalf of the individual to 
     settle any lawsuit, action, or claim disclosed pursuant to 
     subparagraph (A) or under this subparagraph.
       ``(iii) Any disposition of or material change in a matter 
     disclosed pursuant to subparagraph (A) or under this 
     subparagraph.
       ``(3) Each individual appointed in the Administration in 
     the position of physician shall, as part of the biennial 
     review of the performance of the physician under the 
     appointment, submit the request and authorization described 
     in subsection (b)(2). The requirement of this paragraph is in 
     addition to the requirements of paragraph (1) or (2), as 
     applicable.
       ``(d) Investigation of Disclosed Matters.--(1) The Regional 
     Director of the Veterans Integrated Services Network (VISN) 
     in which an individual is seeking appointment in the 
     Administration in the position of physician shall perform a 
     comprehensive investigation (in such manner as the standards 
     required by this section shall specify) of each matter 
     disclosed under subsection (b) with respect to the 
     individual.
       ``(2) The Regional Director of the Veterans Integrated 
     Services Network in which an individual is appointed in the 
     Administration in the position of physician shall perform a 
     comprehensive investigation (in a manner so specified) of 
     each matter disclosed under subsection (c) with respect to 
     the individual.
       ``(3) The results of each investigation performed under 
     this subsection shall be fully documented.
       ``(e) Approval of Appointments by Regional Directors of 
     VISNs.--(1) An individual may not be appointed in the 
     Administration in the position of physician without the 
     approval of the Regional Director of the Veterans Integrated 
     Services Network in which the individual will first serve 
     under the appointment.
       ``(2) In approving the appointment under this subsection of 
     an individual for whom any matters have been disclosed under 
     subsection (b), a Regional Director shall--
       ``(A) certify in writing the completion of the performance 
     of the investigation under subsection (d)(1) of each such 
     matter, including the results of such investigation; and
       ``(B) provide a written justification why any matters 
     raised in the course of such investigation do not disqualify 
     the individual from appointment.
       ``(f) Board Certification.--(1) Except as provided in 
     paragraph (2), an individual may not be appointed in the 
     Administration in the position of physician unless the 
     individual is board certified in the specialties in which the 
     individual will practice under the appointment.
       ``(2) A Regional Director may waive the limitation in 
     paragraph (1) with respect to any individual who has 
     completed a residency program within the two-year period 
     ending on the date of such waiver if the individual provides 
     satisfactory evidence (as determined in accordance with the 
     standards required by this section) of an intent to become 
     board certified. The period of any waiver under this 
     paragraph may not exceed one year.
       ``(g) State License Required for Practice in In-State VA 
     Medical Facilities.--Each physician practicing at a medical 
     facility of the Department in a State, whether under an 
     appointment in the Administration or through the extension of 
     privileges of practice, shall, as a condition of such 
     practice, hold a license to practice medicine in the State 
     within one year of appointment.
       ``(h) Enrollment of Physicians With Practice Privileges in 
     Proactive Disclosure Service.--Each medical facility of the 
     Department at which physicians are extended the privileges of 
     practice shall enroll each physician extended such privileges 
     in the Proactive Disclosure Service of the National 
     Practitioners Data Base.''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of chapter 74 of such title is amended by inserting 
     after the item relating to section 7402 the following new 
     item:

``7402A. Appointment and practice of physicians: standards.''.

       (b) Effective Date and Applicability.--
       (1) Effective date.--Except as provided in paragraph (2), 
     the amendments made by subsection (a) shall take effect on 
     the date of the enactment of this Act.
       (2) Applicability of certain requirements to physicians 
     practicing on effective date.--In the case of an individual 
     appointed to the Veterans Health Administration in the 
     position of physician as of the date of the enactment of this 
     Act--
       (A) the requirements of subsections (f) and (g) of section 
     7402A, United States Code, as added by subsection (a) of this 
     section, shall take effect on the date that is one year after 
     the date of the enactment of this Act; and
       (B) the requirements of subsection (h) of such section 
     7402A, as so added, shall take effect on the date that is 60 
     days after the date of the enactment of this Act.

     SEC. 3. ENHANCEMENT OF QUALITY ASSURANCE BY THE VETERANS 
                   HEALTH ADMINISTRATION.

       (a) Enhancement of Quality Assurance Through Quality 
     Assurance Officers.--
       (1) In general.--Subchapter II of chapter 73 of title 38, 
     United States Code, is amended by inserting after section 
     7311 the following new section:

     ``Sec. 7311A. Quality assurance officers

       ``(a) National Quality Assurance Officer.--(1) The Under 
     Secretary of Health shall designate an official of the 
     Administration to act as the principal quality assurance 
     officer for the quality-assurance program required by section 
     7311 of this title. The official so designated may be known 
     as the `National Quality Assurance Officer of the Veterans 
     Health Administration' (in this section referred to as the 
     `National Quality Assurance Officer').
       ``(2) The National Quality Assurance Officer shall report 
     directly to the Under Secretary for Health in the discharge 
     of responsibilities and duties of the Officer under this 
     section.
       ``(3) The National Quality Assurance Officer shall be the 
     official within the Administration who is principally 
     responsible for the quality-assurance program referred to in 
     paragraph (1). In carrying out that responsibility, the 
     Officer shall be responsible for--
       ``(A) establishing and enforcing the requirements of that 
     program; and
       ``(B) carrying out such other responsibilities and duties 
     relating to quality assurance in the Administration as the 
     Under Secretary for Health shall specify.
       ``(4) The requirements under paragraph (3) shall include 
     requirements regarding the following:
       ``(A) A confidential system for the submittal of reports by 
     Administration personnel regarding quality assurance at 
     Administration facilities.
       ``(B) Mechanisms for the peer review of the actions of 
     individuals appointed in the Administration in the position 
     of physician.
       ``(C) Mechanisms for the accountability of the facility 
     director and chief medical officer

[[Page 31892]]

     of each Administration medical facility for the actions of 
     physicians in such facility.
       ``(b) Quality Assurance Officers for VISNs.--(1) The 
     Regional Director of each Veterans Integrated Services 
     Network (VISN) shall appoint an official of the Network to 
     act as the quality assurance officer of the Network.
       ``(2) Each official appointed as a quality assurance 
     officer under this subsection shall be a board-certified 
     physician.
       ``(3) The quality assurance officer for a Veterans 
     Integrated Services Network shall report to the Regional 
     Director of the Veterans Integrated Services Network, and to 
     the National Quality Assurance Officer, regarding the 
     discharge of the responsibilities and duties of the officer 
     under this section.
       ``(4) The quality assurance officer for a Veterans 
     Integrated Services Network shall--
       ``(A) direct the quality assurance office in the Network; 
     and
       ``(B) coordinate, monitor, and oversee the quality 
     assurance programs and activities of the Administration 
     medical facilities in the Network in order to ensure the 
     thorough and uniform discharge of quality assurance 
     requirements under such programs and activities throughout 
     such facilities.
       ``(c) Quality Assurance Officers for Medical Facilities.--
     (1) The director of each Administration medical facility 
     shall appoint a quality assurance officer for that facility.
       ``(2) Each official appointed as a quality assurance 
     officer under this subsection shall be a board-certified 
     physician.
       ``(3) The official appointed as a quality assurance officer 
     for a facility under this subsection shall be a practicing 
     physician at the facility. If the official appointed as 
     quality assurance officer for a facility has other clinical 
     or administrative duties, the director of the facility shall 
     ensure that those duties are sufficiently limited in scope so 
     as to ensure that those duties do not prevent the officer 
     from effectively discharging the responsibilities and duties 
     of quality assurance officer at the facility.
       ``(4) The quality assurance officer for a facility shall 
     report directly to the director of the facility, and to the 
     quality assurance officer of the Veterans Integrated Services 
     Network in which the facility is located, regarding the 
     discharge of the responsibilities and duties of the quality 
     assurance officer under this section.
       ``(5) The quality assurance officer for a facility shall be 
     responsible for designing, disseminating, and implementing 
     quality assurance programs and activities for the facility 
     that meet the requirements established by the National 
     Quality Assurance Officer under subsection (a).''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of chapter 73 of such title is amended by inserting 
     after the item relating to section 7311 the following new 
     item:

``7311A. Quality assurance officers.''.

       (b) Board-Certified Physician Requirement for Individuals 
     Appointed as Under Secretary for Health.--Section 305(a)(2) 
     of title 38, United States Code, is amended by inserting 
     ``shall be a board-certified physician and'' before ``shall 
     be''.
       (c) Reports on Quality Concerns Under Quality-Assurance 
     Program.--Section 7311(b) of such title is amended by adding 
     at the end the following new paragraph:
       ``(4) As part of the quality-assurance program, the Under 
     Secretary for Health shall establish mechanisms through which 
     employees of Administration facilities may submit reports, on 
     a confidential basis, on matters relating to quality of care 
     in Administration facilities to the quality assurance 
     officers of such facilities under section 7311A(c) of this 
     title and to the quality assurance officers of the Veterans 
     Integrated Services Networks (VISNs) in which such facilities 
     are located under section 7311A(b) of this title. The 
     mechanisms shall provide for the prompt and thorough review 
     of any reports so submitted by the receiving officials.''.
       (d) Review of Current Health Care Quality Safeguards.--
       (1) In general.--The Secretary of Veterans Affairs shall 
     conduct a comprehensive review of all current policies and 
     protocols of the Department of Veterans Affairs for 
     maintaining health care quality and patient safety at 
     Department of Veterans Affairs medical facilities. The review 
     shall include a review and assessment of the National 
     Surgical Quality Improvement Program (NSQIP), including an 
     assessment of--
       (A) the efficacy of the quality indicators under the 
     program;
       (B) the efficacy of the data collection methods under the 
     program;
       (C) the efficacy of the frequency with which regular data 
     analyses are performed under the program; and
       (D) the extent to which the resources allocated to the 
     program are adequate to fulfill the stated function of the 
     program.
       (2) Report.--Not later than 60 days after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the review conducted under paragraph (1), 
     including the findings of the Secretary as a result of the 
     review and such recommendations as the Secretary considers 
     appropriate in light of the review.

     SEC. 4. INCENTIVES TO ENCOURAGE HIGH-QUALITY PHYSICIANS TO 
                   SERVE IN THE VETERANS HEALTH ADMINISTRATION.

       (a) Incentives Required.--
       (1) In general.--Subchapter III of chapter 74 of title 38, 
     United States Code, is amended by inserting after section 
     7431 the following new section:

     ``Sec. 7431A. Physicians: additional incentives for service 
       in hard-to-fill positions

       ``(a) Loan Repayment for Physicians Who Serve in Hard-to-
     Fill Positions.--(1) In order to recruit and retain 
     physicians in the Administration in hard-to-fill positions 
     (as designated by the Secretary for purposes of this 
     subsection), the Secretary shall repay, for each individual 
     who agrees to serve as a physician for a period of not less 
     than three years in an Administration facility in such a 
     position, any loan of such individual as follows:
       ``(A) Any loan of the individual described in paragraphs 
     (1) through (4) of section 16302(a) of title 10.
       ``(B) Any other loan of the individual designated by the 
     Secretary for purposes of this subsection the proceeds of 
     which were used by the individual to finance education 
     leading to the medical degree of the individual.
       ``(2) Each individual seeking repayment of loans under 
     paragraph (1) shall enter into an agreement with the 
     Secretary regarding the repayment of loans. Under the 
     agreement, the individual shall agree--
       ``(A) to perform satisfactory service in a physician 
     position specified in the agreement in an Administration 
     facility specified in the agreement for such period of years 
     as the agreement shall specify; and
       ``(B) to possess and retain for the period of the agreement 
     such professional qualifications as are necessary for the 
     service specified under subparagraph (A).
       ``(3) Repayment of loans under this subsection shall be 
     made on the basis of complete years of service under the 
     agreement under this subsection. The amount to be repayed 
     under an agreement under this subsection for a complete year 
     of service specified in the agreement shall be such amount, 
     not to exceed $30,000, for each complete year of service as 
     the agreement shall specify.
       ``(b) Tuition Reimbursement for Physician Students Who 
     Agree to Serve in Hard-to-Fill Positions.--(1) In order to 
     recruit and retain physicians in the Administration in hard-
     to-fill positions (as designated by the Secretary for 
     purposes of this subsection), the Secretary shall reimburse 
     individuals who are enrolled in a course of education leading 
     toward board certification as a physician for the tuition 
     charged for pursuit of such course of education if such 
     individuals agree to serve as a physician in an 
     Administration facility in such a position.
       ``(2) Each individual seeking tuition reimbursement under 
     paragraph (1) shall enter into an agreement with the 
     Secretary regarding such tuition reimbursement. Under the 
     agreement, the individuals shall agree--
       ``(A) to satisfactorily complete the course of education of 
     the individual described in paragraph (1); and
       ``(B) upon completion of the course of education, to become 
     board-certified as a physician; and
       ``(C) upon completion of the matters referred to in 
     subparagraphs (A) and (B)--
       ``(i) to perform satisfactory service in a physician 
     position specified in the agreement in an Administration 
     facility specified in the agreement for such period of years 
     as the agreement shall specify; and
       ``(ii) to possess and retain for the period of the 
     agreement such professional qualifications as are necessary 
     for the service specified under clause (i).
       ``(3) The amount of reimbursement payable to an individual 
     under paragraph (1) for a year may not exceed $30,000.
       ``(4) Any individual receiving tuition reimbursement under 
     paragraph (1) who does not satisfy the requirements of the 
     agreement under paragraph (2) shall be subject to such 
     repayment requirements as the Secretary shall specify in the 
     agreement.
       ``(5) An individual receiving tuition reimbursement under 
     paragraph (1) for pursuit of a course of education shall also 
     be paid a stipend in the amount of $5,000 for each academic 
     year of pursuit of such course of education after entry into 
     an agreement under paragraph (2).
       ``(c) Participation in FEHBP of Physicians Who Serve Part-
     Time in Hard-to-Fill Positions.--(1) In order to recruit and 
     retain physicians in the Administration in hard-to-fill 
     positions (as designated by the Secretary for purposes of 
     this subsection), an individual not otherwise eligible for 
     health insurance under chapter 89 of title 5 who agrees to 
     serve as a physician in an Administration facility in such a 
     position for not less than five days per month (of which two 
     days must occur in each 14-day period) shall be eligible for 
     enrollment in the health benefit plans under chapter 89 of 
     title 5 on a self only or self and family basis (as 
     applicable).
       ``(2) The Secretary shall administer this subsection in 
     consultation with the Director of the Office of Personnel 
     Management.
       ``(d) Additional Programs.--It is the sense of Congress 
     that the Secretary should undertake active and on-going 
     efforts to establish

[[Page 31893]]

     additional incentive programs to encourage individuals to 
     serve in the position of physician in the Administration, or 
     otherwise practice in the Administration, in hard-to-fill 
     positions, including, in particular, incentive programs to 
     encourage more experienced physicians to serve or practice in 
     such positions.
       ``(e) Construction.--The incentives required under this 
     section are in addition to any other special pays or benefits 
     to which the individuals covered by this section are eligible 
     or entitled under law.''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of chapter 74 of such title is amended by inserting 
     after the item relating to section 731 the following new 
     item:

``7431A. Physicians: additional incentives for service in hard-to-fill 
              positions.''.

       (b) Affiliation of Department of Veterans Affairs Medical 
     Facilities With Medical Schools.--The Secretary of Veterans 
     Affairs shall, to the extent practicable, require each 
     medical facility of the Department of Veterans Affairs to 
     seek to establish an affiliation with a medical school within 
     reasonable proximity of such medical facility.

     SEC. 5. REPORTS TO CONGRESS.

       (a) Report.--Not later than December 15, 2009, and each 
     year thereafter through 2012, the Secretary of Veterans 
     Affairs shall submit to the congressional veterans affairs 
     committees a report on the implementation of this Act and the 
     amendments made by this Act during the preceding fiscal year. 
     Each report shall include, for the fiscal year covered by 
     such report, the following:
       (1) A comprehensive description of the implementation of 
     this Act and the amendments made by this Act.
       (2) Such recommendations as the Secretary considers 
     appropriate for legislative or administrative action to 
     improve the authorities and requirements in this Act and the 
     amendments made by this Act or to otherwise improve the 
     quality of health care and the quality of the physicians in 
     the Veterans Health Administration.
       (b) Congressional Veterans Affairs Committees Defined.--In 
     this section, the term ``congressional veterans affairs 
     committees'' means--
       (1) the Committees on Veterans' Affairs and Appropriations 
     of the Senate; and
       (2) the Committees on Veterans' Affairs and Appropriations 
     of the House of Representatives.
                                 ______
                                 
      By Mr. ROBERTS:
  S. 2378. A bill to authorize the voluntary purchase of certain 
properties in Treece, Kansas, endangered by the Cherokee County 
National Priorities List Site, and for other purposes; to the Committee 
on Environment and Public Works.
  Mr. ROBERTS. Mr. President, I rise today to offer legislation to 
protect the residents of Treece, Kansas from the potential danger of 
remaining in an area that is undergoing a Superfund cleanup. I commend 
my fellow Kansas colleague, Congresswoman Nancy Boyda, for introducing 
similar legislation in the House.
  Treece is located in Cherokee County, Kansas. The Cherokee County 
site encompasses 115 square miles of former mining area. Mining in this 
area dates back to the early 1900s and at one time contained the 
richest lead and zinc ore production in the world. Although the 
drilling stopped in 1970, the effects of over 60 years of mining can be 
seen for miles around with mountains of milling left behind. Below 
these mountains, and surrounding areas, are enormous holes large enough 
to fit a football stadium, and they continually threaten the everyday 
safety of the residents of this community.
  Cherokee County is part of a larger area known as the Tri-State 
Mining District that encompasses cities in southeastern Kansas, 
southwestern Missouri and northeastern Oklahoma. Within the Tri-State 
Mining District are 2 towns of particular importance, Treece, Kansas 
and Picher, Oklahoma. While these 2 towns are separated by a State line 
they are only a mere 2 miles away from one another. These 2 communities 
share more than a State line; they share a major highway, local stores, 
and most importantly the concerns of the aftermath of over 60 years of 
mining on their health, safety and the ultimate survival of their 
towns.
  Currently Picher, part of the Tar Creek Superfund site, is undergoing 
a Federal buyout. The residents of Treece rely heavily on the services 
provided to them by Picher. Without that support the economic stability 
and ultimate survival of their town is in danger. Therefore, in order 
to assist the residents of Treece, I offer this legislation today to 
authorize the Environmental Protection Agency to make available to the 
state of Kansas $6,000,000, in 2009. This money will be used for the 
voluntary purchase of certain properties in Treece and will also allow 
for the relocation of community residents. This legislation will 
provide the residents of Treece an opportunity to relocate to another 
town of their choosing. An opportunity that they may not have without 
the Environmental Protection Agency's assistance.
                                 ______
                                 
      By Mr. SALAZAR:
  S. 2384. A bill to authorize the Chief of Engineers to conduct a 
feasibility study relating to the construction of a multipurpose 
project in the Fountain Creek watershed located in the State of 
Colorado; to the Committee on Environment and Public Works.
  Mr. SALAZAR. Mr. President, today I am introducing the Fountain Creek 
Feasibility Study Act of 2007. This bill is an important piece of a 
larger vision to transform and restore the Fountain Creek watershed, 
which lies in the Arkansas River Valley between the cities of Pueblo 
and Colorado Springs in my State of Colorado.
  The Fountain Creek watershed is a major tributary to the Arkansas 
River and is home to a wide variety of plants and wildlife. Anyone who 
has traveled the 1-25 corridor between Colorado Springs and Pueblo can 
attest to the natural beauty of this region. The watershed itself 
comprises 927 square miles, but the impact of its waterflow extends far 
beyond its strict boundaries. According to the 2000 census, more than 
500,000 people live in the watershed's boundaries. Water from the 
watershed serves municipal, industrial and agricultural uses. Creeks 
within the watershed contribute about 15 percent of the drinking water 
for Colorado Springs and are a source of irrigation for over 100 farms 
and ranches. The fertile farmland there produces wheat, com, hay, oats, 
and vegetable crops; there are also many working livestock ranches 
along Fountain Creek.
  Today there are major problems with Fountain Creek. In recent years, 
instead of serving as an important link for commerce and recreation, 
the Fountain has divided the area. Decades of neglect, increased 
waterflows in the Fountain as a result of major urban development in 
the north half of the watershed, increased stormwater discharges, and 
sewage spills have all harmed the region. The watershed is subject to 
frequent flood damage, erosion, and sedimentation. In 1999 a major 
flood caused millions of dollars of damage to public and private 
property, and destroyed the foundations of numerous homes and roads. 
Indeed, just this spring there was minor flooding from the Fountain in 
the Pueblo area. Farmers and ranchers near the downstream end of the 
watershed in particular have suffered substantial losses of productive 
farmland. Degradation of the water quality and thus aquatic and wetland 
habitats is accelerating due to wastewater spills, loss of natural 
vegetation, and high water volume. Simply put, Fountain Creek 
watershed's ecological conditions are unstable and under constant 
threat.
  This bill is a foundation stone for the idea of restoring Fountain 
Creek and turning the corridor between Colorado Springs and Pueblo into 
an environmental, agricultural, and recreational ``crown jewel'' for my 
State.
  This bill would task the Army Corps of Engineers to conduct a study 
of the feasibility of constructing one or more dams and reservoirs to 
provide more reliable flood and sediment control, to conserve fish and 
wildlife and preserve their ecosystem, and to improve the water quality 
throughout the watershed. The Corps' expertise and experience will be 
critical to determining the options for restoring the health and 
stability of the Fountain Creek watershed.
  The idea of such a multipurpose project on the Fountain is not new. 
It was first proposed in 1970 by the U.S. Army Corps of Engineers after 
the 1965 flood that inundated communities along the Fountain Creek, 
including particularly the city of Pueblo. The proposal was supported 
by the States

[[Page 31894]]

of Colorado and Kansas and local officials, and was even the preferred 
option of the Army Corps for addressing flooding in the Fountain. I 
believe a similar proposal should be evaluated again, in light of 
changed conditions and increased flows in Fountain Creek resulting from 
urban development in the Colorado Springs metro area. Because the 
Fountain contributes a significant amount of water to the Arkansas 
River Valley below the confluence of the Fountain Creek and Arkansas 
River in Pueblo, this project may very well help address the various 
concerns of residents and communities of the Arkansas River Valley from 
Pueblo to the Kansas State line.
  Last year I laid out a vision to revitalize Fountain Creek and 
connect the communities along its bank in a regional project. My plan 
involves the cleanup and revitalization of Fountain Creek; creating a 
linear state park along the river corridor with camping facilities, 
hundreds of miles of new trails, restored wildlife and natural habitat 
and new flat water recreation opportunities; protecting farms and 
ranches along the creek and in the lower Arkansas Valley; and ensuring 
a greenbelt separator between the communities of Colorado Springs and 
Pueblo.
  My vision is to restore and transform this vital watershed. I hope 
that all levels of Government can work together to bring unmatched 
recreational opportunities, create an environment for plants and 
wildlife to flourish, ensure that agricultural lands remain productive, 
and address the flood control and water quality issues on Fountain 
Creek. This bill is an essential step towards achieving this goal.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself and Mrs. BOXER):
  S. 2386. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, to authorize temporary mortgage and rental 
payments; to the Committee on Homeland Security and Governmental 
Affairs.
  Mrs. FEINSTEIN. Mr. President. I rise today to introduce a series of 
bills, S. 2386, S. 2387, S. 2388, and S. 2390, designed to better 
prepare for catastrophic wildfires like the ones that recently 
devastated Southern California.
  The Nation watched as these fires swept, uncontrolled, through 
several counties.
  They caused the evacuation of an estimated 750,000 people--the 
largest evacuation in California history.
  They burned more than 500,000 acres. Destroyed more than 2,000 homes.
  Killed 10 people. Injured 130.
  The financial damage is estimated in the billions.
  Simply put: This was a major disaster.
  It was not the first. Southern California suffered similar wildfire 
losses just 4 years ago.
  We must face the fact that catastrophic wildfires are in California's 
future, and the future of other states.
  California is tinder-dry. Global warming is real, leading to extended 
droughts and longer fire seasons.
  Fires are larger, and they burn hotter and with more intensity.
  More and more people are living in areas at high risk of wildfire. 
There are more than 5 million homes in California alone in this high-
threat ``wildland-urban interface.''
  Across the rest of the country, there are nearly 40 million more 
homes in the wildland-urban interface.
  So the question comes: What can be done?
  There is no doubt that we cannot fully eliminate wildfires.
  But I believe we can take steps now to better protect communities, to 
improve firefighting capabilities, and to improve relief and recovery 
aid.
  The four bills introduced today will get this process started. They 
are the Fire Safe Community Act, which would establish new incentives 
for communities at risk of wildfires to adopt a new model Fire Safe 
ordinance; the Mortgage and Rental Disaster Relief Act, to make sure 
that qualified individuals, displaced by major disasters, can make 
their mortgage and rental payments; the Disaster Rebuilding Assistance 
Act, to increase the amount of Federal dollars available to homeowners 
whose rebuilding costs outstrip their insurance coverage; and the 
Managing Arson Through Criminal History, MATCH, Act, requiring states 
to create registries of convicted arsonists.
  Let me go into greater detail on each of these bills.


                        Fire Safe Community Act

  This bill will help protect our communities from the catastrophic 
effects of wildfires.
  Most importantly, it does three key things: it instructs the National 
Institute of Standards and Technology to develop a model ordinance that 
will serve as a baseline for communities seeking to protect their homes 
and property from wildfire; it encourages local participation by 
allowing for greater Federal reimbursement of firefighting costs in 
communities that adopt the model ordinance; and it creates a grant 
program to encourage responsible development practices that meet model 
guidelines in the wildland-urban interface.
  In effect, the Federal Government would become the partner to local 
governments as they seek to make their communities fire-safe.
  As I have said, we can never stop wildfires. But we can take 
important steps to make these fires less destructive.
  This bill starts with the first step of creating a model ``Fire 
Safe'' ordinance--with clear, unambiguous language that sets a national 
standard for how to address all aspects of fire threat.
  The National Institute of Standards and Technology would provide this 
standard guideline for communities, in conjunction with the U.S. Forest 
Service, the Bureau of Land Management, and the U.S. Fire 
Administration.
  States are also encouraged to adopt model ordinances tailored to the 
needs of their own communities for fire-safe development.
  These guidelines will address water supply, construction materials 
and techniques, defensible space, vegetation management, and 
infrastructure standards.
  The next step is to put this model ordinance to use.
  The bill authorizes a $25 million per year grant program, 
administered by the Federal Emergency Management Agency's Office of 
Grants and Training.
  It will help communities implement these standards, and bring the 
safest development practices to their neighborhoods.
  This grant program will be available to local governments located in 
the wildlife-urban interface, and to high-threat regions that have 
adopted--or plan to adopt--the model ordinance.
  They will have the option of adopting either the federal model 
ordinance, or one produced by their own state.
  As further incentive, this bill would improve Fire Management 
Assistance Grants to communities adopting a model ordinance.
  Today under the Fire Management Assistance Grant program, the Federal 
Government covers 75 percent of the cost of fighting wildfires.
  Under this bill, communities adopting a model ordinance would be 
eligible for federal reimbursement of up to 90 percent of their 
firefighting costs.
  The Fire Safe Community Act will also make grants available to States 
to help them compile their own fire maps.
  The mapping grants will be matched 50-50 by State funds, and will 
encourage development of comprehensive fire hazard maps that indicate 
the exact locations of high-threat fire areas.
  This vital information will aid firefighting efforts at all levels.
  It's important to note that the model ordinances at the core of this 
bill are not mandatory--they would provide voluntary guidelines that 
communities can adopt, or not.
  It does not step on the toes of local government. Rather, it would 
help all of us reach a common goal.
  I come from local government--I'm 9 years a mayor, 9 years a county 
supervisor--and I recognize that zoning is the province of local 
government.
  But we have a real problem here: We know that development in the 
wildland-urban interface is accelerating, making fires more costly.
  So we need to take steps to improve fire safety in these areas.

[[Page 31895]]

  This bill is an important step toward becoming better prepared.
  Now I want to discuss two bills intended to improve recovery aid 
after disaster strikes.


                Mortgage and Rental Disaster Relief Act

  This bill will provide much-needed relief to families hit hard by 
disaster--including people displaced by the recent fires.
  It would authorize FEMA to make mortgage and rental assistance 
available for qualified individuals in communities designated by the 
President as disaster areas.
  It is based on an important point: While catastrophic wildfires and 
other disasters can destroy homes, they don't relieve people of the 
financial obligations that come with home ownership or lease 
agreements.
  In most cases, these payments must still be made, even if the 
residence has been wiped out.
  This burden is too much for many families. They incur additional 
expenses--such as hotel or lodging costs--that come with being 
displaced following a major disaster.
  FEMA used to provide mortgage and rental assistance. But it was 
eliminated by the Disaster Mitigation Act of 2000.
  This bill would reauthorize the program, and make several changes to 
ensure that assistance is provided only to those most in need.
  First, to qualify for assistance applicants must demonstrate that 
they face significant economic hardships and suffered disaster-related 
income loss.
  The disaster-related income loss must fit into one of the following 
categories: Your employer, or your own business, must be located in the 
area declared a major disaster by the President; you lose your job 
because your employer or business has a significant business 
relationship with a company located within the Presidentially declared 
disaster area; or you live in a Presidentially declared disaster area, 
and have suffered financially due to travel restrictions and road 
closures post-disaster.
  To qualify for this aid, applicants must also provide proof that 
their employment was discontinued as a result of disaster.
  They must also show imminent delinquency, eviction, dispossession, or 
foreclosure.
  Finally, this assistance is available only for up to 18 months, and 
is subject to income caps.
  Only households with adjusted gross incomes of $100,000 or less, in 
high-cost States such as California, would be eligible.
  Households in lower-cost States could be eligible if their annual 
adjusted gross incomes do not exceed $75,000.


                   disaster rebuilding assistance act

  This second disaster relief bill would increase the amount of money 
FEMA can provide--for rebuilding and temporary housing--in high-cost 
States such as California.
  It is designed to help disaster victims whose rebuilding costs exceed 
their insurance coverage.
  Sadly, many Californians hit by the wildfires are now learning that 
their insurance coverage was insufficient.
  This is a real problem in California; in fact, California Insurance 
Commissioner Steve Poizner estimates that as many as 25 percent of the 
victims of the recent fires may be underinsured.
  Let me be clear: This bill will not cover the full costs of 
rebuilding.
  But it will help close the gap, for qualified households in areas 
declared by the President to be disaster areas.
  Today, FEMA can provide up to roughly $28,000 to individuals and 
households whose rebuilding costs exceed their insurance coverage.
  This assistance can be used for rebuilding costs, as well as 
temporary housing.
  This bill would increase this amount to $50,000.
  The legislation also gives the President the discretion to increase 
this cap, if necessary, to cover rebuilding expenses in high-cost 
States.
  I believe this bill will provide an important step toward giving 
Americans the chance they need to rebuild their lives after suffering 
through a major disaster.
  The last bill in this package takes aim at criminal arsonists.


              managing arson through criminal history act

  This bill--also known as the MATCH Act--is the Senate version of a 
bill introduced in the House by California Representatives Mary Bono 
and Adam Schiff.
  It would establish Federal and State arson registries; require 
convicted arsonists to register and update certain specified 
information for 5 years after a first conviction, 10 years after a 
second conviction, and for life after a third conviction; and authorize 
grants and incentives so that these registries will be operational 
within 3 years.
  It is important that we improve our ability to keep track of 
arsonists, because it is clear that some of these recent wildfires were 
no accident.
  The Santiago Fire in Orange County--which burned at least 27,000 
acres--has officially been declared an arson fire.
  Would-be arsonists tried to start new fires as the wildfires raged.
  In San Diego County, authorities arrested an adult and a juvenile 
suspected of starting a blaze in Vista.
  In San Bernardino, a suspect was charged with setting a brush fire 
near Victorville.
  There were several arson-related arrests in Los Angeles County--one 
suspect died in a gunfight with police.
  The arsonist who started the Santiago fire remains at-large.
  There is a reward--it now stands at $250,000--but law-enforcement 
officials say an arrest will likely depend on a tip from the public.
  It does not have to be that way.
  This bill would give fire investigators and law-enforcement officials 
up-to-date information on potential arsonists.
  This is common-sense legislation. It will provide a readily 
accessible database, and help investigators rule out persons of 
interest and zero in on arson suspects.
  We owe it to our brave firefighters to give fire investigators this 
important new tool, so they can help bring arsonists to justice.
  Catastrophic wildfires are not going away. In fact, the evidence 
strongly suggests they will occur with greater frequency and ferocity.
  But we can take important steps--now--to make our communities safer.
  To strengthen our firefighting capabilities.
  To ensure that more relief and recovery aid is provided to victims, 
so they can get back on their feet as soon as possible.
  These bills are not a panacea. But they are an important first step. 
I urge my colleagues to vote for them.
                                 ______
                                 
      By Mr. REED:
  S. 2391. A bill to provide for affordable housing relief, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. REED Mr. President, today I introduce the Government Sponsored 
Enterprise Mission Improvement Act of 2007. This bill would amend the 
Housing and Community Development Act of 1992 to dramatically 
strengthen the affordable housing mission of Fannie Mae and Freddie 
Mac. I believe that deepening Fannie and Freddie's responsibilities 
towards affordable housing must be a part of any type of GSE reform 
that we undertake in the Senate.
  The problems caused by the shortage in affordable housing are well 
publicized. But the impact of the shortage, which most commonly affects 
those near the bottom of the income scale, receives less attention. 
Worse, there is currently no Federal housing program that increases the 
supply of housing affordable to those with the most severe needs. The 
bill I am introducing today, the Government Sponsored Enterprise 
Mission Improvement Act, would provide $500 to $900 million per year in 
funding to help those with worst case housing needs.
  Across the U.S., the 17 million renters and owners with lowest 
incomes have by far the most critical housing problems. About three-
fifths of renters and owners with incomes below 30 percent of area 
median income pay more than half of their meager incomes for housing.
  Families must pay such excessive amounts because there are too few 
affordable units. Nationally, according to

[[Page 31896]]

HUD's analysis of 2005 American Housing Survey data, there were 10 
million renters with incomes below 30 percent of area median income in 
2005, but only 6.7 million units with rents affordable to those with 
such incomes.
  This bill I am introducing today would require Fannie Mae and Freddie 
Mac to set aside 4.2 basis points on each dollar of unpaid principle 
balance of total new business purchases for an Affordable Housing 
Program.
  Sixty-five percent of this set-aside would go towards an Affordable 
Housing Block Grant Program. This program would be managed by the 
Secretary of Housing and Urban Development and in the first year after 
enactment, would be allocated to the states by formula grant to help 
address the current subprime mortgage crisis. These grants could be 
used to facilitate loan modification and refinance options for low- and 
moderate-income borrowers facing foreclosure. Some of the funding could 
also be used to help low- and moderate-income homebuyers purchase 
properties that have been foreclosed upon to help stabilize 
neighborhoods.
  After 2008, the funding would be distributed by formula grants to the 
states for the development, construction, and preservation of housing 
for very low- and extremely low-income families. This funding would 
complement other Federal and State programs, such as the HOME 
Investment Partnerships and Low-Income Housing Tax Credit programs, to 
bring down costs enough to primarily target the income group most 
needing housing that is truly affordable to them, extremely low-income 
renters.
  The other 35 percent of this set-aside would be allocated for a 
Capital Magnet Fund managed by the Secretary of the Treasury. This 
funding would go out through competitive grants for financial 
activities that leverage affordable housing development, construction 
and preservation for low-, very low-, and extremely low-income 
families. It could also be used for economic development activities or 
community service facilities, such as day care centers and health care 
clinics, that in conjunction with affordable housing activities 
implement a concerted strategy to stabilize or revitalize a low-income 
community or underserved rural area.
  The Government Sponsored Enterprise Mission Improvement Act also 
would strengthen Fannie and Freddie's Affordable Housing Goals. In 
particular, it would align their goals with current Community 
Reinvestment Act income targeting definitions, which I believe should 
help the lower end of the conventional market become more liquid.
  Finally, this legislation would create a new statutory duty for 
Fannie Mae and Freddie Mac to serve ``underserved markets'' that lack 
adequate credit through conventional lending sources such as 
Manufactured Housing; Affordable Housing Preservation; Subprime 
Borrowers; Community Development Financial Institutions; and Rural 
Housing. I give teeth to this provision by making compliance with this 
duty subject to Section 1336 enforcement provisions.
  I urge my colleagues to cosponsor this legislation and to help make 
it an integral part of any GSE reform that is taken up by the Senate. 
This bill makes it clear that with Fannie and Freddie's Government 
benefits come many important responsibilities.
  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.

                                S. 2391

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Government 
     Sponsored Enterprise Mission Improvement Act'' or the ``GSE 
     Mission Improvement Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Annual housing report regarding enterprises.
Sec. 3. Public use database.
Sec. 4. Revision of housing goals.
Sec. 5. Duty to serve underserved markets.
Sec. 6. Monitoring and enforcing compliance with housing goals.
Sec. 7. Affordable housing programs.
Sec. 8. Enforcement.

     SEC. 2. ANNUAL HOUSING REPORT REGARDING ENTERPRISES.

       (a) Repeal.--Section 1324 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4544) is hereby repealed.
       (b) Annual Housing Report.--The Housing and Community 
     Development Act of 1992 is amended by inserting after section 
     1323 the following:

     ``SEC. 1324. ANNUAL HOUSING REPORT REGARDING ENTERPRISES.

       ``(a) In General.--After reviewing and analyzing the 
     reports submitted under section 309(n) of the Federal 
     National Mortgage Association Charter Act and section 307(f) 
     of the Federal Home Loan Mortgage Corporation Act, the 
     Secretary shall submit a report, not later than October 30 of 
     each year, to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives, on the activities of each 
     enterprise.
       ``(b) Contents.--The report required under subsection (a) 
     shall--
       ``(1) discuss--
       ``(A) the extent to and manner in which--
       ``(i) each enterprise is achieving the annual housing goals 
     established under subpart B;
       ``(ii) each enterprise is complying with its duty to serve 
     underserved markets, as established under section 1335;
       ``(iii) each enterprise is complying with section 1337; and
       ``(iv) each enterprise is achieving the purposes of the 
     enterprise established by law; and
       ``(B) the actions that each enterprise could undertake to 
     promote and expand the purposes of the enterprise;
       ``(2) aggregate and analyze relevant data on income to 
     assess the compliance of each enterprise with the housing 
     goals established under subpart B;
       ``(3) aggregate and analyze data on income, race, and 
     gender by census tract and other relevant classifications, 
     and compare such data with larger demographic, housing, and 
     economic trends;
       ``(4) identify the extent to which each enterprise is 
     involved in mortgage purchases and secondary market 
     activities involving subprime loans; and
       ``(5) compare the characteristics of subprime loans 
     purchased and securitized by each enterprise to other loans 
     purchased and securitized by each enterprise.
       ``(c) Data Collection and Reporting.--
       ``(1) In general.--To assist the Secretary in analyzing the 
     matters described in subsection (b), the Secretary shall 
     conduct, on a monthly basis, a survey of mortgage markets in 
     accordance with this subsection.
       ``(2) Data points.--Each monthly survey conducted by the 
     Secretary under paragraph (1) shall collect data on--
       ``(A) the characteristics of individual mortgages that are 
     eligible for purchase by the enterprises and the 
     characteristics of individual mortgages that are not eligible 
     for purchase by the enterprises including, in both cases, 
     information concerning--
       ``(i) the price of the house that secures the mortgage;
       ``(ii) the loan-to-value ratio of the mortgage, which shall 
     reflect any secondary liens on the relevant property;
       ``(iii) the terms of the mortgage;
       ``(iv) the creditworthiness of the borrower or borrowers; 
     and
       ``(v) whether the mortgage, in the case of a conforming 
     mortgage, was purchased by an enterprise;
       ``(B) the characteristics of individual subprime mortgages 
     that are eligible for purchase by the enterprises and the 
     characteristics of borrowers under such mortgages, including 
     the credit worthiness of such borrowers and determination 
     whether such borrowers would qualify for prime lending; and
       ``(C) such other matters as the Secretary determines to be 
     appropriate.
       ``(3) Public availability.--The Secretary shall make any 
     data collected by the Secretary in connection with the 
     conduct of a monthly survey available to the public in a 
     timely manner, provided that the Secretary may modify the 
     data released to the public to ensure that the data--
       ``(A) is not released in an identifiable form; and
       ``(B) is not otherwise obtainable from other publicly 
     available data sets.
       ``(4) Definition.--For purposes of this subsection, the 
     term `identifiable form' means any representation of 
     information that permits the identity of a borrower to which 
     the information relates to be reasonably inferred by either 
     direct or indirect means.''.

     SEC. 3. PUBLIC USE DATABASE.

       Section 1323 of the Housing and Community Development Act 
     of 1992 (42 U.S.C. 4543) is amended--
       (1) in subsection (a)--
       (A) by striking ``(a) In General.--The Secretary'' and 
     inserting the following:
       ``(a) Availability.--
       ``(1) In general.--The Secretary''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Census tract level reporting.--Such data shall 
     include the data elements required

[[Page 31897]]

     to be reported under the Home Mortgage Disclosure Act of 
     1975, at the census tract level.'';
       (2) in subsection (b)(2), by inserting before the period at 
     the end the following: ``or with subsection (a)(2)''; and
       (3) by adding at the end the following new subsection:
       ``(d) Timing.--Data submitted under this section by an 
     enterprise in connection with a provision referred to in 
     subsection (a) shall be made publicly available in accordance 
     with this section not later than September 30 of the year 
     following the year to which the data relates.''.

     SEC. 4. REVISION OF HOUSING GOALS.

       (a) Repeal.--Sections 1331 through 1334 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4561 through 
     4564) are hereby repealed.
       (b) Housing Goal.--The Housing and Community Development 
     Act of 1992 is amended by inserting before section 1335 the 
     following:

     ``SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.

       ``(a) In General.--The Secretary shall, by regulation, 
     establish effective for the first calendar year that begins 
     after the date of enactment of the Government Sponsored 
     Enterprise Mission Improvement Act, and each year thereafter, 
     annual housing goals, as described in sections 1332, 1333, 
     and 1334, with respect to the mortgage purchases by the 
     enterprises.
       ``(b) Special Counting Requirements.--
       ``(1) In general.--The Secretary shall determine whether an 
     enterprise shall receive full, partial, or no credit for a 
     transaction toward achievement of any of the housing goals 
     established pursuant to this section or sections 1332 through 
     1334.
       ``(2) Considerations.--In making any determination under 
     paragraph (1), the Secretary shall consider whether a 
     transaction or activity of an enterprise is substantially 
     equivalent to a mortgage purchase and either (A) creates a 
     new market, or (B) adds liquidity to an existing market, 
     provided however that the terms and conditions of such 
     mortgage purchase is neither determined to be unacceptable, 
     nor contrary to good lending practices, and otherwise 
     promotes sustainable homeownership and further, that such 
     mortgage purchase actually fulfills the purposes of the 
     enterprise and is in accordance with the chartering Act of 
     such enterprise.
       ``(c) Eliminating Interest Rate Disparities.--
       ``(1) In general.--In establishing and implementing the 
     housing goals under this subpart, the Secretary shall require 
     the enterprises to disclose appropriate information to allow 
     the Secretary to assess if there are any disparities in 
     interest rates charged on mortgages to borrowers who are 
     minorities, as compared with borrowers of similar 
     creditworthiness who are not minorities, as evidenced in 
     reports pursuant to the Home Mortgage Disclosure Act of 1975.
       ``(2) Report to congress and remedy required on 
     disparities.--Upon a finding by the Secretary that a pattern 
     of disparities in interest rates exists pursuant to the 
     information provided by an enterprise under paragraph (1), 
     the Secretary shall--
       ``(A) forward to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House of Representatives a report detailing 
     the disparities; and
       ``(B) require the enterprise to take such actions as the 
     Secretary deems appropriate pursuant to this Act, to remedy 
     such identified interest rate disparities.
       ``(3) Identity of individuals not disclosed.--In carrying 
     out this subsection, the Secretary shall ensure that no 
     personally identifiable financial information that would 
     enable an individual borrower to be reasonably identified 
     shall be made public.
       ``(d) Timing.--The Secretary shall establish an annual 
     deadline for the establishment of housing goals described in 
     subsection (a), taking into consideration the need for the 
     enterprises to reasonably and sufficiently plan their 
     operations and activities in advance, including operations 
     and activities necessary to meet such goals.

     ``SEC. 1331A. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.

       ``(a) Authority.--An enterprise may petition the Secretary 
     in writing at any time during a year to reduce the level of 
     any goal for such year established pursuant to this subpart.
       ``(b) Standard for Reduction.--The Secretary may reduce the 
     level for a goal pursuant to such a petition only if--
       ``(1) market and economic conditions or the financial 
     condition of the enterprise require such action; or
       ``(2) efforts to meet the goal would result in the 
     constraint of liquidity, over investment in certain market 
     segments, or other consequences contrary to the intent of 
     this subpart, section 301(3) of the Federal National Mortgage 
     Association Charter Act (12 U.S.C. 1716(3)), or section 
     301(3) of the Federal Home Loan Mortgage Corporation Act (12 
     U.S.C. 1451 note), as applicable.
       ``(c) Determination.--
       ``(1) 30-day period.--The Secretary shall make a 
     determination regarding any proposed reduction within 30 days 
     of receipt of the petition regarding the reduction.
       ``(2) Extension.--The Secretary may extend the period 
     described in paragraph (1) for a single additional 15-day 
     period, but only if the Secretary requests additional 
     information from the enterprise.

     ``SEC. 1332. SINGLE-FAMILY HOUSING GOALS.

       ``(a) Establishment of Goals.--
       ``(1) In general.--The Secretary shall establish annual 
     goals for the purchase by each enterprise of conventional, 
     conforming, single-family, owner-occupied, purchase money 
     mortgages financing housing for each of the following:
       ``(A) Low-income families.
       ``(B) Families that reside in low-income areas.
       ``(C) Very low-income families.
       ``(2) Goals as percentage of total purchase money mortgage 
     purchases.--The goals established under paragraph (1) shall 
     be established as a percentage of the total number of single-
     family dwelling units financed by single-family purchase 
     money mortgages of the enterprise.
       ``(b) Determination of Compliance.--
       ``(1) In general.--The Secretary shall determine, for each 
     year that the housing goals under this section are in effect 
     pursuant to section 1331(a), whether each enterprise has 
     complied with the single-family housing goals established 
     under this section for such year.
       ``(2) Compliance requirements.--An enterprise shall be 
     considered to be in compliance with a goal described under 
     subsection (a) for a year, only if, for each of the types of 
     families described in subsection (a), the percentage of the 
     number of conventional, conforming, single-family, owner-
     occupied, purchase money mortgages purchased by each 
     enterprise in such year that serve such families, meets or 
     exceeds the target established under subsection (c) for the 
     year for such type of family.
       ``(c) Annual Targets.--
       ``(1) In general.--The Secretary shall establish annual 
     targets for each goal described in subsection (a).
       ``(2) Considerations.--In establishing annual targets under 
     paragraph (1), the Secretary shall consider--
       ``(A) national housing needs;
       ``(B) economic, housing, and demographic conditions;
       ``(C) the performance and effort of the enterprises toward 
     achieving the housing goals under this section in previous 
     years;
       ``(D) the ability of the enterprise to lead the industry in 
     making credit available;
       ``(E) recent information submitted in compliance with the 
     Home Mortgage Disclosure Act of 1975 and such other mortgage 
     data as may be available for non metropolitan areas regarding 
     conventional, conforming, single-family, owner-occupied, 
     purchase money mortgages originated and purchased;
       ``(F) the size of the purchase money conventional mortgage 
     market serving each of the types of families described in 
     subsection (a), relative to the size of the overall purchase 
     money mortgage market; and
       ``(G) the need to maintain the sound financial condition of 
     the enterprises.
       ``(d) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (b) regarding compliance of an enterprise 
     for a year with the housing goals established under this 
     section and before any public disclosure thereof, the 
     Secretary shall provide notice of the determination to the 
     enterprise, which shall include an analysis and comparison, 
     by the Secretary, of the performance of the enterprise for 
     the year and the targets for the year under subsection (c).
       ``(2) Comment period.--The Secretary shall provide each 
     enterprise an opportunity to comment on the determination 
     during the 30-day period beginning upon receipt by the 
     enterprise of the notice.
       ``(e) Use of Borrower Income.--In monitoring the 
     performance of each enterprise pursuant to the housing goals 
     under this section and evaluating such performance (for 
     purposes of section 1336), the Secretary shall consider a 
     mortgagor's income to be the income of the mortgagor at the 
     time of origination of the mortgage.

     ``SEC. 1333. SINGLE-FAMILY HOUSING REFINANCE GOALS.

       ``(a) Prepayment of Existing Loans.--
       ``(1) In general.--The Secretary shall establish annual 
     goals for the purchase by each enterprise of mortgages on 
     conventional, conforming, single-family, owner-occupied 
     housing given to pay off or prepay an existing loan served by 
     the same property for each of the following:
       ``(A) Low-income families.
       ``(B) Families that reside in low-income areas.
       ``(C) Very low-income families.
       ``(2) Goals as percentage of total refinancing mortgage 
     purchases.--The goals described under paragraph (1) shall be 
     established as a percentage of the total number of single-
     family dwelling units refinanced by mortgage purchases of 
     each enterprise.
       ``(b) Determination of Compliance.--
       ``(1) In general.--The Secretary shall determine, for each 
     year that the housing goals under this section are in effect 
     pursuant to section 1331(a), whether each enterprise has 
     complied with the single-family housing refinance goals 
     established under this section for such year.
       ``(2) Compliance.--An enterprise shall be considered to be 
     in compliance with the

[[Page 31898]]

     goals of this section for a year, only if, for each of the 
     types of families described in subsection (a), the percentage 
     of the number of conventional, conforming, single-family, 
     owner-occupied refinancing mortgages purchased by each 
     enterprise in such year that serve such families, meets or 
     exceeds the target for the year for such type of family that 
     is established under subsection (c).
       ``(c) Annual Targets.--
       ``(1) In general.--The Secretary shall establish annual 
     targets for each goal described in subsection (a).
       ``(2) Considerations.--In establishing annual targets under 
     paragraph (1), the Secretary shall consider--
       ``(A) national housing needs;
       ``(B) economic, housing, and demographic conditions;
       ``(C) the performance and effort of the enterprises toward 
     achieving the housing goals under this section in previous 
     years;
       ``(D) the ability of the enterprise to lead the industry in 
     making credit available;
       ``(E) recent information submitted in compliance with the 
     Home Mortgage Disclosure Act of 1975 and such other mortgage 
     data as may be available for non metropolitan areas regarding 
     mortgages on conventional, conforming, single-family, owner-
     occupied, refinanced mortgages originated and purchased;
       ``(F) the size of the refinance conventional mortgage 
     market serving each of the types of families described in 
     subsection (a) relative to the size of the overall refinance 
     conventional mortgage market; and
       ``(G) the need to maintain the sound financial condition of 
     the enterprises.
       ``(d) Notice of Determination and Enterprise Comment.--
       ``(1) Notice.--Within 30 days of making a determination 
     under subsection (b) regarding compliance of an enterprise 
     for a year with the housing goals established under this 
     section and before any public disclosure thereof, the 
     Secretary shall provide notice of the determination to the 
     enterprise, which shall include an analysis and comparison, 
     by the Secretary, of the performance of the enterprise for 
     the year and the targets for the year under subsection (c).
       ``(2) Comment period.--The Secretary shall provide each 
     enterprise an opportunity to comment on the determination 
     during the 30-day period beginning upon receipt by the 
     enterprise of the notice.
       ``(e) Use of Borrower Income.--In monitoring the 
     performance of each enterprise pursuant to the housing goals 
     under this section and evaluating such performance (for 
     purposes of section 1336), the Secretary shall consider a 
     mortgagor's income to be the income of the mortgagor at the 
     time of origination of the mortgage.

     ``SEC. 1334. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.

       ``(a) Establishment.--
       ``(1) In general.--The Secretary shall establish, by 
     regulation, by unit or dollar volume, as determined by the 
     Secretary, an annual goal for the purchase by each enterprise 
     of:
       ``(A) Mortgages that finance dwelling units affordable to 
     very low-income families.
       ``(B) Mortgages that finance dwelling units assisted by the 
     low-income housing tax credit under section 42 of the 
     Internal Revenue Code of 1986.
       ``(2) Additional requirements for smaller projects.--The 
     Secretary shall establish additional requirements for the 
     purchase by each enterprise of mortgages described in 
     paragraph (1) for multifamily housing projects of a smaller 
     or limited size, which may be based on the number of dwelling 
     units in the project or the amount of the mortgage, or both, 
     and shall include multifamily housing projects of 5 to 50 
     units (as adjusted by the Secretary), or with mortgages of up 
     to $5,000,000 (as adjusted by the Secretary).
       ``(3) Factors.--In establishing the goal under this section 
     relating to mortgages on multifamily housing for an 
     enterprise, the Secretary shall consider--
       ``(A) national multifamily mortgage credit needs;
       ``(B) the performance and effort of the enterprise in 
     making mortgage credit available for multifamily housing in 
     previous years;
       ``(C) the size of the multifamily mortgage market;
       ``(D) the most recent information available for the 
     Residential Survey published by the Census Bureau, and such 
     other data as may be available regarding multifamily 
     mortgages;
       ``(E) the ability of the enterprise to lead the industry in 
     expanding mortgage credit availability at favorable terms, 
     especially for underserved markets, such as for--
       ``(i) small multifamily projects;
       ``(ii) multifamily properties in need of preservation and 
     rehabilitation; and
       ``(iii) multifamily properties located in rural areas; and
       ``(F) the need to maintain the sound financial condition of 
     the enterprise.
       ``(b) Units Financed by Housing Finance Agency Bonds.--The 
     Secretary may give credit toward the achievement of the 
     multifamily special affordable housing goal under this 
     section (for purposes of section 1336) to dwelling units in 
     multifamily housing that otherwise qualify under such goal 
     and that is financed by tax-exempt or taxable bonds issued by 
     a State or local housing finance agency, but only if--
       ``(1) such bonds are secured by a guarantee of the 
     enterprise; or
       ``(2) are not investment grade and are purchased by the 
     enterprise.
       ``(c) Use of Tenant Income or Rent.--
       ``(1) In general.--The Secretary shall monitor the 
     performance of each enterprise in meeting the goals 
     established under this section and shall evaluate such 
     performance (for purposes of section 1336) based on--
       ``(A) if such data is available, the income of the 
     prospective or actual tenants of the property; or
       ``(B) if such data is not available, the rent levels 
     affordable to low-income and very low-income families.
       ``(2) Rent level.--A rent level shall be considered to be 
     affordable for purposes of this subsection for an income 
     category referred to in this subsection if it does not exceed 
     30 percent of the maximum income level of such income 
     category, with appropriate adjustments for unit size as 
     measured by the number of bedrooms.
       ``(d) Determination of Compliance.--
       ``(1) In general.--The Secretary shall, for each year that 
     the housing goal under this section is in effect pursuant to 
     section 1331(a), determine whether each enterprise has 
     complied with such goal and the additional requirements under 
     subsection (a)(2).
       ``(2) Compliance.--An enterprise shall be considered to be 
     in compliance with the goal of this section for a year only 
     if for each of the properties described in subsection (a), 
     the percentage of the number of multifamily mortgages 
     purchased by each enterprise in such year, that serve such 
     families, meets or exceeds the goals for the year for such 
     type of properties that are established under subsection (a).
       ``(e) Consideration of Units in Single-Family Rental 
     Housing.--In establishing any goal under this section, the 
     Secretary may take into consideration the number of housing 
     units financed by any mortgage on single-family rental 
     housing purchased by an enterprise.''.
       (c) Conforming Amendments.--The Housing and Community 
     Development Act of 1992 is amended--
       (1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter 
     preceding paragraph (1), by striking ``low- and moderate-
     income housing goal'' and all that follows through ``section 
     1334'' and inserting ``housing goals established under this 
     subpart'';
       (2) in section 1336 (12 U.S.C. 4566)--
       (A) in section (a)(1), by striking ``sections 1332, 1333, 
     and 1334,'' and inserting ``this subpart''; and
       (B) in subsection (b)(1), by striking ``section 1332, 1333, 
     or 1334,'' and inserting ``this subpart''.
       (d) Definitions.--Section 1303 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4502) is amended--
       (1) in paragraph (19), by striking ``60 percent'' each 
     place such term appears and inserting ``50 percent''; and
       (2) by adding at the end the following:
       ``(20) Conforming mortgage.--The term `conforming mortgage' 
     means, with respect to an enterprise, a conventional mortgage 
     having an original principal obligation that does not exceed 
     the dollar limitation, in effect at the time of such 
     origination, under--
       ``(A) section 302(b)(2) of the Federal National Mortgage 
     Association Charter Act; or
       ``(B) section 305(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act.
       ``(21) Low-income area.--The term `low-income area' means a 
     census tract or block numbering area in which the median 
     income does not exceed 80 percent of the median income for 
     the area in which such census tract or block numbering area 
     is located, and, for the purposes of section 1332(a)(2), 
     shall include families having incomes not greater than 100 
     percent of the area median income who reside in minority 
     census tracts.
       ``(22) Very low-income.--
       ``(A) In general.--The term `very low-income' means--
       ``(i) in the case of owner-occupied units, income in excess 
     of 30 percent but not greater than 50 percent of the area 
     median income; and
       ``(ii) in the case of rental units, income in excess of 30 
     percent but not greater than 50 percent of the area median 
     income, with adjustments for smaller and larger families, as 
     determined by the Secretary.
       ``(B) Rule of construction for purposes of housing goals.--
     Notwithstanding subparagraph (A), for purposes of any housing 
     goal established under sections 1331 through 1334, the term 
     `very low-income' means--
       ``(i) in the case of owner-occupied units, families having 
     incomes not greater than 50 percent of the area median 
     income;
       ``(ii) in the case of rental units, families having incomes 
     not greater than 50 percent of the area median income, with 
     adjustments for smaller and larger families, as determined by 
     the Secretary.
       ``(23) Extremely low-income.--The term `extremely low-
     income' means--
       ``(A) in the case of owner-occupied units, income not in 
     excess of 30 percent of the area median income; and
       ``(B) in the case of rental units, income not in excess of 
     30 percent of the area median income, with adjustments for 
     smaller and larger families, as determined by the Secretary.

[[Page 31899]]

       ``(24) Shortage of standard rental units both affordable 
     and available to extremely low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to extremely low-income 
     renter households' means the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     30 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by extremely low-income 
     renter households or are vacant for rent; and
       ``(ii) the number of extremely low-income renter 
     households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low-income households as described in subparagraph 
     (A)(ii), there is no shortage.
       ``(25) Shortage of standard rental units both affordable 
     and available to very low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to very low-income renter 
     households' means the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     50 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by either extremely low- 
     or very low-income renter households or are vacant for rent; 
     and
       ``(ii) the number of extremely low- and very low-income 
     renter households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low- and very low-income households as described in 
     subparagraph (A)(ii), there is no shortage.''.

     SEC. 5. DUTY TO SERVE UNDERSERVED MARKETS.

       (a) Establishment and Evaluation of Performance.--Section 
     1335 of the Housing and Community Development Act of 1992 (12 
     U.S.C. 4565) is amended--
       (1) in the section heading, by inserting ``duty to serve 
     underserved markets and'' before ``other'';
       (2) by striking subsection (b);
       (3) in subsection (a)--
       (A) in the matter preceding paragraph (1), by inserting 
     ``and to carry out the duty under subsection (a) of this 
     section,'' before ``, each enterprise shall'';
       (B) in paragraph (3), by inserting ``and'' after the 
     semicolon at the end;
       (C) in paragraph (4), by striking ``; and'' and inserting a 
     period;
       (D) by striking paragraph (5); and
       (E) by redesignating such subsection as subsection (b);
       (4) by inserting before subsection (b) (as redesignated by 
     paragraph (3)(E) of this subsection) the following new 
     subsection:
       ``(a) Duty To Serve Underserved Markets.--
       ``(1) Duty.--In accordance with the purpose of the 
     enterprises under section 301(3) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1716) and section 
     301(b)(3) of the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1451 note) to undertake activities relating to 
     mortgages on housing for very low-, low-, and moderate-income 
     families involving a reasonable economic return that may be 
     less than the return earned on other activities, each 
     enterprise shall have the duty to purchase or securitize 
     mortgage investments and improve the distribution of 
     investment capital available for mortgage financing for 
     underserved markets.
       ``(2) Underserved markets.--To meet its duty under 
     paragraph (1), each enterprise shall comply with the 
     following requirements with respect to the following 
     underserved markets:
       ``(A) Manufactured housing.--The enterprise shall lead the 
     industry in developing loan products and flexible 
     underwriting guidelines to facilitate a secondary market for 
     mortgages on manufactured homes for very low-, low-, and 
     moderate-income families.
       ``(B) Affordable housing preservation.--The enterprise 
     shall lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market to preserve housing affordable to extremely low-, very 
     low-, and low-income families, including housing projects 
     subsidized under--
       ``(i) the project-based and tenant-based rental assistance 
     programs under section 8 of the United States Housing Act of 
     1937;
       ``(ii) the program under section 236 of the National 
     Housing Act;
       ``(iii) the below-market interest rate mortgage program 
     under section 221(d)(4) of the National Housing Act;
       ``(iv) the supportive housing for the elderly program under 
     section 202 of the Housing Act of 1959;
       ``(v) the supportive housing program for persons with 
     disabilities under section 811 of the Cranston-Gonzalez 
     National Affordable Housing Act; and
       ``(vi) the rural rental housing program under section 515 
     of the Housing Act of 1949.
       ``(C) Subprime borrowers.--The enterprises shall lead the 
     industry in making mortgage credit available to low- and 
     moderate-income families with credit impairment, and shall 
     develop underwriting guidelines that preclude the purchase of 
     loans with unacceptable terms and conditions, or which are 
     contrary to good lending practices or to sustainable 
     homeownership, including--
       ``(i) mandatory arbitration provisions;
       ``(ii) single premium credit insurance financed into the 
     mortgages;
       ``(iii) unreasonable prepayment penalties and up front 
     fees;
       ``(iv) introductory rates that expire in less than 10 
     years; and
       ``(v) any other such loans with unacceptable terms and 
     conditions, or which are contrary to good lending practices 
     or to sustainable homeownership.
       ``(D) Community development financial institutions.--The 
     enterprises shall--
       ``(i) lead the industry in developing loan products and 
     flexible underwriting guidelines to facilitate a secondary 
     market for mortgages on unconventional affordable housing 
     loans made or purchased by Treasury certified community 
     development financial institutions and other nonprofit 
     housing lenders; and
       ``(ii) utilize credit facilities, capital and loss 
     reserves, credit enhancements, securitization, and other 
     methods to facilitate a secondary market for mortgages on 
     unconventional affordable housing loans made or purchased by 
     community development financial institutions certified by the 
     Secretary of the Treasury, as determined by the Secretary and 
     consistent with the Federal National Mortgage Association 
     Charter Act, the Federal Home Loan Mortgage Corporation Act, 
     and the provisions of this Act.
       ``(E) Community reinvestment act considerations.--The 
     enterprise shall take affirmative steps to assist depository 
     institutions to meet their obligations under the Community 
     Reinvestment Act, which shall include developing appropriate 
     underwriting standards, business practices, repurchase 
     requirements, pricing, fees, and procedures.
       ``(F) Rural and other underserved markets.--
       ``(i) In general.--The enterprises shall lead the industry 
     in developing loan products and flexible underwriting 
     guidelines to facilitate a secondary market for mortgages on 
     housing for very low-, low-, and moderate-income families in 
     rural areas, and for mortgages for housing for any other 
     underserved market for very low-, low-, and moderate-income 
     families that the Secretary identifies as lacking adequate 
     credit through conventional lending sources.
       ``(ii) Identification of underserved markets.--Underserved 
     markets may be identified for purposes of this paragraph by 
     borrower type, market segment, or geographic area.
       ``(G) Other underserved markets.--The Secretary may, by 
     rule, determine other underserved markets that the 
     enterprises shall be required to lead the market in 
     facilitating the availability of investment capital for 
     mortgage financing for such markets.''; and
       (5) by adding at the end the following new subsection:
       ``(c) Evaluation and Reporting of Compliance.--
       ``(1) Evaluating compliance.--
       ``(A) In general.--Not later than 6 months after the date 
     of enactment of the Government Sponsored Enterprise Mission 
     Improvement Act, the Secretary shall establish through notice 
     and comment rulemaking, a manner for evaluating whether, and 
     the extent to which, the enterprises have complied with the 
     duty under subsection (a) to serve underserved markets, and 
     for rating the extent of such compliance.
       ``(B) Rating compliance.--Using the evaluation method 
     established under subparagraph (A), the Secretary shall, for 
     each year, evaluate such compliance and rate the performance 
     of each enterprise as to the extent of compliance.
       ``(C) Evaluations and ratings included in annual report of 
     the secretary.--The Secretary shall include such evaluation 
     and rating for each enterprise for a year in the report for 
     that year submitted pursuant to section 1319B(a).
       ``(2) Separate evaluations.--In determining whether an 
     enterprise has complied with the duty referred to in 
     paragraph (1), the Secretary shall separately evaluate 
     whether the enterprise has complied with such duty with 
     respect to each of the underserved markets identified in 
     subsection (a), taking into consideration--
       ``(A) the development of loan products and more flexible 
     underwriting guidelines;
       ``(B) the volume of loans purchased in each of such 
     underserved markets; and
       ``(C) such other factors as the Secretary may determine.''.
       (b) Enforcement.--Section 1336(a) of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4566(a)) is 
     amended--
       (1) in paragraph (1), by inserting ``and with the duty 
     under section 1335(a) of each enterprise with respect to 
     underserved markets'' before ``, as provided in this 
     section,''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Enforcement of duty to provide mortgage credit to 
     underserved markets.--
       ``(A) In general.--The duty under section 1335(a) of each 
     enterprise to serve underserved markets (as determined in 
     accordance

[[Page 31900]]

     with section 1335(c)) shall be enforceable under this section 
     to the same extent and under the same provisions that the 
     housing goals established under sections 1332, 1333, and 1334 
     are enforceable.
       ``(B) Limitation.--The duty under section 1335(a) shall not 
     be enforceable under any other provision of this title 
     (including subpart C of this part) other than this section or 
     under any provision of the Federal National Mortgage 
     Association Charter Act or the Federal Home Loan Mortgage 
     Corporation Act.''.

     SEC. 6. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING 
                   GOALS.

       Section 1336 of the Housing and Community Development Act 
     of 1992 (12 U.S.C. 4566) is amended--
       (1) in subsection (b)--
       (A) in the subsection heading, by inserting ``Preliminary'' 
     before ``Determination'';
       (B) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Notice.--If the Secretary preliminarily determines 
     that an enterprise has failed, or that there is a substantial 
     probability that an enterprise will fail to meet any housing 
     goal established under this subpart, the Secretary shall 
     provide written notice to the enterprise of such a 
     preliminary determination, the reasons for such 
     determination, and the information on which the Secretary 
     based the determination.'';
       (C) in paragraph (2)--
       (i) in subparagraph (A), by inserting ``finally'' before 
     ``determining'';
       (ii) by striking subparagraphs (B) and (C) and inserting 
     the following new subparagraph:
       ``(B) Extension or shortening of period.--The Secretary 
     may--
       ``(i) extend the period under subparagraph (A) for good 
     cause for not more than 30 additional days; and
       ``(ii) shorten the period under subparagraph (A) for good 
     cause.''; and
       (iii) by redesignating subparagraph (D) as subparagraph 
     (C); and
       (D) in paragraph (3)--
       (i) in subparagraph (A), by striking ``determine'' and 
     inserting ``issue a final determination of'';
       (ii) in subparagraph (B), by inserting ``final'' before 
     ``determinations''; and
       (iii) in subparagraph (C)--

       (I) by striking ``Committee on Banking, Finance and Urban 
     Affairs'' and inserting ``Committee on Financial Services''; 
     and
       (II) by inserting ``final'' before ``determination'' each 
     place such term appears; and

       (2) in subsection (c)--
       (A) by striking the subsection designation and heading and 
     all that follows through the end of paragraph (1) and 
     inserting the following:
       ``(c) Cease-and-Desist Orders, Civil Money Penalties, and 
     Remedies Including Housing Plans.--
       ``(1) Requirement.--
       ``(A) Housing plan.--If the Secretary finds, pursuant to 
     subsection (b), that there is a substantial probability that 
     an enterprise will fail, or has actually failed to meet any 
     housing goal under this subpart and that the achievement of 
     the housing goal was or is feasible, the Secretary may 
     require that the enterprise submit a housing plan under this 
     subsection.
       ``(B) Refusal to submit housing plan.--If the Secretary 
     makes such a finding and the enterprise refuses to submit 
     such a plan, submits an unacceptable plan, fails to comply 
     with the plan or the Secretary finds that the enterprise has 
     failed to meet any housing goal under this subpart, in 
     addition to requiring an enterprise to submit a housing plan, 
     the Secretary may--
       ``(i) issue a cease-and-desist order in accordance with 
     section 1341;
       ``(ii) impose civil money penalties in accordance with 
     section 1345; or
       ``(iii) order other remedies as set forth in paragraph (7) 
     of this subsection.'';
       (B) in paragraph (2)--
       (i) by striking ``Contents.--Each housing plan'' and 
     inserting ``Housing plan.--If the Secretary requires a 
     housing plan under this section, such a plan''; and
       (ii) in subparagraph (B), by inserting ``and changes in its 
     operations'' after ``improvements'';
       (C) in paragraph (3)--
       (i) by inserting ``comply with any remedial action or'' 
     before ``submit a housing plan''; and
       (ii) by striking ``under subsection (b)(3) that a housing 
     plan is required'';
       (D) in paragraph (4), by striking the first 2 sentences and 
     inserting the following:
       ``(A) Review.--The Secretary shall review each submission 
     by an enterprise, including a housing plan submitted under 
     this subsection, and not later than 30 days after submission, 
     approve or disapprove the plan or other action.
       ``(B) Extension of time.--The Secretary may extend the 
     period for approval or disapproval for a single additional 
     30-day period if the Secretary determines such extension 
     necessary.
       ``(C) Approval.--''; and
       (E) by adding at the end the following new paragraph:
       ``(7) Additional remedies for failure to meet goals.--In 
     addition to ordering a housing plan under this section, 
     issuing cease-and-desist orders under section 1341, and 
     ordering civil money penalties under section 1345, the 
     Secretary may--
       ``(A) seek other actions when an enterprise fails to meet a 
     goal; and
       ``(B) exercise appropriate enforcement authority available 
     to the Secretary under this Act.''.

     SEC. 7. AFFORDABLE HOUSING PROGRAMS.

       (a) Repeal.--Sections 1337 of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 4562 note) is hereby 
     repealed.
       (b) Annual Housing Report.--The Housing and Community 
     Development Act of 1992 is amended by inserting after section 
     1336 the following:

     ``SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS.

       ``(a) Set Aside and Allocation of Amounts by Enterprises.--
     Subject to subsection (b), in each fiscal year--
       ``(1) the Federal Home Loan Mortgage Corporation shall--
       ``(A) set aside an amount equal to 4.2 basis points for 
     each dollar of unpaid principal balance of its total new 
     business purchases; and
       ``(B) allocate or otherwise transfer--
       ``(i) 65 percent of such amounts to the Secretary of 
     Housing and Urban Development to fund the affordable housing 
     block grant program established under section 1338; and
       ``(ii) 35 percent of such amounts to fund the Capital 
     Magnet Fund established pursuant to section 1339; and
       ``(2) the Federal National Mortgage Association shall--
       ``(A) set aside an amount equal to 4.2 basis points for 
     each dollar of unpaid principal balance of its total new 
     business purchases; and
       ``(B) allocate or otherwise transfer--
       ``(i) 65 percent of such amounts to the Secretary of 
     Housing and Urban Development to fund the affordable housing 
     block grant program established under section 1338; and
       ``(ii) 35 percent of such amounts to fund the Capital 
     Magnet Fund established pursuant to section 1339.
       ``(b) Suspension of Contributions.--The Secretary shall 
     temporarily suspend allocations under subsection (a) by an 
     enterprise upon a finding by the Secretary that such 
     allocations--
       ``(1) are contributing, or would contribute, to the 
     financial instability of the enterprise;
       ``(2) are causing, or would cause, the enterprise to be 
     classified as undercapitalized; or
       ``(3) are preventing, or would prevent, the enterprise from 
     successfully completing a capital restoration plan under 
     section 1369C.
       ``(c) Prohibition of Pass-Through of Cost of Allocations.--
     The Secretary shall, by regulation, prohibit each enterprise 
     from redirecting the costs of any allocation required under 
     this section, through increased charges or fees, or decreased 
     premiums, or in any other manner, to the originators of 
     mortgages purchased or securitized by the enterprise.
       ``(d) Enforcement of Requirements on Enterprise.--
     Compliance by the enterprises with the requirements under 
     this section shall be enforceable under subpart C. Any 
     reference in such subpart to this part or to an order, rule, 
     or regulation under this part specifically includes this 
     section and any order, rule, or regulation under this 
     section.

     ``SEC. 1338. AFFORDABLE HOUSING BLOCK GRANT PROGRAM.

       ``(a) Establishment and Purpose.--The Secretary of Housing 
     and Urban Development shall establish and manage an 
     affordable housing block grant program, which shall be funded 
     with amounts allocated by the enterprises under section 1337. 
     The purpose of the block grant program under this section is 
     to provide grants to States for use--
       ``(1) to increase and preserve the supply of rental housing 
     for extremely low- and very low-income families, including 
     homeless families; and
       ``(2) to increase homeownership for extremely low- and very 
     low-income families.
       ``(b) Affordable Housing Block Grant Allocations for 
     Homeownership Preservation in Fiscal Year 2008.--
       ``(1) Assistance for homeowners facing foreclosure.--
       ``(A) In general.--To help address the subprime mortgage 
     crisis, in fiscal year 2008, 100 percent of the amounts 
     allocated for grants under this section shall be used to make 
     grants to States to--
       ``(i) facilitate loan modification and refinance options 
     for low- and moderate-income borrowers facing foreclosure; 
     and
       ``(ii) expeditiously make available to low- and moderate-
     income homebuyers, properties that have been foreclosed upon.
       ``(B) Distribution.--The amounts allocated to help address 
     the subprime mortgage crisis under subparagraph (A) shall be 
     distributed according to a formula established by the 
     Secretary.
       ``(2) Permissible designees.--A State receiving grant 
     amounts under this subsection may designate a State housing 
     finance agency, housing and community development entity, 
     tribally designated housing entity (as such term is defined 
     in section 4 of the Native American Housing Assistance and 
     Self-Determination Act of 1997 (25 U.S.C. 4103)), or any 
     other qualified instrumentality of the State to receive such 
     grant amounts.

[[Page 31901]]

       ``(3) Development of distribution formula.--Not later than 
     3 months after the date of enactment of the Government 
     Sponsored Enterprise Mission Improvement Act, the Secretary 
     shall develop the distribution formula required under 
     paragraph (1)(B). Such formula shall be based on the 
     following factors:
       ``(A) The population of the State based on the most recent 
     estimate of the resident population of such State as 
     determined by the Bureau of the Census.
       ``(B) The 90-day delinquency rate of the State.
       ``(C) The ratio of foreclosures to owner-occupied 
     households within the State.
       ``(4) Eligible loan uses.--
       ``(A) Loans to homeowners to preserve homeownership.--
       ``(i) In general.--A State or State designated entity shall 
     use any grant amounts made available under this subsection 
     to--

       ``(I) support the refinancing of loans of eligible 
     homeowners, only if such loans have a loan-to-value ratio of 
     not greater than 100 percent of current appraised value of 
     the home on which such loan was taken;
       ``(II) reduce the outstanding loan balances of eligible 
     homeowners, but only if the lender, servicer, investor, or 
     other appropriate entity reduces such balance by the amount 
     necessary to bring the combined loan value (including first 
     and second mortgages) at or below 100 percent of the 
     appraised value of the home; and
       ``(III) pay off any outstanding amounts owed by eligible 
     homeowners for taxes and insurance.

       ``(ii) Program requirements for eligible homeowners.--

       ``(I) Development by states.--Each State or State 
     designated entity that is a recipient of a grant amount under 
     this subsection shall develop program requirements for 
     eligible homeowners seeking a loan under this subparagraph.
       ``(II) Required content.--The program requirements required 
     to be developed under this clause shall, at a minimum, 
     include the following:

       ``(aa) The annual income of the homeowner is no greater 
     than the annual income established by the Secretary as being 
     of low- or moderate-income.
       ``(bb) That any loan under this paragraph may be provided 
     for up to a 4-family owner-occupied residence, including 1-
     family units in a condominium project or a membership 
     interest and occupancy agreement in a cooperative housing 
     project, that is used, or is to be used, as the principal 
     residence of the applicant seeking such grant or loan.
       ``(cc) The homeowner has a loan with unsustainable loan 
     terms, as determined by a State housing finance agency or 
     other designated State agency. For purposes of this item, the 
     term `unsustainable loan terms' includes such activities as 
     the lack of escrow of taxes and insurance, the inclusion of 
     prepayment penalties, and the lack of the ability of the 
     homeowner to pay at the fully indexed interest rate because 
     the debt-to-income ratio on such home loan is greater than 45 
     percent.
       ``(iii) Loan requirements.--In order for a State or State 
     designated entity to use the amounts made available under 
     this subsection to assist eligible homeowners, a loan under 
     this subparagraph--

       ``(I) shall--

       ``(aa) have a fixed interest rate;
       ``(bb) be affordable, so that the maximum debt-to-income 
     ratio of such loan is not greater than 45 percent;
       ``(cc) require mandatory escrow of taxes and insurance;
       ``(dd) have no prepayment penalties;
       ``(ee) have no mandatory arbitration clauses; and
       ``(ff) if the loan-to-value ratio of the original mortgage 
     loan is greater than 100 percent, require the lender to 
     reduce such balance by the amount necessary to bring the loan 
     value at or below 100 percent of the appraised value of the 
     home;

       ``(II) shall not be due and payable unless--

       ``(aa) the real property securing such loan is sold, 
     transferred, or refinanced; or
       ``(bb) the last surviving homeowner of such real property 
     dies;

       ``(III) shall not exceed 10 percent of the principal 
     balance; and
       ``(IV) may be subordinated.

       ``(iv) Existing loan funds.--Any State or State designated 
     entity with a previously existing fund established to make 
     loans to assist homeowners in satisfying any amounts past due 
     on their home loan may use funds appropriated for purposes of 
     this subparagraph for that existing loan fund, even if the 
     eligibility, application, program, or use requirements for 
     that loan program differ from the eligibility, application, 
     program, and use requirements of this subparagraph, unless 
     such use is expressly determined by the Secretary to be 
     inappropriate.
       ``(v) No foreclosure if notice of application for home 
     preservation loan.--A mortgagee shall not initiate a 
     foreclosure--

       ``(I) upon receipt of a written confirmation from the State 
     or other State designated entity that the homeowner has 
     applied for a home preservation loan under this subparagraph; 
     and
       ``(II) for the 2-month period after receipt of such written 
     confirmation or until the mortgagee is informed, in writing, 
     that the homeowner is not eligible for a home preservation 
     loan, whichever occurs first.

       ``(B) Loans to nonprofit developers for the rehabilitation 
     and sale of foreclosed properties to low- and moderate-income 
     homebuyers.--
       ``(i) In general.--A State or State designated entity may 
     use up to 20 percent of the grant amounts made available 
     under this subsection for homeownership preservation to 
     provide loans to nonprofit affordable housing developers for 
     the purposes of assisting low- and moderate-income homebuyers 
     to purchase properties that are in the process of being 
     foreclosed upon or have been acquired by the mortgage holder 
     through the foreclosure process.
       ``(ii) Program requirements for nonprofit affordable 
     housing developers.--

       ``(I) In general.--Each State or State designated entity 
     that is a recipient of a grant under this subsection shall, 
     if they choose to use part of their grant award to make loans 
     under this subparagraph, develop program requirements for 
     nonprofit affordable housing developers for the purposes of 
     assisting low- and moderate-income homebuyers to purchase 
     properties that are in the process of being foreclosed upon 
     or have been acquired by the mortgage holder through the 
     foreclosure process.
       ``(II) Required content.--The program requirements 
     developed under subclause (I) shall, at a minimum, include 
     the following:

       ``(aa) That any loan under this clause may be provided for 
     up to a 4-family owner-occupied residence, including 1-family 
     units in a condominium project or a membership interest and 
     occupancy agreement in a cooperative housing project, that is 
     used, or is to be used, as the principal residence of a low- 
     or moderate-income homebuyer.
       ``(bb) The annual income of the low- or moderate-income 
     homebuyer is not greater than the annual income established 
     by the Secretary as being of low- or moderate-income.
       ``(cc) The property is in foreclosure or has been acquired 
     by the mortgage holder through the foreclosure process, the 
     property has been appraised, and the sales price of the 
     property does not exceed 100 percent of the appraised value 
     of the property.
       ``(iii) Loan requirements.--In order for a State or State 
     designated entity to use the amounts made available under 
     this subsection, a loan under this subparagraph--

       ``(I) may be used for--

       ``(aa) downpayment and closing costs;
       ``(bb) financing the difference between the sales price of 
     a home and the mortgage for which the low- or moderate-income 
     homebuyer qualifies; and
       ``(cc) repairs of a home not to exceed 10 percent of the 
     appraised value of the home;

       ``(II) shall carry a zero percent interest rate;
       ``(III) shall not be due and payable by the low- or 
     moderate-income homebuyer unless--

       ``(aa) the real property securing such loan is sold, 
     transferred, or refinanced; or
       ``(bb) the last surviving homeowner of such real property 
     dies; and

       ``(IV) may be subordinated.

       ``(iv) Existing loan funds.--Any State or State designated 
     entity with a previously existing fund established to make 
     loans for the purposes of this subparagraph may use funds 
     appropriated for purposes of this subparagraph for that 
     existing loan fund, even if the eligibility, application, 
     program, or use requirements for that loan program differ 
     from the eligibility, application, program, and use 
     requirements of this subparagraph, unless such use is 
     expressly determined by the Secretary to be inappropriate.
       ``(c) Allocation for Affordable Housing Block Grants in 
     2009 and Subsequent Years.--
       ``(1) In general.--Except as provided in subsection (b), 
     during each fiscal year the Secretary of Housing and Urban 
     Development shall distribute the amounts allocated for the 
     affordable housing block grant program under this section to 
     provide affordable housing as described in this subsection.
       ``(2) Permissible designees.--A State receiving grant 
     amounts under this subsection may designate a State housing 
     finance agency, housing and community development entity, 
     tribally designated housing entity (as such term is defined 
     in section 4 of the Native American Housing Assistance and 
     Self-Determination Act of 1997 (25 U.S.C. 4103)), or any 
     other qualified instrumentality of the State to receive such 
     grant amounts.
       ``(3) Distribution to states by needs-based formula.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development shall, by regulation, establish a formula within 
     12 months of the date of enactment of the Government 
     Sponsored Enterprise Mission Improvement Act, to distribute 
     amounts made available under this subsection to each State to 
     provide affordable housing to extremely low- and very low-
     income households.
       ``(B) Basis for formula.--The formula required under 
     subparagraph (A) shall include the following:
       ``(i) The ratio of the shortage of standard rental units 
     both affordable and available to extremely low-income renter 
     households in

[[Page 31902]]

     the State to the aggregate shortage of standard rental units 
     both affordable and available to extremely low-income renter 
     households in all the States.
       ``(ii) The ratio of the shortage of standard rental units 
     both affordable and available to very low-income renter 
     households in the State to the aggregate shortage of standard 
     rental units both affordable and available to very low-income 
     renter households in all the States.
       ``(iii) The ratio of extremely-low income renter households 
     in the State living with either (I) incomplete kitchen or 
     plumbing facilities, (II) more than 1 person per room, or 
     (III) paying more than 50 percent of income for housing 
     costs, to the aggregate number of extremely low-income renter 
     households living with either (IV) incomplete kitchen or 
     plumbing facilities, (V) more than 1 person per room, or (VI) 
     paying more than 50 percent of income for housing costs in 
     all the States.
       ``(iv) The ratio of very low-income renter households in 
     the State paying more than 50 percent of income on rent 
     relative to the aggregate number of very low-income renter 
     households paying more than 50 percent of income on rent in 
     all the States.
       ``(v) The resulting sum calculated from the factors 
     described in clauses (i) through (iv) shall be multiplied by 
     the relative cost of construction in the State. For purposes 
     of this subclause, the term `cost of construction'--

       ``(I) means the cost of construction or building 
     rehabilitation in the State relative to the national cost of 
     construction or building rehabilitation; and
       ``(II) shall be calculated such that values higher than 1.0 
     indicate that the State's construction costs are higher than 
     the national average, a value of 1.0 indicates that the 
     State's construction costs are exactly the same as the 
     national average, and values lower than 1.0 indicate that the 
     State's cost of construction are lower than the national 
     average.

       ``(C) Priority.--The formula required under subparagraph 
     (A) shall give priority emphasis and consideration to the 
     factor described in subparagraph (B)(i).
       ``(4) Allocation of grant amounts.--
       ``(A) Notice.--Not later than 60 days after the date that 
     the Secretary of Housing and Urban Development determines the 
     formula amounts described in paragraph (3), the Secretary 
     shall caused to be published in the Federal Register a notice 
     that such amounts shall be so available.
       ``(B) Grant amount.--In each fiscal year other than fiscal 
     year 2008, the Secretary of Housing and Urban Development 
     shall make a block grant to each State in an amount that is 
     equal to the formula amount determined under paragraph (3) 
     for that State.
       ``(C) Minimum state allocations.--If the formula amount 
     determined under paragraph (3) for a fiscal year would 
     allocate less than $3,000,000 to any State, the allocation 
     for such State shall be $3,000,000, and the increase shall be 
     deducted pro rata from the allocations made to all other 
     States.
       ``(5) Allocation plans required.--
       ``(A) In general.--For each year that a State or State 
     designated entity receives an affordable housing block grant 
     under this subsection, the State or State designated entity 
     shall establish an allocation plan. Such plan shall--
       ``(i) set forth a plan for the distribution of grant 
     amounts received by the State or State designated entity for 
     such year;
       ``(ii) be based on priority housing needs, as determined by 
     the State or State designated entity in accordance with the 
     regulations established under subsection (g)(2)(C);
       ``(iii) comply with paragraph (6); and
       ``(iv) include performance goals that comply with the 
     requirements established by the Secretary pursuant to 
     subsection (g)(2).
       ``(B) Establishment.--In establishing an allocation plan 
     under this paragraph, a State or State designated entity 
     shall--
       ``(i) notify the public of the establishment of the plan;
       ``(ii) provide an opportunity for public comments regarding 
     the plan;
       ``(iii) consider any public comments received regarding the 
     plan; and
       ``(iv) make the completed plan available to the public.
       ``(C) Contents.--An allocation plan of a State or State 
     designated entity under this paragraph shall set forth the 
     requirements for eligible recipients under paragraph (8) to 
     apply for such grant amounts, including a requirement that 
     each such application include--
       ``(i) a description of the eligible activities to be 
     conducted using such assistance; and
       ``(ii) a certification by the eligible recipient applying 
     for such assistance that any housing units assisted with such 
     assistance will comply with the requirements under this 
     section.
       ``(6) Selection of activities funded using affordable 
     housing fund grant amounts.--Grant amounts received by a 
     State or State designated entity under this subsection may be 
     used, or committed for use, only for activities that--
       ``(A) are eligible under paragraph (7) for such use;
       ``(B) comply with the applicable allocation plan of the 
     State or State designated entity under paragraph (5); and
       ``(C) are selected for funding by the State or State 
     designated entity in accordance with the process and criteria 
     for such selection established pursuant to subsection 
     (g)(2)(C).
       ``(7) Eligible activities.--Grant amounts allocated to a 
     State or State designated entity under this subsection shall 
     be eligible for use, or for commitment for use, only for 
     assistance for--
       ``(A) the production, preservation, and rehabilitation of 
     rental housing, including housing under the programs 
     identified in section 1335(a)(2)(B) and for operating costs, 
     except that such grant amounts may be used for the benefit 
     only of extremely low- and very low-income families; and
       ``(B) the production, preservation, and rehabilitation of 
     housing for homeownership, including such forms as 
     downpayment assistance, closing cost assistance, and 
     assistance for interest rate buy-downs, that--
       ``(i) is available for purchase only for use as a principal 
     residence by families that qualify both as--

       ``(I) extremely low- and very low-income families at the 
     times described in subparagraphs (A) through (C) of section 
     215(b)(2) of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12745(b)(2)); and
       ``(II) first-time homebuyers, as such term is defined in 
     section 104 of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12704), except that any reference in 
     such section to assistance under title II of such Act shall 
     for purposes of this subsection be considered to refer to 
     assistance from affordable housing fund grant amounts;

       ``(ii) has an initial purchase price that meets the 
     requirements of section 215(b)(1) of the Cranston-Gonzalez 
     National Affordable Housing Act;
       ``(iii) is subject to the same resale restrictions 
     established under section 215(b)(3) of the Cranston-Gonzalez 
     National Affordable Housing Act and applicable to the 
     participating jurisdiction that is the State in which such 
     housing is located; and
       ``(iv) is made available for purchase only by, or in the 
     case of assistance under this subsection, is made available 
     only to homebuyers who have, before purchase completed a 
     program of counseling with respect to the responsibilities 
     and financial management involved in homeownership that is 
     approved by the Secretary;
       ``(8) Eligible recipients.--Grant amounts allocated to a 
     State or State designated entity under this subsection may be 
     provided only to a recipient that is an organization, agency, 
     or other entity (including a for-profit entity or a nonprofit 
     entity) that--
       ``(A) has demonstrated experience and capacity to conduct 
     an eligible activity under paragraph (7), as evidenced by its 
     ability to--
       ``(i) own, construct or rehabilitate, manage, and operate 
     an affordable multifamily rental housing development;
       ``(ii) design, construct or rehabilitate, and market 
     affordable housing for homeownership; or
       ``(iii) provide forms of assistance, such as downpayments, 
     closing costs, or interest rate buy-downs for purchasers;
       ``(B) demonstrates the ability and financial capacity to 
     undertake, comply, and manage the eligible activity;
       ``(C) demonstrates its familiarity with the requirements of 
     any other Federal, State, or local housing program that will 
     be used in conjunction with such grant amounts to ensure 
     compliance with all applicable requirements and regulations 
     of such programs; and
       ``(D) makes such assurances to the State or State 
     designated entity as the Secretary shall, by regulation, 
     require to ensure that the recipient will comply with the 
     requirements of this subsection during the entire period that 
     begins upon selection of the recipient to receive such grant 
     amounts and ending upon the conclusion of all activities 
     under paragraph (8) that are engaged in by the recipient and 
     funded with such grant amounts.
       ``(9) Limitations on use.--
       ``(A) Required amount for homeownership activities.--Of the 
     aggregate amount allocated to a State or State designated 
     entity under this subsection not more than 10 percent shall 
     be used for activities under subparagraph (B) of paragraph 
     (7).
       ``(B) Deadline for commitment or use.--Grant amounts 
     allocated to a State or State designated entity under this 
     subsection shall be used or committed for use within 2 years 
     of the date that such grant amounts are made available to the 
     State or State designated entity. The Secretary shall 
     recapture any such amounts not so used or committed for use 
     and reallocate such amounts under this subsection in the 
     first year after such recapture.
       ``(C) Use of returns.--The Secretary shall, by regulation, 
     provide that any return on a loan or other investment of any 
     grant amount used by a State or State designated entity to 
     provide a loan under this subsection shall be treated, for 
     purposes of availability to and use by the State or State 
     designated entity, as a block grant amount authorized under 
     this subsection.
       ``(D) Prohibited uses.--The Secretary shall, by 
     regulation--
       ``(i) set forth prohibited uses of grant amounts allocated 
     under this subsection, which shall include use for--

[[Page 31903]]

       ``(I) political activities;
       ``(II) advocacy;
       ``(III) lobbying, whether directly or through other 
     parties;
       ``(IV) counseling services;
       ``(V) travel expenses; and
       ``(VI) preparing or providing advice on tax returns;

       ``(ii) provide that, except as provided in clause (iii), 
     affordable housing block grant amounts of a State or State 
     designated entity may not be used for administrative, 
     outreach, or other costs of--

       ``(I) the State or State designated entity; or
       ``(II) any other recipient of such grant amounts; and

       ``(iii) limit the amount of any affordable housing block 
     grant amounts for a year that may be used by the State or 
     State designated entity for administrative costs of carrying 
     out the program required under this subsection to a 
     percentage of such grant amounts of the State or State 
     designated entity for such year, which may not exceed 10 
     percent.
       ``(E) Prohibition of consideration of use for meeting 
     housing goals or duty to serve.--In determining compliance 
     with the housing goals under this subpart and the duty to 
     serve underserved markets under section 1335, the Secretary 
     may not consider any affordable housing block grant amounts 
     used under this section for eligible activities under 
     paragraph (7). The Secretary shall give credit toward the 
     achievement of such housing goals and such duty to serve 
     underserved markets to purchases by the enterprises of 
     mortgages for housing that receives funding from such block 
     grant amounts, but only to the extent that such purchases by 
     the enterprises are funded other than with such grant 
     amounts.
       ``(d) Reduction for Failure to Obtain Return of Misused 
     Funds.--If in any year a State or State designated entity 
     fails to obtain reimbursement or return of the full amount 
     required under subsection (e)(1)(B) to be reimbursed or 
     returned to the State or State designated entity during such 
     year--
       ``(1) except as provided in paragraph (2)--
       ``(A) the amount of the grant for the State or State 
     designated entity for the succeeding year, as determined 
     pursuant to this section, shall be reduced by the amount by 
     which such amounts required to be reimbursed or returned 
     exceed the amount actually reimbursed or returned; and
       ``(B) the amount of the grant for the succeeding year for 
     each other State or State designated entity whose grant is 
     not reduced pursuant to subparagraph (A) shall be increased 
     by the amount determined by applying the formula established 
     pursuant to this section to the total amount of all 
     reductions for all State or State designated entities for 
     such year pursuant to subparagraph (A); or
       ``(2) in any case in which such failure to obtain 
     reimbursement or return occurs during a year immediately 
     preceding a year in which grants under this section will not 
     be made, the State or State designated entity shall pay to 
     the Secretary for reallocation among the other grantees an 
     amount equal to the amount of the reduction for the entity 
     that would otherwise apply under paragraph (1)(A).
       ``(e) Accountability of Recipients and Grantees.--
       ``(1) Recipients.--
       ``(A) Tracking of funds.--The Secretary shall--
       ``(i) require each State or State designated entity to 
     develop and maintain a system to ensure that each recipient 
     of assistance under this section uses such amounts in 
     accordance with this section, the regulations issued under 
     this section, and any requirements or conditions under which 
     such amounts were provided; and
       ``(ii) establish minimum requirements for agreements, 
     between the State or State designated entity and recipients, 
     regarding assistance under this section, which shall 
     include--

       ``(I) appropriate periodic financial and project reporting, 
     record retention, and audit requirements for the duration of 
     the assistance to the recipient to ensure compliance with the 
     limitations and requirements of this section and the 
     regulations under this section; and
       ``(II) any other requirements that the Secretary determines 
     are necessary to ensure appropriate administration and 
     compliance.

       ``(B) Misuse of funds.--
       ``(i) Reimbursement requirement.--If any recipient of 
     assistance under this section is determined, in accordance 
     with clause (ii), to have used any such amounts in a manner 
     that is materially in violation of this section, the 
     regulations issued under this section, or any requirements or 
     conditions under which such amounts were provided, the State 
     or State designated entity shall require that, within 12 
     months after the determination of such misuse, the recipient 
     shall reimburse the State or State designated entity for such 
     misused amounts and return to the State or State designated 
     entity any such amounts that remain unused or uncommitted for 
     use. The remedies under this clause are in addition to any 
     other remedies that may be available under law.
       ``(ii) Determination.--A determination is made in 
     accordance with this clause if the determination is made by 
     the Secretary or made by the State or State designated 
     entity, provided that--

       ``(I) the State or State designated entity provides 
     notification of the determination to the Secretary for 
     review, in the discretion of the Secretary, of the 
     determination; and
       ``(II) the Secretary does not subsequently reverse the 
     determination.

       ``(2) Grantees.--
       ``(A) Report.--
       ``(i) In general.--The Secretary shall require each State 
     or State designated entity receiving grant amounts in any 
     given year under this section to submit a report, for such 
     year, to the Secretary that--

       ``(I) describes the activities funded under this section 
     during such year with such grant amounts; and
       ``(II) the manner in which the State or State designated 
     entity complied during such year with any allocation plan 
     established pursuant to subsection (c).

       ``(ii) Public availability.--The Secretary shall make such 
     reports pursuant to this subparagraph publicly available.
       ``(B) Misuse of funds.--If the Secretary determines, after 
     reasonable notice and opportunity for hearing, that a State 
     or State designated entity has failed to comply substantially 
     with any provision of this section, and until the Secretary 
     is satisfied that there is no longer any such failure to 
     comply, the Secretary shall--
       ``(i) reduce the amount of assistance under this section to 
     the State or State designated entity by an amount equal to 
     the amount of block grant amounts which were not used in 
     accordance with this section;
       ``(ii) require the State or State designated entity to 
     repay the Secretary an amount equal to the amount of the 
     amount block grant amounts which were not used in accordance 
     with this section;
       ``(iii) limit the availability of assistance under this 
     section to the State or State designated entity to activities 
     or recipients not affected by such failure to comply; or
       ``(iv) terminate any assistance under this section to the 
     State or State designated entity.
       ``(f) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Extremely low-income renter household.--The term 
     `extremely low-income renter household' means a household 
     whose income is not in excess of 30 percent of the area 
     median income, with adjustments for smaller and larger 
     families, as determined by the Secretary.
       ``(2) Recipient.--The term `recipient' means an individual 
     or entity that receives assistance from a State or State 
     designated entity from amounts made available to the State or 
     State designated entity under this section.
       ``(3) Shortage of standard rental units both affordable and 
     available to extremely low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to extremely low-income 
     renter households' means for any State or other geographical 
     area the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     30 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by extremely low-income 
     renter households or are vacant for rent; and
       ``(ii) the number of extremely low-income renter 
     households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of 
     extremely low-income households as described in subparagraph 
     (A)(ii), there is no shortage.
       ``(4) Shortage of standard rental units both affordable and 
     available to very low-income renter households.--
       ``(A) In general.--The term `shortage of standard rental 
     units both affordable and available to very low-income renter 
     households' means for any State or other geographical area 
     the gap between--
       ``(i) the number of units with complete plumbing and 
     kitchen facilities with a rent that is 30 percent or less of 
     50 percent of the adjusted area median income as determined 
     by the Secretary that are occupied by very low-income renter 
     households or are vacant for rent; and
       ``(ii) the number of very low-income renter households.
       ``(B) Rule of construction.--If the number of units 
     described in subparagraph (A)(i) exceeds the number of very 
     low-income households as described in subparagraph (A)(ii), 
     there is no shortage.
       ``(5) Very low-income family.--The term `very low-income 
     family' has the meaning given such term in section 1303, 
     except that such term includes any family that resides in a 
     rural area that has an income that does not exceed the 
     poverty line (as such term is defined in section 673(2) of 
     the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 
     9902(2)), including any revision required by such section) 
     applicable to a family of the size involved.
       ``(6) Very low-income renter households.--The term `very 
     low-income renter

[[Page 31904]]

     households' means a household whose income is in excess of 30 
     percent but not greater than 50 percent of the area median 
     income, with adjustments for smaller and larger families, as 
     determined by the Secretary.
       ``(g) Regulations.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development, shall issue regulations to carry out this 
     section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) a requirement that the Secretary ensure that the use 
     of block grant amounts under this section by States or State 
     designated entities is audited not less than annually to 
     ensure compliance with this section;
       ``(B) authority for the Secretary to audit, provide for an 
     audit, or otherwise verify a State or State designated 
     entity's activities to ensure compliance with this section;
       ``(C) requirements for a process for application to, and 
     selection by, each State or State designated entity for 
     activities meeting the State or State designated entity's 
     priority housing needs to be funded with block grant amounts 
     under this section, which shall provide for priority in 
     funding to be based upon--
       ``(i) geographic diversity;
       ``(ii) ability to obligate amounts and undertake activities 
     so funded in a timely manner;
       ``(iii) in the case of rental housing projects under 
     subsection (c)(7)(A), the extent to which rents for units in 
     the project funded are affordable, especially for extremely 
     low-income families;
       ``(iv) in the case of rental housing projects under 
     subsection (c)(7)(A), the extent of the duration for which 
     such rents will remain affordable;
       ``(v) the extent to which the application makes use of 
     other funding sources; and
       ``(vi) the merits of an applicant's proposed eligible 
     activity;
       ``(D) requirements to ensure that block grant amounts 
     provided to a State or State designated entity under this 
     section that are used for rental housing under subsection 
     (c)(7)(A) are used only for the benefit of extremely low- and 
     very low-income families; and
       ``(E) requirements and standards for establishment, by a 
     State or State designated entity, for use of block grant 
     amounts in 2009 and subsequent years of performance goals, 
     benchmarks, and timetables for the production, preservation, 
     and rehabilitation of affordable rental and homeownership 
     housing with such grant amounts.
       ``(h) Affordable Housing Trust Fund.--If, after the date of 
     enactment of the Government Sponsored Enterprise Mission 
     Improvement Act, in any year, there is enacted any provision 
     of Federal law establishing an affordable housing trust fund 
     other than under this title for use only for grants to 
     provide affordable rental housing and affordable 
     homeownership opportunities, and the subsequent year is a 
     year referred to in subsection (c), the Secretary shall in 
     such subsequent year and any remaining years referred to in 
     subsection (c) transfer to such affordable housing trust fund 
     the aggregate amount allocated pursuant to subsection (c) in 
     such year. Notwithstanding any other provision of law, 
     assistance provided using amounts transferred to such 
     affordable housing trust fund pursuant to this subsection may 
     not be used for any of the activities specified in clauses 
     (i) through (vi) of subsection (c)(9)(D).
       ``(i) Funding Accountability and Transparency.--Any grant 
     under this section to a grantee by a State or State 
     designated entity, any assistance provided to a recipient by 
     a State or State designated entity, and any grant, award, or 
     other assistance from an affordable housing trust fund 
     referred to in subsection (h) shall be considered a Federal 
     award for purposes of the Federal Funding Accountability and 
     Transparency Act of 2006 (31 U.S.C. 6101 note). Upon the 
     request of the Secretary of the Office of Management and 
     Budget, the Secretary shall obtain and provide such 
     information regarding any such grants, assistance, and awards 
     as the Secretary of the Office of Management and Budget 
     considers necessary to comply with the requirements of such 
     Act, as applicable, pursuant to the preceding sentence.

     ``SEC. 1339. CAPITAL MAGNET FUND.

       ``(a) Establishment.--There is established in the Treasury 
     of the United States a trust fund to be known as the Capital 
     Magnet Fund, which shall be a special account within the 
     Community Development Financial Institutions Fund.
       ``(b) Deposits to Trust Fund.--The Capital Magnet Fund 
     shall consist of--
       ``(1) any amounts transferred to the Fund pursuant to 
     section 1337; and
       ``(2) any amounts as are or may be appropriated, 
     transferred, or credited to such Fund under any other 
     provisions of law.
       ``(c) Expenditures From Trust Fund.--Amounts in the Capital 
     Magnet Fund shall be available to the Secretary of the 
     Treasury to carry out a competitive grant program to attract 
     private capital for and increase investment in--
       ``(1) the development, preservation, rehabilitation, and 
     purchase of affordable housing for primarily extremely low-, 
     very low-, and low-income families; and
       ``(2) economic development activities or community service 
     facilities, such as day care centers, workforce development 
     centers, and health care clinics, which in conjunction with 
     affordable housing activities implement a concerted strategy 
     to stabilize or revitalize a low-income area or underserved 
     rural area.
       ``(d) Federal Assistance.--All assistance provided using 
     amounts in the Capital Magnet Fund shall be considered to be 
     Federal financial assistance.
       ``(e) Eligible Grantees.--A grant under this section may be 
     made, pursuant to such requirements as the Secretary of the 
     Treasury shall establish for experience and success in 
     attracting private financing and carrying out the types of 
     activities proposed under the application of the grantee, 
     only to--
       ``(1) a community development financial institution; or
       ``(2) a nonprofit organization having as 1 of its principal 
     purposes the development or management of affordable housing.
       ``(f) Eligible Uses.--Grant amounts awarded from the 
     Capital Magnet Fund pursuant to this section may be used for 
     the purposes described in paragraphs (1) and (2) of 
     subsection (c), including for the following uses:
       ``(1) To provide loan loss reserves.
       ``(2) To capitalize a revolving loan fund.
       ``(3) To capitalize an affordable housing fund.
       ``(4) To capitalize a fund to support activities described 
     in subsection (c)(2).
       ``(5) For risk-sharing loans.
       ``(g) Applications.--
       ``(1) In general.--The Secretary of the Treasury shall 
     provide, in a competitive application process established by 
     regulation, for eligible grantees under subsection (e) to 
     submit applications for Capital Magnet Fund grants to the 
     Secretary at such time and in such manner as the Secretary 
     shall determine.
       ``(2) Content of application.--The application required 
     under paragraph (1) shall include a detailed description of--
       ``(A) the types of affordable housing, economic, and 
     community revitalization projects that support or sustain 
     residents of an affordable housing project funded by a grant 
     under this section for which such grant amounts would be 
     used, including the proposed use of eligible grants as 
     authorized under this section;
       ``(B) the types, sources, and amounts of other funding for 
     such projects; and
       ``(C) the expected timeframe of any grant used for such 
     project.
       ``(h) Grant Limitation.--
       ``(1) In general.--Any 1 eligible grantee and its 
     subsidiaries and affiliates may not be awarded more than 15 
     percent of the aggregate funds available for grants during 
     any year from the Capital Magnet Fund.
       ``(2) Geographic diversity.--
       ``(A) Goal.--The Secretary of the Treasury shall seek to 
     fund activities in geographically diverse areas of economic 
     distress, including metropolitan and underserved rural areas 
     in every State.
       ``(B) Diversity defined.--For purposes of this paragraph, 
     geographic diversity includes those areas that meet objective 
     criteria of economic distress developed by the Secretary of 
     the Treasury, which may include--
       ``(i) the percentage of low-income families or the extent 
     of poverty;
       ``(ii) the rate of unemployment or underemployment;
       ``(iii) extent of blight and disinvestment;
       ``(iv) projects that target extremely low-, very low-, and 
     low-income families in or outside a designated economic 
     distress area; or
       ``(v) any other criteria designated by the Secretary of the 
     Treasury.
       ``(3) Leverage of funds.--Each grant from the Capital 
     Magnet Fund awarded under this section shall be reasonably 
     expected to result in eligible housing, or economic and 
     community development projects that support or sustain an 
     affordable housing project funded by a grant under this 
     section whose aggregate costs total at least 10 times the 
     grant amount.
       ``(4) Commitment for use deadline.--Amounts made available 
     for grants under this section shall be committed for use 
     within 2 years of the date of such allocation. The Secretary 
     of the Treasury shall recapture into the Capital Magnet Fund 
     any amounts not so used or committed for use and allocate 
     such amounts in the first year after such recapture.
       ``(5) Lobbying restrictions.--No assistance or amounts made 
     available under this section may be expended by an eligible 
     grantee to pay any person to influence or attempt to 
     influence any agency, elected official, officer or employee 
     of a State or local government in connection with the making, 
     award, extension, continuation, renewal, amendment, or 
     modification of any State or local government contract, 
     grant, loan, or cooperative agreement as such terms are 
     defined in section 1352 of title 31, United States Code.
       ``(6) Prohibition of consideration of use for meeting 
     housing goals or duty to serve.--In determining the 
     compliance of enterprises with the housing goals under this 
     section and the duty to serve underserved markets under 
     section 1335, the Secretary of Housing and Urban Development 
     may not consider any Capital Magnet Fund amounts used under 
     this section for eligible activities

[[Page 31905]]

     under subsection (f). The Secretary of Housing and Urban 
     Development shall give credit toward the achievement of such 
     housing goals and such duty to serve underserved markets to 
     purchases by the enterprises of mortgages for housing that 
     receives funding from Capital Magnet Fund grant amounts, but 
     only to the extent that such purchases by the enterprises are 
     funded other than with such grant amounts.
       ``(7) Accountability of recipients and grantees.--
       ``(A) Tracking of funds.--The Secretary of the Treasury 
     shall--
       ``(i) require each grantee to develop and maintain a system 
     to ensure that each recipient of assistance from the Capital 
     Magnet Fund uses such amounts in accordance with this 
     section, the regulations issued under this section, and any 
     requirements or conditions under which such amounts were 
     provided; and
       ``(ii) establish minimum requirements for agreements, 
     between the grantee and the Capital Magnet Fund, regarding 
     assistance from the Capital Magnet Fund, which shall 
     include--

       ``(I) appropriate periodic financial and project reporting, 
     record retention, and audit requirements for the duration of 
     the grant to the recipient to ensure compliance with the 
     limitations and requirements of this section and the 
     regulations under this section; and
       ``(II) any other requirements that the Secretary determines 
     are necessary to ensure appropriate grant administration and 
     compliance.

       ``(B) Misuse of funds.--If the Secretary of the Treasury 
     determines, after reasonable notice and opportunity for 
     hearing, that a grantee has failed to comply substantially 
     with any provision of this section and until the Secretary is 
     satisfied that there is no longer any such failure to comply, 
     the Secretary shall--
       ``(i) reduce the amount of assistance under this section to 
     the grantee by an amount equal to the amount of Capital 
     Magnet Fund grant amounts which were not used in accordance 
     with this section;
       ``(ii) require the grantee to repay the Secretary an amount 
     equal to the amount of the amount of Capital Magnet Fund 
     grant amounts which were not used in accordance with this 
     section;
       ``(iii) limit the availability of assistance under this 
     section to the grantee to activities or recipients not 
     affected by such failure to comply; or
       ``(iv) terminate any assistance under this section to the 
     grantee.
       ``(i) Periodic Reports.--
       ``(1) In general.--The Secretary of the Treasury shall 
     submit a report, on a periodic basis, to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives describing the activities to be funded under 
     this section.
       ``(2) Reports available to public.--The Secretary of the 
     Treasury shall make the reports required under paragraph (1) 
     publicly available.
       ``(j) Affordable Housing Trust Fund.--If, after the date of 
     enactment of the Government Sponsored Enterprise Mission 
     Improvement Act, in any year, there is enacted any provision 
     of Federal law establishing an affordable housing trust fund 
     other than under this title for use only for grants to 
     provide affordable rental housing and affordable 
     homeownership opportunities, the Secretary of the Treasury 
     shall in such year and any subsequent years transfer to that 
     affordable housing trust fund the aggregate amount allocated 
     pursuant to this section in such year or years. 
     Notwithstanding any other provision of law, assistance 
     provided using amounts transferred to such affordable housing 
     trust fund pursuant to this subsection may not be used for 
     any of the activities specified in subsection (h)(5).
       ``(k) Regulations.--
       ``(1) In general.--The Secretary of the Treasury shall 
     issue regulations to carry out this section.
       ``(2) Required contents.--The regulations issued under this 
     subsection shall include--
       ``(A) authority for the Secretary to audit, provide for an 
     audit, or otherwise verify an enterprise's activities, to 
     ensure compliance with this section;
       ``(B) a requirement that the Secretary ensure that the 
     allocation of each enterprise is audited not less than 
     annually to ensure compliance with this section; and
       ``(C) requirements for a process for application to, and 
     selection by, the Secretary for activities to be funded with 
     amounts from the Capital Magnet Fund, which shall provide 
     that--
       ``(i) funds be fairly distributed to urban, suburban, and 
     rural areas;
       ``(ii) selection shall be based upon specific criteria, 
     including a prioritization of funding based upon--

       ``(I) the ability to use such funds to generate additional 
     investments;
       ``(II) affordable housing need (taking into account the 
     distinct needs of different regions of the country); and
       ``(III) ability to obligate amounts and undertake 
     activities so funded in a timely manner.''.

     SEC. 8. ENFORCEMENT.

       (a) Cease-and-Desist Proceedings.--Section 1341 of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4581) is amended--
       (1) by striking subsection (a) and inserting the following 
     new subsection:
       ``(a) Grounds for Issuance.--The Secretary may issue and 
     serve a notice of charges under this section upon an 
     enterprise if the Secretary determines--
       ``(1) the enterprise has failed to meet any housing goal 
     established under subpart B, following a written notice and 
     determination of such failure in accordance with section 
     1336;
       ``(2) the enterprise has failed to submit a report under 
     section 1314, following a notice of such failure, an 
     opportunity for comment by the enterprise, and a final 
     determination by the Secretary;
       ``(3) the enterprise has failed to submit the information 
     required under subsection (m) or (n) of section 309 of the 
     Federal National Mortgage Association Charter Act, or 
     subsection (e) or (f) of section 307 of the Federal Home Loan 
     Mortgage Corporation Act;
       ``(4) the enterprise has violated any provision of this 
     part or any order, rule, or regulation under this part;
       ``(5) the enterprise has failed to submit a housing plan 
     that complies with section 1336(c) within the applicable 
     period; or
       ``(6) the enterprise has failed to comply with a housing 
     plan under section 1336(c).'';
       (2) in subsection (b)(2), by striking ``requiring the 
     enterprise to'' and all that follows through the end of the 
     paragraph and inserting the following: ``requiring the 
     enterprise to--
       ``(A) comply with the goal or goals of this subpart;
       ``(B) submit a report under section 1314;
       ``(C) comply with any provision of this part or any order, 
     rule, or regulation under such part;
       ``(D) submit a housing plan in compliance with section 
     1336(c);
       ``(E) comply with a housing plan submitted under section 
     1336(c); or
       ``(F) provide the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act, as 
     applicable.'';
       (3) in subsection (c), by inserting ``date of the'' before 
     ``service of the order''; and
       (4) by striking subsection (d).
       (b) Authority of Secretary to Enforce Notices and Orders.--
     Section 1344 of the Housing and Community Development Act of 
     1992 (12 U.S.C. 4584) is amended by striking subsection (a) 
     and inserting the following new subsection:
       ``(a) Enforcement.--
       ``(1) In court.--The Secretary may, in the discretion of 
     the Secretary, apply to the United States District Court for 
     the District of Columbia, or the United States district court 
     within the jurisdiction of which the headquarters of the 
     enterprise is located, for the enforcement of any effective 
     and outstanding notice or order issued under section 1341 or 
     1345, or request that the Attorney General of the United 
     States bring such an action.
       ``(2) Court authority.--A court described under paragraph 
     (1) shall have jurisdiction and power to order and require 
     compliance with any notice or order issued pursuant to 
     paragraph (1).''.
       (c) Civil Money Penalties.--Section 1345 of the Housing and 
     Community Development Act of 1992 (12 U.S.C. 4585) is 
     amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following new subsections:
       ``(a) Authority.--The Secretary may impose a civil money 
     penalty, in accordance with the provisions of this section, 
     on any enterprise that has failed to--
       ``(1) meet any housing goal established under subpart B, 
     following a written notice and determination of such failure 
     in accordance with section 1336(b);
       ``(2) submit a report under section 1314, following a 
     notice of such failure, an opportunity for comment by the 
     enterprise, and a final determination by the Secretary;
       ``(3) submit the information required under subsection (m) 
     or (n) of section 309 of the Federal National Mortgage 
     Association Charter Act, or subsection (e) or (f) of section 
     307 of the Federal Home Loan Mortgage Corporation Act;
       ``(4) comply with any provision of this part or any order, 
     rule, or regulation under this part;
       ``(5) submit a housing plan pursuant to section 1336(c) 
     within the required period; or
       ``(6) comply with a housing plan for the enterprise under 
     section 1336(c).
       ``(b) Amount of Penalty.--The amount of a civil money 
     penalty under subsection (a), as determined by the Secretary, 
     may not exceed--
       ``(1) for any failure described in paragraph (1), (5), or 
     (6) of subsection (a), $50,000 for each day that the failure 
     occurs; and
       ``(2) for any failure described in paragraph (2), (3), or 
     (4) of subsection (a), $20,000 for each day that the failure 
     occurs.'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by inserting ``and'' after the 
     semicolon at the end;
       (ii) in subparagraph (B), by striking ``; and'' and 
     inserting a period; and

[[Page 31906]]

       (iii) by striking subparagraph (C); and
       (B) in paragraph (2), by inserting after the period at the 
     end the following: ``In determining the penalty under 
     subsection (a)(1), the Secretary shall give consideration to 
     the length of time the enterprise should reasonably take to 
     achieve the goal.'';
       (3) in the first sentence of subsection (d)--
       (A) by striking ``request the Attorney General of the 
     United States to'' and inserting ``, in the discretion of the 
     Secretary,''; and
       (B) by inserting ``, or request that the Attorney General 
     of the United States bring such an action'' before the period 
     at the end;
       (4) by striking subsection (f); and
       (5) by redesignating subsection (g) as subsection (f).
       (d) Enforcement of Subpoenas.--Section 1348(c) of the 
     Housing and Community Development Act of 1992 (12 U.S.C. 
     4588(c)) is amended--
       (1) by striking ``request the Attorney General of the 
     United States to'' and inserting ``, in the discretion of the 
     Secretary,''; and
       (2) by inserting ``or request that the Attorney General of 
     the United States bring such an action,'' after ``District of 
     Columbia,''.
       (e) Conforming Amendment.--The heading for subpart C of 
     part 2 of subtitle A of title XIII of the Housing and 
     Community Development Act of 1992 is amended to read as 
     follows:

                      ``Subpart C--Enforcement''.

                                 ______
                                 
      By Mr. COLEMAN (for himself and Ms. Collins):
  S. 2394. A bill to amend the Internal Revenue Code of 1986 to 
simplify, modernize, and improve public notice of and access to tax 
lien information by providing for a national, Internet accessible, 
filing system for Federal tax liens, and for other purposes; to the 
Committee on Finance.
  Mr. COLEMAN. Mr. President, I rise today to introduce the Good 
Government Contractor Act of 2007.
  This legislation represents my continuing efforts targeting federal 
contractors with tax debt. For several years, as Chair and now as 
Ranking Member of the Permanent Subcommittee on Investigations, I have 
led a bipartisan Subcommittee effort, with the assistance of the 
Government Accountability Office, that has uncovered tens of thousands 
of deadbeat civilian and defense contractors.
  What we are dealing with here are not everyday tax delinquents, but 
rather federal contractors who do not pay their fair share of taxes--
despite receiving billions of dollars from American taxpayers each 
year. So far, since PSI began this effort, we have learned that 27,000 
Federal contractors at the Department of Defense owed about $3 billion 
in unpaid taxes; 33,000 Federal contractors at civilian agencies owed 
back taxes amounting to $3.3 billion; 3,800 Federal contractors who 
contract with the General Services Administration owe back taxes amount 
to $1.4 billion.
  These contractors are not just cheating the American taxpayer but in 
many cases cheating their own employees by using payroll taxes for 
their business or personal use. The Subcommittee has learned of 
contractors who have bought luxury cars, boats, and multi-million 
dollar properties, even though they owed hundreds of thousands of 
dollars in unpaid taxes.
  At the end of the day, these contractors are not only shifting the 
burden to honest taxpayers but also depriving the Treasury of funds 
that could be used to address critical priorities from education to 
health care to the fight against terrorism. Accordingly, as part of my 
on-going effort to safeguard the interest of the American taxpayer and 
honest federal contractors, I am introducing legislation to better 
target tax cheating contractors.
  More specifically, my legislation will amend the Federal Acquisition 
Regulations to consider a responsible contractor as one without any tax 
debt; require the Department of Defense, GSA and NASA to issue a final 
rule relating to tax delinquency; establish a national electronic tax 
lien filing system; create a Federal tax conviction database for the 
purposes of verifying contractor tax information; and establish as 
cause for debarment or suspension for knowingly making false statements 
regarding Federal tax information or prior convictions or civil 
judgments for Federal tax evasion or other Federal Tax offenses.
  My bill will also repeal the indiscriminant 3 percent tax withholding 
requirement on all contractors, something which the vast majority of 
responsible, tax-paying government contractors, as well as State and 
local units of government, will appreciate. Last year, Congress passed 
into law a well-intentioned but highly problematic measure establishing 
a 3 percent withholding tax on all government contractors. Section 511 
of the Tax Increase Prevention and Reconciliation Act of 2005 will 
impose a 3 percent withholding tax on Federal, State and local payments 
for goods and services beginning in 2011, except for local governments 
with annual spending of less than $100 million for goods and services. 
While this measure will obviously capture the bad apples, it 
unfortunately will also hit honest contractors--some of whose business 
livelihoods could well be jeopardized as a result. Another serious side 
effect will be the administrative burden on State and local 
governments, which could ultimately heighten the cost of doing business 
in a much larger sense.
  Rather than this broad and cumbersome approach, my Good Government 
Contractor Act of 2007 will replace the blanket 3 percent withholding 
requirement with measures focused on just the bad actors. In closing, 
my bill will protect taxpayers, State and local governments, and law-
abiding government contractors by holding deadbeat contractors 
accountable in a strict but fair way.
  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. 2394

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Good 
     Government Contractor Act of 2007''.
       (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.

     SEC. 2. REPEAL OF IMPOSITION OF WITHHOLDING ON CERTAIN 
                   PAYMENTS MADE TO VENDORS BY GOVERNMENT 
                   ENTITIES.

       The amendment made by section 511 of the Tax Increase 
     Prevention and Reconciliation Act of 2005 is repealed and the 
     Internal Revenue Code of 1986 shall be applied as if such 
     amendment had never been enacted.

     SEC. 3. FAR CONTRACTOR QUALIFICATIONS.

       (a) In General.--Not later than 180 days after the date of 
     the enactment of this Act, the Civilian Agency Acquisition 
     Council and the Defense Acquisition Regulations Council shall 
     amend the Federal Acquisition Regulation issued under 
     sections 6 and 25 of the Office of Federal Procurement Policy 
     Act (41 U.S.C. 405 and 421) to provide that for a prospective 
     contractor to be determined responsible, such contractor must 
     not have any tax debt.
       (b) Tax Debt.--For purposes of this section, the term ``tax 
     debt'' means an outstanding debt under the Internal Revenue 
     Code of 1986 which has not been paid within 180 days after an 
     assessment of a tax, penalty, or interest and which is not 
     subject to further appeal or a petition for redetermination 
     under such Code. Such term does not include a debt that is 
     being paid in a timely manner pursuant to an agreement under 
     section 6159 or section 7122 of such Code.

     SEC. 4. FINAL RULE PROMULGATION.

       Not later than 180 days after the date of the enactment of 
     this Act, the Civilian Agency Acquisition Council and the 
     Defense Acquisition Regulations Council shall make final the 
     proposed rule FAR Case 2006-011 (Representations and 
     Certifications--Tax Delinquency).

     SEC. 5. NATIONAL TAX LIEN FILING SYSTEM.

       (a) Filing of Notice of Lien.--Subsection (f) of section 
     6323 (relating to validity and priority against certain 
     persons) is amended to read as follows:
       ``(f) Filing of Notice; Form.--
       ``(1) Filing of notice.--The notice referred to in 
     subsection (a) shall be filed in the national Federal tax 
     lien registry established under subsection (k). The filing of 
     a notice of lien, or a certificate of release, discharge, 
     subordination, or nonattachment of lien, in the national 
     Federal tax lien registry shall be effective for purposes of 
     determining lien priority regardless of the nature or 
     location of the property interest to which the lien attaches.
       ``(2) Form.--The form and content of the notice referred to 
     in subsection (a) shall be

[[Page 31907]]

     prescribed by the Secretary. Such notice shall be valid 
     notwithstanding any other provision of law regarding the form 
     or content of a notice of lien.
       ``(3) Other national filing systems.--The filing of a 
     notice of lien shall be governed by this title and shall not 
     be subject to any other Federal law establishing a place or 
     places for the filing of liens or encumbrances under a 
     national filing system.''.
       (b) Refiling of Notice.--Paragraph (2) of section 6323(g) 
     (relating to refiling of notice) is amended to read as 
     follows:
       ``(2) Refiling.--A notice of lien may be refiled in the 
     national Federal tax lien registry established under 
     subsection (k).''.
       (c) Release of Tax Liens or Discharge of Property.--
       (1) In general.--Section 6325(a) (relating to release of 
     lien) is amended by inserting ``, and shall cause the 
     certificate of release to be filed in the national Federal 
     tax lien registry established under section 6323(k),'' after 
     ``internal revenue tax''.
       (2) Release of tax liens expedited from 30 to 10 days.--
     Section 6325(a) (relating to release of lien) is amended by 
     striking ``not later than 30 days'' and inserting ``not later 
     than 10 days''.
       (3) Discharge of property from lien.--Section 6325(b) 
     (relating to discharge of property) is amended--
       (A) by inserting ``, and shall cause the certificate of 
     discharge to be filed in the national Federal tax lien 
     registry established under section 6323(k),'' after ``under 
     this chapter'' in paragraph (1),
       (B) by inserting ``, and shall cause the certificate of 
     discharge to be filed in such national Federal tax lien 
     registry,'' after ``property subject to the lien'' in 
     paragraph (2),
       (C) by inserting ``, and shall cause the certificate of 
     discharge to be filed in such national Federal tax lien 
     registry,'' after ``property subject to the lien'' in 
     paragraph (3), and
       (D) by inserting ``, and shall cause the certificate of 
     discharge of property to be filed in such national Federal 
     tax lien registry,'' after ``certificate of discharge of such 
     property'' in paragraph (4).
       (4) Discharge of property from estate or gift tax lien.--
     Section 6325(c) (relating to estate or gift tax) is amended 
     by inserting ``, and shall cause the certificate of discharge 
     to be filed in the national Federal tax lien registry 
     established under section 6323(k),'' after ``imposed by 
     section 6324''.
       (5) Subordination of lien.--Section 6325(d) (relating to 
     subordination of lien) is amended by inserting ``, and shall 
     cause the certificate of subordination to be filed in the 
     national Federal tax lien registry established under section 
     6323(k),'' after ``subject to such lien''.
       (6) Nonattachment of lien.--Section 6325(e) (relating to 
     nonattachment of lien) is amended by inserting ``, and shall 
     cause the certificate of nonattachment to be filed in the 
     national Federal tax lien registry established under section 
     6323(k),'' after ``property of such person''.
       (7) Effect of certificate.--Paragraphs (1) and (2)(B) of 
     section 6325(f) (relating to effect of certificate) are each 
     amended by striking ``in the same office as the notice of 
     lien to which it relates is filed (if such notice of lien has 
     been filed)'' and inserting ``in the national Federal tax 
     lien registry established under section 6323(k)''.
       (8) Release following administrative appeal.--Section 
     6326(b) (relating to certificate of release) is amended--
       (A) by striking ``and shall include'' and insert ``, shall 
     include'', and
       (B) by inserting ``, and shall cause the certificate of 
     release to be filed in the national Federal tax lien registry 
     established under section 6323(k),'' after ``erroneous''.
       (9) Conforming amendments.--Section 6325 is amended by 
     striking subsection (g) and by redesignating subsection (h) 
     as subsection (g).
       (d) National Federal Tax Lien Registry.--
       (1) In general.--Section 6323 is amended by adding at the 
     end the following new subsection:
       ``(k) National Registry.--The national Federal tax lien 
     registry referred to in subsection (f)(1) shall be 
     established and maintained by the Secretary and shall be 
     accessible to and searchable by the public through the 
     Internet at no cost to access or search. The registry shall 
     identify the taxpayer to whom the Federal tax lien applies 
     and reflect the date and time the notice of lien was filed, 
     and shall be made searchable by, at a minimum, taxpayer name, 
     the State of the taxpayer's address as shown on the notice of 
     lien, the type of tax, and the tax period, and, when the 
     Secretary determines it is feasible, by property. The 
     registry shall also provide for the filing of certificates of 
     release, discharge, subordination, and nonattachment of 
     Federal tax liens, as authorized in sections 6325 and 6326, 
     and may provide for publishing such other documents or 
     information with respect to Federal tax liens as the 
     Secretary may by regulation provide.''.
       (2) Administrative action.--The Secretary of the Treasury 
     shall issue regulations or other guidance providing for the 
     maintenance and use of the national Federal tax lien registry 
     established under section 6323(k) of the Internal Revenue 
     Code of 1986. The Secretary of the Treasury shall take 
     appropriate steps to secure and prevent tampering with the 
     data recorded therein. Prior to implementation of such 
     registry, the Secretary of the Treasury shall review the 
     information currently provided in public lien filings and 
     determine whether any such information should be excluded or 
     protected from public viewing in such registry.
       (e) Transition Rules.--The Secretary of the Treasury may by 
     regulation prescribe for the continued filing of notices of 
     Federal tax lien in the offices of the States, counties and 
     other governmental subdivisions after December 31, 2008, for 
     an appropriate period to permit an orderly transition to the 
     national Federal tax lien registry established under section 
     6323(k) of the Internal Revenue Code of 1986.
       (f) Effective Date.--The amendments made by this section 
     shall apply to notices of lien filed after December 31, 2008. 
     The national Federal tax lien registry (established under 
     section 6323(k) of the Internal Revenue Code of 1986) shall 
     be made operational as of January 1, 2009, whether or not the 
     Secretary of the Treasury has promulgated final regulations 
     establishing such registry.

     SEC. 6. FEDERAL TAX CONVICTION DATABASE.

       (a) In General.--The Attorney General of the United States 
     shall establish and maintain a database containing the names 
     of individuals and entities with convictions for Federal tax 
     offenses under the Internal Revenue Code of 1986. Such 
     database shall be accessible and searchable by the head of 
     any Federal agency for purposes of verifying information 
     provided by prospective contractors.
       (b) Administrative Action.--The Attorney General shall 
     issue regulations or other guidance providing for the 
     maintenance and use of the database established under 
     subsection (a). The Attorney General shall take appropriate 
     steps to secure and prevent tampering with the data recorded 
     therein.

     SEC. 7. REQUIRED ACCESS TO REGISTRY AND DATABASE.

       Not later than 180 days after the date of the enactment of 
     this Act, the Civilian Agency Acquisition Council and the 
     Defense Acquisition Regulations Council shall amend the 
     Federal Acquisition Regulation issued under sections 6 and 25 
     of the Office of Federal Procurement Policy Act (41 U.S.C. 
     405 and 421) to require a contracting officer making a 
     determination of responsibility with respect to any 
     prospective contractor to access the national Federal tax 
     lien registry established under section 6323(k) of the 
     Internal Revenue Code of 1986 and the Federal tax conviction 
     database established under section 6 of this Act.

     SEC. 8. CAUSES FOR DEBARMENT AND SUSPENSION.

       Not later than 180 days after the date of the enactment of 
     this Act, the Civilian Agency Acquisition Council and the 
     Defense Acquisition Regulations Council shall amend the 
     Federal Acquisition Regulation issued under sections 6 and 25 
     of the Office of Federal Procurement Policy Act (41 U.S.C. 
     405 and 421)--
       (1) to provide as a cause for either contractor debarment 
     or suspension the knowingly making of false statements 
     regarding Federal tax information, including on the Online 
     Representations and Certifications Application or to the 
     Central Contractor Registry, incurring a tax debt (as defined 
     in section 3(b)), or the conviction or imposition of a civil 
     judgment for the commission of Federal tax evasion or any 
     other Federal tax offense, and
       (2) to require the debarring official or suspending 
     official to provide a statement of explanation for the 
     nondebarment or non-suspension of any contractor in any 
     determination involving any cause for debarment or suspension 
     described in paragraph (1).
                                 ______
                                 
      By Mrs. CLINTON (for herself and Mr. Rockefeller):
  S. 2395. A bill to establish an adoption process improvement pilot 
program; to the Committee on Health, Education, Labor, and Pensions.
  Mrs. CLINTON. Mr. President, I am here today to introduce legislation 
in honor of National Adoption Day that will address the needs of 
children waiting to be adopted from our Nation's foster care system. 
These are children who are unable to return home to their natural 
parents and are in need of permanent, loving, adoptive homes. In recent 
years, Congress has acted to implement supports for this population by 
creating programs that allow states to pursue creative and innovative 
methods for increasing foster care adoptions. However, today, tens of 
thousands of children are still waiting for families. There is still 
more work to be done.
  According to current federal estimates, there are 114,000 children in 
foster care with the goal of adoption. Of these, only 13 percent are 
living in a pre-adoptive home. Moreover, each year in the public child 
welfare system, more children are made eligible for

[[Page 31908]]

adoption than find permanent adoptive homes. For example, in fiscal 
year 2005--the most recent year for which statistics are available--
states finalized 15,000 more terminations of parental rights than 
adoptions. Taken together, these statistics describe a tremendous pool 
of children lingering in foster care, waiting for a ``forever family.'' 
We know the longer children languish in foster care, the more they are 
at risk for developing a range of psychological, behavioral, and 
educational problems. Therefore, permanence for these children is 
essential.
  Child welfare professionals across the country lament a lack of 
adoptive families for children in foster care. However, an untapped 
resource exists. A recent study conducted by the Evan B. Donaldson 
Adoption Institute in collaboration with Harvard University and the 
Urban Institute notes that, in a given year, 240,000 people will call 
for information about adopting a child from foster care, but only a 
fraction will see the process through to adoption. This research states 
that prospective parents are often alienated from the adoption process 
at an early stage; these individuals experience unpleasant initial 
contacts and report difficulty in navigating the adoption process. Out 
of frustration, they abandon their pursuit of bringing a foster child 
permanently into their home.
  Therefore, I am pleased to introduce the Adoption Improvement Act of 
2007. This legislation establishes funding for a demonstration project 
aimed at reducing the attrition of prospective parents from the 
adoption process. Participating states will implement a rigorous 
program that strengthens the first contact prospective adopters have 
when they make that critical, initial inquiry into adopting a child. 
The bill calls on programs to include a specialized adoption hotline; 
hire employees who are trained to respond to callers' requests 
sensitively and efficiently; and incorporate the input of parents who 
have already adopted children from foster care. In addition, programs 
will provide explicit information to parents about how to make their 
way through the various adoption procedures; describe the rewards and 
challenges of the adoption process; and establish a buddy system that 
partners prospective parents with those who have already adopted foster 
children successfully. Finally, all agencies in the demonstration 
project will participate in a thorough program evaluation.
  This month is National Adoption Month, and tomorrow, November 17, 
2007, is National Adoption Day--a day to celebrate the families that 
have already been joined through adoption, and to call attention to the 
thousands of children still waiting for permanent homes. I am delighted 
to join Senators Landrieu and Coleman in their forthcoming resolution 
acknowledging the importance of National Adoption Month and National 
Adoption Day. I encourage my colleagues in Congress to take the 
messages of this resolution and my bill with them, beyond just this 
November, into the future.
  The national data compel us to take action. Too many children in our 
Nation's foster care system are in desperate need of stable, loving 
homes, and there are thousands of potential parents out there yearning 
to provide them. I would like to thank my colleague Senator Rockefeller 
for joining me in this important effort. Please join me in bringing 
these groups together so that children in foster care can find the 
families they deserve.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Rockefeller, Mr. Lott, and Mr. 
        Kennedy):
  S. 2396. A bill to amend title XI of the Social Security Act to 
modernize the quality improvement organization (QIO) program; to the 
Committee on Finance.
  Mr. HATCH. Mr. President, today I join with Senators Rockefeller, 
Lott, and Kennedy to introduce the Medicare Quality Improvement 
Modernization Act of 2007, S. 2396.
  As background for my colleagues, Medicare's Quality Improvement 
Organization, QIO, program has been in existence for 35 years. The 
program's intent has always been to assure that Medicare's 
beneficiaries receive high quality medical care. The program has 
undergone a steady evolution. What began as a program that called 
attention to hospitals and physicians whose care deviated from the 
norms of medical practice has morphed into one that seeks to help 
physicians, hospitals, nursing homes and other providers develop 
systems to improve their quality of care.
  The program has changed as the definition of quality changed. When 
Medicare's peer review program was initiated, high quality care for a 
Medicare beneficiary was simply not to be among the unfortunate few 
whose medical care deviated from the norms of local medical practice. 
Fortunate for them, however, quality today is the routine adherence of 
providers to nationally accepted standards of care.
  The legislative changes we propose for the QIO program reflects an 
ever-advancing definition of quality medical care and a focus on 
helping providers obtain it.
  The QIO program has three functions. First, the program reviews the 
medical care of beneficiaries who have complaints about their care and 
provides the beneficiaries opinions. Second, the program supports 
intensive work with practitioners, nursing homes, managed care plans 
and hospitals to develop delivery systems that improve the quality of 
their care. Third the program publicly reports system-level performance 
measures.
  The bill I introduce today is faithful to the results of a 
congressionally-mandated review of the QIO program reported in 
February, 2006. In that review, the IOM concluded ``The QIO program 
provides a potentially valuable nationwide infrastructure dedicated to 
promoting quality health care.'' For example, the QIO program is 
responsible for a substantial part of the National Healthcare Quality 
Report published by the Agency for Healthcare Research and Quality.
  The IOM report called for changes in the QIO program. Its principal 
findings and recommendations were that the local QIO boards are heavily 
physician-dominated with little consumer representation. Existing 
legislation requires specific levels of physician involvement, an 
outmoded board structure.
  Also, the QIO functions should be harmonized with other federal 
quality Initiatives.
  It found that the QIOs were ``. . . restricted from contracting with 
health care providers in its state for technical assistance or review 
services similar to those covered by its core Medicare contract.'' The 
IOM committee concluded that QIOs would be able to serve more providers 
and expand their function beyond Medicare beneficiaries to the entire 
healthcare system if they could contract for services to supplement 
their CMS funds.
  The Committee also recommended removal of restrictions on public 
access to the QIO's findings. For instance, beneficiaries have been 
unable to review the results of investigations that they requested.
  The IOM recommended that beneficiary reviews be removed from the 
local QIOs.
  The IOM committee concluded that Congress and the secretary of DHHS 
and CMS should improve program management by enhancing the contracting 
process and improving communication with the QIOs.
  The legislation I propose seeks to strengthen the QIO's 
infrastructure to fit with an ever-tightening standard of quality in 
medicine, believing that doctors and hospitals want to do the right 
thing but also that patients should have their say.
  Many of the changes recommended by the Institute of Medicine's 
experts and accepted by the experts at CMS do not require statutory 
change, but some do. Some program modifications are sufficiently 
critical to Medicare's beneficiaries, that while statutory language may 
not be required to affect them, a Congressional mandate is needed to 
assure them.
  First, the Quality Improvement Organization Modernization Act of 2007 
specifies that the Quality Improvement Organizations offer education, 
instruction, and technical assistance to providers, practitioners, and 
Medicare Advantage plans. It incorporates plans

[[Page 31909]]

and providers in urban, rural, and frontier areas and providers that 
treat racial and ethnic minorities.
  Second, our bill strengthens the review process for individual 
Medicare beneficiaries. The QIOs must actively educate beneficiaries of 
their right to bring any concerns to the QIOs. The QIOs must work with 
providers who are reviewed to correct deficiencies where they exist and 
to improve communication with patients where they do not.
  The bill specifies that the findings of the review must be disclosed 
to the beneficiary requesting the review but not before giving the 
provider an opportunity to respond to the findings. The review 
functions are left with the local QIOs and not delegated to other 
entities to perform.
  The bill specifies that the findings of reviews may not be used in 
medical malpractice litigation, otherwise the QIOs would serve more to 
screen cases for litigation than they would to improve the quality of 
care.
  Third, in order to be certain that the QIOs are appropriately judging 
the severity of the errors they find and appropriately recommending 
sanctions to the Secretary, the Office of Inspector General will 
contract for an audit of 10 percent of one year's QIO reviews during 
each 5-year contract period.
  Fourth, program administration is strengthened and its goals focused. 
The program's scope of work must incorporate the priorities of local 
stakeholders.
  A strategic advisory committee will advise the Secretary on program 
goals, on program performance, and on harmonization of the QIO's 
quality functions with other federal and non-federal quality 
initiatives.
  The GAO is instructed to report on implementation of program changes 
1 year after the first 5-year contract period following enactment of 
this legislation. The adequacy of funding allocated to the QIOs for 
local initiatives has been in dispute among the QIOs. Congress is to 
receive an independent report about the adequacy of QIO financing 
before the initiation of each contract period.
  The contracting process is strengthened by mandating timely 
contracting with the QIOs by CMS and by lengthening the contract period 
from 3 to 5 years. All QIOs must bid competitively every 5 years.
  Fifth, local boards have been physician-dominated with little 
consumer representation. Our bill eliminates the requirement that QIOs 
must be physician sponsored organizations. Our bill improves local QIO 
accountability by strengthening the authority of the Secretary over 
board structure and function. It authorizes the Secretary to ensure 
that non-physician quality experts and qualified consumers are given 
appropriate representation on state QIO boards. It authorizes the 
Secretary to ensure that the board structure is appropriate, that the 
compensation of board members and executives is market-based and that 
conflict of interest among board members is mitigated.
  Sixth, as the QIOs focus more of their energies on working with 
providers to improve quality the demand for their services in this 
endeavor exceed their resources. For example, the number of doctors 
requesting help from the Utah QIO in selecting information technology 
for their offices far exceeds the resources available to it from its 
CMS contract.
  Our bill allows a QIO to contract with a provider or organization if 
it meets one of several requirements. Among them are that the QIO must 
receive no more than 5 percent of its revenue from a single provider or 
organization, or if the contracting organization is subject to review 
by the QIO, conflict of interest must be mitigated by using an out-of-
state QIO to perform the reviews that the local QIO would otherwise 
perform.
  The QIO program differs from other Federal health care quality 
programs in that it does not just measure quality; it works with 
providers to attain it. The Medicare Quality Improvement Organization 
Act of 2007 strengthens the rights of beneficiaries, strengthens the 
administration of the program and the contracting process, provides for 
more accountability of contractors, and focuses the program on creating 
quality systems.
  I urge my colleagues to join with me in strengthening the QIO 
program. It is one of the cornerstones of the quality initiative not 
just for Medicare but for all Americans.
                                 ______
                                 
      By Mr. LEAHY (for himself, Mr. Cochran, and Mr. Dodd):
  S.J. Res. 25. A joint resolution providing for the appointment of 
John W. McCarter as a citizen regent of the Board of Regents of the 
Smithsonian Institution; to the Committee on Rules and Administration.
  Mr. LEAHY. Mr. President, I ask unanimous consent that the text of 
the joint resolution be printed in the Record.
  There being no objection, the text of the joint resolution was 
ordered to be printed in the Record, as follows:

                              S.J. Res. 25

       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled, That, in 
     accordance with section 5581 of the Revised Statutes (20 
     U.S.C. 43), the vacancy on the Board of Regents of the 
     Smithsonian Institution, in the class other than Members of 
     Congress, occurring because of the expiration of the term of 
     Walter E. Massey of Georgia, is filled by the appointment of 
     John W. McCarter of Illinois, for a term of 6 years, 
     effective on the date of the enactment of this resolution.

                          ____________________