[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[Senate]
[Pages 25920-25929]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. KAUFMAN (for himself, Mr. Leahy, Mr. Specter, Mr. Kohl, 
        Mr. Schumer, and Ms. Klobuchar):
  S. 1959. A bill to improve health care fraud enforcement; to the 
Committee on the Judiciary.
  Mr. KAUFMAN. Mr. President, it is no longer a secret that fraud 
represents one of the fastest growing and most costly forms of crime in 
America today. In no small part, our current economic crisis can be 
attributed to unchecked mortgage fraud. Mortgage fraud itself was 
spurred by rampant accounting fraud, which enabled crooked executives 
to fatten their larders on a bubble of fake equity. And on the back-
end, securities fraud, in the form of market manipulation and insider 
trading, hastened the eventual market crash and maximized its impact on 
Main Street and average American investors. In response, this body 
passed

[[Page 25921]]

the Fraud Enforcement Recovery Act, FERA, which directed critical 
resources and tools to anti-financial fraud efforts.
  FERA was passed in response to an unprecedented financial crisis. 
Americans should expect Congress to do more than simply react to crises 
after their most destructive impacts have already been felt. We owe it 
to our constituents to be proactive and to seek out and solve problems 
on the horizon so that disaster can be averted.
  In the midst of the debate concerning comprehensive health care 
reform, we must be proactive in combating health care fraud and abuse. 
Each year, criminals drain between $72 and $220 billion from private 
and public health care plans through fraud. We pay these costs as 
taxpayers and through higher health insurance premiums. As we take 
steps to increase the number of Americans who are covered by health 
insurance, and to improve the health care system for everyone, we must 
also ensure that law enforcement has the tools that it needs to deter, 
detect, and punish health care fraud.
  The Finance and HELP committees have worked long and hard to find 
ways to fight fraud and bend the cost curve down. They have done a 
great job. There's more work to be done, however, which is why today I, 
along with Senators Leahy, Specter, Kohl, Schumer, and Klobuchar, 
introduce the Health Care Fraud Enforcement Act of 2009.
  This bill makes straightforward but critical improvements to the 
Federal sentencing guidelines, to health care fraud statutes, and to 
forfeiture, money laundering, and obstruction statutes. The bill would 
also make available more Federal resources to activities specifically 
designed to target health care fraud. Taken together, these measures 
send a strong and unmistakable signal to those who would engage in 
health care fraud that they will be caught, and they will be punished.
  The bill makes important changes to the Federal sentencing guidelines 
to ensure that health care fraud offenses will be punished commensurate 
with the cost that these offenders inflict upon our health care system. 
Health care represents \1/6\ of our national economy, and so unchecked 
health care fraud has the potential to inflict devastating harm to our 
national prosperity.
  Despite the enormous losses in many health care fraud cases, analysis 
from the United States Sentencing Commission suggests that health care 
fraud offenders often receive shorter sentences than other white collar 
offenders in cases with similar loss amounts. And according to 
statements from cooperating health care fraud defendants, many 
criminals are drawn to health care fraud because of this low risk-to-
reward ratio. For this reason, the bill directs the Sentencing 
Commission to increase the offense score of health care fraud offenses 
by two to four levels, depending on the dollar amount involved in the 
crime.
  The bill also clarifies that courts should refuse to entertain 
arguments by defendants that they can avoid stiff punishment because 
only a portion of their fraudulent claims were likely to be paid.
  In addition, the bill updates the definition of ``health care fraud 
offense'' in the Federal criminal code to include violations of the 
anti-kickback statute, the Food, Drug and Cosmetic Act, and certain 
provisions of ERISA. These changes will allow the full panoply of law 
enforcement tools to be used against all health care fraud.
  The bill also strengthens whistleblower actions based on medical care 
kickbacks, which tempt by health care providers to churn unnecessary 
medical care at great risk to patients and great cost to the taxpayer. 
By making all payments that stem from an illegal kickback subject to 
the False Claims Act, this bill leverages the private sector to help 
detect and recover money paid pursuant to these illegal practices.
  The Department of Justice has had success both prosecuting illegal 
kickbacks and pursuing False Claims Act matters based on underlying 
violations of the Anti-Kickback Statute. Nevertheless, defendants in 
such FCA cases continue to mount legal challenges that sometimes defeat 
legitimate enforcement efforts.
  For example, a court recently held that, even though a device company 
may have paid a kickback to a doctor to use a particular medical 
device, the bill to the government for the procedure to implant the 
device was not false or fraudulent because the claim was submitted by 
the innocent hospital, and not by the guilty doctor. In other words, a 
claim that results from a kickback and that is fraudulent when 
submitted by a wrongdoer is laundered into a ``clean'' claim when an 
innocent third party finally submits the claim to the government for 
payment. This has the effect of insulating both the payor and the 
recipient of the kickback from False Claims Act liability. This 
obstacle to a successful action particularly limits the ability of the 
Department of Justice to recover from pharmaceutical and device 
manufacturers, because in such instances the claims arising from the 
illegal kickbacks typically are not submitted by the doctors who 
received the kickbacks, but by pharmacies and hospitals that had no 
knowledge of the underlying unlawful conduct.
  This bill remedies the problem by amending the anti-kickback statute 
to ensure that all claims resulting from illegal kickbacks are ``false 
or fraudulent,'' even when the claims are not submitted directly by the 
wrongdoers themselves. I want to emphasize that in such circumstances, 
neither anti-kickback nor False Claims Act liability will lie against 
the innocent third party that submitted the claim.
  The bill also addresses confusion in the case law over the 
appropriate meaning of ``willful'' conduct in health care fraud. Both 
the anti-kickback statute and the health care fraud statute include the 
term ``willfully.'' In both contexts, the Ninth Circuit Court of 
Appeals has read the term to require proof that the defendant not only 
intended to engage in unlawful conduct, but also knew of the particular 
law in question and intended to violate that particular law.
  This heightened mental state requirement may be appropriate for 
criminal violations of hyper-technical regulations, but it is 
inappropriate for these crimes, which punish simple fraud. The Finance 
Committee health care reform bill, America's Healthy Future Act, 
addresses this problem for the anti-kickback statute, but not for the 
general health care fraud offense. Accordingly, the Health Care Fraud 
Enforcement Act tracks the Finance bill and clarifies that ``willful 
conduct'' in this context does not require proof that the defendant had 
actual knowledge of the law in question or specific intent to violate 
that law. As a result, health care fraudsters will not receive special 
protection that they don't deserve.
  Next, the bill provides the Department of Justice with critical 
subpoena authority for investigations conducted pursuant to the Civil 
Rights for Institutionalized Persons Act, also known as CRIPA.
  Pursuant to that important statute, the Civil Rights Division of the 
Department of Justice investigates conditions in publicly operated 
institutions, such as nursing homes, mental health institutions, 
facilities for persons with disabilities, residential schools for 
children with disabilities, as well as jails and prisons, where there 
has been an allegation of pattern or practice of violating residents' 
Federal civil rights. Under CRIPA, only injunctive relief is available; 
the statute does not provide for the award of damages.
  CRIPA investigations commonly concern allegations of inadequate 
medical and mental health care, unsafe living conditions, and the 
failure to protect residents from harm. The majority of CRIPA 
investigations are conducted with the voluntary cooperation of state 
and local jurisdictions. When unlawful conditions are identified, CRIPA 
investigations are typically resolved through a negotiated settlement 
agreement that addresses the reforms necessary to correct policies, 
procedures and practices to address the identified deficiencies.

[[Page 25922]]

  Some jurisdictions, however, have refused to cooperate with the 
Division. CRIPA does not authorize the Department of Justice to issue 
subpoenas for documents, records, or even for access into the 
institution that is the target of the investigation. As a result, 
investigations have been hamstrung and the effectiveness of CRIPA to 
remedy systemic abuse of institutionalized persons has been 
unnecessarily limited.
  For example, in a CRIPA investigation of a county nursing home in New 
Jersey, the local jurisdiction would not cooperate. The Division's 
investigation revealed inadequate medical and mental health care, 
unlawful restraint, and inadequate nutrition and hydration. In one 
particularly serious incident, which occurred weeks after a meeting 
with the county officials to request their cooperation with the 
investigation, a resident was fed so quickly by staff that she 
aspirated and died. Emergency room physicians extracted a volume of 
mashed potatoes from the resident's lungs that filled a Ziploc bag. 
Another nursing home resident slowly starved to death because staff 
improperly positioned that resident's feeding tube. The Division was 
compelled to file suit, resulting in a negotiated settlement more than 
4 years after the investigation began. To be sure, these abuses are a 
civil rights issue that demand attention even in the absence of fraud 
prevention. But substandard care also represents fraud and waste, 
because taxpayers have paid for the provision of satisfactory medical 
services at facilities that fall under CRIPA jurisdiction.
  The absence of subpoena authority enables non-cooperating 
jurisdictions to obstruct and delay the Division in its mission to 
ensure that the Federal rights of persons in the custody of state and 
local officials are respected. The resultant litigation when 
jurisdictions exploit the absence of subpoena power is extraordinarily 
costly, yet the substantive outcome, appropriate injunctive relief, is 
the same.
  The bill addresses the problem by authorizing the Department of 
Justice to issue subpoenas for access to any institution that is the 
subject of an investigation related to a violation of CRIPA, and for 
any documents, records, materials, files, reports, memoranda, policies, 
procedures, investigations, video or audio recordings, and quality 
assurance reports of such institution.
  In a final substantive change, the bill corrects an apparent drafting 
error by providing that obstruction of criminal investigations 
involving administrative subpoenas under HIPAA, the Health Insurance 
Portability and Accountability Act of 1996, should be treated in the 
same manner as obstruction of criminal investigations involving grand 
jury subpoenas.
  Finally, the Health Care Fraud Enforcement Act provides the resources 
needed for law enforcement to uncover and go after these frauds. Health 
care fraud cannot be fought effectively without more investigators and 
prosecutors. This bill authorizes the appropriation of $20,000,000 each 
year from 2011 through 2016 for investigations, prosecutions, and civil 
or other proceedings relating to fraud and abuse in connection with any 
health care benefit program. The bill authorizes the United States 
Attorneys' Offices to be appropriated an additional $10,000,000 each 
year for this purpose, the Criminal Division of the Department of 
Justice, $5,000,000 each year, and the Civil Division of the Department 
of Justice, $5,000,000 each year.
  As we move toward meaningful health care reform, we must ensure that 
criminals who engage in health care fraud, and those who contemplate 
doing so, understand that they face swift prosecution and substantial 
punishment. Congress should move quickly to pass this legislation so 
that American taxpayers can be confident that their government has the 
tools and resources necessary to protect its investment in the health 
and welfare of our Nation.
  I urge my colleagues to support the Health Care Fraud Enforcement Act 
of 2009.
  Mr. LEAHY. Mr. President, I am pleased to join Senator Kaufman, as 
well as Senators Specter, Kohl, Schumer, and Klobuchar, to introduce 
the Health Care Fraud Enforcement Act of 2009. This legislation builds 
on the impressive steps the administration has already taken to step up 
health care fraud prevention and enforcement, and on the real progress 
represented by the anti-fraud provisions of the Finance and Health, 
Education, Labor and Pension Committee bills already before Congress. I 
was glad to contribute to those efforts.
  I feel strongly, though, that more needs to be done. This bill will 
provide prosecutors with needed tools for the effective investigation, 
prosecution, and punishment of health care fraud. By making modest but 
important changes to the law, it ensures that those who drain our 
health care system of billions of dollars each year, driving up costs 
and risking patients' lives, will go to jail, and that their fraudulent 
gains will be returned to American taxpayers and health care 
beneficiaries.
  For more than 3 decades, I have fought in Congress to combat fraud 
and protect taxpayer dollars. This spring, I introduced with Senator 
Grassley and Senator Kaufman the Fraud Enforcement and Recovery Act, 
the most significant anti-fraud legislation in more than a decade. When 
that legislation was enacted, it provided law enforcement with new 
tools to detect and prosecute financial and mortgage fraud. Now, as 
health care reform moves through the Senate, I want to make sure we do 
all we can to tackle the fraud that has contributed greatly to the 
skyrocketing cost of health care.
  The scale of health care fraud in America today is staggering. 
According to conservative estimates, about three percent of the funds 
spent on health care are lost to fraud--more than $60 billion a year. 
In the Medicare program alone, the Government Accountability Office 
estimates that more than $10 billon was lost to fraud just last year. 
While Medicare and Medicaid fraud is significant, it is important to 
remember that health care fraud does not occur solely in the public 
sector. Private health insurers also see billions of dollars lost to 
fraud. That fraud is often harder for the Government to track. Private 
companies have less incentive to report it, and in some cases, are 
responsible for the fraudulent practices themselves. Reining in private 
sector fraud must be a part of any comprehensive health care reform.
  The Health Care Fraud Enforcement Act of 2009 makes a number of 
straightforward, important improvements to existing statutes to 
strengthen prosecutors' ability to combat health care fraud. The bill 
would increase the Federal sentencing guidelines for health care fraud 
offenses. Despite the enormous losses in many health care fraud cases, 
offenders often receive shorter sentences than other white collar 
criminals. This lower risk is one reason criminals are drawn to health 
care fraud. By increasing the Federal sentencing guidelines for health 
care fraud offenses, we send a clear message that those who steal from 
the Nation's health care system will face swift prosecution and 
substantial punishment.
  The bill also provides for a number of statutory changes to 
strengthen fraud enforcement. For example, it would expand the 
definition of a ``Federal health care fraud offense'' to include 
violations of the anti-kickback statute and several other key health 
care-related criminal statutes, which will allow for more vigorous 
enforcement of those offenses, including making their proceeds subject 
to criminal forfeiture. It would also amend the anti-kickback statute 
to ensure that all claims resulting from illegal kickbacks are 
considered false claims for the purpose of civil action under the False 
Claims Act, even when the claims are not submitted directly by the 
wrongdoers themselves. All too often, health care providers secure 
business by paying illegal kickbacks, which needlessly increase health 
care risks and costs. This change will help ensure that the government 
is able to recoup from wrongdoers the losses caused by false health 
care fraud claims. The bill clarifies the intent requirement of another 
key health care fraud statute in order to facilitate effective, fair, 
and vigorous enforcement.

[[Page 25923]]

  The bill also provides the Department of Justice with limited 
subpoena authority for civil rights investigations conducted pursuant 
to the Civil Rights for Institutionalized Persons Act. This provision 
allows the Government to more effectively investigate conditions in 
publicly operated institutions, such as nursing homes, mental health 
institutions, and residential schools for children with disabilities, 
where there have been allegations of civil rights violations.
  Lastly, the bill provides needed resources for criminal and civil 
enforcement of health care fraud laws. It authorizes the appropriation 
of $20,000,000 a year to the Department of Justice from 2011 through 
2016 for investigations, prosecutions, and civil or other proceedings 
relating to fraud and abuse in connection with any health care benefit 
program. Studies indicate a return on investment of anywhere from $6 to 
$15 in Government recovery of fraud proceeds for every $1 spent on 
health care fraud enforcement, so this is a prudent and needed 
investment.
  We all agree that reducing the cost of health care for American 
citizens is a critical goal of health care reform. We in Congress must 
do our part by ensuring that, when we pass a health care reform bill, 
it includes all the tools and resources needed to crack down on the 
scourge of health care fraud. This bill is an important part of that 
effort.
      By Mr. AKAKA:
  S. 1963. A bill to amend title 38, United States Code, to provide 
assistance to caregivers of veterans, to improve the provision of 
health care to veterans, and for other purposes; read the first time.
  Mr. AKAKA. Mr. President, today I am introducing landmark legislation 
that will provide critical assistance to veterans and their family 
caregivers. The Caregiver and Veterans Omnibus Health Services Act of 
2009, contains provisions from S. 252, the Veterans Health Care 
Authorization Act of 2009, and S. 801, the Caregiver and Veterans 
Health Services Act of 2009. The Committee reported both S. 252 and S. 
801, and but they are being held by a single Senator. Today, I 
reintroduce these vital improvements to veterans' health care as S. 
1963.
  The bipartisan provisions contained in S. 1963 provide needed 
assistance and support to family members and others who are serving as 
caregivers for the most seriously injured veterans of the conflicts in 
Iraq and Afghanistan. This assistance includes health care, counseling, 
support and a living stipend. They also expand services for women 
veterans, those with traumatic brain injury, and veterans that live in 
rural areas. Because the Nation's veterans and their caregivers cannot 
wait any longer for this help, I am introducing S. 1963, and asking 
that it be immediately placed on the Calendar.
  S. 1963 has one simple theme: that every veteran deserves access to 
high quality health care, whether that care is provided by VA, or by a 
family caregiver. The Congress has previously recognized the 
contributions of caregivers. S. 1963 also contains many other important 
veterans' health improvements, including expanding services for women 
veterans; telemedicine technologies; transportation grants; and 
scholarship and loan repayment programs; and eliminating copayments for 
catastrophically disabled veterans. States which have an especially 
high number of veterans living in rural areas, such as Montana, Nevada, 
Wyoming, Florida, Arizona, Arkansas, Virginia, Idaho, Oklahoma, and New 
Mexico, would benefit greatly from the provisions in the bill which are 
designed to improve health care for rural veterans.
                                 ______
                                 
      By Mr. AKAKA:
  S. 1964. A bill to require disclosure of financial relationships 
between brokers and dealers and mutual fund companies, and of certain 
commissions paid by mutual fund companies; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. AKAKA. Mr. President, today, I am introducing the Mutual Fund 
Transparency Act of 2009. Mutual funds are vital investment vehicles 
for middle-income Americans that provide diversification and 
professional money management. Many working families rely on their 
mutual fund investments to pay for their children's education, prepare 
for retirement, and attain other financial goals.
  I first introduced a version of this legislation in 2003. That fall, 
appalling abuses of investor trust were exposed. Ordinary investors 
were being harmed by the greed of brokers, mutual fund employees, and 
institutional and large investors. The transgressions made it clear 
that the boards of mutual fund companies were not providing sufficient 
oversight and failed to adequately protect the interests of their 
shareholders.
  After the introduction of my bill, Securities and Exchange 
Commission, SEC, Chairman William Donaldson proposed several rules that 
mirrored the provisions in my bill, including a requirement that funds 
relying on certain exemptive rules have an independent chairman and 
that 75 percent of board directors be independent. However, legal 
actions taken against the SEC by the Chamber of Commerce and subsequent 
inaction under his successor, Chairman Christopher Cox, have prevented 
the adoption of these rules. The SEC needs additional statutory 
authority to finish these reforms and ensure that investors can rely on 
independent mutual fund boards to protect their interests.
  My bill will ensure the independence of mutual fund boards, increase 
the transparency of fees and expenses of mutual funds, and impose a 
fiduciary duty on all investment advisors.
  I have included in this legislation a number of provisions intended 
to ensure the independence of mutual fund boards. Poor board governance 
was a contributing factor to the mutual fund scandals in 2003. 
Independent directors must have a dominant presence on the board to 
ensure that investors' interests are the top priority. Once again, my 
legislation requires mutual fund boards to have an independent chairman 
and that 75 percent of their members be independent. The legislation 
strengthens the definition of an independent director. These changes 
will ensure that the interest of investors will be the paramount 
priority of the board.
  My legislation will ensure that investors are provided with relevant 
and meaningful disclosures from which they can make better informed 
decisions. Mr. President, my bill will increase the transparency of the 
complex financial relationship between brokers and mutual fund 
companies in ways that are both meaningful and easy to understand for 
investors. Shelf-space payments and revenue-sharing agreements between 
mutual fund companies and brokers present conflicts of interest that 
must be disclosed to investors. Without such disclosures, investors 
cannot make informed financial decisions. Investors may believe that 
brokers are recommending funds based on the expectation of solid 
returns or low volatility, when the broker's recommendation may be 
influenced by hidden broker commissions. I have included a point-of-
sale disclosure requirement in my legislation. In my bill, investors 
would have to be provided with the amount of differential payments and 
average fees for comparable transactions. My legislation also requires 
that confirmation notices be provided for mutual fund transactions, 
which will indicate how their broker was compensated.
  Investors are not provided with a complete and accurate idea of the 
expenses involved with owning a particular fund. Consumers often 
compare the expense ratios of funds when making investment decisions. 
However, expense ratios fail to take into account the cost of 
commissions in the purchase and sale of securities. To further increase 
the transparency of the actual costs of the fund, brokerage commissions 
must be counted as an expense in filings with the SEC and included in 
the calculation of the expense ratio. Currently, brokerage commissions 
are disclosed to the SEC, but not to individual investors. Brokerage 
commissions are only disclosed to investors upon request. My bill 
strengthens brokerage commission disclosure provisions and ensures that 
commissions will be included in a document that investors have access 
to and can utilize.

[[Page 25924]]

The inclusion of brokerage commissions in the expense ratio creates an 
incentive to reduce the use of soft dollars. Soft dollars can be used 
to lower expenses since most purchases using soft dollars do not count 
as expenses and are not calculated into the expense ratio. This change 
will make it easier for investors to know the true cost of the fund and 
compare the expense ratios of funds meaningfully.
  When I reintroduced a version of this bill in 2005, I added a 
provision pertaining to the fiduciary duty of brokers. Although I have 
modified that provision for the current bill, my intent to apply a 
fiduciary duty to brokers remains the same. This is an essential 
provision because it ensures that all financial professionals have the 
same responsibility to act in the best interests of their clients 
whether they are an investment advisor or a broker.
  We must improve the financial literacy of mutual fund investors so 
that they can make more sound investment decisions. I have included a 
requirement that the SEC study financial literacy among mutual fund 
investors. The SEC would be required to develop a strategy to increase 
the financial literacy of investors that results in positive change in 
investor behavior. In addition, the bill requires the Comptroller 
General of the United States to conduct a study on mutual fund 
advertising and make recommendations to improve investor protections 
and ensure that investors can make informed financial decisions when 
purchasing shares.
  We must enact this vital legislation to help protect the investments 
that our working families make in mutual funds. These reforms are long 
overdue. I will build upon the administration's regulatory 
modernization proposal on fiduciary duty for brokers and pre-sale 
disclosure of mutual fund expenses.
  I look forward to working with my friend, SEC Chairman Mary Schapiro, 
to bring about structural reform in the mutual fund industry and 
increase disclosures in order to provide useful and relevant 
information to mutual fund investors.
  Mr. President, I ask unanimous consent that the text of the bill and 
letters of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1964

       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 ``Mutual Fund Transparency Act 
     of 2009''.

     SEC. 2. DISCLOSURE OF FINANCIAL RELATIONSHIPS BETWEEN BROKERS 
                   AND DEALERS AND MUTUAL FUND COMPANIES.

       (a) In General.--Section 15(b) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o(b)) is amended by adding at the 
     end the following:
       ``(13) Confirmation of transactions for mutual funds.--
       ``(A) In general.--Each broker and dealer shall disclose in 
     writing to customers that purchase the shares of any open-end 
     or closed-end company registered under section 8 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-8) or any 
     interest in a unit investment trust or municipal securities 
     registered under this title used for education savings 
     plans--
       ``(i) the amount of any compensation received or to be 
     received by the broker or dealer in connection with such 
     transaction from any sources; and
       ``(ii) such other information as the Commission determines 
     appropriate.
       ``(B) Revenue sharing.--The term `compensation' under 
     subparagraph (A) includes any direct or indirect payment made 
     by an investment adviser (or any affiliate of an investment 
     adviser) to a broker or dealer for the purpose of promoting 
     the sales of securities of an entity described in 
     subparagraph (A), and payments made by an underwriter of the 
     fund to a broker or dealer.
       ``(C) Timing of disclosure.--The disclosure required under 
     subparagraph (A) shall be provided or sent to a customer not 
     later than the date of the completion of the transaction.
       ``(D) Limitation.--The disclosures required under 
     subparagraph (A) may not be made exclusively in--
       ``(i) a registration statement or prospectus of an entity 
     described in subparagraph (A); or
       ``(ii) any other filing of an entity described in 
     subparagraph (A) with the Commission.
       ``(E) Commission authority.--
       ``(i) In general.--The Commission shall issue such final 
     rules or regulations as are necessary to carry out this 
     paragraph, not later than 1 year after the date of enactment 
     of the Mutual Fund Transparency Act of 2009.
       ``(ii) Form of disclosure.--Disclosures under this 
     paragraph shall be in such form as the Commission shall 
     require by rule.
       ``(F) Definitions.--In this paragraph--
       ``(i) the terms `open-end company' and `closed-end company' 
     have the same meanings as in section 5 of the Investment 
     Company Act of 1940 (15 U.S.C. 80a-5);
       ``(ii) the term `unit investment trust' has the same 
     meaning as in section 4 of the Investment Company Act of 1940 
     (15 U.S.C. 80a-4); and
       ``(iii) the term `education savings plan' means a qualified 
     tuition program described in section 529(b)(1)(A)(ii) of the 
     Internal Revenue Code of 1986.''.
       (b) Disclosure of Brokerage Commissions.--Section 30 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-29) is amended 
     by adding at the end the following:
       ``(k) Disclosure of Brokerage Commissions.--The Commission, 
     by rule, shall require that brokerage commissions as an 
     aggregate dollar amount and percentage of assets paid by an 
     open-end or closed-end company or a unit investment trust or 
     issuer of municipal securities during the 5-year period 
     preceding the date of the transaction be included in any 
     disclosure of the amount of fees and expenses that may be 
     payable by the holder of the securities of such company for 
     purposes of--
       ``(1) the registration statement of that company; and
       ``(2) any other filing of that company with the Commission, 
     including the calculation of expense ratios.''.

     SEC. 3. MUTUAL FUND GOVERNANCE.

       (a) Independent Fund Boards.--Section 10(a) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-10(a)) is 
     amended--
       (1) by striking ``shall have'' and inserting the following: 
     ``shall--
       ``(1) have'';
       (2) by striking ``60 per centum'' and inserting ``25 
     percent'';
       (3) by striking the period at the end and inserting a 
     semicolon; and
       (4) by adding at the end the following:
       ``(2) have as chairman of its board of directors an 
     interested person of such registered company; or
       ``(3) permit any person (other than an interested person, 
     as described in paragraph (1)) to serve as a member of its 
     board of directors, unless that person--
       ``(A) is approved or elected by the shareholders of such 
     registered investment company at least once every 5 years; 
     and
       ``(B) has been found, on an annual basis, by a majority of 
     the directors who are not interested persons, after 
     reasonable inquiry by such directors, not to have any 
     material business or familial relationship with the 
     registered company, a significant service provider to the 
     company, or any entity controlling, controlled by, or under 
     common control with such service provider, that could 
     reasonably be interpreted as a conflict of interest or cast 
     doubt on the independence of the director.''.
       (b) Action by Independent Directors.--Section 10 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-10) is amended 
     by adding at the end the following:
       ``(i) Action by Board of Directors.--No action taken by the 
     board of directors of a registered investment company may 
     require the vote of a director who is an interested person of 
     such registered investment company.
       ``(j) Independent Committee.--
       ``(1) In general.--The members of the board of directors of 
     a registered investment company who are not interested 
     persons of such registered investment company shall establish 
     a committee comprised solely of such members, which committee 
     shall be responsible for--
       ``(A) selecting persons to be nominated for election to the 
     board of directors; and
       ``(B) adopting qualification standards for the nomination 
     of directors.
       ``(2) Disclosure.--The standards developed under paragraph 
     (1)(B) shall be disclosed in the registration statement of 
     the registered investment company.''.
       (c) Definition of Interested Person.--Section 2(a)(19) of 
     the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19)) 
     is amended--
       (1) in subparagraph (A)--
       (A) in clause (iv), by striking ``two'' and inserting 
     ``5''; and
       (B) by striking clause (vii) and inserting the following:
       ``(vii) any natural person who has served as an officer or 
     director, or as an employee within the preceding 10 fiscal 
     years, of an investment adviser or principal underwriter to 
     such registered investment company, or of any entity 
     controlling, controlled by, or under common control with such 
     investment adviser or principal underwriter;
       ``(viii) any natural person who has served as an officer or 
     director, or as an employee within the preceding 10 fiscal 
     years, of any entity that has within the preceding 5 fiscal 
     years acted as a significant service provider to such 
     registered investment company, or of any entity controlling, 
     controlled by, or

[[Page 25925]]

     under the common control with such service provider;
       ``(ix) any natural person who is a member of a class of 
     persons that the Commission, by rule or regulation, 
     determines is unlikely to exercise an appropriate degree of 
     independence as a result of--

       ``(I) a material business or professional relationship with 
     the investment company or an affiliated person of such 
     investment company;
       ``(II) a close familial relationship with any natural 
     person who is an affiliated person of such investment 
     company; or
       ``(III) any other reason determined by the Commission:''; 
     and

       (2) in subparagraph (B)--
       (A) in clause (iv), by striking ``two'' and inserting 
     ``5''; and
       (B) by striking clause (vii) and inserting the following:
       ``(vii) any natural person who is a member of a class of 
     persons that the Commission, by rule or regulation, 
     determines is unlikely to exercise an appropriate degree of 
     independence as a result of--

       ``(I) a material business or professional relationship with 
     such investment adviser or principal underwriter or 
     affiliated person of such investment adviser or principal 
     underwriter;
       ``(II) a close familial relationship with any natural 
     person who is an affiliated person of such investment adviser 
     or principal underwriter; or
       ``(III) any other reason, as determined by the 
     Commission.''.

       (d) Definition of Significant Service Provider.--Section 
     2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
     2(a)) is amended by adding at the end the following:
       ``(54) Significant service provider.--
       ``(A) In general.--Not later than 270 days after the date 
     of enactment of the Mutual Fund Transparency Act of 2009, the 
     Commission shall issue final rules defining the term 
     `significant service provider'.
       ``(B) Requirements.--The definition developed under 
     paragraph (1) shall include, at a minimum, the investment 
     adviser and principal underwriter of a registered investment 
     company for purposes of paragraph (19).''.

     SEC. 4. FINANCIAL LITERACY AMONG MUTUAL FUND INVESTORS STUDY.

       (a) In General.--The Securities and Exchange Commission 
     shall conduct a study to identify--
       (1) the existing level of financial literacy among 
     investors that purchase shares of open-end companies, as that 
     term is defined under section 5 of the Investment Company Act 
     of 1940, that are registered under section 8 of that Act;
       (2) the most useful and understandable relevant information 
     that investors need to make sound financial decisions prior 
     to purchasing such shares;
       (3) methods to increase the transparency of expenses and 
     potential conflicts of interest in transactions involving the 
     shares of open-end companies;
       (4) the existing private and public efforts to educate 
     investors; and
       (5) a strategy to increase the financial literacy of 
     investors that results in a positive change in investor 
     behavior.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall submit a report on the study required under subsection 
     (a) to--
       (1) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate; and
       (2) the Committee on Financial Services of the House of 
     Representatives.

     SEC. 5. STUDY REGARDING MUTUAL FUND ADVERTISING.

       (a) In General.--The Comptroller General of the United 
     States shall conduct a study on mutual fund advertising to 
     identify--
       (1) existing and proposed regulatory requirements for open-
     end investment company advertisements;
       (2) current marketing practices for the sale of open-end 
     investment company shares, including the use of unsustainable 
     past performance data, funds that have merged, and incubator 
     funds;
       (3) the impact of such advertising on consumers; and
       (4) recommendations to improve investor protections in 
     mutual fund advertising and additional information necessary 
     to ensure that investors can make informed financial 
     decisions when purchasing shares.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General of the United 
     States shall submit a report on the results of the study 
     conducted under subsection (a) to--
       (1) the Committee on Banking, Housing, and Urban Affairs of 
     the United States Senate; and
       (2) the Committee on Financial Services of the House of 
     Representatives.

     SEC. 6. POINT-OF-SALE DISCLOSURE.

       (a) In General.--Section 15(b) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o(b)), as amended by section 2 of 
     this Act, is amended by adding at the end the following:
       ``(14) Broker and dealer disclosures in mutual fund 
     transactions.--
       ``(A) In general.--Each broker and dealer shall disclose in 
     writing to each person that purchases the shares of an open-
     end or closed-end company registered under section 8 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-8) or any 
     interest in a unit investment trust or municipal securities 
     registered under this title--
       ``(i) the source and amount, in dollars and as a percentage 
     of assets, of any compensation received or to be received by 
     the broker or dealer in connection with such transaction from 
     any sources;
       ``(ii) the amount, in dollars and as a percentage of 
     assets, of compensation received in connection with 
     transactions in shares of other investment company shares 
     offered by the broker or dealer, if materially different from 
     the amount under clause (i);
       ``(iii) comparative information that shows the average 
     amount received by brokers and dealers in connection with 
     comparable transactions, as determined by the Commission; and
       ``(iv) such other information as the Commission determines 
     appropriate.
       ``(B) Revenue sharing.--The term `compensation' under 
     subparagraph (A) shall include any direct or indirect payment 
     made by an investment adviser (or any affiliate of an 
     investment adviser) to a broker or dealer for the purpose of 
     promoting the sales of securities of a registered investment 
     company.
       ``(C) Timing of disclosure.--The disclosures required under 
     subparagraph (A) shall be made to permit the person 
     purchasing the shares to evaluate such disclosures before 
     deciding to engage in the transaction.
       ``(D) Limitation.--The disclosures required under 
     subparagraph (A) may not be made exclusively in--
       ``(i) a registration statement or prospectus of a 
     registered investment company; or
       ``(ii) any other filing of a registered investment company 
     with the Commission.
       ``(E) Commission authority.--The Commission shall 
     promulgate such final rules as are necessary to carry out 
     this paragraph not later than 1 year after the date of 
     enactment of the Mutual Fund Transparency Act of 2009.''.
       (b) Fiduciary Duties.--Section 15 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at 
     the end the following new subsection:
       ``(k) Standard of Care.--Notwithstanding any other 
     provision of this title or the Investment Advisers Act of 
     1940, the Commission shall promulgate rules, not later than 1 
     year after the date of enactment of the Mutual Fund 
     Transparency Act of 2009 to provide that the standard of care 
     for all brokers and dealers in providing investment advice 
     about securities to retail customers or clients (and such 
     other customers or clients as the Commission may by rule 
     provide) shall be the fiduciary duty established under the 
     Investment Advisers Act of 1940, including, without 
     limitation, the duty to act solely in the best interest of 
     the customer or client, without regard to the financial or 
     other interest of the broker or dealer providing the 
     advice.''.

                                                 October 21, 2009.
     Hon. Daniel K. Akaka,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Akaka: We are writing to express our strong 
     support for your efforts to ensure that professionals who 
     advise America's investors are held to the highest standard 
     of care--the fiduciary standard. Section 6(b) of the Mutual 
     Fund Transparency Act of 2009 (``MFTA'') would clearly 
     establish that brokers are subject to a fiduciary duty with 
     respect to investment advice provided to retail investors. 
     This provision eliminates a regulatory gap that has long 
     exposed investors to unscrupulous and harmful sales practices 
     by brokers.
       Under current law, brokers are subject to a general 
     suitability standard when providing investment advice to 
     their retail clients. Under a suitability standard, a broker 
     is not required to ensure that his recommendations are what 
     is best for his clients, but only what is generally suitable. 
     The suitability standard allows brokers to recommend 
     investments, for example, based on the amount of compensation 
     the broker receives rather than what is in the best interest 
     of the client. The suitability standard does not even require 
     brokers to disclose their compensation so that their clients 
     can evaluate conflict of interest payments for themselves.
       In contrast, investment advisers are subject to a strict 
     fiduciary duty under the Advisers Act. As such, they are 
     required to make recommendations only if they are in the 
     client's best interest and to disclose all material 
     conflicts. By applying the fiduciary standard under the 
     Advisers Act to brokers, Section 6(b) of the MFTA ensures 
     that the protection of a fiduciary standard for retail 
     advisory clients will not depend on an arbitrary regulatory 
     distinction between brokers and investment advisers, but will 
     be applied rationally to provide all Americans who receive 
     investment advice with the regulatory protection that they 
     expect and deserve.
       We wish to express our enthusiastic support for your 
     proposal to establish a fiduciary duty for brokers and are 
     available to provide whatever assistance you may need in this 
     respect.
           Respectfully submitted,
     Mercer Bullard,
       Founder and President, Fund Democracy, Inc.
     Barbara Roper,

[[Page 25926]]

       Director of Investor Protection, Consumer Federation of 
     America.
     Denise Voigt Crawford,
       Texas Securities Commissioner and President, North American 
     Securities Administrators Association, Inc.
     Ellen Turf,
       CEO, National Association of Personal Financial Advisors.
     Kevin R. Keller,
       Chief Executive Officer, Certified Financial Planner Board 
     of Standards, Inc.
     Marvin W. Tuttle Jr.,
       CAE, Executive Director and CEO, Financial Planning 
     Association.
                                  ____

                                                 October 21, 2009.
     Hon. Daniel K. Akaka,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Akaka: We are writing to express our 
     enthusiastic support for the Mutual Fund Transparency Act of 
     2009 because your bill will benefit fund shareholders in 
     three significant respects. First, it will strengthen the 
     independence of mutual fund boards to help ensure that the 
     gross abuses of trust committed by fund managers in 
     connection with the recent mutual fund scandal will not be 
     repeated. Second, the bill will require that fund 
     shareholders be provided with full and understandable 
     disclosure of brokers' fees and conflicts of interest, and 
     that when brokers provide individualized investment advice 
     they will be held to the same fiduciary standards to which 
     all other investment advisers are held. Third, the bill will 
     promote competition through increased price transparency, and 
     thereby improve services and reduce costs for the almost 100 
     million Americans who have entrusted their financial security 
     to mutual funds.


                            Fund Governance

       The mutual fund scandal that erupted in September 2003 and 
     continues to be litigated to this day revealed ``a serious 
     breakdown in management controls in more than just a few 
     mutual fund complexes.'' As noted by the Securities and 
     Exchange Commission:

     The breakdown in fund management and compliance controls 
     evidenced by our enforcement cases raises troubling questions 
     about the ability of many fund boards, as presently 
     constituted, to effectively oversee the any management of 
     funds. The failure of a board to play its proper role can 
     result, in addition to serious compliance breakdowns, in 
     excessive fees and brokerage commissions, less than 
     forthright disclosure, mispricing of securities, and inferior 
     investment performance.''
       The Act directly addresses the governance weaknesses 
     revealed by the scandal by strengthening the independence of 
     fund directors. It plugs loopholes that have allowed former 
     executives of fund managers and other fund service providers, 
     among others, to qualify as ``independent'' directors when 
     their independence is clearly compromised by their former 
     positions. The Act also ensures that the board's agenda will 
     be set by an independent chairman, and not by the CEO of the 
     fund's manager, as is common practice today, and that 
     independent directors will control board matters and the 
     evaluation of independent nominees. The Act's requirement 
     that independent directors seek shareholder approval at least 
     every five years will enhance the accountability of 
     independent directors to the shareholders whose interests 
     they are supposed to serve.
       The Act's requirement that funds have an independent 
     chairman and a 75 percent independent board of directors is 
     critical in light of the SEC's failure to take final action 
     on rules imposing similar requirements. Even if these rules 
     were adopted, they would not prevent fund managers from 
     terminating independent chairmen or reducing independent 
     representation on the board to the statutory minimum of 40 
     percent. The SEC's rules would apply only when the funds 
     choose to rely on certain exemptive rules. If there were a 
     conflict between the fund's independent directors and the 
     fund manager, the fund manager could simply stop relying on 
     the rules and seek to install its own executives in a 
     majority of board positions. More importantly, independent 
     directors know that the protection given them by the SEC is 
     limited, and they therefore will be less likely to stand up 
     for shareholders than they would be if--as you have 
     proposed--the SEC's proposals were codified.


    Fiduciary Duties and Full Disclosure for all Investment Advisers

       Recent regulatory investigations and enforcement actions 
     have uncovered persistent and widespread sales abuses by 
     brokers. Regulators have found that brokers have 
     systematically overcharged investors for commissions, 
     routinely made improper recommendations of B shares, accepted 
     undisclosed directed brokerage payments in return for 
     distribution services, and received revenue sharing payments 
     that create incentives to favor funds that pay the highest 
     compensation rather than funds that are the best investment 
     option for their clients.
       Five years ago, the Commission promised that it would 
     address the problems that have so long plagued brokers' sales 
     practices, but the Commission's efforts have fallen far short 
     of the mark. Its proposals failed to require full disclosure 
     of brokers' compensation, much less the disclosure of 
     information that would enable investors to fully evaluate 
     their brokers' conflicts of interests. The new disclosure 
     requirements that you have proposed will ensure that brokers 
     will be subject to a fiduciary duty and their conflicts of 
     interest will be fully transparent to investors. Investors 
     will be able to view the amount the broker is being paid for 
     the fund being recommended compared with the (often lesser) 
     amount the broker would receive for selling a different fund, 
     which cannot help but direct investors' attention to the 
     conflict of interest created by differential compensation 
     structures. We especially applaud your proposal to ensure 
     that all broker compensation, including revenue sharing 
     payments, is disclosed in the point-of-sale document, which 
     ensures that disclosure rules will not create an incentive 
     for brokers to favor revenue sharing as a means of avoiding 
     disclosure.
       Remarkably, in the wake of a longstanding pattern of 
     brokers' sales abuses, the Commission has effectively 
     repealed Congress's narrow exemption from advisory regulation 
     for brokers who provide only ``solely incidental'' advice. 
     The Commission's strained interpretation of ``solely 
     incidental'' advice to include any advice provided ``in 
     connection with and reasonably related to a broker's 
     brokerage services'' has effectively stripped advisory 
     clients of the protections of an entire statutory regime 
     solely on the ground that the investment advice happens to be 
     provided by a broker. The Commission's position flatly 
     contradicts the text and purpose of the Investment Advisers 
     Act, which, as the Supreme Court has stated: ``reflects a 
     congressional recognition `of the delicate fiduciary nature 
     of an investment advisory relationship,' as well as a 
     congressional intent to eliminate, or at least to expose, all 
     conflicts of interest which might incline an investment 
     adviser--consciously or unconsciously--to render advice which 
     was not disinterested.''

       Your proposal restores crucial components of Congress's 
     carefully constructed regulatory scheme for the distinct and 
     complementary regulation of brokerage and advisory services. 
     It properly recognizes that a ``fiduciary, which Congress 
     recognized the investment adviser to be,'' is also what 
     consumers expect an investment adviser to be, as is generally 
     the case when professional services are provided on a 
     personalized basis. The Act also recognizes the importance of 
     ``expos[ing] all conflicts of interest which might incline an 
     investment adviser--consciously or unconsciously--to render 
     advice which was not disinterested,'' by requiring full 
     disclosure of such conflicts of interests and other material 
     information at the time that the prospective client is 
     deciding whether to enter into the relationship.


                  Fee Disclosure and Price Competition

       Your fee disclosure provisions will do double duty, by 
     addressing conflicts of interest and brokers' sales abuses 
     while also promoting competition, thereby improving services 
     and driving down expenses. Requiring brokers to disclose the 
     amount of differential payments and average fees for 
     comparable transactions will provide the kind of price 
     transparency that is a necessary predicate for price 
     competition and the efficient operation of free markets. In 
     addition, the requirement that funds disclose the amount of 
     commissions they pay will ensure that the fund expense ratio 
     includes all of the costs of the fund's operations and will 
     enable investors to make more informed investment decisions. 
     The best regulator of fees is the market, but the market 
     cannot operate efficiently when brokers and funds are 
     permitted to hide the actual cost of the services they 
     provide.


               Financial Literacy and Fund Advertisements

       Finally, we strongly agree that there is a need for further 
     study of financial literacy, including especially information 
     that fund investors need to make informed investment 
     decisions and methods to increase the transparency of fees 
     and potential conflicts of interest. Your proposed study of 
     mutual fund advertisements is also timely, as the regulation 
     of fund ads continues to permit misleading touting of 
     outsized short-term performance and other abuses.
       Mutual funds are Americans' most important lifeline to 
     retirement security. The regulation of mutual funds, however, 
     has not kept pace with their enormous growth. We applaud your 
     continuing efforts to enhance investor protection, promote 
     vigorous market competition and create wealth for America's 
     mutual fund investors through effective disclosure and truly 
     independent board oversight.
           Respectfully submitted,
     Mercer Bullard,
       Founder and President, Fund Democracy, Inc.

[[Page 25927]]


     Barbara Roper,
       Director of Investor Protection, Consumer Federation of 
     America.
     Ken McEldowney,
       Executive Director, Consumer Action.
     Irene E. Leech,
       Virginia Citizens Consumer Council.
     Walter Dartland,
       Consumer Federation of the Southeast.
     Damon Silvers,
       Director of Policy and Special Counsel, AFL-CIO.
     Denise Voigt Crawford,
       Texas Securities Commissioner and President, North American 
     Securities Administrators Association, Inc.
                                 ______
                                 
      By Ms. LANDRIEU:
  S. 1965. A bill to authorize the Secretary of the Interior to provide 
financial assistance to the State of Louisiana for a pilot program to 
develop measures to eradicate or control feral swine and to assess and 
restore wetlands damaged by feral swine; to the Committee on 
Environment and Public Works.
  Ms. LANDRIEU. Mr. President, I rise today to introduce a bill that 
will be an important component in our efforts to rebuild Louisiana's 
vast wetlands. Today, the coastline of my home state is the site of one 
of the Nation's most pronounced ecological disasters: the massive 
erosion of Louisiana's coastal wetlands. Few are aware that the marsh 
and wetlands along Louisiana's coast comprise some 40 percent of the 
Nation's total salt marshes. Louisiana's coastline is a national 
treasure. Yet, this national treasure is disappearing at an alarming 
rate due to a number of natural and man-made factors, including the 
destruction of wetlands caused by non-native feral pig populations that 
are literally eating away the coast. The loss of our wetlands threatens 
not only our teeming wildlife, but also land, lives, energy 
infrastructure, and navigation.
  That is why I rise today, to introduce the Feral Swine Eradication 
and Control Pilot Program Act of 2009, address the challenges these 
species pose to our efforts to reverse coastal wetland deterioration.
  Every 30 minutes, a portion of Louisiana's coast the size of a 
football field is converted from healthy marsh into open water. Since 
1930, 1.2 million acres have been lost--an area roughly the size of 
Delaware. Scientists predict that Louisiana will lose another 700 
square miles of coastal wetlands by 2050--an area the size of the 
greater Washington, D.C. and Baltimore metro areas.
  Louisiana's coastal land loss problems are caused by a number of 
natural and man-made factors. The primary factor has been the leveeing 
of the Mississippi River for purposes of flood control and navigation. 
Historically, the river would flood seasonally, taking silt from the 
Midwest and depositing it across the Mississippi Delta. Levees provided 
the needed flood protection, yet prevented vital land-building 
sediments and nutrients from replenishing and elevating deteriorating 
marshes. Additional activity added to the problem, including dredging 
thousands of miles of access canals for petroleum extraction and 
navigation. Those canals accelerated saltwater intrusion, further 
weakening the marsh.
  Another human activity that resulted in significant wetland loss was 
the introduction of two invasive species to the marshland habitat: the 
nutria and the feral pig. These non-native species are consuming our 
wetlands at an alarming rate. Nutria were initially introduced by those 
who wanted to raise them for their furs. Their population exploded in 
the wild and their appetite for marsh grass is boundless. Scientists 
estimate that nutria are currently affecting an estimated 100,000 acres 
of coastal wetlands.
  The feral hog is another exotic species which has expanded its range 
throughout most of Louisiana. Feral swine cause extensive damage to 
natural wildlife habitat. In Louisiana, the wild omnivores compete with 
native wildlife for food resources; prey on young domestic animals and 
wildlife; and carry diseases that can affect pets, livestock, wildlife 
and people. Scientists now believe that the feral hogs are not only 
wreaking enormous damage to the marsh, but are also negatively 
impacting native freshwater mussels and insects by contributing E. coli 
to water systems.
  According to the Louisiana Department of Wildlife and Fisheries, the 
wild pig is the most prolific large mammal in North America and given 
adequate nutrition, its populations in an area can double in just 4 
months.
  As I mentioned earlier, Louisiana's landscape has already been 
ravaged by the nutria rodent. In 2002, the first program was created to 
combat the increasing nutria populations. This program, the Coast-wide 
Nutria Control Program, CNCP, incentivized trappers to catch nutria in 
return for monetary compensation. This program has proven successful at 
decreasing nutria populations and significantly reducing their impact 
to coastal wetlands.
  However, more effort was needed to further reduce the nutria damage 
to wetlands, both in Louisiana and in other marshy environments, 
including Maryland's Chesapeake Bay. The Nutria Eradication and Control 
Act was enacted in 2003 to provide a critical supplement of funding to 
strengthen the Coast-wide Nutria Control Program. In July, I joined my 
friend and colleague Senator Cardin in introducing the reauthorization 
of the Nutria Eradication and Control Act. These two measures have been 
instrumental in reducing the nutria damage to Louisiana's wetlands.
  Now, it is my hope that we can achieve similar success with the 
problem of feral hogs. Feral swine are listed by the World Conservation 
Union, IUCN, as one of the top 100 invasive species worldwide. If 
action is not taken to control the feral swine population, our 
biologists fear these animals will undo much of the progress Louisiana 
has made in controlling the nutria population. It is my hope that with 
the help of my colleagues, we can pass this bill to help eradicate 
these pests from our vanishing coastline once and for all.
  The bill I am introducing today authorizes the Secretary of the 
Interior to allocate funding to create a pilot program modeled off of 
the Nutria Eradication and Control Act. This program will assess the 
nature and extent of damage to the wetlands in Louisiana and develop 
methods to eradicate or control the feral swine population, and restore 
the coastal areas damaged by this invasive species.
  It is a small program, but rewards it could reap are potentially 
vast. Consider this, Louisiana's wetlands are not only the home to our 
famed wildlife, they are also the most effective protection we have 
against future storm damage.
  Coastal wetlands are the last barrier between the sea and the land. 
Wetlands reduce high winds and absorb the deadly storm surges that 
often accompany hurricanes. Scientists estimate that every 3 to 4 miles 
of wetlands can absorb enough water to reduce the height of a storm 
surge by 1 foot. That protects the millions of hardworking men and 
women who live along Louisiana's coast.
  But I would also like to remind my colleagues of the vital strategic 
importance these wetlands serve to the Nation's energy security: 
Louisiana is one of the economy's largest producers of energy. Without 
wetlands as a buffer, storms could devastate the Nation's critical 
energy infrastructure.
  It is for all of these reasons that this legislation is crucial. I 
ask that my colleagues support its prompt passage.
                                 ______
                                 
      By Mr. FEINGOLD (for himself, Ms. Klobuchar, Mr. Tester, Mr. 
        Harkin, and Mr. Kerry):
  S. 1986. A bill to amend the Help America Vote Act of 2002 to require 
States to provide for same day registration; to the Committee on Rules 
and Administration.
  Mr. FEINGOLD. Mr. President, today I will reintroduce, along with 
Senators Klobuchar, Tester, Harkin and Kerry, the Same Day Registration 
Act of 2009, a bill that would significantly

[[Page 25928]]

increase voter participation by allowing all eligible citizens to 
register to vote in federal elections on Election Day or the same day 
that they vote.
  In many ways, the machinery of our democracy needs significant 
repair. We live in an age of low turnout and high cynicism. The 
American people have lost faith in our election system, in part because 
they are not confident that their votes will be counted or that the 
ballot box is accessible to each and every voter regardless of ability, 
race, or means.
  What we see instead are long lines at polling places; faulty voting 
machines; under-trained, under-paid, over-worked poll workers; partisan 
election administrators; suspect vote tallies; caging lists; 
intimidation at the polling place; misleading flyers; illegal voter-
file purges; and now, the Supreme Court approving discriminatory voter 
ID laws. If people cannot trust their elections, why should they trust 
their elected officials?
  Three years ago, Professor Dan Tokaji, a leading election law expert, 
called for a ``moneyball approach to election reform.'' Named after 
Michael Lewis' book about the Oakland A's data-driven hiring system, 
Tokaji's approach is quintessentially progressive, as that term was 
understood at the turn of the century. ``I mean to suggest a research-
driven inquiry,'' Tokaji wrote, ``in place of the anecdotal approach 
that has too often dominated election reform conversations. While 
anecdotes and intuition have their place, they're no substitute for 
hard data and rigorous analysis.''
  This bill embodies the moneyball approach to election reform. In 
stark contrast to many so-called election reform proposals, this bill 
addresses a real problem--low voter turnout; it targets a major cause 
of the problem--archaic registration laws; and it offers a proven 
solution--same day registration SDR sometimes known as Election Day 
registration, EDR.
  The bill is very simple: it amends the Help America Vote Act to 
require every state to allow eligible citizens to register and vote in 
a Federal election on the day of the election, or on any day where 
voting is permitted, like during early voting. Voters may register 
using any form that satisfies the requirements of the National Voter 
Registration Act, including the Federal mail in voter registration form 
and any state's standard registration form. North Dakota, which does 
not have voter registration, is exempted from the bill's requirements.
  The bill itself is simple, but it addresses a significant problem: 
the low voter turnout that has plagued this country for the last 40 
years. We live in a participatory democracy, where our government 
derives its power from the consent of the governed, a consent embodied 
in the people's exercise of their fundamental right to vote. It is self 
evident that a participatory democracy depends on participation.
  This may be a government of the people, Mr. President, but the people 
are not voting. Since 1968, American political participation has 
hovered around 50 percent for Presidential elections and 40 percent for 
congressional elections. Even in 2008, a record-breaking year, national 
turnout was only 61.7 percent of the voting age population. The U.S. 
may be the only established democracy in the world where the fact that 
nearly 40 percent of the electorate stayed home is considered cause for 
celebration.
  In fact, our predecessors in the Senate would be surprised to find us 
celebrating such low turnout: a 1974 report by the Senate Committee on 
the Post Office and Civil Service bemoaned the ``shocking'' drop in 
turnout in the 1972 election. And what was the number that so troubled 
the Committee? Fifty-five percent.
  The report went on: ``[i]t is the Committee's conviction that our 
disquieting record of voter participation is in large part due to the 
hodgepodge of registration barriers put in the way of the voter. Such 
obstacles have little, if anything, to recommend them. At best, current 
registration laws in the various states are outmoded and simply 
inappropriate for a highly mobile population. At worst, registration 
laws can be construed as a deliberate effort to disenfranchise voters 
who desperately need entry into the decision-making processes of our 
country.''
  What a shame, that the Committee's findings are still valid. Our 
archaic registration laws have been reformed, but they are still 
archaic. We have passed a number of important bills designed to combat 
low turnout, but turnout is still low. America is even more mobile than 
it was in 1974, and yet our registration laws are still out of touch 
with the reality that more than 40 million Americans move every year. 
Worst of all, our registration laws still fall especially hard on the 
young, the old, and the poor.
  We have long known that complicated voter registration requirements 
constitute one of the major barriers to voting. In fact, many states 
adopted voter registration in order to prevent certain segments of the 
population from voting. Alexander Keyssar, the preeminent scholar on 
the history right to vote in this country, writes that although 
``[r]egistration laws emerged in the nineteenth century as a means of 
keeping track of voters and preventing fraud; they also served--and 
were intended to serve--as a means of keeping African-American, 
working-class, immigrant, and poor voters from the polls.''
  It is time for a fundamental change. A large body of research tells 
us that unnecessarily burdensome voter registration requirements are 
the single largest factor in preventing people from voting. Simply put, 
voter registration restrictions should not keep eligible Americans from 
exercising their right to vote. The solution to this problem is same 
day registration.
  Decades of empirical research confirm same day registration's 
positive impact on turnout. As one academic paper states, ``the 
evidence on whether EDR augments the electorate is remarkably clear and 
consistent. Studies finding positive and significant turnout impacts 
are too numerous to list.'' Mr. President, studies indicate that same 
day registration alone increases turnout by roughly 5 to 10 percentage 
points.
  In general, States with same day registration boast voter turnout 
that is 10-12 percentage points higher than States that require voters 
to register before Election Day. Turnout in Minnesota and Wisconsin, 
which implemented same day registration over 35 years ago has been 
especially high: in 2004, for example, when national turnout was just 
55 percent, 78 percent of eligible Minnesotans and 75 percent of 
eligible Wisconsinites went to the polls. The last time national voter 
turnout was above 70 percent, it was 1896, there were only 45 States, 
and the gold standard was the dominant campaign issue.
  Critics might worry about the possibility of fraud, but same day 
registration actually makes the registration process more secure. 
Voters registering when they vote do so in the presence of an elections 
official who verifies the voter's residency and identity on the spot. 
Mark Ritchie, Minnesota's Secretary of State, points out that same day 
registration ``is much more secure because you have the person right in 
front of you--not a postcard in the mail. That is a no-brainer. We have 
33 years of experience with this.''
  In contrast to most election reforms, the cost of same day 
registration is negligible. A recent survey of 26 local elections 
officials in six same day registration States found that ``officials 
agreed that incidental expense of administering EDR is minimal.'' In 
fact, same day registration may actually result in a net savings 
because it significantly reduces the use of provisional ballots. 
Provisional ballots, which are required by the Help America Vote Act, 
are expensive to administer. The Congressional Budget Office estimates 
that provisional ballots cost State and local governments about $25 
million a year.
  In some States the number of provisional ballots cast is surprisingly 
large. For example, in 2004, more than 4 percent of California's 
registered voters cast provisional ballots--that is 644,642 provisional 
ballots. In Ohio, 157,714 provisional ballots were cast, about 2 
percent of all registered voters.

[[Page 25929]]

  In contrast, in 2004 only 0.03 percent of voters in SDR states cast a 
provisional ballot. In Wisconsin, only 374 provisional ballots were 
cast. In Maine, only 95 provisional ballots were cast. In fact, only 
952 provisional ballots were cast in all the SDR states combined in 
2004. To be sure, this bill is no cure-all: it does not address long 
lines, deceptive flyers, and faulty voting machines. Other bills, good 
bills, address those issues.
  The bottom line is this: the Same Day Registration Act would 
substantially increase civic participation, improve the integrity of 
the electoral process, reduce election administration costs, and 
reaffirm that voting is a fundamental right. It has been proven 
effective by more than 30 years of successful implementation in 
Minnesota and Wisconsin and decades of empirical research. Same day 
registration is good for voters, good for taxpayers, and good for 
democracy.
  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. 1986

       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 ``Same Day Registration Act''.

     SEC. 2. SAME DAY REGISTRATION.

       (a) In General.--Title III of the Help America Vote Act of 
     2002 (42 U.S.C. 15481 et seq.) is amended--
       (1) by redesignating sections 304 and 305 as sections 305 
     and 306, respectively; and
       (2) by inserting after section 303 the following new 
     section:

     ``SEC. 304. SAME DAY REGISTRATION.

       ``(a) In General.--
       ``(1) Registration.--Notwithstanding section 8(a)(1)(D) of 
     the National Voter Registration Act of 1993 (42 U.S.C. 
     1973gg-6), each State shall permit any eligible individual on 
     the day of a Federal election and on any day when voting, 
     including early voting, is permitted for a Federal election--
       ``(A) to register to vote in such election at the polling 
     place using a form that meets the requirements under section 
     9(b) of the National Voter Registration Act of 1993; and
       ``(B) to cast a vote in such election.
       ``(2) Exception.--The requirements under paragraph (1) 
     shall not apply to a State in which, under a State law in 
     effect continuously on and after the date of the enactment of 
     this section, there is no voter registration requirement for 
     individuals in the State with respect to elections for 
     Federal office.
       ``(b) Eligible Individual.--For purposes of this section, 
     the term `eligible individual' means, with respect to any 
     election for Federal office, an individual who is otherwise 
     qualified to vote in that election.
       ``(c) Effective Date.--Each State shall be required to 
     comply with the requirements of subsection (a) for the 
     regularly scheduled general election for Federal office 
     occurring in November 2010 and for any subsequent election 
     for Federal office.''.
       (b) Conforming Amendments.--
       (1) Section 401 of such Act (42 U.S.C. 15511) is amended by 
     striking ``and 303'' and inserting ``303, and 304''.
       (2) The table of contents of such Act is amended--
       (A) by redesignating the items relating to sections 304 and 
     305 as relating to sections 305 and 306, respectively; and
       (B) by inserting after the item relating to section 303 the 
     following new item:

``Sec. 304. Same day registration.''.

                          ____________________