[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[Senate]
[Pages 4280-4303]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. KERRY (for himself and Mr. Grassley):
  S. 434. A bill to amend title XIX of the Social Security Act to 
improve the State plan amendment option for providing home and 
community-based services under the Medicaid program, and for other 
purposes; to the Committee on Finance.
  Mr. KERRY. Mr. President, every day millions of Americans are faced 
with significant challenges when it comes to meeting their own personal 
needs or caring for a loved one who needs substantial support. Many 
elderly Americans and individuals of all ages with disabilities need 
long-term services and supports, such as assistance with dressing, 
bathing, preparing meals, and managing chronic conditions. They prefer 
to live and work in their community, and it is time that the Federal 
Government and states act as better partners to provide improved access 
to home and community-based long-term care services, HCBS.
  The Medicaid program, administered by the States but jointly financed 
with the Federal Government, is our nation's largest payer for long-
term care services. Medicaid spends about $100 billion per year on 
long-term services. Despite recognizing that per person spending is 
much lower in community settings, and that people generally prefer 
community services, Medicaid still spends 61 percent of its long-term 
services spending in institutional settings. This disparity is due, in 
large part, to a strong access and payment bias in the program for 
institutional care.
  Where Medicaid does offer HCBS, it is often in short supply, with 
more than 280,000 Medicaid beneficiaries on waiting lists for HCBS 
waiver services. Further, eligibility for HCBS waiver services requires 
beneficiaries to already have a very significant level of disability 
before gaining access, and they must meet a level of functional need 
that qualifies them for a nursing home. This not only contributes to 
the unmet needs of those in the community but it also prevents states 
from providing services that can help prevent beneficiaries from one 
day requiring high-cost institutional care. While institutionalized 
care may be an appropriate choice for some, it should be just that: a 
choice that individuals and families are allowed to make about the most 
appropriate setting for their own care.
  The result of Medicaid's ``institutional bias'' is that, according to 
the Georgetown Health Policy Institute, ``one in five persons living in 
the community with a need for assistance from others has unmet needs, 
endangering their health and demeaning their quality of life.'' This is 
simply unacceptable.
  The lack of long-term care options available to families has a 
significant impact on their lives. Many of my constituents are 
affected, as are countless Americans across the country. Take

[[Page 4281]]

the parents living in Newton who continue to wait for their physically 
disabled daughter, Julia, to have the opportunity to live 
independently. Julia is a young adult and instead of starting out on 
her own, she must watch as her peers move away and begin their 
independent lives--something she yearns to do as well. Growing up, 
Julia was able to attend Newton schools and keep a similar schedule to 
other children in the community but now has limited social interaction, 
as there is no other option but to live at home with her parents. 
Julia's parents are her full time caregivers and would like to see her 
able to live in an environment more conducive to both her needs and 
their own. Community-based care or home-based care in an apartment she 
could share with a roommate are options Julia and her parents would 
mutually benefit from. As the opportunities for the future grow for her 
peers, Julia's options continue to shrink because housing and home-
based supports for adults with disabilities are limited at best. I have 
heard many stories similar to that of Julia, which emphasizes the 
urgency in which HCBS is needed. In addition to individual lives being 
put on hold, entire families must deal with the consequences of 
inadequate services available to their family members.
  Access to HCBS affects individuals in all stages of life, including 
Americans dealing with conditions such as Alzheimer's. Take Ann Bowers 
and Jay Sweatman for example. Without access to HCBS services, Jay, who 
suffers from early onset Alzheimer's, was forced to first move into 
assisted living and then a nursing home. By the time Jay was approved 
for HCBS it was too late and he was no longer able to live 
independently. Ann had worked tirelessly to coordinate her husband's 
care and get additional HCBS support but the process was so difficult 
that by the time help came, it was simply too late. This is just one 
case of many where early HCBS intervention would have not only saved 
time, money, and stress for family members, but would have made a 
significant impact on the quality of life and personal independence for 
Jay and Ann.
  Today I am introducing, with my colleague from the Finance Committee, 
Senator Grassley, the Empowered at Home Act, a bill that increases 
access to home and community-based services by giving states new tools 
and incentives to make these services more available to those in need. 
It has four basic parts.
  First, it will improve the Medicaid HCBS State Plan Amendment Option 
by giving states more flexibility in determining eligibility for which 
services they can offer under the program, which will create greater 
options for individuals in need of long-term supports. In return we ask 
that states no longer cap enrollment and that services be offered 
throughout the entire state.
  Second, the bill ensures that the same spousal impoverishment 
protections offered for new nursing home beneficiaries will be in place 
for those opting for home and community-based services. In addition, 
low-income recipients of home and community-based services will be able 
to keep more of their assets when they become eligible for Medicaid, 
allowing them to stay in their community as long as possible.
  Third, the Empowered at Home Act addresses the financial needs of 
spouses and family members caring for a loved one by offering tax-
related provisions to support family caregivers and promotes the 
purchase of meaningful private long-term care insurance.
  Finally, the bill seeks to improve the overall quality of home and 
community-based services available by providing grants for states to 
invest in organizations and systems that can help to ensure a 
sufficient supply of high quality workers, promote health, and 
transform home and community-based care to be more consumer-centered.
  I want to say a word about the Community Choice Act, legislation 
long-championed by Senator Harkin that would make HCBS a mandatory 
benefit in Medicaid. I am a strong supporter and co-sponsor of this 
landmark legislation, and look forward to working for its enactment as 
soon as possible. The legislation I am introducing today seeks to 
supplement--not supplant--the Community Choice Act by increasing access 
to HCBS for those who are disabled but not at a sufficient level of 
need to qualify for nursing home services. These two complimentary 
bills will finally make HCBS a right while vastly improving HCBS 
availability to vulnerable citizens of varying levels of disability.
  I would also like to thank a number of organizations who have been 
integral to the development of the Empowered at Home Act and who have 
endorsed it today, including the National Council on Aging, the 
American Association of Retired Persons, AARP, the Arc of the United 
States, United Cerebral Palsy, the American Association of Homes and 
Services for the Aging, the Alzheimer's Association, the National 
Association of Area Agencies on Aging, the American Geriatrics Society, 
ANCOR, the Trust for America's Health, and SEIU.
  Improving access to a range of long-term care services for the 
elderly and Americans of all ages with disabilities is an issue that 
must not stray from our Nation's health care priorities. I believe this 
legislation can move forward in a bi-partisan manner to dramatically 
improve access to high-quality home and community-based care for the 
millions of Americans who are not receiving the significant supports 
and services they need.
  Mr. GRASSLEY. Mr. President, I am pleased to join my colleague 
Senator Kerry today to re-introduce the Empowered at Home Act for the 
111th Congress. This bill is a continuation of efforts that I undertook 
in 2005 and again in 2008 to improve access to home and community based 
services for those needing long-term care. This is an important piece 
of legislation that continues our efforts to make cost-effective home 
and community based care options more available to those who need it.
  In 2005, I introduced the Improving Long-term Care Choices Act with 
Senator Bayh. That legislation set forth a series of proposals aimed at 
improving the accessibility of long-term care insurance and promoting 
awareness about the protection that long-term care insurance can offer. 
It also sought to broaden the availability of the types of long-term 
care services such as home and community-based care, which many people 
prefer to institutional care.
  The year 2005 ended up being a very important year for health policy 
as it relates to Americans who need extensive care. In the Deficit 
Reduction Act of 2005, Congress passed into law the Family Opportunity 
Act, the Money Follows the Person initiative, and many critical pieces 
of the Improving Long-term Care Choices Act. With the bill I am re-
introducing today with Senator Kerry, I hope to set us on the path to 
completing the work we started in 2005 and continued in 2008.
  Making our long-term care system more efficient is a critical goal as 
we consider the future of health care. There are more than 35 million 
Americans, roughly 12 percent of the U.S. population, over the age of 
65. This number is expected to increase dramatically over the next few 
decades as the baby boomers age and life expectancy increases. 
According to the U.S. Administration on Aging, by the year 2030, there 
will be more than 70 million elderly persons in the United States. As 
the U.S. population ages, more and more Americans will require long-
term care services.
  The need for long-term care will also be affected by the number of 
individuals under the age of 65 who may require a lifetime of care. 
Currently, almost half of all Americans who need long-term care 
services are individuals with disabilities under the age of 65. This 
number includes over 5 million working-age adults and approximately 
400,000 children.
  Long-term care for elderly and disabled individuals, including care 
at home and in nursing homes, represents almost 40 percent of Medicaid 
expenditures. Contrary to general assumptions, it is Medicaid, not 
Medicare that pays for the largest portion of long-term care for the 
elderly. Over 65 percent of Medicaid long-term care expenditures 
support elderly and disabled

[[Page 4282]]

individuals in nursing facilities and institutions. Although most 
people who need long-term care prefer to remain at home, Medicaid 
spending for long-term care remains heavily weighted toward 
institutional care.
  Section 6086 of the Deficit Reduction Act of 2005, DRA, P.L. 109-171, 
was based on the Improving Long-term Care Choices Act. The DRA 
provision authorized a new optional benefit under Medicaid that allows 
states to extend home and community-based services to Medicaid 
beneficiaries under the section 1915(i) Home and Community-Based 
Services State Option. Under this authority, states can offer Medicaid-
covered home and community-based services under a state's Medicaid plan 
without obtaining a section 1915(c) home and community-based waiver. 
Eligibility for these section 1915(i) services may be extended only to 
Medicaid beneficiaries already enrolled in the program whose income 
does not exceed 150 percent of the Federal poverty level.
  To date, only one State, my own state of Iowa, has sought to take 
advantage of the provision authorized through the DRA. While we had 
hoped far more states would participate, we know that the relatively 
low income cap, 150 percent, in the DRA provision creates an 
administrative complexity that has not made the option appealing for 
states.
  The bill we are re-introducing today mirrors the one we introduced in 
2008 during the 110th Congress. In this bill, the income eligibility 
standard would be raised for access to covered services under section 
1915(i) to persons who qualify for Medicaid because their income does 
not exceed a specified level established by the state up to 300 percent 
of the maximum Supplemental Security Income, SSI, payment applicable to 
a person living at home. This will significantly increase the number of 
people eligible for these services. States will be able to align their 
institutional and home and community-based care income eligibility 
levels.
  The bill would also establish two new optional eligibility pathways 
into Medicaid. These groups would be eligible for section 1915(i) home 
and community-based services as well as services offered under a 
state's broader Medicaid program. Under this bill, states with an 
approved 1915(k) state plan amendment would have the option to extend 
Medicaid eligibility to individuals: who are not otherwise eligible for 
medical assistance; whose income does not exceed 300 percent of the 
supplemental security income benefit rate; and who would satisfy state-
established needs-based criteria based upon a state's determination 
that the provision of home and community-based services would 
reasonably be expected to prevent, delay, or decrease the need for 
institutionalized care. Under this new eligibility pathway, states 
could choose to either limit Medicaid benefits to those home and 
community-based services offered under section 1915(k) or allow 
eligibles to access services available under a state's broader Medicaid 
program in addition to the 1915(k) benefits. These changes will give 
the states the option of exploring the use of an interventional use of 
home and community-based services. If states have the flexibility to 
provide the benefit as contemplated in the bill, they can try to delay 
the need for institutional care and keep people in their homes longer.
  As the number of Americans reaching retirement age grows 
proportionally larger, ultimately the number of Americans needing more 
extensive care will grow. Many of these Americans will look to Medicaid 
for assistance. States need more tools to provide numerous options to 
people in need so that they can stay in their own homes as long as 
possible.
  The cost of providing long-term care in an institutional setting is 
far more expensive care than providing care in the home. States will 
benefit from having options before them that allow them to keep people 
appropriately in home settings longer. The more States learn how to use 
those tools, the more States and ultimately the Federal taxpayer will 
benefit from reduced costs for institutional care.
  I am also pleased that this bill will include key provisions from S. 
2337, the Long-Term Care Affordability and Security Act of 2007. The 
bill includes important tax provisions that I introduced in previous 
Congresses as well, the Improving Long-term Care Choices Act of 2005, 
introduced in the 109th Congress.
  Research shows that the elderly population will nearly double by 
2030. By 2050, the population of those aged 85 and older will have 
grown by more than 300 percent. Research also shows that the average 
age at which individuals need long-term care services, such as home 
health care or a private room at a nursing home, is 75. Currently, the 
average annual cost for a private room at a nursing home is more than 
$75,000. This cost is expected to be in excess of $140,000 by 2030.
  Based on these facts, we can see that our nation needs to prepare its 
citizens for the challenges they may face in old-age. One way to 
prepare for these challenges is by encouraging more Americans to obtain 
long-term care insurance coverage. To date, only 10 percent of seniors 
have long-term care insurance policies, and only 7 percent of all 
private-sector employees are offered long-term care insurance as a 
voluntary benefit.
  Under current law, employees may pay for certain health-related 
benefits, which may include health insurance premiums, co-pays, and 
disability or life insurance, on a pre-tax basis under cafeteria plans 
and flexible spending arrangements, FSAs. Essentially, an employee may 
elect to reduce his or her annual salary to pay for these benefits, and 
the employee doesn't pay taxes on the amounts used to pay these costs. 
Employees, however, are explicitly prohibited from paying for the cost 
of long-term care insurance coverage tax-free.
  Our bill would allow employers, for the first time, to offer 
qualified long-term care insurance to employees under FSAs and 
cafeteria plans. This means employees would be permitted to pay for 
qualified long-term care insurance premiums on a tax-free basis. This 
would make it easier for employees to purchase long-term care 
insurance, which many find unaffordable. This should also encourage 
younger individuals to purchase long-term care insurance. The younger 
the person is at the time the long-care insurance contract is 
purchased, the lower the insurance premium.
  Our bill also allows an individual taxpayer to deduct the cost of 
their long-term care insurance policy. In other words, the individual 
can reduce their gross income by the premiums that they pay for a long-
term care policy, and therefore, pay less in taxes. This tax benefit 
for long-term care insurance should encourage more individuals to 
purchase these policies. It certainly makes a policy more affordable, 
especially for younger individuals. This would allow a middle-aged 
taxpayer to start planning for the future now.
  Finally a provision that is included in our bill that I am really 
pleased with is one that provides a tax credit to long-term caregivers. 
Long-term caregivers could include the taxpayer him- or herself. 
Senator Kerry and I recognize that these taxpayers--who have long-term 
care needs, yet are taking care of themselves--should be provided extra 
assistance. Also, taxpayers taking care of a family member with long-
term care needs would also be eligible for the tax credit. These 
taxpayers should be given a helping hand. As our population continues 
to age, the least that we can do is provide a tax benefit for these 
struggling individuals.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Graham, Mr. Leahy, Mr. Wyden, 
        Mr. Crapo, Mr. Martinez, and Ms. Landrieu):
  S. 437. A bill to amend the Internal Revenue Code of 1986 to allow 
the deduction of attorney-advanced expenses and court costs in 
contingency fee cases; to the Committee on Finance.
  Mr. SPECTER. Mr. President, I seek recognition to introduce 
legislation to amend Section 162 of the Internal Revenue Code to permit 
attorneys to deduct expenses and court costs incurred on behalf of 
contingency fee clients as

[[Page 4283]]

an ordinary and necessary business expense in the year such expenses 
are sustained. I introduced the same legislation in the 110th Congress, 
and the bill attracted bipartisan support. My bill simply clarifies the 
law to make certain that attorneys who take on contingency fee cases 
are able to enjoy the same tax benefits as virtually every other small 
business in the country.
  Contingency agreements between attorneys and clients are very common 
in personal injury, medical malpractice, product liability, Social 
Security disability, workers compensation, civil liberties, and 
employment cases. Under these agreements, an attorney pays all out-of-
pocket costs associated with a case before any conclusion to the case. 
Such expenses include costs for expert witnesses, depositions, medical 
records, and court fees. Contingency agreements have numerous benefits 
to clients; in particular, indigent individuals who might otherwise be 
unable to afford legal services.
  The obvious benefit to clients of contingency fee arrangements is 
that they do not have to incur out-of-pocket expenses for attorneys' 
fees. This may be particularly valuable to clients who do not have the 
ability to pay attorneys by the hour to advance their case. The 
arrangement also benefits the client by effectively spreading the risk 
of litigation. An hourly-rate payment agreement requires the client to 
assume all of the risk because the attorneys' fees are a sunk cost. 
However, under a contingent-fee arrangement, the attorney shares that 
risk and is only paid a fee if he wins the case or obtains a 
settlement.
  Currently, the Internal Revenue Service, IRS, treats expenses and 
court costs on behalf of contingency clients as loans to the client. As 
a result, the IRS does not permit any deduction by the attorney until 
the litigation is resolved, sometimes many years after the attorney has 
incurred the expenses on behalf of their client. The IRS treats the 
expenses and court costs as a loan despite the fact that no interest is 
charged and the lawyer only recoups costs if the case is won or 
settled. Not only is the IRS's position illogical, but it is contrary 
to a ruling by the United States Court of Appeals for the 9th Circuit.
  In Boccardo v. Commissioner, 56 F.3d 1016, 9t Cir. 1995, the 9th 
Circuit held that because the firm had a ``gross fee'' contract with 
the client, the firm incurred ordinary and necessary business expenses 
in the payment of costs and charges in connection with its clients' 
litigation. Consequently, litigation costs such as filing fees, witness 
fees, travel expenses, and medical consultation fees were deductible as 
ordinary and necessary business expenses in the year the costs were 
incurred on behalf of the clients. In a ``gross fee'' contract, the 
client is only obligated to pay their attorney a percentage of the 
amount recovered and is not expressly responsible for specific 
repayment of costs. While the Boccardo court contrasted ``gross fee'' 
contracts with ``net fee'' contracts, such a distinction is trivial for 
tax purposes. In both agreements, the attorney takes a considerable 
business risk to incur significant costs on behalf of a client and only 
recoups the expenses if a recovery is won.
  Despite the Boccardo court's ruling in favor of attorneys, the IRS 
continues to treat the out-of-pocket costs related to contingency fee 
cases as loans. Lawyers who make the decision to deduct these costs are 
exposed to potential audit and litigation. Over the past 13 years, 
taxpayers have had to proceed at their own peril--Ninth Circuit 
taxpayers risk a conflict with the IRS on this matter despite the case 
law, and taxpayers outside of the Ninth Circuit have no guidance at all 
since they cannot directly rely on Boccardo.
  My bill reverses an unfair IRS position by treating these businesses 
the same as all other small businesses. It does so by allowing 
attorneys with contingency fee clients to deduct their expenses and 
costs in the year that they are paid. My legislation does not give 
attorneys anything above and beyond that which is currently enjoyed by 
virtually every other small business in our country.
  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. 437

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

     SECTION 1. DEDUCTION OF ATTORNEY-ADVANCED EXPENSES AND COURT 
                   COSTS IN CONTINGENCY FEE CASES.

       (a) In General.--Section 162 of the Internal Revenue Code 
     of 1986 (relating to trade or business expenses) is amended 
     by redesignating subsection (q) as subsection (r) and by 
     inserting after subsection (p) the following new subsection:
       ``(q) Attorney-Advanced Expenses and Court Costs in 
     Contingency Fee Cases.--There shall be allowed as a deduction 
     under this section any expenses and court costs paid or 
     incurred by an attorney the repayment of which is contingent 
     on a recovery by judgment or settlement in the action to 
     which such expenses and costs relate. Such deduction shall be 
     allowed in the taxable year in which such expenses and costs 
     are paid or incurred by the taxpayer.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to expenses and costs paid or incurred after the 
     date of the enactment of this Act, in taxable years beginning 
     after such date.
                                 ______
                                 
      By Mr. INOUYE:
  S. 439. A bill to provide for and promote the economic development of 
Indian tribes by furnishing the necessary capital, financial services, 
and technical assistance to Indian-owned business enterprises, to 
stimulate the development of the private sector of Indian tribal 
economies, and for other purposes; to the Committee on Indian Affairs.
  Mr. INOUYE. Mr. President, I rise today to introduce a bill to 
establish an Indian Development Finance Corporation as an independent, 
Federally-chartered corporation that is modeled after the family of 
Development Banks established by the World Bank in lesser-developed 
countries around the world.
  Mr. President, in my more than 30 years of service on the U.S. Senate 
Committee on Indian Affairs, I have visited many Indian communities and 
Alaska Native villages, and I have seen that in many parts of Indian 
country, there are economic and social conditions that are as dire as 
those conditions found in the so-called ``lesser developed countries'' 
around the world. And although we have seen some economic success in 
recent years across Native America as a result of the Indian Gaming 
Regulatory Act, most Indian tribes and Native villages are not engaged 
in the conduct of gaming, nor have tribal governments found the means 
to overcome the challenges associated with their remote locations from 
populations centers and market places that serve the commercially-
successful tribal gambling operations.
  In those rurally-isolated areas, there is real potential to succeed 
in developing viable local economies based on agricultural and fishery 
resources, and the development of the vast energy resources that are 
located on Indian lands. What these Native communities need is the type 
of development financing services that the World Bank has successfully 
established--institutions empowered to make small, leveraged capital 
investments and economic infrastructure development to support tailored 
industrial programs, internet-based communication services, national 
and international trade agreements, and economic research capabilities. 
An Indian Development Finance Corporation could provide these kinds of 
services through a network of centers that would be based in Indian 
Country.
  Under this bill, the Corporation would be authorized to issue 500,000 
shares of common stock at $50 per share to every Tribal Nation in 
Indian Country and Alaska. The Corporation would be managed by a Board 
elected by the Tribal shareholders and the Board would be charged with 
hiring a President and a team of managers as well as set operating 
policies. Seed capital would be injected into the Indian Development 
Finance Corporation (IDFC) by the U.S. Treasury in exchange for the 
issuance of capital stock. Initially, $20 million in start-up funds 
would be invested and after the

[[Page 4284]]

majority of common stock was purchased by tribes, another $80 million 
would be authorized.
  I believe that the IDFC can take advantage of opportunities to 
integrate the economic stimulus activities soon to be created by the 
American Recovery and Reinvestment Act, and. I am confident that there 
will be support forthcoming from those tribal governments and Alaska 
Native corporations that have the resources to invest in the economic 
infrastructure initiatives that will be established by the IDFC in this 
period of our greatest need.
  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. 439

       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 ``Indian 
     Development Finance Corporation Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and policy.
Sec. 3. Definitions.

            TITLE I--INDIAN DEVELOPMENT FINANCE CORPORATION

Sec. 101. Establishment of Corporation.
Sec. 102. Duties and powers.
Sec. 103. Loans and obligations.
Sec. 104. Board of Directors.
Sec. 105. President of Corporation.
Sec. 106. Annual shareholder meetings.
Sec. 107. Annual reports; development plan.

                        TITLE II--CAPITALIZATION

Sec. 201. Issuance of stock.
Sec. 202. Borrowing authority.

               TITLE III--AUTHORIZATION OF APPROPRIATIONS

Sec. 301. Authorization of appropriations.

     SEC. 2. FINDINGS AND POLICY.

       (a) Findings.--Congress finds that--
       (1) a special relationship has existed between the United 
     States and Indian tribes, which is recognized in clause 3 of 
     section 8 of article I of the Constitution of the United 
     States;
       (2) pursuant to laws, treaties, and administrative 
     authority, Congress has implemented activities to fulfill the 
     responsibility of the United States for the protection and 
     preservation of Indian tribes and tribal resources;
       (3) despite the availability of abundant natural resources 
     on Indian land and a rich cultural legacy that places great 
     value on self-determination, self-reliance, and independence, 
     Indians and Alaska Natives experience poverty and 
     unemployment, together with associated incidences of social 
     pathology, to an extent unequaled by any other group in the 
     United States;
       (4)(A) the reasons for that poverty and unemployment have 
     been widely studied and documented by Congress, the 
     Government Accountability Office, the Department of the 
     Interior, private academic institutions, and Indian tribes; 
     and
       (B) the studies described in subparagraph (A) have 
     consistently identified as fundamental obstacles to balanced 
     economic growth and progress by Indians and Alaska Natives--
       (i) the very limited availability of long-term development 
     capital and sources of financial credit necessary to support 
     in Indian country the development of a private sector economy 
     comprised of Indian-owned business enterprises;
       (ii) the lack of effective control by Indians over their 
     own land and resources; and
       (iii) the scarcity of experienced Indian managers and 
     technicians;
       (5) previous efforts by the Federal Government directed at 
     stimulating Indian economic development through the provision 
     of grants, direct loans, loan guarantees, and interest 
     subsidies have fallen far short of objectives due to--
       (A) inadequate funds;
       (B) lack of coordination;
       (C) arbitrary project selection criteria;
       (D) politicization of the delivery system; and
       (E) other inefficiencies characteristic of a system of 
     publicly administered financial intermediation; and
       (6) the experience acquired by multilateral lending 
     institutions among ``lesser-developed countries'' has 
     demonstrated the value and necessity of development financial 
     institutions in achieving economic growth in underdeveloped 
     economies and societies that are strikingly similar to Indian 
     and Alaska Native communities in relation to matters such 
     as--
       (A) control over natural resource management;
       (B) the absence of experienced, indigenous managers and 
     technicians; and
       (C) the availability of long-term development capital and 
     private sources of financial credit.
       (b) Policy.--It is the policy of the United States that, in 
     fulfillment of the special and long-standing responsibility 
     of the United States to Indian tribes, the United States 
     should provide assistance to Indians in efforts to break free 
     from the devastating effects of extreme poverty and 
     unemployment and achieve lasting economic self-sufficiency 
     through the development of the private sector of tribal 
     economies by establishing a federally chartered, mixed-
     ownership development financing institution to provide a 
     broad range of financial intermediary services (including 
     working capital, direct loans, loan guarantees, and project 
     development assistance) using the proven efficiencies of the 
     private market mode of operation.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Board.--The term ``Board'' means the Board of Directors 
     of the Corporation.
       (2) Corporation.--The term ``Corporation'' means the Indian 
     Development Finance Corporation established by section 
     101(a).
       (3) Indian.--The term ``Indian'' means an individual who is 
     a member of an Indian tribe.
       (4) Indian business enterprise.--
       (A) In general.--The term ``Indian business enterprise'' 
     means any commercial, industrial, or business entity--
       (i) at least 51 percent of which is owned by 1 or more 
     Indian tribes;
       (ii) that produces or provides goods, services, or 
     facilities on a for-profit basis;
       (iii) that is chartered or controlled by an Indian tribe or 
     tribal organization that is a [shareholder/member] of the 
     Corporation;
       (iv) the principal place of business of which is located 
     within or adjacent to the boundaries of a reservation; and
       (v) the principal business activities of which, in addition 
     to the production of a stream of income, as determined by the 
     Corporation--

       (I) are directly beneficial to an Indian tribe; and
       (II) contribute to the economy of that Indian tribe.

       (B) Inclusion.--The term ``Indian business enterprise'' 
     includes any subsidiary entity owned and controlled by an 
     entity described in subparagraph (A).
       (5) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b).
       (6) Reservation.--The term ``reservation'' has the meaning 
     given the term in section 3 of the Indian Financing Act of 
     1974 (25 U.S.C. 1452).
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (8) Tribal organization.--The term ``tribal organization'' 
     means--
       (A) the governing body of an Indian tribe; and
       (B) any entity established, controlled, or owned by such a 
     governing body.

            TITLE I--INDIAN DEVELOPMENT FINANCE CORPORATION

     SEC. 101. ESTABLISHMENT OF CORPORATION.

       (a) In General.--There is established a corporation, to be 
     known as the ``Indian Development Finance Corporation''.
       (b) Powers of Congress.--Congress shall have the sole 
     authority--
       (1) to amend the charter of the Corporation; and
       (2) to terminate the Corporation.

     SEC. 102. DUTIES AND POWERS.

       (a) Duties.--The Corporation shall--
       (1) provide development capital through financial services 
     under section 103;
       (2) encourage the development of new and existing Indian 
     business enterprises eligible to receive assistance from the 
     Corporation by providing, and coordinating the availability 
     of--
       (A) long-term capital and working capital;
       (B) loans, loan guarantees, and other forms of specialized 
     credit; and
       (C) technical and managerial assistance and training;
       (3) maintain broad-based control of the Corporation 
     relative to the voting shareholders of the Corporation;
       (4) encourage active participation in the Corporation by 
     Indian tribes through ownership of equity securities of the 
     Corporation; and
       (5) otherwise assist in strengthening Indian tribal 
     economies through the development of Indian business 
     enterprises.
       (b) Powers.--In carrying out this Act, the Corporation 
     may--
       (1) adopt and alter a corporate seal, which shall be 
     judicially noticed;
       (2)(A) enter into agreements and contracts with 
     individuals, Indian tribes, and private or governmental 
     entities; and
       (B) make payments or advance payments under those 
     agreements and contracts without regard to section 3324 of 
     title 31, United States Code, except that the Corporation 
     shall provide financial assistance only in accordance with 
     this Act;
       (3) with respect to any real, personal, or mixed property 
     (or any interest in such property)--
       (A) lease, purchase, accept gifts or donations of, or 
     otherwise acquire the property;
       (B) own, hold, improve, use, or otherwise deal in or with 
     the property; and
       (C) sell, convey, mortgage, pledge, lease, exchange, or 
     otherwise dispose of the property;

[[Page 4285]]

       (4)(A) sue and be sued in corporate name;
       (B) complain and defend in any court of competent 
     jurisdiction; and
       (C) represent itself, or contract for representation, in 
     any judicial, legal, or other proceeding;
       (5)(A) with the approval of the department or agency 
     concerned, make use of the services, facilities, and property 
     of any board, commission, independent establishment, or 
     Federal department or agency in carrying out this Act; and
       (B) pay for that use, with the payments to be credited to 
     the applicable appropriation that incurred the expense;
       (6) use the United States mails on the same terms and 
     conditions as a Federal department or agency;
       (7) obtain insurance or make other provisions against 
     losses;
       (8) participate with 1 or more other financial 
     institutions, agencies, instrumentalities, trusts, or 
     foundations in loans or guarantees provided under this Act on 
     such terms as may be agreed on;
       (9) accept guarantees from other agencies for which loans 
     made by the Corporation may be eligible;
       (10) establish, as soon as practicable, regional offices to 
     more efficiently serve the widely disbursed Indian 
     population;
       (11) buy and sell--
       (A) obligations of, or instruments insured by, the Federal 
     Government; and
       (B) securities backed by the full faith and credit of any 
     Federal department or agency;
       (12) make such investments as the Board determines to be 
     appropriate;
       (13) establish such offices within the Corporation as are 
     necessary, including--
       (A) project development;
       (B) project evaluation and auditing;
       (C) fiscal management;
       (D) research and development; and
       (E) such other activities as are authorized by the Board; 
     and
       (14) exercise all other authority necessarily or reasonably 
     relating to the establishment of the Corporation to carry out 
     this Act.

     SEC. 103. LOANS AND OBLIGATIONS.

       (a) In General.--The Corporation may--
       (1) make loans or commitments for loans to any Indian 
     business enterprise; and
       (2) purchase, insure, or discount any obligation of an 
     Indian business enterprise, if the Indian business enterprise 
     meets the requirements of subsection (b).
       (b) Requirements.--An Indian business enterprise meets the 
     requirements of this subsection if the Corporation determines 
     that--
       (1) the Indian business enterprise has or will have--
       (A) a sound organizational and financial structure;
       (B) income in excess of the operating costs of the Indian 
     business enterprise;
       (C) assets in excess of the obligations of the Indian 
     business enterprise; and
       (D) a reasonable expectation of continuing demand for--
       (i) the products, goods, commodities, or services of the 
     Indian business enterprise; or
       (ii) the facilities of the Indian business enterprise; and
       (2) the loan or obligation proposed to be purchased, 
     insured, or discounted will be fully repayable by the Indian 
     business enterprise in accordance with the terms and 
     conditions of the loan or obligation.
       (c) Terms, Rates, and Charges.--
       (1) In general.--In establishing the terms, rates, and 
     charges for a loan provided under this section, the 
     Corporation, to the maximum extent practicable, shall seek to 
     provide the type of credit needed by the applicable Indian 
     business enterprise at the lowest reasonable cost and on a 
     sound business basis, taking into consideration--
       (A) the cost of money to the Corporation;
       (B) the necessary reserve and expenses of the Corporation; 
     and
       (C) the technical and other assistance attributable to 
     loans made available by the Corporation under this section.
       (2) Interest rates.--The terms of a loan under this 
     subsection may provide for an interest rate that varies from 
     time to time during the repayment period of the loan in 
     accordance with the interest rates being charged by the 
     Corporation for new loans during those periods.
       (d) Advancing and Reloaning.--A loan provided under this 
     section may be advanced or reloaned by the Corporation to any 
     member or shareholder of the Corporation for the development 
     of an individually owned business on or adjacent to a 
     reservation, in accordance with the bylaws of the 
     Corporation.
       (e) Loan Guarantees.--
       (1) In general.--The Corporation may guarantee any part of 
     the principal or interest of a loan that is provided--
       (A) by a State-chartered or federally chartered lending 
     institution to an Indian business enterprise that meets the 
     requirements of subsection (b); and
       (B) in accordance with such terms and conditions (including 
     the rate of interest) as would be permissible if the loan was 
     a direct loan provided by the Corporation.
       (2) Charges.--The Corporation may impose a charge for a 
     loan guarantee provided under this subsection.
       (3) Limitation.--The Corporation shall not provide a loan 
     guarantee under this subsection if the income to the lender 
     from the applicable loan is excludable from the gross income 
     of the lender for purposes of chapter 1 of the Internal 
     Revenue Code of 1986.
       (4) Assignability.--A loan guarantee under this subsection 
     shall be assignable to the extent provided in the contract 
     for the loan guarantee.
       (5) Incontestability.--A loan guarantee under this 
     subsection shall be incontestable, except in any case of 
     fraud or misrepresentation of which the holder of the loan 
     had actual knowledge at the time the holder acquired the 
     loan.
       (6) Purchase of guaranteed loans.--
       (A) In general.--In lieu of requiring the original lender 
     to service a loan guaranteed under this subsection until 
     final maturity or liquidation, the Corporation may purchase 
     the guaranteed loan without penalty, if the Corporation 
     determines that--
       (i) the purchase would not be detrimental to the interests 
     of the Corporation;
       (ii) liquidation of the guaranteed loan would--

       (I) result in the insolvency of the borrower; or
       (II) deprive the borrower of an asset essential to 
     continued operation; and

       (iii)(I) the guaranteed loan will be repayable on revision 
     of the rates, terms, payment periods, or other conditions of 
     the loan, consistent with loans made by the Corporation under 
     subsection (a)(1); but
       (II) the lender or other holder of the guaranteed loan is 
     unwilling to make such a revision.
       (B) Amount.--The amount paid by the Corporation to purchase 
     a loan under subparagraph (A) shall not exceed an amount 
     equal to the sum of--
       (i) the balance of the principal of the loan; and
       (ii) the amount of interest accrued on the loan as of the 
     date of purchase.
       (f) Purchases of Equity and Ownership; Supervision and 
     Participation.--
       (1) Purchases of equity and ownership.--For purposes of 
     providing long-term capital and working capital to Indian 
     business enterprises, the Corporation may purchase, or make 
     commitments to purchase, any portion of the equity or 
     ownership interest in the Indian business enterprise if the 
     Corporation determines, after a full and complete appraisal 
     of all project and business plans associated with the 
     investment, that the investment will not expose the 
     Corporation to any unreasonable business risk, taking into 
     consideration applicable development finance standards, as 
     applied to Indian economic development in light of the 
     socioeconomic, political, and legal conditions unique to 
     reservations.
       (2) Supervision and participation.--The Corporation may 
     supervise or participate in the management of an Indian 
     business enterprise in which an investment has been made 
     under paragraph (1), in accordance with such terms and 
     conditions as are agreed to by the Corporation and the Indian 
     business enterprise, including the assumption of a 
     directorship in the corporate body of the Indian business 
     enterprise by an officer of the Corporation.

     SEC. 104. BOARD OF DIRECTORS.

       (a) Membership.--The Corporation shall be headed by a board 
     of directors, to be composed of 21 members, of whom--
       (1) 1 shall be a Federal official, to be appointed by the 
     Secretary;
       (2) 19 shall be representatives of the shareholders of the 
     Corporation, to be appointed by the Secretary--
       (A) based on consultation with, and recommendations from, 
     Indian tribes;
       (B) in accordance with subsection (b); and
       (C) taking take into consideration the experience of a 
     representative regarding--
       (i) private business enterprises; and
       (ii) development or commercial financing; and
       (3) 1 shall be the president of the Corporation.
       (b) Appointment of Shareholder Representatives.--The 
     initial members of the Board appointed under subsection 
     (a)(2) shall be appointed by the Secretary, based on 
     recommendations from Indian tribal leaders.
       (c) Terms of Shareholder Representatives.--The terms of 
     service of the initial members of the Board appointed under 
     subsection (a)(2) shall terminate at the beginning of the 
     first annual meeting of shareholders of the Corporation held 
     as soon as practicable after the date on which subscriptions 
     have been paid for at least 10 percent of the common stock of 
     the Corporation initially offered for sale to Indian tribes 
     under section 201(b).
       (d) Vacancies.--
       (1) In general.--Subject to paragraph (2), a vacancy on the 
     Board resulting from the resignation or removal of a member 
     of the Board shall be filled by the Board in accordance with 
     the bylaws of the Corporation.
       (2) Term.--The term of service of a member of the Board 
     appointed under paragraph (1) shall terminate at the 
     beginning of the next annual shareholder meeting of the 
     Corporation occurring after the date of appointment.
       (e) Removal.--A member of the Board may be removed from 
     office by the Board only for--
       (1) neglect of duty; or
       (2) malfeasance in office.
       (f) Administrative Duties.--

[[Page 4286]]

       (1) Chairperson and vice-chairperson.--The Board shall 
     annually elect from among the members of the Board described 
     in [subsection (a)(2)] a chairperson and vice-chairperson.
       (2) Policies and management.--The Board shall--
       (A) establish the policies of the Corporation; and
       (B) supervise the management of the Corporation.
       (3) Bylaws.--The Board shall adopt and amend, as necessary, 
     such bylaws as are necessary for the proper management and 
     function of the Corporation.
       (4) Meetings.--
       (A) In general.--The Board shall meet at the call of the 
     chairperson of the Board, in accordance with the bylaws of 
     the Corporation, not less frequently than once each quarter.
       (B) Private executive sessions.--The Board may meet in a 
     private executive session if the matter involved at the 
     meeting may impinge on the right of privacy of an individual.
       (g) Member Appointed by Secretary.--The member of the Board 
     appointed by the Secretary under subsection (a)(1) shall--
       (1) have 20 percent of the share of votes cast at each 
     annual shareholder meeting; and
       (2) be overruled only by \2/3\ majority vote at a regular 
     meeting of the Board with respect to any matter regarding--
       (A) a request by the Board of capital under subsection 
     (b)(3)(B) or (c)(2)(B) of section 201;
       (B) borrowing by the Corporation of any amount in excess of 
     $10,000,000;
       (C) a loan or investment made by the Corporation in excess 
     of $10,000,000; or
       (D) a change to an investment or credit policy of the 
     Corporation.
       (h) Compensation.--
       (1) Non-governmental employees.--A member of the Board who 
     is not otherwise employed by the Federal Government or a 
     State government shall receive compensation at a rate equal 
     to the daily rate for GS-18 of the General Schedule under 
     section 5332 of title 5, United States Code, for each day, 
     including traveling time, during which the member carries out 
     a duty as a member of the Board.
       (2) Governmental employees.--A member of the Board who is 
     an officer or employee of the Federal Government or a State 
     government shall serve without additional compensation.
       (3) Travel and other expenses.--Each member of the Board 
     shall be reimbursed for travel, subsistence, and other 
     necessary expenses incurred by the member in carrying out a 
     duty as a member of the Board.

     SEC. 105. PRESIDENT OF CORPORATION.

       (a) Appointment.--The Board shall appoint a president of 
     the Corporation.
       (b) Duties and Powers.--The president shall--
       (1) serve as the chief executive officer of the 
     Corporation; and
       (2) subject to the direction of the Board and the general 
     supervision of the chairperson, carry out the policies and 
     functions of the Corporation;
       (3) manage the personnel and activities of the Corporation; 
     and
       (4) on approval of the Board, appoint and fix the 
     compensation and duties of such officers and employees as may 
     be necessary for the efficient administration of the 
     Corporation, without regard to--
       (A) the provisions of title 5, United States Code, 
     governing appointments in the competitive service; or
       (B) chapter 51 or subchapter III of chapter 53 of title 5, 
     United States Code.

     SEC. 106. ANNUAL SHAREHOLDER MEETINGS.

       (a) Meetings.--
       (1) In general.--The Corporation shall hold meetings of the 
     shareholders of the Corporation not less frequently than once 
     each year.
       (2) Openness.--A shareholder meeting under this section 
     shall be held open to the public.
       (3) Notice.--The Corporation shall provide to each 
     shareholder of the Corporation a notice of each shareholder 
     meeting under this section by not later than 30 days before 
     the date of the meeting.
       (b) Activities.--
       (1) Corporation.--At a shareholder meeting under this 
     section, the Corporation--
       (A) shall provide to shareholders a report describing--
       (i) the activities of the Corporation during the preceding 
     calendar year; and
       (ii) the financial condition of the Corporation as in 
     effect on the date of the meeting; and
       (B) may present to the shareholders proposals for future 
     action and other matters of general concern to shareholders 
     and Indian business enterprises eligible to receive services 
     of the Corporation.
       (2) Shareholders.--At a shareholder meeting under this 
     section, a shareholder of the Corporation may--
       (A) present a motion or resolution relating to any matter 
     within the scope of this Act; and
       (B) participate in any discussion relating to such a matter 
     or any other matter on the agenda of the meeting.
       (c) Voting.--Each Indian tribe that is a member of the 
     Corporation may vote the common stock of the Indian tribe 
     regarding--
       (1) any matter on the agenda of a meeting under this 
     section; or
       (2) any other matter relating to the election of a member 
     of the Board.

     SEC. 107. ANNUAL REPORTS; DEVELOPMENT PLAN.

       (a) Annual Reports.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act and annually thereafter, the Board 
     shall submit to the appropriate committees of Congress a 
     report describing--
       (A) the activities of the Corporation during the preceding 
     calendar year; and
       (B) the capital and financial condition of the Corporation 
     as in effect on the date of submission of the report.
       (2) Inclusion.--Each report under paragraph (1) shall 
     include recommendations for legislation to improve the 
     services of the Corporation.
       (b) Development Plan.--Not later than 1 year after the date 
     of enactment of this Act, the Corporation shall submit to 
     Congress a comprehensive, 5-year organizational development 
     plan that includes--
       (1) financial projections for the Corporation;
       (2) a description of the corporate structure and locations 
     of the Corporation; and
       (3) operational guidelines for the Corporation, 
     particularly regarding the coordinating relationship the 
     Corporation has, or plans to have, with Federal domestic 
     assistance programs that allocate financial resources and 
     services to Indian tribes and reservations for economic and 
     business development purposes.

                        TITLE II--CAPITALIZATION

     SEC. 201. ISSUANCE OF STOCK.

       (a) Issuance.--
       (1) In general.--The Corporation may issue shares of stock 
     in the Corporation, in such quantity and of such class as the 
     Board determines to be appropriate, in accordance with this 
     section.
       (2) Requirement.--A share of stock under paragraph (1) may 
     be issued to, and held by, only--
       (A) an Indian tribe; or
       (B) the Federal Government.
       (3) Redemption and repurchase.--The Corporation may redeem 
     or repurchase a share of stock issued pursuant to paragraph 
     (1) [at a price to be determined by the Board].
       (b) Initial Offering of Common Stock.--
       (1) In general.--The Corporation shall make an initial 
     offering of common stock of the Corporation to Indian tribes 
     under this section--
       (A) in a quantity of not less than 500,000 shares; and
       (B) at a price of not less than $50 per share.
       (2) Form of payment.--Of the price paid by an Indian tribe 
     for a share of stock of the Corporation under this 
     subsection--
       (A) 20 percent shall be provided in cash or cash-equivalent 
     securities; and
       (B) 80 percent shall provided in the form of a legally 
     binding financial commitment that is--
       (i) available at the request of the Board to meet the 
     obligations of the Corporation; but
       (ii) not available for any lending activity or 
     administrative expenses of the Corporation.
       (c) Subscription by Secretary for Shares of Capital 
     Stock.--
       (1) In general.--The Secretary may subscribe for not more 
     than 2,000,000 shares of capital stock of the Corporation.
       (2) Payments.--
       (A) Initial period.--Not later than 2 years after the date 
     of enactment of this Act, the Secretary shall pay to the 
     Corporation for subscription for capital stock under 
     paragraph (1) not less than $20,000,000.
       (B) Subsequent period.--
       (i) In general.--Beginning in fiscal year 2012, the 
     Secretary shall pay to the Corporation for subscription for 
     capital stock under paragraph (1)--

       (I) $80,000,000; or
       (II) such lesser amount as the Board may request, in 
     accordance with clause (ii).

       (ii) Requests by board.--The amount of a request by the 
     Board under clause (i)(II) shall be determined jointly by the 
     Secretary and the Board based on an assessment of the need of 
     the Corporation, taking into consideration a risk analysis of 
     the investment and credit policies and practices of the 
     Corporation.
       (iii) Limitations.--A payment under this subparagraph--

       (I) shall be subject to the availability of appropriations;
       (II) shall be provided only as needed to meet the 
     obligations of the Corporation; and
       (III) shall not be available for any lending activity or 
     administrative expenses of the Corporation.

       (3) Requirements.--A share of capital stock subscribed for 
     by the Secretary under this subsection--
       (A) shall be valued at not less than $50 per share;
       (B) shall be nonvoting stock;
       (C) shall not accrue dividends; and
       (D) shall not be transferred to any individual or entity 
     other than the Corporation.
       (d) Exempted Securities.--A share of stock, and any other 
     security or instrument, issued by the Corporation shall be 
     considered

[[Page 4287]]

     to be an exempted security for purposes of the laws 
     (including regulations) administered by the Securities and 
     Exchange Commission.

     SEC. 202. BORROWING AUTHORITY.

       (a) Issuance of Obligations.--The Corporation may issue 
     such bonds, notes, and other obligations at such times, 
     bearing interest at such rates, and containing such terms and 
     conditions as the Board, in consultation with the Secretary 
     of the Treasury, determines to be appropriate.
       (b) Amount of Obligations.--The aggregate amount of the 
     obligations issued pursuant to subsection (a) shall not 
     exceed an amount equal to the sum of--
       (1) the product obtained by multiplying--
       (A) the sum of--
       (i) the paid-in capital of the Corporation; and
       (ii) the retained earnings and profits of the Corporation; 
     and
       (B) 10; and
       (2) the sum of the book values of--
       (A) the capital subject to request of the Board represented 
     by the total commitments of Indian tribal shareholders under 
     section 201(b)(2)(B); and
       (B) the amount paid by the Secretary under section 
     201(c)(2).
       (c) Sale of Obligations.--An obligation of the Corporation 
     under subsection (a) may be--
       (1) issued through an agent by negotiation, offer, bid, 
     syndicate sale, or otherwise; and
       (2) completed by book entry, wire transfer, or any other 
     appropriate method.

               TITLE III--AUTHORIZATION OF APPROPRIATIONS

     SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

       (a) General Operational Expenses.--There are authorized to 
     be appropriated--
       (1) $2,000,000 for fiscal year 2009 to carry out this Act;
       (2) $2,500,000 for each of fiscal years 2010 through 2014 
     to carry out project development activities under this Act; 
     and
       (3) such sums as are necessary to carry out this Act (other 
     than subparagraphs (A) and (B) of section 201(c)(2)) for each 
     of fiscal years 2010 through 2014.
       (b) Paid-in Capital Stock.--There are authorized to be 
     appropriated--
       (1) for each of fiscal years 2010 and 2011, $10,000,000 to 
     carry out section 201(c)(2)(A); and
       (2) for fiscal year 2011 and each fiscal year thereafter, 
     $80,000,000 to carry out section 201(c)(2)(B).
                                 ______
                                 
      By Mr. SPECTER (for himself and Mr. Leahy):
  S. 440. A bill to amend the Internal Revenue Code of 1986 to allow an 
above-the-line deduction for attorney fees and costs in connection with 
civil claim awards; to the Committee on Finance.
  Mr. SPECTER. Mr. President, I seek recognition to introduce 
legislation to amend Section 62(a)(20) of the Internal Revenue Code to 
allow taxpayers to subtract from their taxable gross income the 
attorneys' fees and court costs paid by the taxpayer in connection with 
an award or settlement of monetary damages in a civil claim. Such a 
deduction is commonly referred to as an ``above-the-line'' deduction.
  Under current law, there is an inequity in the tax code that results 
in the double taxation of attorneys' fees and costs in certain 
circumstances. In addition, attorneys' fees paid by individuals in 
recovering a taxable award in certain civil claims are only deductible 
as miscellaneous itemized deductions. As such, they are subject to a 
reduction equal to two percent of the individual's adjusted gross 
income and subject to a complete disallowance when calculating the 
alternative minimum tax. Consequently, many plaintiffs end up incurring 
significant tax liability beyond the amount they actually bring home 
after winning or settling a case.
  Congress partially corrected the problem in 2004, when we passed, and 
President Bush signed, the American Jobs Creation Act of 2004, Jobs 
Act. The Jobs Act allows an above-the-line deduction for amounts 
attributable to attorneys' fees and costs received by individuals based 
on claims brought under certain statutes, including the False Claims 
Act, 1862(b)(3)(A) of the Social Security Act, or unlawful 
discrimination claims. Prior to enactment of the Jobs Act, the Internal 
Revenue Code already excluded from income awards arising out of claims 
relating to physical injury and sickness. However, attorneys' fees paid 
in the pursuit and collection of punitive awards, awards for libel, 
slander, or other awards in cases not involving a physical injury or a 
claim of discrimination are still not subtracted from gross income.
  In 2005, the United States Supreme Court added further confusion to 
the issue. In Commissioner v. Banks, 543 U.S. 426 (2005), the Court 
attempted to resolve a circuit split on the Federal income tax 
treatment of attorneys' fees. In an 8-0 opinion, the Court held that 
when a litigant's recovery constitutes income, the litigant's income 
includes the portion of the recovery paid to the attorney as a 
contingent fee. Consequently, for those claims not excluded from gross 
income in the Jobs Act, attorneys' fees are subjected to double 
taxation; subjected to a reduction equal to two percent of the 
individual's adjusted gross income when listed as a miscellaneous 
itemized deduction; and subjected to a complete disallowance when 
calculating the alternative minimum tax.
  My legislation corrects the problem by permitting taxpayers to 
subtract from their taxable gross income the attorneys' fees and court 
costs paid by the taxpayer in connection with an award or settlement of 
monetary damages in all civil claims. The legislation would ensure more 
uniform treatment of contingency fees in all types of litigation, not 
just the limited categories of litigation as specified in the Jobs Act. 
Importantly, this change does not affect the requirement that attorneys 
pay federal income tax on legal fees they receive. The legislation does 
eliminate the inequity of the client also paying taxes on attorneys' 
fees despite not receiving the funds under the terms of a contingency 
fee contract.
  I encourage my colleagues to join me in this effort to bring fairness 
to the tax code.
  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. 440

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

     SECTION 1. ABOVE-THE-LINE DEDUCTION FOR ATTORNEY FEES AND 
                   COSTS IN CONNECTION WITH CIVIL CLAIM AWARDS.

       (a) In General.--Paragraph (20) of section 62(a) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(20) Costs involving civil cases.--Any deduction 
     allowable under this chapter for attorney fees and court 
     costs paid by, or on behalf of, the taxpayer in connection 
     with any action involving a civil claim. The preceding 
     sentence shall not apply to any deduction in excess of the 
     amount includible in the taxpayer's gross income for the 
     taxable year on account of a judgment or settlement (whether 
     by suit or agreement and whether as lump sum or periodic 
     payments) resulting from such claim.''.
       (b) Conforming Amendment.--Section 62 of the Internal 
     Revenue Code of 1986 is amended by striking subsection (e).
       (c) Effective Date.--The amendments made by this section 
     shall apply to fees and costs paid after the date of the 
     enactment of this Act with respect to any judgment or 
     settlement occurring after such date.

  Mr. LEAHY. Mr. President, I am pleased to join Senator Specter in the 
introduction of two bills, S. 437 and S. 440, that will correct 
inconsistencies and provide fairness to lawyers and their clients under 
the Federal Tax Code.
  Currently, attorneys who take on contingency fee cases, and advance 
their clients funds for court costs, witnesses, or other expenses, 
cannot deduct these expenses as ordinary business expenses at the time 
they are made. Instead, attorneys who advance these costs may not take 
a deduction until the case for which they are advanced is resolved. In 
most cases this is a timeframe of several years. This results in an 
attorney carrying the burden of these costs from year to year until the 
case is resolved. For many small law firms or solo practitioners, this 
is a significant burden.
  Where attorneys are advancing costs to clients so that those clients 
may pursue their rights in court, they deserve to be treated as any 
other small business owner. This disparate treatment is inequitable and 
correcting it will make legal representation more easily provided by 
attorneys and more available to clients.
  The other bill we introduce today helps clients who have been awarded

[[Page 4288]]

funds through a contingency fee arrangement. Under current tax law, 
punitive damages awards and awards to a plaintiff resulting from 
certain claims are subject to Federal taxation for the entire amount of 
the award, even if the plaintiff then uses a portion to satisfy a 
contingency fee agreement. The result is that the portion of an award 
to a plaintiff in a contingency fee arrangement that then goes to an 
attorney is taxed twice--once through the plaintiff and again through 
the attorney.
  This legislation will allow a plaintiff who has recovered an award to 
take an above the line deduction for the portion of his or her award 
that will be transmitted to the attorney who provided the 
representation. This is a commonsense solution and where an individual 
has suffered an injury and will rely on his or her award it is sound 
policy to reduce this unnecessary and duplicative tax burden.
  Neither of these bills gives any special treatment to attorneys or 
their clients. Rather, in combination, they will help attorneys provide 
more representation to clients who by virtue of their financial or 
other circumstances must enter a contingency fee arrangement, and will 
allow a greater amount of funds recovered to be put to use by the 
individual for whose benefit they were awarded.
  I thank Senator Specter for introducing this legislation and I hope 
all Senators will join us in supporting these sensible corrections to 
our Tax Code.
                                 ______
                                 
      By Mr. DORGAN (for himself and Ms. Snowe):
  S. 442. A bill to impose a limitation on lifetime aggregate limits 
imposed by health plans; to the Committee on Health, Education, Labor, 
and Pensions.
  Ms. SNOWE. Mr. President, I join today with Senator Dorgan to address 
the growing problem of beneficiaries who exceed their lifetime cap on 
health care coverage. Today, many Americans responsibly purchase a 
health plan to cover themselves and their loved ones in case of 
illness. Tragically, some of these individuals become stricken by 
illness that is extremely expensive to treat, and too often exceeds 
their policy's lifetime cap provision. After doing all you can to act 
responsibly and avoid becoming a burden on society, an overly 
restrictive lifetime cap on benefits can cause one to go bankrupt--and 
ultimately shifts costs to public programs such as Medicaid.
  We have seen that even beneficiaries who acquire health insurance 
with seemingly hefty lifetime caps have found that the high cost of 
modern treatments--combined with medical inflation which exceeds the 
consumer price index by two to threefold--has greatly deflated the true 
value of the lifetime cap. The legislation offered today addresses this 
issue by setting a higher minimum cap. It has been estimated the cost 
of this improved protection--spread over many insurance purchasers--
will increase premiums by approximately $8 per year. This reinforces 
the principle of insurance--spreading high risks over many purchasers--
in order to assure adequate protection should a protracted and 
expensive illness befall an individual. This bill will also assure that 
costs are not inappropriately shifted onto the government programs, 
such as Medicaid--where taxpayers will feel the brunt of financial 
responsibility for costly treatment.
  As I work with my colleagues and the administration to grapple with 
how to make health care more affordable to the millions of Americans 
struggling to pay their premiums, coinsurance and copays--raising the 
floor on lifetime caps will provide the immediate financial relief to 
families so that they will have access to health care should a costly, 
chronic disease occur.
                                 ______
                                 
      By Mrs. MURRAY (for herself and Ms. Cantwell):
  S. 443. A bill to transfer certain land to the United States to be 
held in trust for the Hoh Indian Tribe, to place land into trust for 
the Hoh Indian Tribe, and for other purposes; to the Committee on 
Indian Affairs.
  Mrs. MURRAY. 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 
placed in the Record, as follows:

                                 S. 443

       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 ``Hoh Indian Tribe Safe 
     Homelands Act''.

     SEC. 2. FINDINGS.

       (a) Findings.--Congress finds the following:
       (1) The Hoh Indian Reservation, located along the Hoh River 
     and the Pacific Ocean in a remote section of Jefferson 
     County, Washington, is the homeland of the Hoh Indian Tribe, 
     a federally recognized Indian tribe.
       (2) Established by Executive Order in 1893, the Reservation 
     is approximately one square mile, but its habitable acreage 
     has been reduced over time due to storm surges, repeated 
     flooding and erosion, and lack of river dredging.
       (3) Due to its location along the river and ocean and 
     frequent torrential rains, 90 percent of the Reservation is 
     located within a flood zone and, in fact, has flooded 
     repeatedly over the last five years. In addition, 100 percent 
     of the Reservation is within a tsunami zone, leaving most of 
     the Reservation unfit for safe occupation.
       (4) The Tribe has repeatedly suffered from serious flood 
     and wind damage to homes, tribal buildings, and utility 
     infrastructure that have caused significant damage and 
     resulted in critical safety and environmental hazards.
       (5) Federal agencies such as the Bureau of Indian Affairs, 
     the Department of Housing and Urban Development, and the 
     Federal Emergency Management Agency have limited authority to 
     assist the Tribe with housing and other improvements and 
     services due to the dangerous and unsustainable location of 
     the Reservation.
       (6) The Tribe has purchased from private owners near the 
     Reservation approximately 260 acres of land in order to move 
     key infrastructure out of the flood zone.
       (7) In addition, the State of Washington's Department of 
     Natural Resources has transferred ownership of 160 acres of 
     land to the Tribe.
       (8) An approximately 37 acre parcel of logged land, 
     administered by the National Park Service, lies between the 
     current Reservation land and those lands acquired by the 
     Tribe, and the only road accessing the Reservation crosses 
     this parcel.
       (9) Together, the lands described in paragraphs 6, 7, and 8 
     would constitute a contiguous parcel for the Reservation and 
     would create a safe area for members of the Tribe to live and 
     rebuild their community.

     SEC. 3. DEFINITIONS.

       For the purposes of this Act----
       (1) the term ``Federal land'' mean the Federal lands 
     described in section 4(c)(2);
       (2) the term ``Reservation'' means the reservation of the 
     Hoh Indian Tribe;
       (3) the term ``Secretary'' means the Secretary of the 
     Interior; and
       (4) the term ``Tribe'' means the Hoh Indian Tribe, a 
     federally recognized Indian tribe.

     SEC. 4. TRANSFER OF LANDS TO BE HELD IN TRUST AS PART OF THE 
                   TRIBE'S RESERVATION; PLACEMENT OF OTHER LAND 
                   INTO TRUST.

       (a) In General.--The Secretary shall transfer to the Tribe 
     all right, title, and interest of the United States in and to 
     the Federal land. Such land shall be held in trust by the 
     United States for the benefit of the Tribe. Such land shall 
     be excluded from the boundaries of Olympic National Park. At 
     the request of the Tribe, at the time of transfer of the 
     Federal land, the Secretary shall also place into trust for 
     the benefit of the Tribe the non-Federal land owned by the 
     Tribe and described in subsection (c)(1).
       (b) Reservation.--Land taken into trust for the Tribe 
     pursuant to subsection (a) shall be part of the Reservation.
       (c) Description of Lands.--The land to be transferred and 
     held in trust under subsection (a) is the land generally 
     depicted on the map titled ``H.R. ___ Hoh Indian Tribe Safe 
     Homelands Act'', and dated _________ and further described 
     as--
       (1) the non-Federal land owned by the Hoh Tribe; and
       (2) the Federal land administered by the National Park 
     Service, located in Section 20, Township 26N, Range 13W, W.M. 
     South of the Hoh River.
       (d) Availability of Map.--Not later than 120 days after the 
     completion of the land transfer of Federal land under this 
     section, the Secretary shall make the map available to the 
     appropriate agency officials and congressional committees. 
     The map shall be available for public inspection in the 
     appropriate offices of the Secretary.
       (e) Congressional Intent.--It is the intent of Congress 
     that--
       (1) the condition of the Federal land at the time of the 
     transfer under this section should be preserved and 
     protected;
       (2) that the natural environment existing on the Federal 
     land at the time of the transfer under this section should 
     not be altered, except as described in this Act; and

[[Page 4289]]

       (3) the Tribe and the National Park Service shall work 
     cooperatively on issues of mutual concern related to this 
     Act.

     SEC. 5. PRESERVATION OF EXISTING CONDITION OF FEDERAL LAND; 
                   TERMS OF CONSERVATION AND USE IN CONNECTION 
                   WITH LAND TRANSFER.

       (a) Restrictions on Use.--The use of the Federal land 
     transferred pursuant to section 4 is subject to the following 
     conditions:
       (1) No commercial, residential, industrial, or other 
     buildings or structures shall be placed on the Federal land 
     being transferred and placed into trust. The existing road 
     may be maintained or improved, but no major improvements or 
     road construction shall occur on the lands.
       (2) In order to maintain its use as a natural wildlife 
     corridor and to provide for protection of existing resources, 
     no logging or hunting shall be allowed on the land.
       (3) The Tribe may authorize tribal members to engage in 
     ceremonial and other treaty uses of these lands and existing 
     tribal treaty rights are not diminished by this Act.
       (4) The Tribe shall survey the boundaries of the Federal 
     land and submit the survey to the National Park Service for 
     review and concurrence.
       (b) Cooperative Efforts.--Congress urges the Secretary and 
     the Tribe to enter into written agreements on the following:
       (1) Upon completion of the Tribe's proposed emergency fire 
     response building, Congress urges the parties to work toward 
     mutual aid agreements.
       (2) The National Park Service and the Tribe shall work 
     collaboratively to provide opportunities for the public to 
     learn more about the culture and traditions of the Tribe.
       (3) The land may be used for the development of a multi-
     purpose, non-motorized trail from Highway 101 to the Pacific 
     Ocean. The parties agree to work cooperatively in the 
     development and placement of such trail.

     SEC. 6. HOH INDIAN RESERVATION.

       All lands taken into trust by the United States under this 
     Act shall be a part of the Hoh Indian Reservation.

     SEC. 7. GAMING PROHIBITION.

       No land taken into trust for the benefit of the Hoh Indian 
     Tribe under this Act shall be considered Indian lands for the 
     purpose of the Indian Gaming Regulatory Act (25 U.S.C. 2701 
     et seq.).
                                 ______
                                 
      By Mr. SPECTER (for himself, Ms. Landrieu, Mr. Carper, Mr. Kerry, 
        Mrs. McCaskill, and Mr. Cochran):
  S. 445. A bill to provide appropriate protection to attorney-client 
privileged communications and attorney work product; to the Committee 
on the Judiciary.
  Mr. SPECTER. Mr. President, I seek recognition today to reintroduce 
the Attorney-Client Privilege Protection Act of 2009, which is nearly 
identical to S. 3217, a bill I introduced in July of 2008 under the 
same name. This legislation continues to address the Department of 
Justice's corporate prosecution guidelines. Those guidelines, last 
revised by Deputy Attorney General Mark Filip in August 2008, erode the 
attorney-client relationship by allowing prosecutors to continue 
considering the provision of privileged information in order for 
corporations to receive cooperation credit.
  To their credit, the Filip guidelines preclude prosecutors from 
asking for privilege waivers in nearly all circumstances. However, as 
evidenced by the numerous versions of the Justice Department's 
corporate prosecution guidelines over the past decade, the Filip 
reforms cannot be trusted to remain static. Moreover, unlike Federal 
law--which requires the assent of both houses and the President's 
signature or a super-majority in Congress--the Filip guidelines are 
subject to unilateral executive branch modification. Therefore, to 
avoid a recurrence of prosecutorial abuses and attorney-client 
privilege waiver demands, legislation is necessary.
  Like my previous bills, this bill will protect the sanctity of the 
attorney-client relationship by statutorily prohibiting Federal 
prosecutors and investigators across the executive branch from 
requesting waiver of attorney-client privilege and attorney work 
product protections in corporate investigations. The bill would 
similarly prohibit the government from conditioning charging decisions 
or any adverse treatment on an organization's payment of employee legal 
fees, invocation of the attorney-client privilege, or agreement to a 
joint defense agreement.
  The bill makes many subtle improvements over earlier iterations, 
including defining ``organization'' to make clear that continuing 
criminal enterprises and terrorist organizations will not benefit from 
the bill's protections. The bill also clarifies language that the 
Department of Justice had previously criticized as ambiguous. The bill 
further makes clear in its findings that its prohibition on informal 
privilege waiver demands is far from unprecedented. The bill states: 
``Congress recognized that law enforcement can effectively investigate 
without attorney-client privileged information when it banned Attorney 
General demands for privileged materials in the Racketeer Influenced 
and Corrupt Organizations Act. See 18 U.S.C. Sec. 1968(c)(2).''
  Though an improvement over past guidelines, there is no need to wait 
to see how the Filip guidelines will operate in practice. There is 
similarly no need to wait for another Department of Justice or 
executive branch reform that will likely fall short and become the 
sixth policy in the last 10 years. Any such internal reform may prove 
fleeting and might not address the privilege waiver policies of other 
government agencies that refer matters to the Department of Justice, 
thus allowing in through the window what isn't allowed through the 
door.
  As I said when I introduced my first bill on this subject, the right 
to counsel is too important to be passed over for prosecutorial 
convenience or Executive Branch whimsy. It has been engrained in 
American jurisprudence since the 18th century when the Bill of Rights 
was adopted. The 6th Amendment is a fundamental right afforded to 
individuals charged with a crime and guarantees proper representation 
by counsel throughout a prosecution. However, the right to counsel is 
largely ineffective unless the confidential communications made by a 
client to his or her lawyer are protected by law. As the Supreme Court 
observed in Upjohn Co. v. United States, ``the attorney-client 
privilege is the oldest of the privileges for confidential 
communications known to the common law.'' When the Upjohn Court 
affirmed that attorney-client privilege protections apply to corporate 
internal legal dialogue, the Court manifested in the law the importance 
of the attorney-client privilege in encouraging full and frank 
communication between attorneys and their clients, as well as the 
broader public interests the privilege serves in fostering the 
observance of law and the administration of justice. The Upjohn Court 
also made clear that the value of legal advice and advocacy depends on 
the lawyer having been fully informed by the client.
  In addition to the importance of the right to counsel, it is also 
fundamental that the Government has the burden of investigating and 
proving its own case. Privilege waiver tends to transfer this burden to 
the organization under investigation. As a former prosecutor, I am well 
aware of the enormous power and tools a prosecutor has at his or her 
disposal. The prosecutor has enough power without the coercive tools of 
the privilege waiver, whether that waiver policy is embodied in the 
Holder, Thompson, McCallum, McNulty, or Filip memorandum.
  As in my prior bills designed to protect the attorney-client 
privilege, this bill amends title 18 of the United States Code by 
adding a new section, Sec. 3014, that would prohibit any agent or 
attorney of the U.S. Government in any criminal or civil case to demand 
or request the disclosure of any communication protected by the 
attorney-client privilege or attorney work product. The bill would also 
prohibit government lawyers and agents from basing any charge or 
adverse treatment on whether an organization pays attorneys' fees for 
its employees or signs a joint defense agreement.
  This legislation is needed to ensure that constitutional protections 
of the attorney-client relationship are preserved in Federal 
prosecutions and investigations.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Grassley, Mr. Durbin, Mr. 
        Schumer, Mr. Feingold, and Mr. Cornyn):
  S. 446. A bill to permit the televising of Supreme Court proceedings; 
to the Committee on the Judiciary.
  Mr. SPECTER. Mr. President, once more I seek recognition to introduce

[[Page 4290]]

legislation that will give the public greater access to our Supreme 
Court. This bill requires the High Court to permit television coverage 
of its open sessions unless it decides by a majority vote of the 
Justices that allowing such coverage in a particular case would violate 
the due process rights of one or more of the parties involved in the 
matter.
  The purpose of this legislation is to open the Supreme Court doors so 
that more Americans can see the process by which the Court reaches 
critical decisions of law that affect this country and everyday 
Americans. The Supreme Court makes pronouncements on Constitutional and 
Federal law that have a direct impact on the rights of Americans. Those 
rights would be substantially enhanced by televising the oral arguments 
of the Court so that the public can see and hear the issues presented 
to the Court. With this information, the public would have insight into 
key issues and be better equipped to understand the impact of and 
reasons for the Court's decisions.
  In a very fundamental sense, televising the Supreme Court has been 
implicitly recognized--perhaps even sanctioned--in a 1980 decision by 
the Supreme Court of the United States entitled Richmond Newspapers v. 
Virginia. In this case, the Court noted that a public trial belongs not 
only to the accused but to the public and the press as well and 
recognized that people now acquire information on court procedures 
chiefly through the print and electronic media.
  That decision, in referencing the electronic media, appears to 
anticipate televising court proceedings, although I do not mean to 
suggest that the Supreme Court is in agreement with this legislation. I 
should note that the Court could, on its own initiative, televise its 
proceedings but has chosen not to do so. This presents, in my view, the 
necessity for legislating on this subject.
  When I argued the case of the Navy Yard, Dalton v. Specter, back in 
1994, the Court proceedings were illustrated by an artist's drawings--
some of which now hang in my office. Today, the public gets a 
substantial portion, if not most, of its information from television 
and the internet. While many court proceedings are broadcast routinely 
on television, the public has little access to the most important and 
highest court in this country. Although the internet has made the 
Court's transcripts, and even more recently, audio recordings, more 
widely accessible, the public is still deprived of the real time 
transmission of audio and video feeds from the Court. I believe it is 
vital for the public to see, as well as to hear, the arguments made 
before the Court and the interplay among the justices. I think the 
American people will gain a greater respect for the way in which our 
High Court functions if they are able to see oral arguments.
  Justice Felix Frankfurter perhaps anticipated the day when Supreme 
Court arguments would be televised when he said that he longed for a 
day when: ``The news media would cover the Supreme Court as thoroughly 
as it did the World Series, since the public confidence in the 
judiciary hinges on the public's perception of it, and that perception 
necessarily hinges on the media's portrayal of the legal system.''
  When I spoke in favor of this legislation in September of 2000, I 
said, ``I do not expect a rush to judgment on this very complex 
proposition, but I do believe the day will come when the Supreme Court 
of the United States will be televised. That day will come, and it will 
be decisively in the public interest so the public will know the 
magnitude of what the Court is deciding and its role in our democratic 
process.'' I have continued to reiterate those sentiments in September 
of 2005 and in January of 2007 when I re-introduced identical bills. 
Today, I continue to support this legislation because I believe that it 
is crucial to the public's awareness of Supreme Court proceedings and 
their impact on the daily lives of all Americans.
  I pause to note that it was not until 1955 that the Supreme Court, 
under the leadership of Chief Justice Warren, first began permitting 
audio recordings of oral arguments. Between 1955 and 1993, there were 
apparently over 5,000 recorded arguments before the Supreme Court. That 
roughly translates to an average of about 132 arguments annually. But 
audio recordings are simply ill suited to capture the nuance of oral 
arguments and the sustained attention of the American citizenry. Nor is 
it any response that people who wish to see open sessions of the 
Supreme Court should come to the Capital and attend oral arguments. 
For, according to one source: ``Several million people each year visit 
Washington, D.C., and many thousands tour the White House and the 
Capitol. But few have the chance to sit in the Supreme Court chamber 
and witness an entire oral argument. Most tourists are given just three 
minutes before they are shuttled out and a new group shuttled in. In 
cases that attract headlines, seats for the public are scarce and 
waiting lines are long. And the Court sits in open session less than 
two hundred hours each year. Television cameras and radio microphones 
are still banned from the chamber, and only a few hundred people at 
most can actually witness oral arguments. Protected by a marble wall 
from public access, the Supreme Court has long been the least 
understood of the three branches of our Federal Government.''
  In light of the increasing public desire for information, it seems 
untenable to continue excluding cameras from the courtroom of the 
Nation's highest court. As one legal commentator observes: ``An 
effective and legitimate way to satisfy America's curiosity about the 
Supreme Court's holdings, Justices, and modus operandi is to permit 
broadcast coverage of oral arguments and decision announcements from 
the courtroom itself.''
  Televised court proceedings better enable the public to understand 
the role of the Supreme Court and its impact on the key decisions of 
the day. Not only has the Supreme Court invalidated Congressional 
decisions where there was, in the views of many, simply a difference of 
opinion as to what is preferable public policy, but the Court 
determines novel issues such as whether AIDS is a disability under the 
Americans with Disabilities Act, whether Congress can ban obscenity 
from the Internet, and whether states can impose term limits upon 
members of Congress. The current Court, like its predecessors, hands 
down decisions which vitally affect the lives and liberties of all 
Americans. Since the Court's historic 1803 decision, Marbury v. 
Madison, the Supreme Court has the final authority on issues of 
enormous importance from birth to death. In Roe v. Wade, 1973, the 
Court affirmed a Constitutional right to abortion in this country and 
struck down state statutes banning or severely restricting abortion 
during the first two trimesters on the grounds that they violated a 
right to privacy inherent in the Due Process Clause of the Fourteenth 
Amendment. In the case of Washington v. Glucksberg, 1997, the court 
refused to create a similar right to assisted suicide. Here the Court 
held that the Due Process Clause does not recognize a liberty interest 
that includes a right to commit suicide with another's assistance.
  In the Seventies, the Court first struck down then upheld state 
statutes imposing the death penalty for certain crimes. In Furman v. 
Georgia, 1972, the Court struck down Georgia's death penalty statute 
under the cruel and unusual punishment clause of the Eighth Amendment 
and stated that no death penalty law could pass constitutional muster 
unless it took aggravating and mitigating circumstances into account. 
This decision led Georgia and many States to amend their death penalty 
statutes and, four years later, in Gregg v. Georgia, 1976, the Supreme 
Court upheld Georgia's amended death penalty statute.
  Over the years, the Court has also played a major role in issues of 
war and peace. In its opinion in Scott v. Sandford, 1857--better known 
as the Dred Scott decision--the Supreme Court held that Dred Scott, a 
slave who had been taken into ``free'' territory by his owner, was 
nevertheless still a slave.
  The Court further held that Congress lacked the power to abolish 
slavery in

[[Page 4291]]

certain territories, thereby invalidating the careful balance that had 
been worked out between the North and the South on the issue. 
Historians have noted that this opinion fanned the flames that led to 
the Civil War.
  The Supreme Court has also ensured adherence to the Constitution 
during more recent conflicts. Prominent opponents of the Vietnam War 
repeatedly petitioned the Court to declare the Presidential action 
unconstitutional on the grounds that Congress had never given the 
President a declaration of war. The Court decided to leave this 
conflict in the political arena and repeatedly refused to grant writs 
of certiorari to hear these cases. This prompted Justice Douglas, 
sometimes accompanied by Justices Stewart and Harlan, to take the 
unusual step of writing lengthy dissents to the denials of cert.
  In New York Times Co. v. United States, 1971--the so called 
``Pentagon Papers'' case--the Court refused to grant the government 
prior restraint to prevent the New York Times from publishing leaked 
Defense Department documents which revealed damaging information about 
the Johnson Administration and the war effort. The publication of these 
documents by the New York Times is believed to have helped move public 
opinion against the war.
  In its landmark civil rights opinions, the Supreme Court took the 
lead in effecting needed social change, helping us to address 
fundamental questions about our society in the courts rather than in 
the streets. In Brown v. Board of Education, the Court struck down the 
principle of ``separate but equal'' education for blacks and whites and 
integrated public education in this country. This case was then 
followed by a series of civil rights cases which enforced the concept 
of integration and full equality for all citizens of this country, 
including Gamer v. Louisiana, 1961, Burton v. Wilmington Parking 
Authority, 1961, and Peterson v. City of Greenville, 1963.
  In recent years Marbury, Dred Scott, Furman, New York Times, and Roe, 
familiar names in the lexicon of lawyerly discussions concerning 
watershed Supreme Court precedents, have been joined with similarly 
important cases like Hamdi, Rasul, Roper, and Boumediene--all cases 
that affect fundamental individual rights. In Hamdi v. Rumsfeld, 2004, 
the Court concluded that although Congress authorized the detention of 
combatants, due process demands that a citizen held in the United 
States as an enemy combatant be given a meaningful opportunity to 
contest the factual basis for that detention before a neutral 
decisionmaker. The Court reaffirmed the nation's commitment to 
constitutional principles even during times of war and uncertainty. 
Similarly, in Rasul v. Bush, 2004, the Court held that the Federal 
habeas statute gave district courts jurisdiction to hear challenges of 
aliens held at Guantanamo Bay, Cuba in the U.S. War on Terrorism. In 
Roper v. Simmons, a 2005 case, the Court held that executions of 
individuals who were under 18 years of age at the time of their capital 
crimes is prohibited by Eighth and Fourteenth Amendments. In Boumediene 
v. Bush, 2008, the Court held that, subsequent to Hamdan v. Rumsfeld 
and regardless of Congress' attempts to strip federal courts of 
jurisdiction to consider pending habeas corpus petitions from 
Guantanamo detainees, the detainees nonetheless were not barred from 
seeking the writ and procedures under the Detainee Treatment Act were 
not an adequate substitute for it.
  When deciding issues of such great national import, the Supreme Court 
is rarely unanimous. In fact, a large number of seminal Supreme Court 
decisions, such as Boumediene, have been reached through a vote of 5-4. 
Such a close margin reveals that these decisions are far from foregone 
conclusions distilled from the meaning of the Constitution, reason and 
the application of legal precedents. On the contrary, these major 
Supreme Court opinions embody critical decisions reached on the basis 
of the preferences and views of each individual justice. In a case that 
is decided by a vote of 5-4, an individual justice has the power by his 
or her vote to change the law of the land.
  Since the beginning of its October 2005 term when Chief Justice 
Roberts first began hearing cases, the Supreme Court has issued 45 
decisions with a 5-4 split, not including the current October 2008 
term, in which I understand there are additional 5-4 decisions within 
the few cases that have already been decided. It has also issued six 5-
3 decisions in which one justice recused. Finally, it has issued a rare 
5-2 decision in which Chief Justice Roberts and Justice Alito took no 
part, and in the October 2007 term, two 4-4 ties. In sum, since the 
beginning of its October 2005 term and not counting the current term, 
the Supreme Court has issued 52 decisions establishing the law of the 
land in which only 5 justices explicitly concurred. Many of these 
narrow majorities occur in decisions involving the Court's 
interpretation of our Constitution--a sometimes divisive endeavor on 
the Court. I will not discuss all 52 thinly decided cases but will 
describe a few to illustrate my point about the importance of the Court 
and its decisions in the lives of Americans.
  The first 5-4 split decision, decided on January 11, 2006, was Brown 
v. Sanders. In this case the Court considered ``the circumstances in 
which an invalidated sentencing factor will render a death sentence 
unconstitutional by reason of its adding an improper element to the 
aggravation scale in the jury's weighing process.'' A majority of the 
Court held that henceforth in death penalty cases, an invalidated 
sentencing factor will render the sentence unconstitutional by reason 
of its adding an improper element to the aggravation scale unless one 
of the other sentencing factors enables the sentencer to give 
aggravating weight to the same facts and circumstances. The majority 
opinion was authored by Justice Scalia and joined by Chief Justice 
Roberts and Justices O'Connor, Kennedy and Thomas. Justice Stevens 
filed a dissenting opinion in which Justice Souter joined. Similarly, 
Justice Breyer filed a dissenting opinion in which Justice Ginsburg 
joined.
  In November 2006, the Supreme Court decided Ayers v. Belmontes, a 
capital murder case in which the Belmontes contended that California 
law and the trial court's instructions precluded the jury from 
considering his forward looking mitigation evidence suggesting he could 
lead a constructive life while incarcerated. In Ayers the Supreme Court 
found the Ninth Circuit erred in holding that the jury was precluded by 
jury instructions from considering mitigation evidence. Justice Kennedy 
authored the majority opinion while Justice Stevens wrote a dissent 
joined by three other justices.
  Other 5-4 split decisions since October 2005 include United States v. 
Gonzalez-Lopez, concerning whether a defendant's Sixth Amendment right 
to counsel was violated when a district court refused to grant his paid 
lawyer permission to represent him based upon some past ethical 
violation by the lawyer, June 26, 2006; LULAC v. Perry, deciding 
whether the 2004 Texas redistricting violated provisions of the Voting 
Rights Act, June 28, 2006; Kansas v. Marsh, concerning the Eighth and 
Fourteenth Amendments in a capital murder case in which the defense 
argued that a Kansas statute established an unconstitutional 
presumption in favor of the death sentence when aggravating and 
mitigating factors were in equipoise, April 25, 2006; Clark v. Arizona, 
a capital murder case involving the constitutionality of an Arizona 
Supreme Court precedent governing the admissibility of evidence to 
support an insanity defense, June 29, 2006; Garcetti v. Ceballos, a 
case holding that when public employees make statements pursuant to 
their official duties they are not speaking as citizens for First 
Amendment purposes, and the Constitution does not insulate their 
communications from employer discipline, May 30, 2006; and District of 
Columbia v. Heller, June 26, 2008, which found that Washington, D.C.'s 
gun laws were unconstitutionally restrictive of rights afforded under 
the Second Amendment.
  The justices have split 5-3 six times since October 2005.
  In Georgia v. Randolph, March 22, 2006, a 5-3 majority of the Supreme 
Court held that a physically present

[[Page 4292]]

co-occupant's stated refusal to permit a warrantless entry and search 
rendered the search unreasonable and invalid as to that occupant. 
Justice Souter authored the majority opinion. Justice Stevens filed a 
concurring opinion as did Justice Breyer. The Chief Justice authored a 
dissent joined by Justice Scalia. Moreover, Justice Scalia issued his 
own dissent as did Justice Thomas. In Randolph, there were six opinions 
in all from a Court that only has nine justices. One can only imagine 
the spirited debate and interplay of ideas, facial expressions and 
gestures that occurred in oral arguments. Audio recordings are simply 
inadequate to capture all of the nuance that only cameras could capture 
and convey.
  In House v. Bell, a 5-3 opinion authored by Justice Kennedy, June 12, 
2006, the Supreme Court held that because House had made the stringent 
showing required by the actual innocence exception to judicially-
established procedural default rules, he could challenge his conviction 
even after exhausting his regular appeals. Justice Alito took no part 
in considering or deciding the House case. It bears noting, however, 
that if one justice had been on the other side of this decision it 
would have resulted in a 4-4 tie and, ultimately, led to affirming the 
lower court's denial of House's post-conviction habeas petitions due to 
a procedural default.
  In Hamdan v. Rumsfeld, a 5-3 decision in which Chief Justice Roberts 
took no part, the Supreme Court held that Hamdan could challenge his 
detention and the jurisdiction of the President's military commissions 
to try him despite recent enactment of the Detainee Treatment Act. A 
thin majority of the justices supported the decision despite knowledge 
that the DTA explicitly provides ``no court . . . shall have 
jurisdiction to hear or consider . . . an application for . . . habeas 
corpus filed by . . . an alien detained . . . at Guantanamo Bay.'' In 
deciding the merits, the Court went on to hold that the President 
lacked authority to establish a military commission to try Hamdan or 
others without enabling legislation passed by both houses of Congress 
and enacted into law. This case was one of a handful of recent cases in 
which the Supreme Court released audiotapes of oral arguments almost 
immediately after they occurred. Yet it would have been vastly 
preferable to watch the parties' advocates grapple with the legal 
issues as the justices peppered them with jurisdictional, 
constitutional and merits-related questions from the High Court's 
bench.
  In another fascinating 5-3 case, Jones v. Flowers, April 26, 2006, 
the Supreme Court considered whether, when notice of a tax sale is 
mailed to the owner and returned undelivered, the government must take 
additional reasonable steps to provide notice before taking the owner's 
property. In an opinion by Chief Justice Roberts, the Court held that 
where the Arkansas Commissioner of State Lands had mailed Jones a 
certified letter and it had been returned unclaimed, the Commissioner 
had to take additional reasonable steps to provide Jones notice. 
Justices Thomas, Scalia and Kennedy dissented and Justice Alito took no 
part in the decision.
  Though Jones v. Flowers involved the Due Process Clause of the 
Fourteenth Amendment, not the Takings Clause of Fifth Amendment, one 
could draw interesting analogies to the Court's controversial 2005 
decision in Kelo v. City of New London. In Kelo, a majority of the 
justices held that a city's exercise of eminent domain power in 
furtherance of a privately initiated economic development plan 
satisfied the Constitution's Fifth Amendment ``public use'' requirement 
despite the absence of any blight. Four justices dissented in Kelo and 
public opinion turned sharply against the decision immediately after it 
was issued.
  It's possible, though merely speculative, that the public ire aimed 
at Kelo informed what became a majority of justices in Jones v. 
Flowers. In a passage by Chief Justice Roberts, the Court notes, ``when 
a letter is returned by the post office, the sender will ordinarily 
attempt to resend it, if it is practicable to do so. This is especially 
true when, as here, the subject matter of the letter concerns such an 
important and irreversible prospect as the loss of a house.''
  Not only lawyers but all homeowners could benefit from knowing how 
the Court grapples with legal issues governing the rights to their 
houses. My legislation creates the opportunity for all interested 
Americans to watch the Court in action in cases like these. From his 
perch on the High Court one justice has been heard to contend that most 
Americans could care less about the arcane legal issues argued before 
the Court. But as elected representatives of the people we must 
endeavor to view America from a bottoms-up, rather than a top-down 
perspective.
  Regardless of one's view concerning the merits of these decisions, it 
is clear that they frequently have a profound effect on the interplay 
between the government, on the one hand, and the individual on the 
other. So, it is with these watershed decisions in mind that I 
introduce legislation designed to make the Supreme Court less esoteric 
and more accessible to common men and women who are so clearly affected 
by its decisions.
  Given the enormous significance of each vote cast by each justice on 
the Supreme Court, televising the proceedings of the Supreme Court will 
allow sunlight to shine brightly on these proceedings and ensure 
greater public awareness and scrutiny.
  In a democracy, the workings of the government at all levels should 
be open to public view. With respect to oral arguments, the more 
openness and the more real the opportunity for public observation the 
greater the understanding and trust. As the Supreme Court observed in 
the 1986 case of Press-Enterprise Co. v. Superior Court, ``People in an 
open society do not demand infallibility from their institutions, but 
it is difficult for them to accept what they are prohibited from 
observing.''
  It was in this spirit that the House of Representatives opened its 
deliberations to meaningful public observation by allowing C-SPAN to 
begin televising debates in the House chamber in 1979. The Senate 
followed the House's lead in 1986 by voting to allow television 
coverage of the Senate floor.
  Beyond this general policy preference for openness, however, there is 
a strong argument that the Constitution requires that television 
cameras be permitted in the Supreme Court.
  It is well established that the Constitution guarantees access to 
judicial proceedings to the press and the public. In 1980, the Supreme 
Court relied on this tradition when it held in Richmond Newspapers v. 
Virginia that the right of a public trial belongs not just to the 
accused, but to the public and the press as well. The Court noted that 
such openness has ``long been recognized as an indisputable attribute 
of an Anglo-American trial.''
  Recognizing that in modern society most people cannot physically 
attend trials, the Court specifically addressed the need for access by 
members of the media: ``Instead of acquiring information about trials 
by first hand observation or by word of mouth from those who attended, 
people now acquire it chiefly through the print and electronic media. 
In a sense, this validates the media claim of acting as surrogates for 
the public. [Media presence} contributes to public understanding of the 
rule of law and to comprehension of the functioning of the entire 
criminal justice system.''
  To be sure, a strong argument can be made that forbidding television 
cameras in the court, while permitting access to print and other media, 
constitutes an impermissible discrimination against one type of media 
over another. In recent years, the Supreme Court and lower courts have 
repeatedly held that differential treatment of different media is 
impermissible under the First Amendment absent an overriding 
governmental interest. For example, in 1983 the Court invalidated 
discriminatory tax schemes imposed only upon certain types of media in 
Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue. In 
the 1977 case of ABC v. Cuomo, the Second Circuit rejected the 
contention by the two candidates for mayor of New

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York that they could exclude some members of the media from their 
campaign headquarters by providing access through invitation only. The 
Court wrote that: ``Once there is a public function, public comment, 
and participation by some of the media, the First Amendment requires 
equal access to all of the media or the rights of the First Amendment 
would no longer be tenable.''
  However, in the 1965 case of Estes v. Texas, the Supreme Court 
rejected the argument that the denial of television coverage of trials 
violates the equal protection clause. In the same opinion, the Court 
held that the presence of television cameras in the Court had violated 
a Texas defendant's right to due process. Subsequent opinions have cast 
serious doubt upon the continuing relevance of both prongs of the Estes 
opinion.
  In its 1981 opinion in Chandler v. Florida, the court recognized that 
Estes must be read narrowly in light of the state of television 
technology at that time. The television coverage of Estes' 1962 trial 
required cumbersome equipment, numerous additional microphones, yards 
of new cables, distracting lighting, and numerous technicians present 
in the courtroom. In contrast, the court noted, television coverage in 
1980 can be achieved through the presence of one or two discreetly 
placed cameras without making any perceptible change in the atmosphere 
of the courtroom. Accordingly, the Court held that, despite Estes, the 
presence of television cameras in a Florida trial was not a violation 
of the rights of the defendants in that case. By the same logic, the 
holding in Estes that exclusion of television cameras from the courts 
did not violate the equal protection clause must be revisited in light 
of the dramatically different nature of television coverage today.
  Given the strength of these arguments, it is not surprising that over 
the last two decades there has been a rapidly growing acceptance of 
cameras in American courtrooms which has reached almost every court 
except for the Supreme Court itself.
  On September 6, 2000, the Senate Judiciary Committee's Subcommittee 
on Administrative Oversight and the Courts held a hearing titled 
``Allowing Cameras and Electronic Media in the Courtroom.'' The primary 
focus of the hearing was Senate bill S. 721, legislation introduced by 
Senators Grassley and Schumer that would give Federal judges the 
discretion to allow television coverage of court proceedings. One of 
the witnesses at the hearing, the late Judge Edward R. Becker, then-
Chief Judge U.S. Court of Appeals for the Third Circuit, spoke in 
opposition to the legislation and the presence of television cameras in 
the courtroom. The remaining five witnesses, however, including a 
Federal judge, a State judge, a law professor and other legal experts, 
all testified in favor of the legislation. They argued that cameras in 
the courts would not disrupt proceedings but would provide the kind of 
accountability and access that is fundamental to our system of 
government.
  On November 9, 2005, the Judiciary Committee held a hearing to 
address whether Federal court proceedings should be televised generally 
and to consider S. 1768, my earlier version of this bill, and S. 829, 
Senator Grassley's ``Sunshine in the Courtroom Act of 2005.'' During 
the November 9 hearing, most witnesses spoke favorably of cameras in 
the courts, particularly at the appellate level. Among the witnesses 
favorably disposed toward the cameras were Peter Irons, author of May 
It Please the Court, Seth Berlin, a First Amendment expert at a local 
firm, Brian Lamb, founder of C-SPAN, Henry Schleif of Court TV 
Networks, and Barbara Cochran of the Radio-Television News Directors 
Association and Foundation.
  The notable exception was the Honorable Judge Jan DuBois of the 
Eastern District of Pennsylvania, who testified on behalf of the 
Judicial Conference. Judge DuBois warned of problems particularly at 
the trial level, where witnesses who appear uncomfortable because of 
cameras might seem less credible to jurors. I note, however, that 
appellate courts do not appear susceptible to this criticism because 
there are no witnesses or jurors present for appellate arguments.
  The Judiciary Committee considered and passed both bills on March 30, 
2006. The Committee vote to report S. 1768 was 12-6, and the bill was 
placed on the Senate Legislative Calendar. Unfortunately, due to the 
press of other business neither bill was allotted time on the Senate 
Floor. Again, in the 110th Congress, I introduced this legislation, and 
it was reported out of the Judiciary Committee by a vote of 11-7.
  During their confirmation hearings over the past two years, Chief 
Justice John Roberts stated he would keep an open mind on the issue and 
Justice Alito stated that as a circuit judge he unsuccessfully voted, 
in the minority, to permit televised open proceedings in the Third 
Circuit. I applaud the fact the new Chief Justice has taken steps to 
make the Court more open and to ensure the timely publication of audio 
recordings of the arguments as well as the written transcripts.
  In my judgment, Congress, with the concurrence of the President, or 
overriding his veto, has the authority to require the Supreme Court to 
televise its proceedings. Such a conclusion is not free from doubt and 
is highly likely to be tested with the Supreme Court, as usual, having 
the final word. As I see it, there is clearly no constitutional 
prohibition against such legislation.
  Article 3 of the Constitution states that the judicial power of the 
United States shall be vested ``in one Supreme Court and such inferior 
Courts as the Congress may from time to time ordain and establish.'' 
While the Constitution specifically creates the Supreme Court, it left 
it to Congress to determine how the Court would operate. For example, 
it was Congress that fixed the number of justices on the Supreme Court 
at nine. Likewise, it was Congress that decided that any six of these 
justices are sufficient to constitute a quorum of the Court. It was 
Congress that decided that the term of the Court shall commence on the 
first Monday in October of each year, and it was Congress that 
determined the procedures to be followed whenever the Chief Justice is 
unable to perform the duties of his office.
  Beyond such basic structural and operational matters, Congress also 
controls more substantive aspects of the Supreme Court. Most 
importantly, it is Congress that in effect determines the appellate 
jurisdiction of the Supreme Court. Although the Constitution itself 
sets out the original jurisdiction of the Court, it provides that 
appellate jurisdiction exists ``with such exceptions and under such 
regulations as the Congress shall make.''
  Some objections have been raised to televised proceedings of the 
Supreme Court on the ground that it would subject justices to undue 
security risks. My own view is such concerns are vastly overstated. 
Well-known members of Congress walk on a regular basis in public view 
in the Capitol complex. Other very well-known personalities, 
presidents, vice presidents, cabinet officers, all are on public view 
with even incumbent presidents exposed to risks as they mingle with the 
public. Such risks are minimal in my view given the relatively minor 
ensure that Supreme Court justices would undertake through television 
appearances. Also, any concerns could be mitigated by focusing only on 
the attorneys presenting arguments. There is no requirement that the 
justices permit the cameras to focus on the bench.
  As I explained earlier, the Supreme Court could, of course, permit 
television through its own rule but has decided not to do so. Congress 
should be circumspect and even hesitant to impose a rule mandating the 
televising of Supreme Court proceedings and should do so only in the 
face of compelling public policy reasons. The Supreme Court has such a 
dominant role in key decision-making functions that their proceedings 
ought to be better known to the public; and, in the absence of Court 
rule, public policy would be best served by enactment of legislation 
requiring the televising of Supreme Court proceedings.
  This legislation embodies sound policy and will prove valuable to the 
all Americans. I urge my colleagues to support this bill.

[[Page 4294]]


                                 ______
                                 
      By Mr. LEVIN:
  S. 447. A bill to amend the Commodity Exchange Act to prevent 
excessive price speculation with respect to energy and agricultural 
commodities, and for other purposes; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Mr. LEVIN. Mr. President, over the past couple of years energy prices 
have taken the American people on an unpredictable, expensive, and 
damaging roller coaster ride. In early 2007, a barrel of crude oil cost 
about $50. Over the course of the year, the price rose steeply, nearly 
doubling by the end of the year to almost $100 per barrel. Oil prices 
continued to soar through the first half of 2008, peaking at nearly 
$150 per barrel in July. Then, over the next few months, oil prices 
crashed back down to $35 per barrel, a drop of over $110 per barrel.
  These huge price swings can't be explained by simple changes in 
supply and demand. Even taking into account the recession now plaguing 
our country and the world economy, many market analysts believe that it 
was a stampede of speculators into the crude oil futures market that 
first drove prices far higher than justified by global supply and 
demand, and now an exodus of those same speculators has driven prices 
much lower than justified by supply and demand.
  Like crude oil, the natural gas, gasoline, and heating oil markets 
have also seen large price changes. The prices are way up, they're way 
down, they're unpredictable--making it impossible for many businesses 
and consumers to plan for and afford energy costs and related goods and 
services.
  Unpredictable energy prices continue to take a tremendous toll on 
millions of American consumers and businesses. Unless we act to protect 
our energy markets from excessive speculation and price manipulation, 
the American economy will continue to be vulnerable to wild price 
swings affecting the prices of transportation, food, manufacturing and 
everything in between, endangering the economic security of our people, 
our businesses, and our nation.
  Congress should act now to help tame rampant speculation and 
reinvigorate supply and demand as market forces.
  That is why I am re-introducing legislation today that is nearly 
identical to the legislation I and others introduced near the end of 
the last Congress that provides strong and workable measures to prevent 
excessive speculation and price manipulation in U.S. energy and 
agricultural markets. It will close the loopholes in our commodities 
laws that now impede the policing of U.S. energy trades on foreign 
exchanges and in the unregulated over-the-counter market. It will 
ensure that large commodity traders cannot use these markets to hide 
from CFTC oversight or avoid limits on speculation. It will strengthen 
disclosure, oversight, and enforcement in U.S. energy markets, 
restoring the financial oversight that is crucial to protect American 
consumers, American businesses, and the U.S. economy from further 
energy shocks.
  This legislation, which addresses commodity markets, is one important 
piece of the broader reform effort needed to repair our financial 
regulatory system, stop abusive practices, and put the cop back on the 
beat in all of our markets.
  Specifically, this particular legislation would make four sets of 
changes.
  First, it would require the CFTC to set limits on the holdings of 
traders in all of the energy futures contracts traded on regulated 
exchanges to prevent traders from engaging in excessive speculation or 
price manipulation. Since we closed the Enron loophole last year all 
futures contracts must be traded in regulated markets.
  Second, it would close the ``London loophole'' by giving the CFTC the 
same authority to police traders in the United States who trade U.S. 
futures contracts on a foreign exchange and by requiring foreign 
exchanges that want to install trading terminals in the United States 
to impose comparable limits on speculative trading as the CFTC imposes 
on domestic exchanges to prevent excessive speculation and price 
manipulation.
  Third, it would close the ``swaps loophole'' by requiring traders in 
the over-the-counter energy markets to report large trades to the CFTC, 
and it would authorize the CFTC to set limits on trading in the 
presently unregulated over-the-counter markets to prevent excessive 
speculation and price manipulation.
  Finally, it would require the CFTC to revise the standards that allow 
traders who use futures markets to hedge their holdings to exceed the 
speculation limits that apply to everyone else.
  My Permanent Subcommittee on Investigations has shown that one key 
factor in price spikes of energy is increased speculation in the energy 
markets. Traders are now trading millions of contracts for future 
delivery of oil, creating a demand for paper contracts that gets 
translated into increases in prices and increasing price volatility.
  Much of this increase in trading of futures has been due to 
speculators who are not in the oil business but who are buying and 
selling oil futures contracts in the hope of making a profit from 
changing prices. According to the CFTC's data, the number of futures 
and options contracts held by speculators grew from around 100,000 
contracts in 2001, which was 20 percent of the total number of 
outstanding contracts, to almost 1.2 million contracts last fall, 
representing almost 40 percent of the outstanding futures and options 
contracts in oil on NYMEX. Even these statistics understate the 
increase in speculation, since the CFTC data classifies futures trading 
involving index funds as commercial trading rather than speculation, 
and the CFTC classifies all traders in commercial firms as commercial 
traders, regardless of whether any particular trader in that firm may, 
in fact, be speculating.
  Basic economic theory tells us that the greater the demand there is 
to buy futures contracts for the delivery of a commodity, the higher 
the price will be for those futures contracts.
  Not surprisingly, therefore, massive speculation that the price of 
oil will increase, together with massive purchases of futures contracts 
in pursuit of that belief, have, in fact, helped increase the price of 
oil to a level far above the price justified by the traditional forces 
of supply and demand.
  In June 2006, I released a Subcommittee report, The Role of Market 
Speculation in Rising Oil and Gas Prices: A Need to Put a Cop on the 
Beat. This report found that the traditional forces of supply and 
demand didn't account for sustained price increases and price 
volatility in the oil and gasoline markets. The report concluded that, 
in 2006, a growing number of trades of contracts for future delivery of 
oil occurred without regulatory oversight and that market speculation 
had contributed to rising oil and gasoline prices, perhaps accounting 
for $20 out of a then-priced $70 barrel of oil.
  Oil industry executives and experts arrived at similar conclusions. 
As oil prices neared $100 in late 2007, the President and CEO of 
Marathon Oil said, ``$100 oil isn't justified by the physical demand in 
the market. It has to be speculation on the futures market that is 
fueling this.'' At about the same time, Mr. Fadel Gheit, oil analyst 
for Oppenheimer and Company described the oil market as ``a farce.'' 
``The speculators have seized control and it's basically a free-for-
all, a global gambling hall, and it won't shut down unless and until 
responsible governments step in.'' In January of 2008, when oil first 
hit $100 per barrel, Mr. Tim Evans, oil analyst for Citigroup, wrote: 
``[T]he larger supply and demand fundamentals do not support a further 
rise and are, in fact, more consistent with lower price levels.'' At a 
joint hearing on the effects of speculation my Subcommittee held in 
late 2007, Dr. Edward Krapels, a financial market analyst, testified: 
``Of course financial trading, speculation affects the price of oil 
because it affects the price of everything we trade. . . . It would be 
amazing if oil somehow escaped this effect.'' Dr. Krapels added that as 
a result of this speculation ``there is a bubble in oil prices.''

  Last summer, the Presidents and CEOs of major U.S. airlines described 
the disastrous effects of rampant speculation on the airline industry. 
The

[[Page 4295]]

CEOs stated: ``normal market forces are being dangerously amplified by 
poorly regulated market speculation.'' The CEOs wrote: ``For airlines, 
ultra-expensive fuel means thousands of lost jobs and severe reductions 
in air service to both large and small communities.''
  To rein in this rampant speculation, the first step to take is to put 
a cop back on the beat in all our energy markets to prevent excessive 
speculation, price manipulation, and trading abuses.
  With respect to the commodity futures markets, the legislation we are 
introducing today requires the CFTC to establish limits on the amount 
of futures contracts any trader can hold. Currently, the CFTC allows 
the futures exchanges themselves to set these limits. This bill would 
require the CFTC to set those limits to prevent excessive speculation 
and price manipulation. It would preserve, however, the exchanges' 
obligation and ability to police their traders to ensure they remain 
below these limits.
  This legislation would also require the CFTC to conduct a rulemaking 
to review and revise the criteria for allowing traders who are using 
the futures market to hedge their risks in a commodity to acquire 
holdings in excess of the limits on holdings for speculators.
  Another step is to give the CFTC authority to prevent excessive 
speculation in the over-the-counter markets. In 2007, my Subcommittee 
issued a report on the effects of speculation in the energy markets 
entitled, Excessive Speculation in the Natural Gas Market. This 
investigation showed that speculation by a single hedge fund named 
Amaranth distorted natural gas prices during the summer of 2006 and 
drove up prices for average consumers. The report demonstrated how 
Amaranth had shifted its speculative activity to unregulated markets, 
under the ``Enron loophole,'' to avoid the restrictions and oversight 
in the regulated markets, and how Amaranth's trading in the unregulated 
markets contributed to price increases.
  Following this investigation, I introduced a bill, S. 2058, to close 
the Enron loophole and regulate the un-regulated electronic energy 
markets. Working with Senators Feinstein and Snowe, and with the 
members of the Agriculture Committee in a bipartisan effort, we 
included an amendment to close the Enron loophole in the farm bill, 
which Congress passed last year.
  The legislation to close the Enron loophole placed over-the-counter, 
OTC, electronic exchanges under CFTC regulation. However, this 
legislation did not address the separate issue of trading in the rest 
of the OTC market, which includes bilateral trades through voice 
brokers, swap dealers, and direct party-to-party negotiations. In order 
to ensure there is a cop on the beat in all of the energy commodity 
markets, we need to address the rest of the OTC market as well.
  A large portion of this OTC market consists of the trading of swaps 
relating to the price of a commodity. Generally, commodity swaps are 
contracts between two parties where one party pays a fixed price to 
another party in return for some type of payment at a future time 
depending on the price of a commodity. Because some of these swap 
instruments look very much like futures contracts--except that they do 
not call for the actual delivery of the commodity--there is concern 
that the price of these swaps that are traded in the unregulated OTC 
market could affect the price of the very similar futures contracts 
traded on the regulated futures markets. We don't yet know for sure 
that this is the case, or that it is not, because we don't have any 
access to comprehensive data or reporting on the trading of these swaps 
in the OTC market.
  The legislation introduced today includes provisions to give the CFTC 
oversight authority to stop excessive speculation in the over-the-
counter market. These provisions represent a practical, workable 
approach that will enable the CFTC to obtain key information about the 
OTC market to enable it to prevent excessive speculation and price 
manipulation.
  Under these provisions, the CFTC will have the authority to ensure 
that traders cannot avoid the CFTC reporting requirements by trading 
swaps in the unregulated OTC market instead of regulated exchanges. It 
will enable the CFTC to act, such as by requiring reductions in 
holdings of futures contracts or swaps, against traders with large 
positions in order to prevent excessive speculation or price 
manipulation regardless of whether the trader's position is on an 
exchange or in the OTC market.
  This bill also gives the CFTC the authority to establish position 
limits in the over-the-counter market for energy and agricultural 
commodities in order to prevent excessive speculation and price 
manipulation. The CFTC needs this authority to ensure that large 
traders are not using the over-the-counter markets to evade the 
position limits in the futures markets.
  The ``London loophole'' allowed crude oil traders in the U.S. to 
avoid the position limits that apply to trading on U.S. futures 
exchanges by directing their trades onto the ICE Futures Exchange in 
London.
  In the last Congress, after I and others introduced legislation to 
close the London loophole that is similar to the legislation we are now 
introducing, the CFTC imposed more stringent requirements upon the ICE 
Futures Exchange's operations in the United States--for the first time 
requiring the London exchange to impose and enforce comparable position 
limits in order to be allowed to keep its trading terminals in the 
United States. This is the very action our legislation called for. 
However, the current CFTC position limits apply only to the nearest 
futures contract. Our legislation will ensure that foreign exchanges 
with trading terminals in the U.S. will apply position limits to other 
futures contracts once the CFTC establishes those limits for U.S. 
exchanges.
  Although the CFTC has taken these important steps that will go a long 
way towards closing the London loophole, Congress should still pass 
this legislation to make sure the London loophole stays closed. The 
legislation would put the conditions the CFTC has imposed upon the 
London exchange into statute, and ensure that the CFTC has clear 
authority to take action against any U.S. trader who is manipulating 
the price of a commodity or excessively speculating through the London 
exchange, including requiring that trader to reduce positions.
  The legislation also provides authorization for the CFTC to hire an 
additional 100 employees to oversee the commodity markets it regulates. 
The CFTC has been understaffed and underfunded for years. This 
authorization is a necessary first step to reinvigorate the agency's 
oversight and enforcement capabilities.
  In summary, the legislation I am introducing today will give the CFTC 
ability to police all of our energy commodity markets to prevent 
excessive speculation and price manipulation. This legislation is 
necessary to close the loopholes in current law that permit speculators 
in commodity markets to avoid trading limits designed to prevent the 
type of excessive speculation that has been contributing to high energy 
and other commodity prices. I hope my colleagues will support this 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill and 
support material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 447

       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 ``Prevent 
     Excessive Speculation Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition of energy and agricultural commodity.
Sec. 3. Speculative limits and transparency of off-shore trading.
Sec. 4. Authority of Commodity Futures Trading Commission with respect 
              to certain traders.
Sec. 5. Working group of international regulators.

[[Page 4296]]

Sec. 6. Position limits for energy and agricultural commodities.
Sec. 7. Over-the-counter transactions.
Sec. 8. Index traders and swap dealers.
Sec. 9. Disaggregation of index funds and other data in energy and 
              agricultural markets.
Sec. 10. Additional Commodity Futures Trading Commission employees for 
              improved enforcement.

     SEC. 2. DEFINITIONS OF ENERGY AND AGRICULTURAL COMMODITY.

       (a) Definition of Energy Commodity.--Section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a) is amended--
       (1) by redesignating paragraphs (13) through (34) as 
     paragraphs (14) through (35), respectively; and
       (2) by inserting after paragraph (12) the following:
       ``(13) Energy commodity.--The term `energy commodity' 
     means--
       ``(A) crude oil;
       ``(B) natural gas;
       ``(C) coal;
       ``(D) gasoline, heating oil, diesel fuel, and any other 
     source of energy derived from coal, crude oil, or natural 
     gas;
       ``(E) electricity;
       ``(F) ethanol and any other fuel derived from a renewable 
     biomass;
       ``(G) any commodity that results from the management of air 
     emissions, including but not limited to greenhouse gases, 
     sulfur dioxide, and nitrogen oxides; and
       ``(H) any other substance that is used as a source of 
     energy, as the Commission, in its discretion, deems 
     appropriate.''.
       (b) Definition of Agricultural Commodity.--Section 1a of 
     the Commodity Exchange Act (7 U.S.C. 1a) is amended--
       (1) by redesignating paragraphs (1) through (35) as 
     paragraphs (2) through (36), respectively; and
       (2) by inserting a new paragraph (1) as follows:
       ``(1) Agricultural commodity.--The term `agricultural 
     commodity' means any commodity specifically described in 
     paragraph (5).''.
       (c) Conforming Amendments.--
       (1) Section 2(c)(2)(B)(i)(II)(cc) of the Commodity Exchange 
     Act (7 U.S.C. 2(c)(2)(B)(i)(II)(cc)) is amended--
       (A) in subitem (AA), by striking ``section 1a(20)'' and 
     inserting ``section 1a(21)''; and
       (B) in subitem (BB), by striking ``section 1a(20)'' and 
     inserting ``section 1a(21)''.
       (2) Section 13106(b)(1) of the Food, Conservation, and 
     Energy Act of 2008 is amended by striking ``section 1a(32)'' 
     and inserting ``section 1a''.
       (3) Section 402 of the Legal Certainty for Bank Products 
     Act of 2000 (7 U.S.C. 27) is amended--
       (A) in subsection (a)(7), by striking ``section 1a(20)'' 
     and inserting ``section 1a''; and
       (B) in subsection (d)--
       (i) in paragraph (1)(B), by striking ``section 1a(33)'' and 
     inserting ``section 1a''; and
       (ii) in paragraph (2)(D), by striking ``section 1a(13)'' 
     and inserting ``section 1a''.

     SEC. 3. SPECULATIVE LIMITS AND TRANSPARENCY OF OFF-SHORE 
                   TRADING.

       Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is 
     amended by adding at the end the following:
       ``(e) Foreign Boards of Trade.--
       ``(1) In general.--The Commission may not permit a foreign 
     board of trade to provide to the members of the foreign board 
     of trade or other participants located in the United States, 
     or otherwise subject to the jurisdiction of the Commission, 
     direct access to the electronic trading and order matching 
     system of the foreign board of trade with respect to an 
     agreement, contract, or transaction in an energy commodity 
     that settles against any price (including the daily or final 
     settlement price) of one or more contracts listed for trading 
     on a registered entity, unless--
       ``(A) the foreign board of trade--
       ``(i) makes public daily trading information regarding the 
     agreement, contract, or transaction that is comparable to the 
     daily trading information published by the registered entity 
     for the one or more contracts against which the agreement, 
     contract or transaction traded on the foreign board of trade 
     settles; and
       ``(ii) promptly notifies the Commission of any change 
     regarding--

       ``(I) the information that the foreign board of trade will 
     make publicly available;
       ``(II) the position limits and position accountability 
     provisions that the foreign board of trade will adopt and 
     enforce;
       ``(III) the position reductions required to prevent 
     manipulation; and
       ``(IV) any other area of interest expressed by the 
     Commission to the foreign board of trade; and

       ``(B) the foreign board of trade (or the foreign futures 
     authority that oversees the foreign board of trade)--
       ``(i) adopts position limits or position accountability 
     provisions for the agreement, contract, or transaction that 
     are comparable to the position limits or position 
     accountability provisions adopted by the registered entity 
     for the one or more contracts against which the agreement, 
     contract or transaction traded on foreign board of trade 
     settles;
       ``(ii) has the authority to require or direct market 
     participants to limit, reduce, or liquidate any position the 
     foreign board of trade (or the foreign futures authority that 
     oversees the foreign board of trade) determines to be 
     necessary to prevent or reduce the threat of price 
     manipulation, excessive speculation, price distortion, or 
     disruption of delivery or the cash settlement process; and
       ``(iii) provides information to the Commission that is 
     comparable to the information that the Commission determines 
     to be necessary to publish the commitments of traders report 
     of the Commission for the one or more contracts against which 
     the agreement, contract or transaction traded on the foreign 
     board of trade settles.
       ``(2) Existing foreign boards of trade.--Paragraph (1) 
     shall not be effective with respect to any agreement, 
     contract, or transaction in an energy commodity executed on a 
     foreign board of trade to which the Commission had granted 
     direct access permission prior to the date of enactment of 
     this subsection until the date that is 180 days after the 
     date of enactment of this subsection.
       ``(3) Existing contracts.--No contract of sale of a 
     commodity for future delivery traded or executed on or 
     through the facilities of a board of trade, exchange or 
     market located outside the United States for purposes of 
     subsection (a) shall be void, voidable or unenforceable and 
     no party to such contract shall be entitled to rescind or 
     recover any payments made with respect to such contract based 
     upon the failure of the foreign board of trade to comply with 
     any provision of this Act.''.

     SEC. 4. AUTHORITY OF COMMODITY FUTURES TRADING COMMISSION 
                   WITH RESPECT TO CERTAIN TRADERS.

       (a) In General.--
       (1) Restriction of futures trading to contract markets or 
     derivatives transaction execution facilities.--Section 4(b) 
     of the Commodity Exchange Act (7 U.S.C. 6(b)) is amended by 
     inserting after the first sentence the following: ``The 
     Commission may adopt rules and regulations requiring the 
     maintenance of books and records by any person that is 
     located within the United States (including the territories 
     and possessions of the United States) or that enters trades 
     directly into the trade matching system of a foreign board of 
     trade from the United States (including the territories and 
     possessions of the United States).''
       (2) Commission authority over traders.--Section 4 of the 
     Commodity Exchange Act (7 U.S.C. 6) is amended by adding at 
     the end the following:
       ``(e) The Commission shall have authority under this Act to 
     require or direct a person located in the United States, or 
     otherwise subject to the jurisdiction of the Commission, to 
     limit, reduce, or liquidate any position on a foreign board 
     of trade to prevent or reduce the threat of price 
     manipulation, excessive speculation, price distortion, or 
     disruption of delivery or the cash settlement process with 
     respect to any contract listed for trading on a registered 
     entity.
       ``(f) Consultation.--Before taking any action under 
     subsection (e), the Commission shall consult with the 
     appropriate--
       ``(1) foreign board of trade; and
       ``(2) foreign futures authority.''.
       (3) Violations.--Section 9(a) of the Commodity Exchange Act 
     (7 U.S.C. 13(a)) is amended by inserting ``(including any 
     person trading on a foreign board of trade)'' after ``Any 
     person'' each place it appears.
       (4) Effect.--No amendment made by this subsection limits 
     any of the otherwise applicable authorities of the Commodity 
     Futures Trading Commission.

     SEC. 5. WORKING GROUP OF INTERNATIONAL REGULATORS.

       Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as 
     amended by section 4(a)(2)(B)) is amended by adding at the 
     end the following:
       ``(g) Working Group of International Regulators.--Not later 
     than 90 days after the date of enactment of this subsection, 
     the Commission shall invite regulators of foreign boards of 
     trade to participate in a working group of international 
     regulators to develop uniform international reporting and 
     regulatory standards to ensure the protection of the energy 
     and agricultural futures markets from excessive speculation, 
     manipulation, and other trading practices that may pose 
     systemic risks to energy and agricultural futures markets, 
     countries, and consumers.''.

     SEC. 6. POSITION LIMITS FOR ENERGY AND AGRICULTURAL 
                   COMMODITIES.

       Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is 
     amended--
       (1) in subsection (a)--
       (A) by inserting ``(1)'' after ``(a)''; and
       (B) by adding after and below the end the following:
       ``(2) In accordance with the standards set forth in 
     paragraph (1) of this subsection and consistent with the good 
     faith exception cited in subsection (b)(2), with respect to 
     energy and agricultural commodities, the Commission, within 
     90 days after the date of the enactment of this paragraph, 
     shall issue a proposed rule, and within 180 days after 
     issuance of such proposed rule shall adopt a final rule, 
     after notice and an opportunity for public comment, to 
     establish limits on the amount of positions that may be held 
     by any person with respect to contracts of sale for future 
     delivery or with respect to options

[[Page 4297]]

     on such contracts or commodities traded on or subject to the 
     rules of a contract market or derivatives transaction 
     execution facility, or on an electronic trading facility with 
     respect to a significant price discovery contract.
       ``(3) In establishing the limits required in paragraph (2), 
     the Commission shall set limits--
       ``(A) on the number of positions that may be held by any 
     person for the spot month, each other month, and the 
     aggregate number of positions that may be held by any person 
     for all months;
       ``(B) to the maximum extent practicable, in its 
     discretion--
       ``(i) to diminish, eliminate, or prevent excessive 
     speculation;
       ``(ii) to deter and prevent market manipulation, squeezes, 
     and corners;
       ``(iii) to ensure sufficient market liquidity; and
       ``(iv) to ensure that the price discovery function of the 
     underlying cash market is not distorted or disrupted.
       ``(4) In addition to the position limits for energy and 
     agricultural commodities that the Commission establishes 
     under paragraph (2), the Commission may require or permit a 
     contract market, derivatives transaction execution facility, 
     or electronic trading facility with respect to a significant 
     price discovery contract, to establish and enforce position 
     accountability, as the Commission determines may be necessary 
     and appropriate to accomplish the objectives set forth in 
     paragraph (3)(B), provided that the number of positions that 
     may be authorized under position accountability may not 
     exceed the position limits established under paragraph (2).
       ``(5) Nothing in this section shall require the Commission 
     to revise any position limit for an agricultural commodity 
     that is in effect on the date of enactment of this Act.''.

     SEC. 7. OVER-THE-COUNTER TRANSACTIONS.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
     amended by adding at the end the following:
       ``(j) Over-the-Counter Transactions.--
       ``(1) Definitions.--In this subsection:
       ``(A) Covered person.--The term `covered person' means a 
     person that enters into an over-the-counter transaction that 
     is required to be reported under paragraph (3)(C).
       ``(B) Over-the-counter transaction.--The term `over-the-
     counter transaction' means a contract, agreement, or 
     transaction in an energy or agricultural commodity that is--
       ``(i) entered into only between persons that are eligible 
     contract participants at the time the persons enter into the 
     agreement, contract, or transaction;
       ``(ii) not entered into on a trading facility; and
       ``(iii) not a sale of any cash commodity for delivery.
       ``(2) Authority in major market disturbances.--
       ``(A) In general.--In the case of a major market 
     disturbance, as determined by the Commission, the Commission 
     may require any trader subject to the reporting requirements 
     described in paragraph (3) to take such action as the 
     Commission considers to be necessary to maintain or restore 
     orderly trading in any contract listed for trading on a 
     registered entity, including--
       ``(i) the liquidation of any futures contract; and
       ``(ii) the fixing of any limit that may apply to a market 
     position involving any over-the-counter transaction acquired 
     in good faith before the date of the determination of the 
     Commission.
       ``(B) Major market disturbance.--The term `major market 
     disturbance' means any disturbance in a commodity market that 
     disrupts the liquidity and price discovery function of that 
     market from accurately reflecting the forces of supply and 
     demand for a commodity, including--
       ``(i) a threatened or actual market manipulation or corner;
       ``(ii) excessive speculation; and
       ``(iii) any action of the United States or a foreign 
     government that affects a commodity.
       ``(C) The term `market disturbance' shall be interpreted in 
     a manner consistent with section 8a(9).
       ``(D) Judicial review.--Any action taken by the Commission 
     under subparagraph (A) shall be subject to judicial review 
     carried out in accordance with section 8a(9).
       ``(3) Reporting; recordkeeping.--
       ``(A) In general.--The Commission shall require each 
     covered person to submit to the Commission a report--
       ``(i) at such time and in such manner as the Commission 
     determines to be appropriate; and
       ``(ii) containing the information required under 
     subparagraph (B) to assist the Commission in detecting and 
     preventing potential price manipulation of, or excessive 
     speculation in, any contract listed for trading on a 
     registered entity.
       ``(B) Contents of report.--A report required under 
     subparagraph (A) shall contain--
       ``(i) information describing large trading positions of the 
     covered person obtained through one or more over-the-counter 
     transactions that involve--

       ``(I) substantial quantities of a commodity in the cash 
     market; or
       ``(II) substantial positions, investments, or trades in 
     agreements or contracts relating to the commodity; and

       ``(ii) any other information relating to over-the-counter 
     transactions required to be reported under subparagraph (C) 
     carried out by the covered person that the Commission 
     determines to be necessary to accomplish the purposes 
     described in subparagraph (A).
       ``(C) Over-the-counter transactions to be reported.--
       ``(i) In general.--The Commission shall identify each large 
     over-the-counter transaction or class of large over-the-
     counter transactions the reporting of which the Commission 
     determines to be appropriate to assist the Commission in 
     detecting and preventing potential price manipulation of, or 
     excessive speculation in, any contract listed for trading on 
     a registered entity.
       ``(ii) Mandatory factors for determinations.--

       ``(I) In general.--In carrying out a determination under 
     clause (i), the Commission shall consider the extent to which 
     each factor described in subclause (II) applies.
       ``(II) Factors.--The factors required for carrying out a 
     determination under clause (i) include whether--

       ``(aa) a standardized agreement is used to execute the 
     over-the-counter transaction;
       ``(bb) the over-the-counter transaction settles against any 
     price (including the daily or final settlement price) of one 
     or more contracts listed for trading on a registered entity;
       ``(cc) the price of the over-the-counter transaction is 
     reported to a third party, published, or otherwise 
     disseminated;
       ``(dd) the price of the over-the-counter transaction is 
     referenced in any other transaction;
       ``(ee) there is a significant volume of the over-the-
     counter transaction or class of over-the-counter 
     transactions; and
       ``(ff) there is any other factor that the Commission 
     determines to be appropriate.
       ``(iii) Periodic review.--The Commission shall periodically 
     conduct a review, but not less than once every 2 years, to 
     determine whether to initiate a rulemaking to include any 
     additional transactions or classes of transactions or to 
     exclude any transactions or classes of transactions from the 
     reporting requirements of this paragraph.
       ``(D) Alternate reporting.--The Commission may permit any 
     report required to be reported under paragraph (A) by--
       ``(i) a member of a derivatives clearing organization; or
       ``(ii) only one of the persons entering into the 
     transaction, provided that each person entering into the 
     transaction or transactions has notified the Commission, in 
     the manner specified by the Commission, that one of the 
     persons to the transaction or transactions has assumed, on 
     behalf of the other person to the transaction, the legal 
     obligations for such other person to submit reports under 
     this section, including liabilities for failure to file such 
     reports in accordance with the Commission's regulations. Any 
     notification provided under this paragraph shall be effective 
     in imposing such legal obligations and liabilities upon such 
     person.
       ``(E) Recordkeeping.--The Commission, by rule, shall 
     require each covered person--
       ``(i) in accordance with section 4i, to maintain such 
     records as directed by the Commission for a period of 5 
     years, or longer, if directed by the Commission; and
       ``(ii) to provide such records upon request to the 
     Commission or the Department of Justice.
       ``(4) Position limits for over-the-counter transactions.--
     Upon review of the information reported to the Commission 
     under paragraph (3), or following a major market disturbance 
     as determined by the Commission under paragraph (2), the 
     Commission may establish, after due notice and opportunity 
     for hearing, by rule, regulation, or order, such limits on 
     the amount of trading in over-the-counter transactions as the 
     Commission determines are necessary and appropriate to 
     accomplish one or more of the following objectives with 
     respect to any contract listed for trading on a registered 
     entity--
       ``(A) diminish, eliminate, or prevent excessive 
     speculation;
       ``(B) deter and prevent market manipulation, squeezes, and 
     corners;
       ``(C) ensure sufficient market liquidity; and
       ``(D) ensure that the price discovery function of the 
     underlying cash market is not distorted or disrupted.
       ``(5) Protection of proprietary information.--In carrying 
     out this subsection, the Commission may not--
       ``(A) require the publication of any proprietary 
     information;
       ``(B) prohibit the commercial sale or licensing of any 
     proprietary information; and
       ``(C) except as provided in section 8, publicly disclose 
     any information relating to any market position, business 
     transaction, trade secret, or name of any customer of a 
     covered person.
       ``(6) Applicability.--Notwithstanding subsections (g) and 
     (h), and any exemption issued by the Commission for any 
     energy or agricultural commodity, each over-the-counter 
     transaction shall be subject to this subsection.
       ``(7) Savings clause.--Nothing in this subsection modifies 
     or alters--

[[Page 4298]]

       ``(A) the guidance of the Commission; or
       ``(B) any applicable requirements with respect the 
     disclosure of proprietary information.
       ``(8) Bona fide hedging transaction review.--
       ``(A) In general.--The Commission shall review and revise 
     the definition of bona fide hedging transaction in subsection 
     (c) of Section 4a of the Commodity Exchange Act (7 U.S.C 
     2(h)(2)(A)) as the Commission determines is necessary and 
     appropriate to ensure that the commodity markets effectively 
     perform their risk management and price discovery 
     functions.''.

     SEC. 8. INDEX TRADERS AND SWAP DEALERS.

       Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as 
     amended by section 3) is amended by adding at the end the 
     following:
       ``(f) Index Traders and Swap Dealers.--Not later than 60 
     days after the date of enactment of this subsection, the 
     Commission shall--
       ``(1) routinely require detailed reporting from index 
     traders and swap dealers in markets under the jurisdiction of 
     the Commission;
       ``(2) reclassify the types of traders for regulatory and 
     reporting purposes to distinguish between index traders and 
     swaps dealers; and
       ``(3) review the trading practices for index traders in 
     markets under the jurisdiction of the Commission--
       ``(A) to ensure that index trading is not adversely 
     impacting the price discovery process; and
       ``(B) to determine whether different practices or 
     regulations should be implemented.''.

     SEC. 9. DISAGGREGATION OF INDEX FUNDS AND OTHER DATA IN 
                   ENERGY AND AGRICULTURAL MARKETS.

       Section 4 of the Commodity Exchange Act (7 U.S.C. 6) (as 
     amended by section 8) is amended by adding at the end the 
     following:
       ``(g) Disaggregation of Index Funds and Other Data in 
     Energy and Agricultural Markets.--The Commission shall 
     disaggregate and make public monthly--
       ``(1) the number of positions and total value of index 
     funds and other passive, long-only positions in energy and 
     agricultural markets; and
       ``(2) data on speculative positions relative to bona fide 
     physical hedgers in those markets.''.

     SEC. 10. ADDITIONAL COMMODITY FUTURES TRADING COMMISSION 
                   EMPLOYEES FOR IMPROVED ENFORCEMENT.

       Section 2(a)(7) of the Commodity Exchange Act (7 U.S.C. 
     2(a)(7)) is amended by adding at the end the following:
       ``(D) Additional employees.--As soon as practicable after 
     the date of enactment of this subparagraph, the Commission 
     shall appoint at least 100 full-time employees (in addition 
     to the employees employed by the Commission as of the date of 
     enactment of this subparagraph)--
       ``(i) to increase the public transparency of operations in 
     energy futures markets;
       ``(ii) to improve the enforcement of this Act in those 
     markets; and
       ``(iii) to carry out such other duties as are prescribed by 
     the Commission.''.
                                  ____


                Levin Prevent Excessive Speculation Act

                              Bill Summary

       The Prevent Excessive Speculation Act would:
       Authorize Speculation Limits for all Energy and 
     Agricultural Commodities. Direct CFTC to impose position 
     limits on energy and agricultural futures contracts to 
     prevent excessive speculation and manipulation and to ensure 
     sufficient market liquidity.
       Authorize CFTC to permit exchanges to impose and enforce 
     accountability levels that are lower than CFTC-established 
     speculation limits.
       Close London Loophole by Regulating Offshore Traders and 
     Increasing Transparency of Offshore Trades. Prohibit a 
     foreign exchange from operating in the United States unless 
     it imposes comparable speculation limits and reporting 
     requirements as apply to U.S. exchanges.
       Provide CFTC with same enforcement authority over U.S. 
     traders on foreign exchanges as it has over traders on U.S. 
     exchanges, including authority to require traders to reduce 
     their holdings to prevent excessive speculation or 
     manipulation.
       Require CFTC to invite non-U.S. regulators to form an 
     international working group to develop uniform regulatory and 
     reporting requirements to protect futures markets from 
     excessive speculation and manipulation.
       Close the Swaps Loophole and Regulate Over-the-Counter 
     Transactions. Authorize CFTC to impose speculation limits on 
     OTC transactions to protect the integrity of prices in the 
     futures markets and cash markets.
       Require large OTC trades that affect futures prices to be 
     reported to CFTC. Allow one party to a transaction to 
     authorize the other party to file the report. Require CFTC 
     periodic review of reporting requirements to ensure key 
     trades are covered.
       Direct CFTC to revise bona fide hedge exemption to ensure 
     regulation of all speculators, and strengthen data analysis 
     and transparency of swap dealer and index trading.
       Clarify definition of OTC transactions to exclude spot 
     market transactions.
       Protect Both Energy and Agriculture Commodities. Cover 
     trades in crude oil, natural gas, gasoline, heating oil, 
     coal, propane, electricity, other petroleum products and 
     sources of energy from fossil fuels, as well as ethanol, 
     biofuels, emission allowances for greenhouse gases, 
     SO2, NOx, and other air emissions.
       Cover trades in agricultural commodities listed in the 
     Commodity Exchange Act.
       Strengthen CFTC Oversight. Authorize CFTC to hire 100 new 
     personnel to oversee markets.
       Direct CFTC to issue proposed rules within 90 days and 
     final rules within 180 days.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Schumer, Mr. Lugar, and Mr. 
        Graham):
  S. 448. A bill to maintain the free flow of information to the public 
by providing conditions for the federally compelled disclosure of 
information by certain persons connected with the news media; to the 
Committee on the Judiciary.
  Mr. SPECTER. Mr. President, I sought recognition to introduce the 
Free Flow of Information Act of 2009. I am honored to be joined in my 
efforts by Senators Schumer, Lugar and Graham, who are original 
cosponsors. Some 242 years ago, on January 16, 1767, Thomas Jefferson 
remarked in a letter to Col. Edward Carrington, ``Were it left to me to 
decide whether we should have a government without newspapers, or 
newspapers without a government, I should not hesitate a moment to 
prefer the latter.'' We take our free press for granted because it is 
so ingrained in our history. But we need only look at free press 
movements in fledgling democracies to appreciate how sometimes fragile 
and easily chilled freedom of press truly is.
  The Free Flow of Information Act protects the public interest by 
ensuring an informed citizenry. In the past three years the Department 
of Justice has provided inconsistent numbers of subpoenaed journalists 
to the Judiciary Committee. We know from the public record, however, 
that at least 19 journalists have been subpoenaed by federal and 
special prosecutors for confidential source information since 2001 
claim. Among them are Judith Miller, Matt Cooper, Tim Russert, Lance 
Williams, Mark Fainaru-Wada, and Philip Shenon. We also know 4 
journalists have been imprisoned at the request either of the DoJ, U.S. 
Attorneys, or special prosecutors since 2000. Josh Wolf, Judith Miller, 
Jim Taricani, Vanessa Leggett. Collectively, these journalists have 
spent over 19 months imprisoned. Journalists who are not jailed for 
failing to comply with subpoenas still suffer the prospect of being 
held in contempt. Several have suffered this fate: Toni Locy, James 
Stewart, Walter Pincus, Jim Taricani.
  In addition to the subpoenas from special prosecutors mentioned 
above, more than a dozen reporters have received subpoenas in civil 
suits, such as the Wen Ho Lee and Hatfill privacy lawsuits against the 
government. A preliminary report on the 2007 Media Subpoena Survey 
conducted by Professor RonNell Andersen Jones at the Law College 
Foundation at the University of Arizona states: 761 responding news 
organizations reported receiving a total of 3,602 subpoenas seeking 
information or material relating to newsgathering activities in 
calendar year 2006. Of these, 335 were subpoenas arising out of 
proceedings that took place in a federal forum. Sixty-four percent of 
responding newsroom leaders believe the frequency of media subpoenas to 
be greater than it was five years ago. Fifty percent of the media 
companies believe the risk of their own organization receiving a 
subpoena is greater than it was five years ago, while only 5 percent 
believe the risk to be less.
  This bipartisan legislation would establish a qualified reporters' 
privilege protecting them from being compelled to identify confidential 
source information. The bill seeks to reconcile reporters' need to 
maintain confidentiality, in order to ensure that sources will speak 
openly and freely with the media, with the public's right to effective 
law enforcement and fair trials. The situation in the United States 
today is that journalists are subject to

[[Page 4299]]

a compulsory process to disclose confidential informants--at least in 
Federal courts. At the State level, there are many laws providing 
qualified privileges for journalists. Prior versions of this bill 
garnered the support of numerous bipartisan cosponsors, as well as 39 
media organizations, including the Washington Post, The Hearst 
Corporation, Time Warner, ABC Inc., CBS, CNN, The New York Times 
Company, and National Public Radio.
  In 2005 I cosponsored two prior bills and was principle author of yet 
another. In the 110th Congress, I introduced S. 1035 the Free Flow of 
Information Act of 2007, along with Senator Schumer, and Senators 
Lugar, Graham, and Dodd other senators to join as cosponsors were 
Senators Leahy, Johnson, Boxer, Klobuchar, Salazar, Obama, Clinton, 
Dole, Murray, Landrieu, Webb, Tester, Lieberman, Durbin, Baucus, and 
Lautenberg. On October 4, 2007, the Committee on the Judiciary 
favorably reported S.2035 out of committee by a 15-4 vote, which marked 
the first time a reporters' privilege bill had ever passed out of the 
Senate Judiciary Committee.
  On March 6, 2008, I, along with Senator Leahy, sent a letter to 
Majority Leader Reid and Minority Leader McConnell asking that S. 2035 
receive floor time for full Senate consideration. They answered our 
call. On July 30, 2008, the Senate entertained a cloture vote on the 
motion to proceed to the measure that failed by a vote of 51-43. 
Nonetheless, the bill continues to enjoy broad bipartisan support--
including the pledged support of former Senator, now--President Barack 
Obama. I urge all of my colleagues to join me in passing the Free Flow 
of Information Act of 2009, its high time we stop jailing or holding in 
contempt reporters who, in good faith, protect their confidential 
sources even in the face of a government subpoena.
  There has been a growing consensus that we need to establish a 
Federal journalists' privilege to protect the integrity of the news 
gathering process, a process that depends on the free flow of 
information between journalists and whistleblowers, as well as other 
confidential sources.
  Under my chairmanship, the Judiciary Committee held three separate 
hearings on this issue at which we heard from 20 witnesses, including 
prominent journalists like William Safire and Judith Miller, current 
and former Federal prosecutors, including former Deputy Attorney 
General Paul McNulty, and First Amendment scholars.
  These witnesses demonstrated that there are two vital, competing 
concerns at stake. On one hand, reporters cite the need to maintain 
confidentiality in order to ensure that sources will speak openly and 
freely with the news media. The renowned William Safire, former 
columnist for the New York Times, testified that ``the essence of news 
gathering is this: if you don't have sources you trust and who trust 
you, then you don't have a solid story--and the public suffers for 
it.'' Reporter Matthew Cooper of Time Magazine said this to the 
Judiciary Committee: ``As someone who relies on confidential sources 
all the time, I simply could not do my job reporting stories big and 
small without being able to speak with officials under varying degrees 
of anonymity.''
  On the other hand, the public has a right to effective law 
enforcement and fair trials. Our judicial system needs access to 
information in order to prosecute crime and to guarantee fair 
administration of the law for plaintiffs and defendants alike. As a 
Justice Department representative told the Committee, prosecutors need 
to ``maintain the ability, in certain vitally important circumstances, 
to obtain information identifying a source when a paramount interest is 
at stake. For example, obtaining source information may be the only 
available means of preventing a murder, locating a kidnapped child, or 
identifying a serial arsonist.''
  As Federal courts have considered these competing interests, they 
adopted rules that went in several different directions. Rather than a 
clear, uniform standard for deciding claims of journalist privilege, 
the Federal courts currently observe a ``crazy quilt'' of different 
judicial standards.
  The confusion began 36 years ago, when the Supreme Court decided 
Branzburg v. Hayes. The Court held that the press' First Amendment 
right to publish information does not include a right to keep 
information secret from a grand jury investigating a criminal matter. 
The Supreme Court also held that the common law did not exempt 
reporters from the duty of every citizen to provide information to a 
grand jury.
  The Court reasoned that just as newspapers and journalists are 
subject to the same laws and restrictions as other citizens, they are 
also subject to the same duty to provide information to a court as 
other citizens. However, Justice Powell, who joined the 5-4 majority, 
wrote a separate concurrence in which he explained that the Court's 
holding was not an invitation for the Government to harass journalists. 
If a journalist could show that the grand jury investigation was being 
conducted in bad faith, the journalist could ask the court to quash the 
subpoena. Justice Powell indicated that courts might assess such claims 
on a case-by-case basis by balancing the freedom of the press against 
the obligation to give testimony relevant to criminal conduct.
  In attempting to apply Justice Powell's concurring opinion, Federal 
courts have split on the question of when a journalist is required to 
testify. In more than three decades since Branzburg, the Federal courts 
are split in at least three ways in their approaches to Federal 
criminal and civil cases.
  With respect to Federal criminal cases, five circuits apply Branzburg 
so as to not allow journalists to withhold information absent 
governmental bad faith. Four other circuits recognize a qualified 
privilege, which requires courts to balance the freedom of the press 
against the obligation to provide testimony on a case-by-case basis. 
The law in the District of Columbia Circuit is unsettled.
  With respect to Federal civil cases, 9 of the 12 circuits apply a 
balancing test when deciding whether journalists must disclose 
confidential sources. One circuit affords journalists no privilege in 
any context. Two other circuits have yet to decide whether journalists 
have any privilege in civil cases. Meanwhile, 49 States plus the 
District of Columbia have recognized some form of reporters' privilege 
within their own jurisdictions. Thirty-one States plus the District of 
Columbia have passed some form of reporter's shield statute, and 18 
States have recognized a privilege at common law.
  There is little wonder that there is a growing consensus concerning 
the need for a uniform journalists' privilege in Federal courts. This 
system must be simplified.
  Today, we move toward resolving this problem by introducing the Free 
Flow of Information Act of 2009. The purpose of this bill is to 
guarantee the flow of information to the public through a free and 
active press, while protecting the public's right to effective law 
enforcement and individuals' rights to the fair administration of 
justice.
  The bill provides a qualified privilege for reporters to withhold 
from Federal courts, prosecutors, and other Federal entities, 
confidential source information and documents and materials obtained or 
created under a promise of confidentiality. However, the bill 
recognizes that, in certain instances, the public's interest in law 
enforcement and fair trials outweighs a source's interest in remaining 
anonymous through the reporter's assertion of a privilege. Therefore, 
it allows courts to require disclosure where certain criteria are met.
  Under the legislation, in most criminal investigations and 
prosecutions, the Federal entity seeking the reporter's source 
information must show that there are reasonable grounds to believe that 
a crime has occurred, and that the reporter's information is essential 
to the prosecution or defense. In criminal investigations and 
prosecutions of leaks of classified information, the Federal entity 
seeking disclosure must additionally show that the leak caused

[[Page 4300]]

significant, clear, and articulable harm to national security. In 
noncriminal actions, the Federal entity seeking source information must 
show that the reporter's information is essential to the resolution of 
the matter.
  In all cases and investigations, the Federal entity must demonstrate 
that nondisclosure would be contrary to the public interest. In other 
words, the court must balance the governmental need for the information 
against the public interest in newsgathering and the free flow of 
information.
  Further, the bill ensures that Federal Government entities do not 
engage in ``fishing expeditions'' for a reporter's information. The 
information a reporter reveals must, to the extent possible, be limited 
to verifying published information and describing the surrounding 
circumstances. The information must also be narrowly tailored to avoid 
compelling a reporter to reveal peripheral or speculative information.
  Finally, the Free Flow of Information Act adds layers of safeguards 
for the public. Reporters are not allowed to withhold information if a 
Federal court concludes that the information is needed for the defense 
of our Nation's security, as long as it outweighs the public interest 
in newsgathering and maintains the free flow of information to 
citizens, or to prevent an act of terrorism. Similarly, journalists may 
not withhold information reasonably necessary to stop a kidnapping or a 
crime that could lead to death or physical injury. Also, the bill 
ensures that both crime victims and criminal defendants will have a 
fair hearing in court. Under this bill, a journalist who is an 
eyewitness to a crime or tort or takes part in a crime or tort may not 
withhold that information on grounds of the qualified privilege. 
Journalists should not be permitted to hide from the law by writing a 
story and then claiming a reporter's privilege.
  It is time for Congress to clear up the ambiguities journalists and 
the Federal judicial system face in balancing the protections 
journalists need in providing confidential information to the public 
with the ability of the courts to conduct fair and accurate trials. I 
urge my colleagues to support this legislation and help create a fair 
and efficient means to serve journalists and the news media, 
prosecutors and the courts, and most importantly the public interest on 
both ends of the spectrum.
                                 ______
                                 
      By Mr. SPECTER (for himself, Mr. Lieberman, and Mr. Schumer):
  S. 449. A bill to protect free speech; to the Committee on the 
Judiciary.
  Mr. SPECTER. Mr. President. I am introducing the Free Speech 
Protection Act of 2009 to address a serious challenge to one of the 
most basic protections in our Constitution. American journalists and 
academics must have the freedom to investigate, write, speak, and 
publish about matters of public importance, limited only by the legal 
standards laid out in our First Amendment jurisprudence, including 
precedents such as New York Times v. Sullivan. Despite the protection 
for free speech under our own law, the rights of the American public, 
and of American journalists who share information with the public, are 
being threatened by the forum shopping of libel suits to foreign courts 
with less robust protections for free speech.
  These suits are filed in, and entertained by, foreign courts, despite 
the fact that the challenged speech or writing is written in the United 
States by U.S. journalists, and is published or disseminated primarily 
in the United States. The plaintiff in these cases may have no 
particular connection to the country in which the suit is filed. 
Nevertheless, the U.S. journalists or publications who are named as 
defendants in these suits must deal with the expense, inconvenience and 
distress of being sued in foreign courts, even though their conduct is 
protected by the First Amendment.
  An example of why the legislation is necessary is found in litigation 
involving Dr. Rachel Ehrenfeld, a U.S. citizen and Director of the 
American Center for Democracy, whose articles have appeared in the Wall 
Street Journal, the National Review, and the Los Angeles Times. She has 
been a scholar with Columbia University, the University of New York 
School of Law, and Johns Hopkins, and has testified before Congress. 
Dr. Ehrenfeld's 2003 book, ``Funding Evil: How Terrorism is Financed 
and How to Stop It'', which was published solely in the United States 
by a U.S. publisher, alleged that a Saudi Arabian subject and his 
family financially supported Al Qaeda in the years preceding the 
attacks of September 11. He sued Ehrenfeld for libel in England, 
although only 23 books were sold there. Why? Because under English law, 
it is not necessary for a libel plaintiff to prove falsity or actual 
malice as is required in the United States.
  Dr. Ehrenfeld did not appear, and the English court entered a default 
judgment for damages, an injunction against publication in the United 
Kingdom, a ``declaration of falsity'', and an order that she and her 
publisher print a correction and an apology.
  Dr. Ehrenfeld sought to shield herself with a declaration from both 
federal and state courts that her book did not create liability under 
American law, but jurisdictional barriers prevented both the Federal 
and New York State courts from acting. Reacting to this problem, the 
Governor of New York, on May 1, 2008, signed into law the ``Libel 
Terrorism Protection Act.'' Congress must now take similar action. I 
note that the person who sued Dr. Ehrenfeld has filed dozens of 
lawsuits in England, and there is a real danger that other American 
writers and researchers will be afraid to address this crucial subject 
of terror funding and other important matters. Other countries should 
be free to have their own libel law, but so too should the United 
States. Venues that have become magnets for defamation plaintiffs from 
around the world permit those who want to intimidate our journalists to 
succeed in doing so. The stakes are high. The United Nations in 2008 
noted the importance of free speech and a free press, and the threat 
that libel tourism poses to the world.
  Following the New York example, the legislation my co-sponsors and I 
introduce today confers jurisdiction on federal courts to bar 
enforcement of foreign libel judgments if the material at issue would 
not constitute libel under U.S. law. Significantly, it also deters 
foreign suits in the first place by permitting American defendants to 
countersue from the moment papers are served on them. Damages available 
in the countersuit include the amount at issue in the foreign libel 
suit as well as treble damages if the foreign suit is part of a scheme 
to suppress a U.S. person's first amendment rights.
  This deterrent mechanism is critical because those who bring these 
foreign libel suits are more interested in intimidating the authors 
than in actually collecting damages. They know that even if a foreign 
judgment cannot be enforced in the United States, the cost of defending 
the suit and the penalty for taking a default judgment can have a 
chilling effect on American writers and publishers. In particular, 
under English law a contempt citation may issue against authors or 
publishers who fail to satisfy default judgments, pursuant to which 
their property may be seized and they may be imprisoned. What is worse, 
defendants can no longer skirt the consequences merely by avoiding 
contact with England. Under recent European Commission regulations, 
default judgments for monetary claims are enforceable in all EU 
countries except Denmark.
  The potentially severe ramifications of a default judgment make clear 
that merely barring enforcement of a foreign libel judgment in U.S. 
courts is entirely insufficient particularly for publishers with 
European offices. While it is important to bar enforcement, in the 
words of a New York Times editorial, that does ``not go as far as it 
could.''
  I often remark that the Senate is the world's greatest deliberative 
body and all the facts and arguments ought to be examined before it 
acts. Accordingly, I must address a letter in opposition to this bill 
from a prominent British libel lawyer and explain why his arguments are 
unpersuasive.
  He notes that a ``U.S. citizen . . . knocked down by the negligent 
driving'' of a London taxi driver is ``just as

[[Page 4301]]

entitled as any British citizen'' to sue in England for damages. Why 
should a U.S. citizen ``not be entitled on the same basis, like any 
other UK citizen, to sue for damages to his reputation?'' The answer, 
of course, is that the analogy is inapt. In that hypothetical, the 
plaintiff sues the defendant in the defendant's jurisdiction for a harm 
committed and suffered there, an injury that is universally recognized 
as a tort. By contrast, the plaintiff in a foreign libel action 
purposely avoids suing in the jurisdiction where the defendant 
journalist writes and publishes, a jurisdiction where the material is 
not libelous. The proper analogy would be if the injured American had 
sued the taxi driver in the United States instead of England because 
the driver's conduct would not constitute negligence under English law. 
That hardly seems fair play. Our bill is designed specifically to 
prevent such forum shopping.
  That essay also asks whether ``legislators will extend their 
intervention'' to commercial matters such as contracts and debts and 
warns that such extension could trigger ``retaliatory action on the 
part of UK legislators.'' Actually, such extension has already 
happened, but at the hands of British legislators not American ones. In 
the antitrust context, British law bars enforcement of foreign 
judgments for treble damages such as those awarded by U.S. courts. In 
addition, it allows a British corporation, against whom a judgment for 
treble damages was entered in a foreign court, to recover from the 
plaintiff any excess over actual damages. In any event, this bill is 
confined to the narrow area of core First Amendment rights.
  ``Perhaps of most significance'' he continues in his letter, is that 
to his knowledge ``very few of these claims have actually come before 
UK courts.'' But it is the chilling effect and the mere threat of 
litigation that suffices to silence authors; there is no need to try 
the cases. In 2004, fear of a lawsuit forced Random House UK to cancel 
publication of ``House of Bush, House of Saud,'' a best seller in the 
U.S. that was written by an American author. Similarly, in 2007, the 
threat of a lawsuit compelled Cambridge University Press to apologize 
and destroy all available copies of ``Alms for Jihad,'' a book on 
terrorism funding by American authors. Indeed, an October 2008 study 
reported in The Guardian found that ``[m]edia companies are becoming 
less willing to fight defamation court cases all the way to a verdict. 
. . . With the burden of proof effectively resting on the defendant'' 
and attorneys' fees paid by the loser, defendants ``are forced to enter 
into settlement negotiations.''
  Numerous organizations have endorsed the bill we offer today, 
including the ACLU and the Anti-Defamation League, as well as numerous 
journalists and publishers groups. Op-eds and editorials supporting our 
efforts have run in national papers, including the New York Times on 
September 15, 2008 and the New York Sun on July 28, 2008. Also drawing 
attention to the issue was an op-ed Senator Lieberman and I penned that 
ran in the Wall Street Journal on July 14, 2008.
  Freedom of speech, freedom of the press, freedom of expression of 
ideas, opinions, and research, and freedom of exchange of information 
are all essential to the functioning of a democracy. They are also 
essential in the fight against terrorism.
  I thank Senators Lieberman and Schumer, as well as Congressman Pete 
King and his cosponsors for working with me on this important bill.
                                 ______
                                 
      By Mr. BAUCUS (for himself, Ms. Stabenow, Mr. Tester, Mr. Conrad, 
        Mr. Johnson, and Mr. Schumer):
  S. 450. A bill to understand and comprehensively address the oral 
health problems associated with methamphetamine use; to the Committee 
on Health, Education, Labor, and Pensions.
  Mr. BAUCUS. Mr. President, I rise today to re-introduce the Meth 
Mouth Prevention and Community Recovery Act in the 111th Congress.
  In December 2007, the U.S. Department of Justice's National Drug 
Intelligence Center, NDIC, reported the increasing availability of 
high-purity methamphetamine throughout the country and the expansion of 
methamphetamine networks. According to the 2005 National Survey on Drug 
Use and Health, NSDUH, an estimated 10.4 million Americans aged 12 or 
older used methamphetamine at least once in their lifetimes for 
nonmedical reasons, representing 4.3 percent of the U.S. population in 
that age group. Its use has been destructive to individual people, 
families and communities in our nation. Lung disease, fatal heart 
attacks, mental illness and decaying teeth have been implicated with 
its prevalent use.
  Dental problems are common among drug users. Many do not care for 
their teeth regularly and most do not see a dentist often. But 
methamphetamine seems to be taking a unique and horrific toll inside 
its user's mouths.
  In those populated areas where its use is highly concentrated, more 
and more dentists are encountering patients with a distinct, painful 
and often debilitating pattern of oral decay. The condition, known as 
``meth mouth'', is characterized by teeth that are blackened, stained, 
rotting and crumbling or falling apart. Some believe meth mouth is 
caused by the drug's acidic nature, its ability to dry the mouth, the 
tendency of users to grind and clench their teeth and a drug-induced 
craving for sugary drinks. Often the damage is so severe that 
extraction is the only viable treatment option.
  The Meth Mouth Prevention and Community Recovery Act authorizes 
funding for local, school-based initiatives to educate primary and 
elementary school students about the dangers of methamphetamine usage. 
It will also provide for enhanced research and professional training in 
substance use disorders, oral health and the provision of dental care.
  The bill I am putting forth here today will begin to address our 
Nation's need to better understand and educate our population along 
helping the dental health providers treat the oral disease originating 
from this drug's abuse. The studies funded and treatment offered here 
will begin to stem the tide on this terrible affliction.
  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 
placed in the Record, as follows:

                                 S. 450

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

     SECTION 1. SHORT TITLE; PURPOSES.

       (a) Short Title.--This Act may be cited as the ``Meth Mouth 
     Prevention and Community Recovery Act''.
       (b) Purposes.--The purposes of this Act are--
       (1) to investigate and report on all aspects of meth mouth, 
     including its causes, public health impact, innovative models 
     for its prevention, and new and improved methods for its 
     treatment;
       (2) to ensure dentists and allied dental personnel are able 
     to recognize the signs of substance abuse in their patients, 
     discuss the nature of addiction as it relates to oral health 
     and dental care, and facilitate appropriate help for patients 
     (and family members of patients) who are affected by a 
     substance use disorder;
       (3) to determine whether, how, and to what degree educating 
     youth about meth mouth is an effective strategy for 
     preventing or reducing the prevalence of methamphetamine use; 
     and
       (4) to underscore the many ways that dentists and other 
     oral health professionals can contribute to the general 
     health of their patients, their communities, and the country 
     as a whole.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title; purposes.
Sec. 2. Table of contents.

                   TITLE I--EVIDENCE-BASED PREVENTION

Sec. 101. Findings; purpose; definitions.
Sec. 102. Methamphetamine prevention demonstration projects.
Sec. 103. Education for American Indian and Alaska native children.
Sec. 104. Authorization of appropriations.

              TITLE II--METH MOUTH RESEARCH INVESTMENT ACT

Sec. 201. Findings; purpose; definitions.
Sec. 202. Research on substance abuse, oral health, and dental care.
Sec. 203. Study of methamphetamine-related oral health costs.
Sec. 204. Authorization of appropriations.

[[Page 4302]]

     TITLE III--SUBSTANCE ABUSE EDUCATION FOR DENTAL PROFESSIONALS

Sec. 301. Findings; purpose; definitions.
Sec. 302. Substance abuse training for dental professionals.
Sec. 303. Authorization of appropriations.

                   TITLE I--EVIDENCE-BASED PREVENTION

     SEC. 101. FINDINGS; PURPOSE; DEFINITIONS.

       (a) Findings.--The Congress finds as follows:
       (1) According to the Substance Abuse and Mental Health 
     Services Administration, first-time methamphetamine use is 
     most likely to occur between the ages of 18 and 25. 
     Prevention efforts must therefore begin during the teen 
     years.
       (2) Most young people do not realize that methamphetamine 
     use can quickly leave their teeth blackened, stained, 
     rotting, and crumbling or falling apart and that the 
     treatment options are often limited.
       (3) By educating youth about meth mouth, oral health 
     advocates can play a substantial role in helping to prevent 
     first-time methamphetamine use.
       (b) Purpose.--The purpose of this title is to provide for a 
     number of projects to evaluate whether, how, and to what 
     degree educating youth about meth mouth is an effective 
     strategy for preventing or reducing methamphetamine use.
       (c) Definitions.--In this title:
       (1) Anti-drug coalition.--The term ``anti-drug coalition'' 
     has the meaning given to the term ``eligible coalition'' in 
     section 1023 of the National Narcotics Leadership Act of 1988 
     (21 U.S.C. 1523).
       (2) Dental organization.--The term ``dental organization'' 
     means a group of persons organized to represent the art and 
     science of dentistry or who are otherwise associated for the 
     primary purpose of advancing the public's oral health.
       (3) Director.--The term ``Director'' means the Director of 
     the Center for Substance Abuse Prevention.
       (4) Elementary school; secondary school.--The terms 
     ``elementary school'' and ``secondary school'' have the 
     meanings given to such terms in section 9101 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7801).
       (5) Indian; indian tribe; tribal organization.--The terms 
     ``Indian'', ``Indian tribe'', and ``tribal organization'' 
     have the meanings given to such terms in section 4 of the 
     Indian Self-Determination and Education Assistance Act (25 
     U.S.C. 450b).
       (6) Meth mouth.--The term ``meth mouth'' means a distinct 
     and often severe pattern of oral decay that is commonly 
     associated with methamphetamine use.
       (7) Substance use disorder.--The term ``substance use 
     disorder'' means any harmful pattern of alcohol or drug use 
     that leads to clinically significant impairment in physical, 
     psychological, interpersonal, or vocational functioning.
       (8) Youth.--The term ``youth'' has the meaning given to 
     such term in section 1023 of the National Narcotics 
     Leadership Act of 1988 (21 U.S.C. 1523).

     SEC. 102. METHAMPHETAMINE PREVENTION DEMONSTRATION PROJECTS.

       (a) In General.--In carrying out section 519E of the Public 
     Health Service Act (42 U.S.C. 290bb-25e), the Director of the 
     Center for Substance Abuse Prevention shall make grants to 
     public and private nonprofit entities to enable such entities 
     to determine whether, how, and to what degree educating youth 
     about meth mouth is an effective strategy for preventing or 
     reducing methamphetamine use.
       (b) Use of Funds.--
       (1) Mandatory uses.--Amounts awarded under this title shall 
     be used for projects that focus on, or include specific 
     information about, the oral health risks associated with 
     methamphetamine use.
       (2) Authorized uses.--Amounts awarded under this title may 
     be used--
       (A) to develop or acquire instructional aids to enhance the 
     teaching and learning process (including audiovisual items, 
     computer-based multimedia, supplemental print material, and 
     similar resources);
       (B) to develop or acquire promotional items to be used for 
     display or distribution on school campuses (including 
     posters, flyers, brochures, pamphlets, message-based apparel, 
     buttons, stickers, and similar items);
       (C) to facilitate or directly furnish school-based 
     instruction concerning the oral health risks associated with 
     methamphetamine use;
       (D) to train State and local health officials, health 
     professionals, members of anti-drug coalitions, parents, and 
     others how to carry messages about the oral health risks 
     associated with methamphetamine use to youth; and
       (E) to support other activities deemed appropriate by the 
     Director.
       (c) Grant Eligibility.--
       (1) Application.--To be eligible for grants under this 
     title, an entity shall prepare and submit an application at 
     such time, in such manner, and containing such information as 
     the Director may reasonably require.
       (2) Contents.--Each application submitted pursuant to 
     paragraph (1) shall include--
       (A) a description of the objectives to be attained;
       (B) a description of the manner in which the grant funds 
     will be used; and
       (C) a plan for evaluating the project's success using 
     methods that are evidence-based.
       (3) Preference.--In awarding grants under this title, the 
     Director shall give preference to applicants that intend to--
       (A) collaborate with one or more dental organizations;
       (B) partner with one or more anti-drug coalitions; and
       (C) coordinate their activities with one or more national, 
     State, or local methamphetamine prevention campaigns or oral 
     health promotion initiatives.
       (d) Limitations.--
       (1) Grant amounts.--The amount of an award under this title 
     may not exceed $50,000 per grantee.
       (2) Duration.--The Director shall award grants under this 
     title for a period not to exceed 3 years.
       (e) Evaluation and Dissemination.--The Director shall 
     collect and widely disseminate information about the 
     effectiveness of the demonstration projects assisted under 
     this title.

     SEC. 103. EDUCATION FOR AMERICAN INDIAN AND ALASKA NATIVE 
                   CHILDREN.

       Not less than 5 percent of the funds appropriated pursuant 
     to section 104 for a fiscal year shall be awarded to Indian 
     tribes and tribal organizations for the purpose of educating 
     Indian youth about the oral health risks associated with 
     methamphetamine use.

     SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for the purpose of 
     carrying out this title $1,000,000 for each of fiscal years 
     2010 through 2012. Amounts authorized to be appropriated 
     under this section are in addition to any other amounts 
     authorized to be appropriated for such purpose.

              TITLE II--METH MOUTH RESEARCH INVESTMENT ACT

     SEC. 201. FINDINGS; PURPOSE; DEFINITIONS.

       (a) Findings.--The Congress finds as follows:
       (1) As the number of regular methamphetamine users has 
     increased, so has a peculiar set of dental problems linked to 
     the drug. The condition (known as ``meth mouth'') develops 
     rapidly and is attributed to the drug's acidic nature, its 
     ability to dry the mouth, the tendency of users to grind and 
     clench their teeth, and a drug-induced craving for sugar-
     laden soft drinks.
       (2) Meth mouth is regarded by many as an anecdotal 
     phenomenon. Few peer-reviewed studies have been published 
     that examine its causes, its physical effects, its 
     prevalence, or its public health costs.
       (3) Enhanced research would help to identify the prevalence 
     and scope of meth mouth. Such research would also help 
     determine how substances of abuse can damage the teeth and 
     other oral tissues, and offer the possibility of developing 
     new and improved prevention, harm-reduction, and cost 
     management strategies.
       (b) Purpose.--The purpose of this title is to provide for 
     enhanced research examining all aspects of meth mouth, 
     including its causes, its public health impact, innovative 
     models for its prevention, and new and improved methods for 
     its treatment.
       (c) Definitions.--In this title:
       (1) Clinical research; health services research.--The terms 
     ``clinical research'' and ``health services research'' shall 
     have the meanings given to such terms in section 409 of the 
     Public Health Service Act (42 U.S.C. 284d).
       (2) Indian; indian tribe; tribal organization.--The terms 
     ``Indian'', ``Indian tribe'', and ``tribal organization'' 
     shall have the meanings given to such terms in section 4 of 
     the Indian Self-Determination and Education Assistance Act 
     (25 U.S.C. 450b).
       (3) Meth mouth.--The term ``meth mouth'' means a distinct 
     and often severe pattern of oral decay that is commonly 
     associated with methamphetamine use.
       (4) Public health research.--The term ``public health 
     research'' means research that focuses on population-based 
     health measures.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (6) Substance use disorder.--The term ``substance use 
     disorder'' means any harmful pattern of alcohol or drug use 
     that leads to clinically significant impairment in physical, 
     psychological, interpersonal, or vocational functioning.

     SEC. 202. RESEARCH ON SUBSTANCE ABUSE, ORAL HEALTH, AND 
                   DENTAL CARE.

       (a) Expansion of Activity.--In carrying out part A of title 
     III of the Public Health Service Act (42 U.S.C. 241 et seq.), 
     the Secretary shall expand and intensify the clinical 
     research, health services research, and public health 
     research on associations between substance use disorders, 
     oral health, and the provision of dental care.
       (b) Administration.--In carrying out subsection (a), the 
     Secretary--
       (1) may enter into contracts or agreements with other 
     Federal agencies, including interagency agreements, to 
     delegate authority for the execution of grants and for such 
     other activities as may be necessary to carry out this 
     section;
       (2) may carry out this section directly or through grants 
     or cooperative agreements with State, local, and territorial 
     units of

[[Page 4303]]

     government, Indian tribes, and tribal organizations, or other 
     public or nonprofit private entities; and
       (3) may request and use such information, data, and reports 
     from any Federal, State, local, or private entity as may be 
     required to carry out this section, with the consent of such 
     entity.

     SEC. 203. STUDY OF METHAMPHETAMINE-RELATED ORAL HEALTH COSTS.

       (a) In General.--In carrying out section 202, the Secretary 
     shall conduct a study to determine whether, how, and to what 
     degree methamphetamine use affects the demand for (and 
     provision of) dental care. The study shall account for both 
     genders, all racial and ethnic groups (and subgroups), and 
     persons of all ages and from all geographic areas as 
     appropriate for the scientific goals of the research.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall publish a special 
     report detailing the results of the study described in 
     subsection (a), with findings that address--
       (1) the prevalence and severity of oral health problems 
     believed to be associated with methamphetamine use;
       (2) the criteria most commonly used to determine whether a 
     patient's oral health problems are associated with 
     methamphetamine use;
       (3) the therapies most commonly used to treat patients with 
     meth mouth;
       (4) the clinical prognosis for patients who received care 
     for meth mouth; and
       (5) the financial impact of meth mouth on publicly financed 
     dental programs.

     SEC. 204. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for the purpose of 
     carrying out this title, $200,000 for each of fiscal years 
     2010 through 2012. Amounts authorized to be appropriated 
     under this section are in addition to any other amounts 
     authorized to be appropriated for such purpose.

     TITLE III--SUBSTANCE ABUSE EDUCATION FOR DENTAL PROFESSIONALS

     SEC. 301. FINDINGS; PURPOSE; DEFINITIONS.

       (a) Findings.--The Congress finds as follows:
       (1) The use of certain therapeutic agents in dental 
     treatment can jeopardize the health and affect the relapse 
     potential of patients with substance use disorders.
       (2) Screening patients for substance abuse is not a common 
     practice among dentists, according to several peer-reviewed 
     articles published in the ``Journal of the American Dental 
     Association''. Limited time, inadequate training, and the 
     potential for alienating patients are among the reasons often 
     cited.
       (3) Dentists receive little formal education and training 
     in screening patients for substance abuse, discussing the 
     nature of addiction as it relates to oral health and dental 
     care, and facilitating appropriate help for patients, and 
     family members of patients, who are affected by a substance 
     use disorder.
       (4) The American Dental Association maintains that dentists 
     should be knowledgeable about substance use disorders in 
     order to safely administer and prescribe controlled 
     substances and other medications. The American Dental 
     Association further recommends that dentists become familiar 
     with their community's substance abuse treatment resources 
     and be able to make referrals when indicated.
       (5) Training can greatly increase the degree to which 
     dentists, allied dental personnel, and other health 
     professionals can screen patients for substance abuse, 
     discuss the nature of addiction as it relates to oral health 
     and dental care, and facilitate appropriate help for 
     patients, and family members of patients, who are affected by 
     a substance use disorder.
       (b) Purpose.--The purpose of this title is to provide for 
     enhanced training and technical assistance to ensure that 
     dentists and allied dental personnel are able to recognize 
     the signs of substance abuse in their patients, discuss the 
     nature of addiction as it relates to oral health and dental 
     care, and facilitate appropriate help for patients, and 
     family members of patients, who are affected by a substance 
     use disorder.
       (c) Definitions.--For the purposes of this title:
       (1) Allied dental personnel.--The term ``allied dental 
     personnel'' means individuals who assist the dentist in the 
     provision of oral health care services to patients, including 
     dental assistants, dental hygienists, and dental laboratory 
     technicians who are employed in dental offices or other 
     patient care facilities.
       (2) Continuing education.--The term ``continuing 
     education'' means extracurricular learning activities 
     (including classes, lecture series, conferences, workshops, 
     seminars, correspondence courses, and other programs) whose 
     purpose is to incorporate the latest advances in science, 
     clinical, and professional knowledge into the practice of 
     health care (and whose completion is often a condition of 
     professional licensing).
       (3) Continuing education credit.--The term ``continuing 
     education credit'' means a unit of study that is used to 
     officially certify or recognize the successful completion of 
     an activity that is consistent with professional standards 
     for continuing education.

     SEC. 302. SUBSTANCE ABUSE TRAINING FOR DENTAL PROFESSIONALS.

       (a) In General.--In carrying out title V of the Public 
     Health Service Act (42 U.S.C. 290 et seq.), the Administrator 
     of the Substance Abuse and Mental Health Services 
     Administration shall support training and offer technical 
     assistance to ensure that dentists and allied dental 
     personnel are prepared to--
       (1) recognize signs of alcohol or drug addiction in their 
     patients and the family members of their patients;
       (2) discuss the nature of substance abuse as it relates to 
     their area of expertise;
       (3) understand how certain dental therapies can affect the 
     relapse potential of substance dependent patients; and
       (4) help those affected by a substance use disorder to find 
     appropriate treatment for their condition.
       (b) Continuing Education Credits.--The Administrator of the 
     Substance Abuse and Mental Health Services Administration may 
     collaborate with professional accrediting bodies--
       (1) to develop and support substance abuse training courses 
     for oral health professionals; and
       (2) to encourage that the activities described in paragraph 
     (1) be recognized for continuing education purposes.

     SEC. 303. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for the purpose of 
     carrying out this title, $500,000 for each of fiscal years 
     2010 through 2012. Amounts authorized to be appropriated 
     under this section are in addition to any other amounts 
     authorized to be appropriated for such purpose.

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